Rail fare rises driven by demands of shareholders and foreign corporate owners

A Virgin Trains East Coast train at King’s Cross station in London [Image: David Parry/PA].

A Virgin Trains East Coast train at King’s Cross station in London [Image: David Parry/PA].

Shadow Transport Secretary Andy McDonald has read this right – so of course his comment appears last in the Guardian‘s article, where nobody is likely to see it.

He said passengers are paying higher fares to subsidise the demands of the privatised rail companies’ shareholders, including foreign firms who will put the money into other nations’ rail systems.

This raises the obvious question, in an atmosphere of (false) allegations that foreign citizens have moved to the UK to take services that should go to the people of the UK:

Why are British citizens (actually) being forced to subsidise foreign services and utilities (rail isn’t the only one) through our privatised companies?

The Virgin Trains East Coast rise appears to be motivated by the failure of the Branson-owned firm to increase passenger numbers – possibly because the prices are too high?

As a result, we are told, the firm is struggling to pay premiums it promised to the Treasury in return for the franchise.

So the passengers are being forced to pay more because of privatisation. Weren’t we all promised that prices would fall?

The 2.3% average UK rail fare rises for 2017 are being driven by much higher increases on the reprivatised Virgin Trains East Coast, where ticket prices set by the operator will far outstrip the rate of inflation.

While regulated fares such as season tickets and off-peak returns, which are set by the government, are to increase by 1.9%, fares on Virgin Trains East Coast will increase by 4.9% overall.

The rail firm said that would be hiking the fares it controls by an average of around 5.5%.

The rail firm – a partnership between Richard Branson’s Virgin and the transport group Stagecoach – won the franchise in March 2015, when it was controversially reprivatised by the coalition government after more than five years of operation in the public sector.

Passenger numbers have not risen in line with projections from the time of the bid, leaving the operator struggling to meet the £3.3bn in premiums it has promised to pay the Treasury by 2023, with the bulk of that due in the later years of the eight-year franchise.

Andy McDonald, the shadow transport secretary, said Labour was committed to returning franchises to public ownership to “put an end to Britain’s rip-off railways”. He added: “Passengers are told that higher fares are necessary to fund investment, but vital projects have been delayed by years. Rail fares have risen by 25% on average in the last six years alone, whilst real wages remain below their 2008 levels.

“Money that could be used to keep fares down or reinvested to improve our services is instead subsidising the profits of private companies and other nations’ railway systems – it’s a scandal.”

Source: Rail fare rises driven by hikes on Virgin Trains East Coast | Money | The Guardian

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3 thoughts on “Rail fare rises driven by demands of shareholders and foreign corporate owners

  1. Barry Davies

    If the raise in fairs was put back into the superstructure there may be an argument for it, but the fact is the rails are owned by a different company tho the ones who own the trains, so they can only charge what they are allowed to for the use of the tracks, Virgin which runs the lucrative west coast line should be able to balance the books, but does the government allow this as the east coast is a separate franchise?

  2. NMac

    So called rail privatisation was a big con right from the start. It is all about people like Branson becoming rich at the expense of the public and the public subsidising the shareholders of these companies. I remember when I was a teenager (a long time ago) my Uncle telling me that Tories hate anything from which they and their chums can’t make a lot of money for themselves. That was back in the 1960s and his words have been proved absolutely right.

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