As the debate around renationalising the railways
continues, and rail fares are due to increase yet again, a new
report from the TaxPayers' Alliance shows that privatisation
has been a good thing for commuters (and taxpayers) in the
UK.
CLICK HERE TO READ THE
FULL PAPER.
Despite claims made about privatised rail, services in
Britain are:
-
Two thirds of
delays are caused by Network Rail, which
is nationalised.
- Every year of privatisation, except during the recession in
2009-10, has seen an increase in the
number of passenger journeys.
- Passenger satisfaction is high and stands at
83 per cent.
Significantly lower fares could only be delivered
by
increasing taxpayer support which
would disproportionately benefit high earners: the top fifth of
households travel six times as far by rail than those in the
bottom 20 per cent. It would be deeply unfair for poorer
taxpayers to subsidise wealthier commuters' rail journeys.
Commenting on the report, John O'Connell, Chief
Executive at the TaxPayers' Alliance, said:
"Whilst we hear from some on the left that
renationalisation is the only way to improve the
railways, the evidence clearly points in the opposite
direction. Dividend payments from the private companies are
very small, whilst investment is very high, and the only way to
significantly lower fares would be to make taxpayers subsidise
them. Rather than waste billions renationalising, efforts
should be spent on ending the disruption of trade unions, as
well as scrapping the true rail scandal in this country, which
is HS2."
The 'dividends are preventing investment' argument is
bogus
Support for the full renationalisation of the railways in the
UK is increasingly popular. A recent poll showed that
three-quarters of the British public support renationalisation
of trains and the headlines over trade union disputes with
Southern Rail have been widely reported.
Those who support renationalisation say that Train
Operating Companies (TOCs) pay their shareholders dividends,
which means higher fares, and that renationalisation would
improve efficiency and the level of service.
But dividend payments were equal to
just 2.5 per
cent of fare income
in 2015-16, or 13 pence per journey.
And half of train operators did not
pay any dividends to shareholders in 2015-16.
The many billions renationalisation would cost, as well as the
signficant disruption to services, is unlikely to be worth the
13 pence per journey, even in the highly unlikely outcome
that government could run services better and more efficiently
than private companies.
Continental comparisons
Revenue from passengers would have been £21.7 billion lower
since privatisation if the growth in passenger numbers in the
UK had been the same as in more government-controlled railways
such as those in Germany, Spain and France.
This would mean either more money from taxpayers or
higher fares:
- If paid for by fares this would mean £1.12 per journey
more.
- If paid for by taxes, it would mean £853 per household over
the period.
Either of these figures vastly out-weighs the
dividends paid and shows that the private sector incentive to
grow the railways more than pays off for passengers and
taxpayers.
