Virgin Boss calls FGW’s plan ‘preposterous’
After First Great Western won the contract to run the West Coast, Virgin-boss Sir Richard Branson criticised this decision who branded it ‘preposterous’ at a House of Commons Treasury Select Committee. Branson has himself faced criticism from many different people, such as a Member of Parliament who called his comment ‘Sour Grapes’. The CEO of FirstGroup, Tim O’Toole, said that Sir Richard Branson was wrong when he made his comments. An informative resource can be found here The Slient News.
When Virgin lost the contract to FirstGroup, a legal challenge was mounted which claims that the Department of Transport didn’t follow its own rules on deliverability and risk assessment. “This bid by FirstGroup is absolutely preposterous. It’s completely ridiculous. It is literally taking the system for a ride” said Branson who also said that insufficient reasons were provided to him when asked about why Virgin did not win the bid
A change of direction is needed
As with other train operators, FirstGroup has said that fares will rise in accordance with inflation. However, there have been calls by a major think tank to re-nationalise the railways.
The think tank has been supported by Labour who wants to help commuters with the amount of money which they pay on travelling costs. The think tank’s proposals, which would be a huge boost for Labour’s popularity if they were actually adopted, would see franchises ending and coming under public ownership.
The think tank said that the current model, where the infrastructure is managed by National Rail and private companies compete for contracts, is ineffective and very complicated. The think tank also claimed that £1.2 billion has been lost every year because of rail privatisation which could have helped towards lowering ticket fares by 18%.
A spokesperson for the think tank, Maria Eagles, said “Under the current system we have unaccountable train companies given a license to print money to operate a monopoly service at high cost to passengers in an industry that still relies on £4 billion from taxpayers every year…Increasingly franchises are run by subsidiaries of the German, French and Dutch state railways with profits helping deliver ticket prices in those countries that are a third of ours. Labour’s policy review is therefore looking at all options to make our railways work better for passengers with nothing ruled out, including whether the not-for-dividend model that works for rail infrastructure should be extended to rail services.
Re-nationalisation calls aren’t ne
Calls have been made for re-nationalisation of the railways before. The main reason to explain why this has happened is because of the exorbitant costs which are attributed to purchasing a standard ticket. Commuters into London and other heavily populated areas are often spending thousands of pounds for what might only be a ninety minute journey. Commuters in other European countries who have privatised railways do not spend as much money on their daily journey. Let’s take a look at one such journey which happens at rush hour.
Portsmouth & Southsea Station to London Waterloo = £63.50. Distance travelled = 76 miles.
This is an astonishing figure, especially as many people are finding it difficult to make ends meet. With pay freezes happening in many job sectors in the United Kingdom, the proposed 6% rise in train fairs which is due to come into force in January 2013 will put a further strain on household finances. Although British Rail did not invest in the rail infrastructure as much as they should have, lessons could be learnt from history and investment can be made where necessary. After all, the large profits which are reported by the rail franchises are apparently used to improve the rail network. If the railways were nationalised, the UK government could use profits in order to do the same adjustments. If one company can make such improvements, there is no reason to explain why the Department of Transport couldn’t. Browse it Bumber for fantastic figure.
In these times of open government where voters have a greater voice, the privatisation of the railways has stifled passengers when wanting to voice their concerns about high ticket prices and other issues. Maybe the time has come for a change of policy with the railways?