by Keith Richmond
Britain’s controversial privatised rail franchises contain an extraordinary clause which means the Government has to pay out public money to private companies in the event of industrial action.
The clause in the franchise agreements reads: “The Secretary of State, at his sole discretion, may decide to reimburse or ameliorate net losses of the franchise operator arising from industrial action, howsoever caused and of whatever nature.”
This means that a Labour government – and the Labour Party was, in opposition, opposed to rail privatisation – is in the perverse position of giving taxpayers’ money to a company making private profits running what many people think should be a public service.
As a high level source at the train drivers’ union ASLEF, which is affiliated to the Labour Party, told Tribune this week: “What incentive is this for good industrial relations?”
The existence of the controversial clause – which has in the past been denied by the Department for Transport – was revealed in a remarkable answer to a question by Dave Anderson, Labour MP for Blaydon.
Last month, Mr Anderson asked in the House of Commons if compensation had been paid from public funds to a rail franchise to compensate for industrial action.
Chris Mole, Parliamentary Under-Secretary of State for Transport, said it had – in October 2006. Last week, Mr Anderson asked a further question to try to find out which franchise operator received the money – and how much was paid out.
The department is clearly embarrassed about the payment. When asked by a member of the public about a dispute with Silverlink in 2006, it would admit nothing. After the intervention of the Information Commissioner the DfT then said it had not paid out money to Silverlink. But the department’s reluctance to reply for two years raised suspicions – hence Mr Anderson’s questions in the House.
The privatisation of Britain’s railways by John Major’s Conservative Government has always been controversial, and is now generally regarded to have been, at best, a qualified success and, at worst, an unmitigated failure. Christian Wolmar, the respected author and journalist, even wrote a book called Broken Rails: How Privatisation Wrecked Britain’s Railways.
British Rail, formed when Britain’s railways were nationalised in 1948, was broken up by the Railways Act of 1993. But Railtrack went into administration in 2001 and the troubled East Coast franchise, run by National Express, was re-nationalised earlier this month – the second time in three years that the route has been handed back (after GNER in 2006).
This has again prompted calls from Labour MPs and trade unions to scrap the rail franchise system and bring the service back into public ownership.
