Back in 1993 John Major's Tory government committed one of the most flagrant acts of mugging ever. They smashed our rail system into almost one hundred parts and sold them off to franchisee’s, many of whom became millionaires; and to their friends in the business world, who again became very rich almost immediately after the sales.
The myth perpetrated, one that Thatcher popularised, was the old chestnut that insisted that all our industries, utilities and services would be better managed, cheaper to run and more profitable in the hands of the private sector.
|Chart 1: rail subsidy (2011/12 prices)|
Yet 21 years on from the second great train robbery we can see from the chart above that far from being cheaper to run the public subsidy going to this privately run service is greater today than it has ever been. So I suppose the system is more profitable in that shareholders and the people at the top of the rail companies are raking in fortunes from a repeatedly mugged public.
One could be forgiven for thinking: OK the subsidy is very high, but aren’t passengers getting value for their money with cheaper fares. The answer is: no we aren’t!