Leader says train operators among ‘cosy cartels that government hasn’t cut down to size’

Bus and train operators came under fire during speeches to the Labour Party’s annual conference in Manchester this week.

In his speech, party leader Ed Miliband accused train operators of being among “the cosy cartels and powerful interests that government hasn’t cut down to size”.

He said people struggling to make ends meet would ask “why is it that the privatised train companies can make hundreds of millions of pounds in profit at the same time as train fares are going up by 10% a year?”

Responding to Miliband’s comments, Michael Roberts, chief executive of the Association of Train Operating Companies, said: “Train companies are subject to strict rules laid down by the Department for Transport, rules that have been rigorously implemented by successive governments.

“Profit margins for train companies are, on average, around 3% – considerably lower than many other industries.”

Maria Eagle, shadow secretary of state for transport, criticised bus operators in her speech.

Eagle accused bus operators of cashing in on Labour’s decision to give free bus travel for pensioners. “In a deregulated bus market, there was only one way to deliver it,” she said. “We paid the bus companies, and we watched as profits soared.”

If Labour wins power in 2015, Eagle said that bus companies would be required to deliver concessionary travel for NEETs (young people aged 16-19 not in education or training) “in return for the profits they make in a subsidised industry”.

Bus industry sources were perplexed by Eagle’s comments given that the Greener Journeys campaign has already announced that it is examining the potential for an industry-funded discount for NEETs (PT035). An announcement from bus operators is expected at the Euro Bus Expo show in November.

Eagle was also critical of resistance from bus operators to the introduction of Quality Contracts. She singled out Stagecoach for its threat to shut down its operations if bus franchising was implemented.

“To the bus companies, I say: ‘You operate successfully in a regulated system right across Europe, and you can do so here’,” she said.

Meanwhile, Eagle accused transport minister Norman Baker of stacking the rules on bus funding against reformers by making transport authorities that pursue Quality Contracts ineligible for Better Bus Area funding.

 

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