Grayling’s select committee evidence shows our railway is now run as a corporate welfare scheme, not a public service.

23 January 2018

Chris Grayling admitted in his evidence to the Transport Select Committee yesterday (22nd January) that the Virgin East Coast rail franchise deal was “over ambitious in what they thought they could deliver,” yet insisted that the Department for Transport had little alternative but to accept the highest bidder.

General Secretary Mick Whelan commented, “The natural conclusion of Grayling’s evidence is that the DfT are happy to offer franchises to overambitious bids, knowing that the chances are that the terms of the contracts won’t be met and the taxpayer will lose out on billions. Offering deals worth billions to a bad bid because you have little alternative shows just how fundamentally flawed the privatised franchising system is.”

The revelation comes after the DfT has already discussed ways to attract more bidders for franchises as even potential operators are deserting the system. The introduction of a new risk sharing mechanism for franchises will reduce potential losses for train operators and transfer more financial risk to the taxpayer.

Mick concluded, “Bids accepted with the knowledge they’ll probably fail. Private companies told that if they make less money than they thought, the taxpayer will top up their profits. It’s becoming increasingly clear that our railway is being run as a corporate welfare scheme for multinationals and foreign state owned operators, rather than as a public service. It’s time to end this farce.”

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