Writing on the wall

Submitted by Anon on 18 August, 2003 - 6:55

RECORD FINE FOR PFI FIRM

Earlier this month PFI engineering firm Balfour Beatty and Network Rail, the successor company to Railtrack, were fined £10 million and £3.5million, respectively, for their part in the Hatfield rail disaster. The judge described the crash as “one of the worst examples of sustained industial negligence”.

Despite this, no-one has been convicted in a criminal court of causing the disaster because of the ludicrous inadequacy of the corporate manslaughter laws. What is more, the campaign by the relatives of victims of a number of rail crashes for the government’s reform of those laws to be really effective, have so far fallen on deaf ears.

Recently we learned that those responsible for the Potters Bar crash are not to be prosecuted.

Balfour Beatty are, of course, not just an incompetent PFI firm. They are responsible for other things too. The company was a main contractor on the infamous Ilisu Dam project in Turkey, used by the Turkish government to displace Kurdish communities and destroy Kurdish and Armenian antiquities as part of its ongoing programme of slow cultural genocide in the Eastern part of the country.

Nowadays, though, Balfour Beatty finds Britain a more attractive investment, attracted by the government's manic privatisation drive. Thanks to PFI, Balfour Beatty announced a rise in sales to £3.44bn during 2002 and PFI now forms 20% of its £5.1bn forward order book. It is now Britain's leading PPP/PFI contractor.

The company's record in that capacity is not great. In 1994 it was fined £1.2 million for the Heathrow tunnel collapse; it was also fined £500,000 for the Rivenhall rail disaster. But it was a major donor to the Tory Party, and continued to be given contracts. Ron Henderson, its finance director at the time and thus ultimately responsible for the cost-cutting that led to these disasters, now does the same job for Network Rail!

In some countries bribery is more direct, and Balfour Beatty has been found to be involved in corruption at the highest level in Malaysia, Singapore (where it was banned from bidding for public contracts for this reason) and Lesotho. Yet Balfour Beatty remains a favourite bidder for PFI contracts in this country. We wonder why?

RIP-OFF RAIL

A recent report published by the think-tank Catalyst has revealed the full extent of the waste of public money on rail privatisation.

When the then Tory government privatised British Rail in 1994, it handed over the railways at greatly discounted prices to private bus operators like First Group with no experience of running railways. The consequences in terms of efficiency were predictable, but the new PFI companies also demanded huge subsidies from the government to keep services running.

When Labour took power in 1997 the new government did not renationalise the railways. Rather, it crated a quango, the Strategic Rail Authority, to make the private companies more efficient. This has not worked. In 2004 the government abandoned targets for passenger and freight growth. Private companies were repeatedly “bailed out with additional subsidies, offered ‘cost-plus’ contracts that transferred risk back to the state, granted franchise extensions without competitive tendering, and granted new franchises despite poor performance elsewhere”. Today, contracts are awarded on the basis of the lowest subsidy demanded by the company - from public funds — to make their operations profitable for them!

Public subsidies constituted 21% of train operating companies' total income in 2003, the latest year for which figures have been provided, and the proportion has probably increased since then. Without these subsidies the companies would have made a loss every single year since 1994 — in other words, a genuine free market in rail travel, not propped up by the state to provide profits for parent companies and major shareholders, is and was from the beginning financially unsustainable.

Under the current system, however, vast profits are made. Since privatisation, £890 million — of public money — has gone from the train operating companies to their parent companies, and this outflow is steadily increasing. When things go wrong, the public bears the cost in order to keep services running. Post-tax returns on equity to rail shareholders, in consequence, are running at 1,155% of normal levels. But the trains still aren't running on time - if at all.

THE SORRY SAGA OF SOUTH-EAST TRAINS

When PFI company Connex was deprived of its franchise over South-Eastern passenger rail services in November 2003 for gross incompetence, the service went into public ownership, South-East Trains being wholly owned by the government’s Strategic Rail Authority. In the first six months of public ownership there was a 9% improvement in services. Despite this the government decided to spend £3.85 million on “tendering” to find a private company willing to run the trains.

Despite more than two-thirds of the public consistently being in favour of rail renationalisation, despite the proven greater efficiency and lower cost of public over private service provision, despite the string of fatal accidents owing to private companies' cost-cutting and incompetence and despite the chaos caused by a fragmented system of responsibility on the railways — despite all this, the government has refused even to consider not re-privatising South-East Trains. Nor does it intend to consider using its current strategic review of Midlands and cross-country rail franchises, or the fact that most PFI contracts will end in 2007, to bring the raileways back into public ownership.

As the railworkers’ union RMT and many others have said, here the government is driven by sheer dogma. The responses of Alastair Darling, arch-Blairite transport mnister, in Parliamentary questions last year, are quite revealing. Every question elicits the same response: “I strongly believe that having both private and public sector involvement in the railways is good.” No justification is provided other than easily-refuted formulas.

CRIME AND POVERTY

A new report published by the Crime and Society Foundation contains shocking statistics on the link between deprivation and becoming a victim of violent crime. People living in the poorest 10% of communities are six times as likely to be murdered as people living in the richest 10% of communities.

What is more, as inequality widens so life becomes more dangerous for the poorest people. People in the richest 10% of communities are 4% less likely to be murdered than in 1981, but those in the poorest 10% are 39% more likely to be murdered.

In short: capitalism kills.

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