Stop the privatisation of East Coast

Today I’ve written for Progress on why campaigning to keep East Coast public could boost Labour’s fiscal credibility.

In an interview with Progress last year, Labour’s shadow transport secretary Maria Eagle called for East Coast trains to remain in the public sector in the long term. At the time this represented a shift in the party’s policy. When the previous operator National Express collapsed in 2009 and the government took responsibility for running services, this was viewed as a temporary measure.

No doubt this has been welcomed by those on the left who believe in public ownership in principle. But it should also be greeted by those in the centre who take a more pragmatic view. There is a strong argument that keeping East Coast public will save money, and the new approach that this signals could reduce costs across the industry and boost Labour’s own fiscal credibility.

To explain this it’s necessary to give a brief overview of how the privatised railway was meant to work. Crudely, the competition in the system is meant to occur when various private companies bid for the right to run services on a particular line for a fixed period of time. These franchises will generally be awarded to the bidder that asks for the least subsidy, in the case of loss-making parts of the network, or offers the government the most premium payments, where services are profitable. Bidders will set premium payments at such a level that they can also afford to hive off some profits as dividends to shareholders. While proponents of privatisation accept that some money will leak out of the system, they contend that this is more than compensated for by the efficiency and innovation of the private operators.

Unfortunately experience suggests that this isn’t the case.

In fact recent experience of East Coast has shown that a public operator can be as successful – if not more so – than a private one. New faster services, improved punctuality, high customer satisfaction, and a concerted effort to attract business customers have all been delivered. And this has been achieved without any shareholders to pay, allowing all £640m of profits from the last four years to be returned to the Treasury.

Tory ministers, embarrassed about the success of a publicly operated railway, are attempting to undermine Labour’s plans to keep East Coast public. Following the West Coast debacle, their new franchising timetable sees the reprivatisation of East Coast brought forward to February 2015 – three months before the next general election. I’ve started a campaign against the plans, and hope to secure a debate in the new parliamentary session.

But I would argue that a future Labour government should go further than just preserving East Coast as a public operator. As the well-researched Rebuilding Rail report sets out, the remaining private franchises could be allowed to run their course. Major intercity routes could be transferred to East Coast’s parent company Directly Operated Railways. Regional franchises could be devolved to groups of local authorities, as is suggested in Labour’s policy review. These public operators could then work closely with infrastructure provider Network Rail – also publicly owned – to reduce costs, which the McNulty report concluded were 40 per cent higher in Britain compared to publicly operated railways on the continent.

So ensuring East Coast remains public should be the first priority. But Labour should look seriously at expanding public involvement in the railway in the future, not because public is best in principle, but because it offers the best prospect of reducing costs across the industry. This could, in turn, boost Labour’s own fiscal credibility in the eyes of the electorate.

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Interview with Scottish Churches Parliamentary Office

This interview was first published by the Scottish Churches Parliamentary Office on 30 April 2013 under the title There have been changes, but you can’t take your foot off the pedal. I have reproduced it in full below.

Growing up in a family with a strong allegiance to the Labour party, Sheila Gilmore’s childhood was most definitely political. Her eventual involvement in student politics and the women’s movement (particularly the setting up of the Edinburgh Rape Crisis Centre in the early 1970s) merely cemented the “born and bred in the bones stuff” that comes with growing up having political discussions in the home, particularly with her father, a staunch Labour supporter. Nevertheless, Sheila and her father’s view on Labour policies were not necessarily always the same; when Sheila was a student, she was appalled that the Labour party was even considering supporting the war in Vietnam. However, in 2003, “we had a bit of a set-to when my dad was saying how dreadful it was that Blair had supported Bush in Iraq – it was quite an interesting turnaround, I don’t know what it is, when you’re actively involved you feel more obliged to perhaps defend the sometimes indefensible.”

As a Labour MP on the opposition benches in the UK Parliament, Sheila is not prepared to defend the Government’s actions on welfare reform. She is also frustrated at the way in which language is used to “fuel panic”. “I hate the word welfare; I try not to use it. In itself it should be a neutral word, but it’s attracted a meaning that’s not always seen in a good light. We used to talk about social security and I had someone come up to me recently who was quite angry, asking ‘why are our pensions being lumped in with ‘welfare’? We’ve paid for this’… He was, rightly I think, unhappy about the growing assumptions.” She is well aware that spending on benefits has risen in recent years, but the inclusion of pensions (including state pensions) in the Department for Work and Pensions’ welfare bill has been entirely “for political reasons… to make the point about DWP spending being out of control.” Sheila gives one example of a headline claiming: “900,000 people who had been on incapacity benefit had dropped their claim when they were asked to attend an assessment, and then the rest of the article goes on to suggest that people were ‘at it’ for years…”. Sheila then explains the various means by which people find themselves on Employment and Support Allowance, but the biggest explanation for new claims not getting to the assessment stage is that people are claiming for a short period of sickness and then are no longer eligible for the benefit as they have recovered. “Now I’ve taken probably about five minutes to explain that. How do you compete with a headline? What will have stuck in people’s heads is the headline, which is then repeated on the TV… Then you wonder why, when MORI goes out and asks people ‘do you think welfare should be cut back?’, people say yes.” This is something that obviously causes Sheila angst: “It’s more than just rhetoric. It’s misuse of statistics. It’s appalling and, unless you have experience of going through it, you probably have no notion of having to claim anything so don’t necessarily know…”

However, she thinks that the issue which has resonated with people is the ‘bedroom tax’: the changes to housing benefit which lead to payments being cut for people deemed to be over-occupying properties based on the number of residents compared to the number of bedrooms. This, Sheila thinks, has “made people sit up and think.” While the legislation was going through, “the housing organisations tried very hard -it was they who coined the term ‘bedroom tax’- the Government say that it was the Labour party who coined the term but I have to say we can’t actually take credit for that!”, but Sheila thinks that it is only recently that this issue has really caught people’s attention. “It’s not addressing the correct problem. There is a problem that there has been a rise in housing benefit payments, which has doubled in ten years, and actually is expected to keep rising despite all of the reforms. My analysis is that it has had a lot to do with the huge expansion in the private rented sector over the past ten years.” The real issue, Sheila notes, is not that there are people claiming housing benefit for extravagant housing, and living beyond their means; it is that there is a lack of affordable housing to move into, and more and more people are being pushed into the private rented sector, which in turn is pushing the amount of housing benefit paid, up. Sheila observes that the total amount that the Government spends on housing, subsidising housing in one way or another, relative to national income, probably hasn’t changed that much in the last 30 or 40 years. However, she notes that the proportion of funding spent on investment in housing stock has fallen from around 80% to 20%, whilst the amount spent on “income subsidy”, assisting people to pay their rent, has shifted from around 20% to 80% of the total housing budget: “public spending hasn’t changed very much in real terms, but it looks as if the benefits side of it has spiralled uncontrollably, unsustainably. I think there is a strong argument for investing in the assets.” Sheila recently conducted some research of her own, looking into the number of one-bedroomed properties available in Edinburgh for rent (either from the council or housing associations) and found that there were 24 one bedroomed properties (5 of which were sheltered) available at the time. The system in Edinburgh allows prospective tenants to bid for properties that they are interested in, and one had received over 900 bids. “Those numbers are eye-boggling really. It makes it very real. … We do have a big issue with houses in short supply in Edinburgh. Not everyone who is applying for housing who doesn’t have a council house at the moment is homeless, in the sense of not having a roof over their head, but many are living in insecure properties.”

However, Sheila recognises that there is still a crucial issue which is often overlooked in this debate, which is not just how many bedrooms your house has; but what social ties you have in the area in which you currently live: “people want to stay in the area in which they have all their social networks, whatever that is, whether its friends, local church, if that’s your social network – people don’t want the upheaval of going somewhere else and starting again. It’s not good for people’s mental wellbeing.” This is something which has been somewhat lost in the panic regarding the need for people to downsize or find alternative accommodation or face a shortfall in rent every month. How people are covering the often unavoidable shortfalls is another area of concern for Sheila: “we’ve seen the growth of pay-day lending institutions as well. People seem to be managing to find rented accommodation even with the reduction in the amount of benefit to cover it, so they’re not literally out on the street, but you have to ask how they’re meeting that, and are they meeting it through cutting back on other things, or by repeatedly borrowing a bit more to keep going, but in the end that can be a very expensive way of meeting that.”

As a female MP at Westminster, Sheila is often asked whether it is still a boys’ club – to which she responds “I don’t think I’m being naïve in saying that, at least on our side of the House, I don’t feel it hugely so, but it may be just simply because the number of women has grown and that has had its own impact and effect, so it’s not as crass as it would have been. You know, when you read about someone like Shirley Williams when she became an MP and the type of atmosphere there was then was very different. So I think we are making progress, but slowly.” In the Labour Party at Westminster, around 31% of MPs are women, which Sheila admits is by no means ideal, but it is a situation that is improving. As someone who was very active in the women’s movement in the 1970s, when asked for her assessment of the progress made since then, Sheila is cautiously positive: “There has been a lot of progress and we mustn’t forget that, because sometimes you can get very despondent and think that nothing’s changed, and it was all for nothing. Even just the language that people use; people do behave differently. While there are some obstacles, the opportunities are greater. The expectations of young women coming out of school and college are different. Now, some of them sometimes find that the real world is not quite so welcoming as they have perhaps been educated to expect, and it comes as a bit of a rude shock when things aren’t quite in place. There have been changes, but you can’t take your foot off the pedal.”

Turning to the question of Scottish independence, which is at the forefront of all discussions about Scottish politics currently, Sheila is a firm supporter of devolution, a process which she feels “was never a closed book, and it is something that needs to keep evolving…” One example of this is the Scotland Act 2012, which passed through the UK Parliament last year, but which has left Sheila frustrated at the slow rate at which change will take place. She singles out the power for the Scottish Parliament to raise taxation, which won’t take effect until 2016: “Now why it takes so long to do that I don’t know, but broadly what it does is it gives the Scottish Parliament more borrowing powers, and an ability to raise taxes. … There’ll still be an element of grant coming from Westminster…but there’ll be an amount which the Scottish Parliament will be required to set and will be then dependent on collecting. So that’s coming. Now personally, I would much rather it was coming quicker because it seems to have disappeared from the public consciousness… hardly anyone is talking about the additional powers that are coming. Now maybe some people think that they are genuinely still not enough, that’s a point of view, but I think we should be clear that the path is already underway, and in fact the same Act that gives those extra powers enables further tax powers to be given to the Scottish Parliament without additional legislation… I think we’re already on the road and sometimes the debate is sometimes framed to suggest that either it is independence or the status quo as has been since 1999, and that is not the case – I think that shows that there is capacity to move further, but I am keen to see people to start discussing what they want to do with the powers and how they think it will enable or change Scotland.”

Discussion is obviously important to Sheila. She already has a relationship with some local church groups:” I meet quite regularly with a group in Portobello, a Peace and Justice group that several denominations are involved in”, and she recently spoke at Sacred Heart in Lauriston on welfare issues. However, Sheila notes that it does depend on the issue: she is honest in saying that “I’ve had disagreements with some churches and church people on things like same sex marriage of late, but I don’t think you should fall out with people because you disagree on certain issues but probably agree and can work together on others.” However, she recognises that with some people, “there are some points where there are genuine disagreements and that’s fair enough.”

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Press Release: Government needs to sort out tests for sickness and disability benefit

15 per cent of decisions overturned on appeal, costing taxpayer £50 million per year

30 April 2013 – for immediate use

Edinburgh East MP and Work and Pensions Select Committee member Sheila Gilmore today called on the Government to sort out the controversial test for sickness and disability benefit Employment and Support Allowance.

Sheila Gilmore was speaking following the release by the Department for Work and Pensions of data on the outcomes of Work Capability Assessments (WCA) for new claimants. The WCA determines eligibility for Employment and Support Allowance (ESA) – the new replacement for old-fashioned incapacity benefits.

Sheila Gilmore said:

These figures show that the Government still haven’t resolved the flaws in Work Capability Assessment. Since the test’s introduction 39% of those found fit for work have appealed their decision – costing the taxpayer £50 million per year – and 37% of those appeals have been successful. This means that on average 15% of all fit for work decisions are flawed.

There are some trends in these figures that I welcome. For example more people are being correctly assessed and awarded ESA first time, and more people who are awarded ESA are being given the unconditional support they need through the Support Group.

However more needs to be done so that fewer people are wrongly assessed as being able to work when they are clearly unfit to do so. Specifically Ministers need to introduce a new set of questions designed by disability charities for use in face-to-face assessments; ensure audio recording equipment is available at assessment centres to push up the quality of assessments; and stop people being called back for reassessment just weeks after being awarded benefit on appeal.

Notes to Editors:

  • Data was published earlier today by the Department for Work and Pensions on the outcomes of Work Capability Assessments for new claimants and can be found here.
  • Sheila Gilmore is a member of the Commons Work and Pensions Select Committee. You can view the committee’s website here.
  • For more information please contact Matt Brennan, Parliamentary Assistant to Sheila Gilmore MP, on 020 7219 7062, 07742 986 513 or matthew.brennan@parliament.uk.
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