Sept 2005 - Railtrack wants public subsidies ... but not public accountability

01 June 2013

Network Rail exists as a publicly-owned enterprise because its predecessor Railtrack deconstructed after the Hatfield rail crash laid bare the failure of the business to carry out its core functions.

Maintaining and replacing the railway infrastructure is not rocket science. In some ways it is an even more complicated operation. It involves many thousands of highly skilled people. It requires big revenue flows. Upon the efficient conduct of its business depends the lives and safety of millions of passengers and thousands of railway workers. A big part of the economy and many, many jobs rest on its effective management.

It is for these commonsense reasons rather than any questions of ideology that the rail unions, the whole trade union movement, the Labour Party (if not ministers), public opinion in its overwhelming majority and most probably the angels in heaven believe that such an enterprise should be publicly owned. But Railtrack, lest we forget, was a privately owned business and, as such, its executives seem, as the disturbing abandonment of the manslaughter charges reveal, beyond the reach of the law. Its shareholders perhaps saw themselves as buccaneering captains of private enterprise boldly taking risks, pledging their capital in a precarious commercial environment. In reality, it was a privately owned business that was locked into a network of highly profitable arrangements with infrastructure and construction firms.

The first response of Railtrack's managers to their business crisis was not to go to their shareholders for a cash injection but to solicit and get a massive public subsidy. Their second was to dish out £137 million in dividends to precisely these shareholders. Some risk.

In the final reckoning shareholders were compensated with 240p a share while the public picked up the bill for reconstituting their failed business as Network Rail. You have to admire the sheer brass neck of these people who now are seeking to blame Stephen Byers, the former transport minister, for the collapse of the business. ASLEF didn't always find itself in agreement with him but we are clear that on this issue he acted with prudence and foresight and in the public interest. The case for rail public ownership is confirmed both by his actions and by the contrasting irresponsibility and amorality of these litigants.

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