The latest bright idea about how to deal with Britain’s trains is that there should be a windfall profit tax on those franchises which don’t meet certain time and punctuality standards. Which, if all such franchises were profitable, if all such parts of the system were running on profit making franchises, may or may not be a good idea. But given that not all are either it’s a terrible one. It’s sofa thinking, the worst of the Blair years. Dream up something without consideration of reality, then struggle to impose what turns out to be a very bad idea indeed:
A multimillion-pound tax on poorly performing rail companies should be used to freeze fares for passengers hit by weeks of disruption, Labour says.
Andy McDonald, the shadow transport secretary, backed the move as another major fares rise is set to be confirmed this week, despite disruptions on several lines that have affected thousands of passengers.
The first bit of thinking that should be done about this idea is that those passengers who have been hit by the disruption already get compensation. Quite why those future passengers who haven’t been hit by it should gain cheaper travel is not obvious. It’s also true that any such tax would be a windfall now, but will be built into any future bids for franchises – the risk of it will. Thus the taxpayers will get less money from future lettings of the railways, the net cost to taxpayers will rise. We will all thus be paying, through general taxation, to compensate those who have not had their journeys interrupted.
Sounds like a hell of a plan really.
McDonald said three train companies affected by major disruption this year – Govia Thameslink, Arriva Rail North and First Transpennine Express – should fund a fare freeze as a “gesture of goodwill” to passengers. Labour said it backed the idea of profits tax as a one-off move.
Those northern railways receive subsidy so any profit is purely an accounting exercise. Transpennine, dunno. And the Govia Thamelink line that everyone whines about, down to Brighton, isn’t even a franchise. It’s an operating contract with fare revenue going to DoT and agreed costs being paid to Govia.
They’re not really thinking this through before they start making plans, are they?