Britain has a productivity crisis. It also has inadequate infrastructure, a governing elite wedded to failed market dogma, and a decaying public realm. In addition, average real wages are forecast by the OECD to fall by 0.7 per cent in 2018, the worst performance of any advanced economy.
While wages decline, prices are surging. Average rail fares have increased by an unacceptable 3.4 per cent and season tickets by 3.6 per cent. Since 2010, regulated train fares, which are set by the government, have risen by an average of £694 (32 per cent). An annual season ticket from Peterborough to London now costs £7,864. In Germany, by contrast, one can purchase an annual travel card for all train journeys across the national network for less than half this amount: £3,797.
In her first speech as Prime Minister, Theresa May vowed to make Britain “a country that works not for a privileged few, but for every one of us”. What a hollow boast that was. On 2 December, Alan Milburn resigned as chair of the government’s Social Mobility Commission, citing the inaction of the May government. Another former Labour cabinet minister, Andrew Adonis, resigned over Christmas as chair of the National Infrastructure Commission. Adonis, who served with passion and imagination as transport secretary from 2009-10, also cited the failures of government, and denounced the Tories’ “indefensible” bailout of Virgin and Stagecoach, the private firms which run the East Coast Main Line. Rather than forfeiting as much as £2bn in public money, he argued, Transport Secretary Chris Grayling should have followed his example and renationalised the franchise.
Mr Adonis recognises that the public interest is not invariably served by private commerce. After its 2009 nationalisation, the East Coast Main Line cut journey times, carried more than a million extra passengers and achieved the highest customer satisfaction of any rail franchise. Free of the need to pay dividends to private shareholders, it also returned £1bn to the Treasury. But for purely ideological reasons, the Conservative-led government privatised East Coast in 2015. Mr Grayling similarly denied Transport for London – a model public service – the right to take over suburban London rail lines lest they fall into “the clutches of a Labour mayor”.
Nothing better exhibits the absurdity of our economic model than the ownership of the UK’s other rail franchises. Though the British state is deemed unfit to run lines, its Dutch and German counterparts are not. The Greater Anglia, West Midlands and ScotRail franchises are majority-owned by the Dutch state company Abellio, whose dire performance has been widely criticised by passenger groups. Chiltern Railways and Northern are owned by Germany’s Deutsche Bahn. Through payments that far exceed pre-privatisation levels, British taxpayers are inadvertently subsidising foreign governments. This is an outrage.
Austerity’s social costs are visible to all in overburdened schools and hospitals, unrepaired roads, uncollected bins and closed libraries and children’s centres. And the economic and political strains imposed by Brexit are further depriving the UK of the capacity to reform a broken model.
The Iranian conundrum
These are turbulent times in Iran. A protest that began on 28 December in the country’s second-largest city, Mashhad, quickly spread to other areas. We are witnessing the biggest display of economic and political grievance in nearly a decade. At the time of writing, at least 21 people have been killed in the unrest. President Hassan Rouhani, a relative “moderate” who was re-elected in May, has urged demonstrators to avoid violence but defended their right to protest. “The requests and demands of the people should be taken note of,” he said on Twitter. But the security forces have pledged to deal more harshly with the protesters, some of whom have called for the death of the president and the supreme leader, Seyyed Ali Khamenei.
Mr Rouhani’s challenge and responsibility is to ensure no more lives are lost. Many of the protesters are young – half the population is aged under 30 – and they are disenchanted with Islamic theocracy, repression, corruption, high unemployment and rising food prices. The lifting of economic sanctions as part of the 2015 nuclear deal with foreign powers has failed to improve people’s livelihoods. Unless their voices are heard, and action is taken, there will be more bloodshed.
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This article appears in the 03 Jan 2018 issue of the New Statesman, Young vs Old