Privatising East Coast is a bad deal for passengers and taxpayers

02 Dec 2016, by Sharon Sukhram in Public services

Virgin Trains is set to increase rail fares by 4.9% overall in 2017, compared to the average 2.3% rise across the UK. In 2015, Virgin Trains won the East Coast Main Line franchise when the line was hurriedly re-privatised ahead of the General Election, but the service has gone downhill when compared to being run by publicly owned Directly Operated Railways (DOR). Privatisation means that passengers are now paying more for a worse service.

Figures from the Office or Road and Rail Regulation show that since Virgin Trains took over East Coast the number of cancelled and significantly late trains have both increased (comparing 2014-15 under public ownership with 2015-16 under Virgin). The number of trains arriving within 5 minutes and 10 minutes of their destination time have also declined since Virgin took over.

Transport Focus surveys show a drop in overall passenger satisfaction from 90% (under public ownership) to 88% (under Virgin) – in under two years. The rhetoric that privatisation and competition drives up standards isn’t borne out by passenger experience on East Coast. In terms of value for money for the price of your ticket, the surveys show that the numbers of passengers rating good or satisfied fell by 3% from 64% under DOR to 61% under Virgin. So passengers clearly feel they are getting a worse deal.

While fares are going up with Virgin East Coast – money that should be reinvested in our railways is being paid out in shareholder dividends. In 2014-15 Virgin Trains East Coast paid out £19m in shareholder dividends. Needless to say, in 2013-14 publicly owned East Coast paid out no shareholder dividends – instead profits were returned to the Treasury. In six years of public ownership, East Coast returned over £1bn to the Treasury – a better deal for taxpayers.

Overall – passengers and taxpayers are getting a worse deal since East Coast was privatised and Virgin Trains took over. It’s time to bring our railways back into public ownership.