Office of Rail Regulation: nationalised rail firm is most efficient in the country

East Coast gets a net subsidy of just 1 per cent, ORR reports.

The Financial Times, that most fervently socialist of newspapers, reports that the East Coast franchise – the only one of the British rail franchises owned by the state – is outdoing the private sector. Mark Odell reports:

The state-run East Coast mainline has emerged as the most efficiently run rail franchise in terms of its reliance on taxpayer funding, raising questions about a recent government decision to privatise the operation.

The ORR found that among the rail franchises that make net payments to the Treasury, the East Coast mainline, which has been run by the state since November 2009, is reliant on just 1 per cent of government funding once cost of infrastructure is taken into account.

The reliance on state funding of the other nine franchises that make net payments to the government ranges from 3 per cent to 36 per cent.

The news comes shortly after the government announced plans to refranchise East Coast to the private sector. Odell reports that those plans were "designed to draw a line under the months of chaos in the UK rail industry triggered by the West Coast fiasco", but they were widely seen as a spoiler for Labour's plans for the railway system, which would have kept the franchise in public hands.

As Railnews writes, "a new East Coast franchise, once let, would be difficult and expensive to reverse until it had run its natural term, which could be ten years or more." That's quite a long time to bind the country into a style of management which seems to be sub-par.

Maria Eagle, Labour's shadow transport secretary, used the report to double-down on that position:

Considering the East Coast service makes one of the highest annual payments to government, receives the least subsidy and is the only route on which all profits are reinvested in services, it makes no sense for the government to prioritise this privatisation over getting the rest of the industry back on track.

Of course, even "privatising" East Coast might not be quite what it sounds like. As Christian Wolmar wrote in 2011:

In a way, it’s funny. The Brpitish railway system is slowly being renationalised, but not by our own government. Rather, it is being taken over by foreign state-owned railways that now have an interest in almost half the franchises, and in one of the three open access operators as well.

That's as true now as it has ever been. Not one of the three companies bidding to run the privatised parts of Crossrail – operations will still be run by the nationalised Transport for London – is privately held. Instead, the largest transport project in decades will be run by a partnership of a British state-owned firm and either the French, Dutch or German national operator.

The free market: it's a funny place, sometimes.

Alex Hern is a technology reporter for the Guardian. He was formerly staff writer at the New Statesman. You should follow Alex on Twitter.

Getty Images,
Show Hide image

John McDonnell praises New Labour as he enters conciliatory mode

The shadow chancellor sought to build a bridge between the past and the present by crediting the 1997 government. 

Ever since Jeremy Corbyn became Labour leader, John McDonnell has been on a mission to reinvent himself as a kinder, gentler politician. He hasn’t always succeeded. In July, the shadow chancellor declared of rebel MPs: “As plotters they were fucking useless”.

But in his Labour conference speech, Corbyn’s closest ally was firmly in conciliatory mode. McDonnell thanked Owen Smith for his part in defeating the Personal Independence Payment cuts. He praised Caroline Flint, with whom he has clashed, for her amendment to the financial bill on corporate tax transparency. Jonathan Reynolds, who will soon return to the frontbench, was credited for the “patriots pay their taxes” campaign (the latter two not mentioned in the original text).

McDonnell’s ecunmenicism didn’t end here. The 1997 Labour government, against which he and Corbyn so often defined themselves, was praised for its introduction of the minimum wage (though McDonnell couldn’t quite bring himself to mention Tony Blair). Promising a “real Living Wage” of around £10 per hour, the shadow chancellor sought to build a bridge between the past and the present. Though he couldn’t resist adding some red water as he closed: “In this party you no longer have to whisper it, it's called socialism. Solidarity!”

As a rebuke to those who accuse him of seeking power in the party, not the country, McDonnell spoke relentlessly of what the next Labour “government” would do. He promised a £250bn National Investment Bank, a “Right to Own” for employees, the repeal of the Trade Union Act and declared himself “interested” in the potential of a Universal Basic Income. It was a decidedly wonkish speech, free of the attack lines and jokes that others serve up.

One of the more striking passages was on McDonnell’s personal story (a recurring feature of Labour speeches since Sadiq Khan’s mayoral victory). “I was born in the city [Liverpool], not far from here,” he recalled. “My dad was a Liverpool docker and my mum was a cleaner who then served behind the counter at British Homes Stores for 30 years. I was part of the 1960's generation.  We lived in what sociological studies have described as some of the worst housing conditions that exist within this country. We just called it home.”

In his peroration, he declared: “In the birthplace of John Lennon, it falls to us to inspire people to imagine.” Most Labour MPs believe that a government led by Corbyn and McDonnell will remain just that: imaginary. “You may say I'm a dreamer. But I'm not the only one,” the shadow chancellor could have countered. With his praise for New Labour, he began the work of forging his party’s own brotherhood of man.

George Eaton is political editor of the New Statesman.