davidsberry

Today’s Hootsmon prints an op ed piece by local MSP Iain Gray entitled “Smiling and Nodding Will not Create Change”. In it, Iain, a former  Minister for Social Justice, fulminates about the lack of progress in harmonising (if not actually integrating) the NHS with social work across the country. Now, I believe Iain may be sincere in his wish to see this but his track record while he was capable of influencing this gives these recent comments more than a whiff of sanctimony.

He is correct in his assertion that the two services ought to work together far more closely and he is also correct that officials on both sides of the divide have not fallen over themselves to make that happen. But if he indeed started this process in 2001, how come, when I became East Lothian Council leader in 2007 and started down the road he advocates, was it as if this idea of joint working had never occurred to anyone before?

There are definitely culpable officials on both sides of the divide. But in East Lothian Council, we rid ourselves of both the relevant director and head of service and set to making joint working the order of the day for the best reason in the world—because it made sense. What we had not bargained for was the degree of entrenched self-interest of senior staff within NHS Lothian.

That first summer, we came up with three major projects that we thought exemplified the  joined-up thinking required that would provide better service at less cost to the public purse. The first was a joint surgery and day centre for Gullane. The current NHS Cusworth surgery there is bursting at the seams and the present ELC-run Day Centre requires a substantial re-build.

Looking around for alternatives, we hit on the local tennis courts. They were bang in the centre of the village and in desperate need of a refurb themselves (the chain-link fence round the courts fell over in high winds). By shifting the three courts bodily westward and buying an adjacent house that was on the market, we could plunk a joint building with more than enough car parking on Hamilton Road. Meetings with the surgery doctors, the tennis club, day centre attendees and the public secured local agreement.

NHS Officials attended the same meetings and pledged to co-operate. Four and a half years later, the council has bought the relevant house and shifted/refurbed the tennis courts. But we waited so long for the NHS to commit any capital that it’s been turned over to the Scottish Government to finish. So much for what had been agreed to be a pilot of co-operation. Similar intransigence put two other crucial projects on ice.

They were for a revolutionary concept in local hospital and elderly care. Instead of the NHS ‘rationalising’ its hospitals further away from the patients and the council providing ‘pure’ care homes, why not combine the two? Building 60-bed joint units could allow elderly in care who needed medical assistance to stay in the same room but switch to medical staff—and then back to the care staff when treatment succeeded. There would be no barriers between the two levels of care, the patient would suffer no disruption and the economies of scale would benefit all.

Tranent and Musselburgh were earmarked as likely projects. For four years, ELC tried to get NHS Lothian to commit to this even bigger ‘everyone wins’ concept. We have now given up and gone back to planning for separate care homes while the NHS touts a ‘community’ hospital in Haddington for all East Lothian—as if the other five towns think of Haddington as any part of their community when it’s a 45-minute bus ride away.

Is there a villain to this piece? Why, yes—and it’s not Iain Gray, who may well have tried to shift the NHS off its complacent arse. But he is complicit, because it was on his watch that Professor James Barbour OBE was appointed chair of the board of NHS Lothian in 2001 . Having seen how senior officials operate around Prof. Barbour and having had the depressing experience of sitting across the table from him in negotiations, I would say, simplistic as it is to blame any individual, that here lay the root of willful, pathological obfuscation from the NHS.

What his real motivations for this were remains unclear. Perhaps he, like many other senior Humphreys of officialdom, was angling for a knighthood. But it was clear that nobody in NHS Lothian went to the toilet without his permission, far less work on a project costing millions where anyone else had a say. The only time I recall ELC getting any concession out of him during negotiations, I watched him, as he was leaving, kick a stone clear across the Deaconess House car park in frustration.

But he is not alone. Where Iain and his colleagues must bear much blame was the series of apparatchik appointments they made to the many quangos under their control over their eight years of tenure. While the NHS Boards may not provide the worst examples of cronyism indulged in, it would be hard to find a more egregious example of my-trainset-and-I’ll-play-with-it-as-I-like than Lothian NHS under Professor Barbour.

Iain may be sincere in wishing it were not so but he’s also being very disingenuous.

The future, we are told, must be green. To be green, the future must be sustainable and the only way civilisation can be sustainable is through public transport, the backbone of which is our railways. Are you with me so far? Good.

But thanks to some lame duck privatisation that sang descant to the swan song of the last Tory government in the mid- 1990’s and some egregious bottling of principle by the Labour interregnum of the noughties, we have one of the most commercially efficient rail services on the planet.

Efficient!*!#?? you splutter as you try not to spill lukewarm coffee standing in the vestibule of an overcrowded Glasgow shuttle as it waits outside Polmont. THIS is efficient? Well, yes—very efficient. Not for the customers, of course; they’re just fare fodder. No, for the investors, for whom the whole shambolic structure was dreamed up. There have been few more lucrative—not to say copper-bottomed—ventures in which the shrewd investor could have placed his money than into the corpse of British Rail.

Unlike the BT or National Grid or English water company sell-offs, which may have been repugnant to socialists and those who felt this was a privatisation too far, by the time we got to the railways, Major’s dying days were scenes of desperation. Other sell-offs were going concerns that were given proper shares and a viable future; British Rail was a last desperate punt to get another out the door before a 1997 general election comeuppance.

The Railways Act 1993 created a fragmented industry in which the train operators leased rolling stock from the ROSCOs and paid track access charges to use to the infrastructure from Railtrack, while all these businesses were still state-owned. This merry-go-round was overseen by the UK Department of Transport & Regions, the Rail Passenger Council, the UK Railways Inspectorate, the Strategic Rail Authority, the Office of the Rail Regulator and various Passenger Transport Executives. With me so far? Didn’t think so. It’s a pig’s breakfast, made all the more so by the haste with which it was shoved out the door. Railtrack folded, taking many people’s savings with them, to be replaced by Network Rail, a lunatic concept of a private (and therefore independent) company, wholly owned by the public purse.

The Train Operating Companies (TOCs—who actually run the trains) are just the surface of a complex web of financial arrangements at the heart of which are three little-known cash cows labelled ROlling Stock leasing COmpanies—Roscos for short. Seldom has an acronym—that here corresponds to the slang name for what a mobster uses to shoot his way out of a sticky heist—been so appropriate. For while Railtrack went bust and TOCs struggle to please passengers using rolling stock they don’t own running over track they don’t control, Roscos have been mugging the public purse, big style.

UK railways turn over around £13bn each year, roughly half of which comes from fares and half from public subsidy. If you thought (as was sold at the time) that privatisation would reduce the public subsidy element, you thought wrong: it has increased every year since privatisation in 1996. Fair dos; the number of trains services has increased in that time but the number of passengers has increased by even more so shouldn’t any subsidy be coming down? Not when you see how the Roscos operate.

These rolling stock companies are a major component of the industry: their overall turnover of over £1bn last year was equivalent to over 20% of the passenger revenue of all train operators.

“The ROSCOs have attracted relatively little attention in the literature and have been little discussed in the context of the privatised British railway system.  Yet nowhere have the flaws in the privatisation process become more apparent” 

Taken for a Ride S. McCartney and J. Stittle

Here’s a potted history of the three of them:

• Eversholt was sold for £518.3 m on 2^nd February 1996 to Eversholt Holdings Ltd, a management buyout backed by The Candover Group and Electra Fleming.  On 19^th  February 1997, Eversholt was sold to Forward Trust Group (part of HSBC Holdings plc) for £726 m—40% more than the initial sale, and changed its name to Forward Trust Rail Limited on 1 December 1997.  The name of the company for the next decade, HSBC Rail (UK) Limited, was adopted on 27^th September 1999.  Ten managers were reported as having personally made total profits of £103m as a result of the sale to HSBC. Eversholt was renamed back to its original in anticipation of being sold to a consortium for £2.1bn in 2010.
• Alpha Trains International was originally Angel Train Contracts Ltd. ATC was sold on 16^th January 1996 to GRS Holding Company Limited (a consortium of Nomura, Babcock and others) for £696.3m.  Shortly after privatisation, GRS sold their right to Angel’s capital rental income for some £690m.  In December 1997, the remainder of the business was sold for £395m to Royal Bank of Scotland (RBS), of which GRS became a wholly-owned subsidiary.  The total realised from the sale of GRS (£1,085m) was some 56% more than the government had received.  RBS then sold for £3.6bn in 2008 to a consortium led by the European arm of Babcock & Brown, now called Arcus Infrastructure and the company renamed Alpha. Alpha Trains has about 40% of the UK train leasing market, owning 280 freight locomotives and 4,100 passenger carriages, including the 52 nine-carriage tilting Pendolino trains on the West Coast Main Line. They have been expanding into €1.8bn in freight wagon leasing in 12 countries across the Continent (using Slovakian wagon builder Tatravagonka).
• Porterbrook Originally costing £528m in a management buyout in 1996, this was sold by that same management six months later to Stagecoach for £836m without investing a penny. Directors and staff, who had invested only £300,000 of their own money, made nearly £83.7m. Porterbrook’s managing director, who had invested £120,000, scooped £34m. Venture-capital firms, which had put £2.2m into Porterbrook, picked up £315m. Abbey National then bought it in 2000. When taken over by Santander in 2008, Abbey National sold on to a consortium of Deutsche Bank, Lloyds and Antin Infrastructure Partners, price unknown. In 2012, Porterbrook claim to have invested £2bn in rolling stock and be the only Rosco to grow market share from its original 30%.

From the profits made in all three cases, it is clear that they were sold underpriced. The consequences of under-pricing could have been mitigated by the inclusion of clawback provisions in the sale agreements, to ensure that the government could recover some profits made if ROSCOs were sold on within a specified period. Clawback provisions were specified elsewhere in the railway privatisation.  For example, in the case of Railtrack, 25% of any profits generated from future sales of property assets were to be reclaimed by the government for the benefit of the TOCs.

The National Audit Office concludes that the sale was premature, and had ‘an adverse impact’ on the level of proceeds because the ROSCOs had no relevant track record.  The House of Commons Public Accounts Committee agreed with this view and further argued that privatising the ROSCOs first, before awarding franchises and selling Railtrack, was a key factor why only £1.8bn was obtained for public funds in sale proceeds from RailTrack, the Roscos and the TOCs.

Finally waking up to the scale of rip-off in 1996 the DfT said: “On the information and analysis available, the department is not satisfied the prices charged for the rolling stock are fair and competitive. It is the department’s contention that there is a lack of effective competition. This decision has been taken to secure good value for both tax- and fare-payers.”

After the resulting investigation, the Competition Commission published its report in July 2009, making three recommendations:

1. “Introducing longer franchise terms of 12 to 15 years or longer”
2. “Assessing the benefits of alternative new or used rolling stock proposals beyond the franchise term and across other franchises when evaluating franchise bids”
3. “Ensuring that franchise ITTs are specified in such a way that franchise bidders are allowed a choice of rolling stock”

Wow! Hardly revolutionary stuff. Certainly not incisive enough to have the boardrooms at Porterbrook et al quaking in their handmade shoes. Nonetheless, after 3 years of delving what action did the Brown government of the time take? None. Needless to say, once the 2010 election was safely behinfd them, the Tories let no more be heard of this.

So the Roscos continue to be held to the head of the travelling public. It is estimated that the UK rail system is 40% more expensive than it needs to be. This is, in part, because of its fractured nature. But it is primarily because, sitting in the middle of this web of profit are the Roscos who, on a turnover around £1bn between them, make ongoing profits (i.e. not counting the windfalls already in sundry pockets listed above) up from around £165m in 1996 to over £250m now.

Worst of all, the whole system detracts from TOCs or anyone else investing in the long term. Angel cheerfully charges £1,800 a month for a clapped out 20-year-old 2-car diesel Pacer and have the gall to slap on £3,600 a month for ‘maintenance’. The idea of Scotland getting its own internal express trains dies on the twin horns of the ScotRail franchise locked into the Roscos and the fact it only runs seven years at a time.

Until this nonsense is overturned—and it is only the UK government that currently has the power to cut this Gordian knot—we will continue to rattle around in a second-rate public rail system while the Continent shows how a sustainable society works.

Today (Friday 2nd March) The Grauniad printed an op ed piece from Jim Murphy MP entitled “Scotland Cannot Afford to Leave NATO” in which Jim, in his usual declarative style, seeks to disparage the SNP’s position, this time on defence and foreign alliances. As the Grauniad already had 78 comments after only 2 hours and refused to let me register to add to them, I am forced to respond here. If Jim or anyone of his acquaintance reads this, I would be happy receive responses to the points made:

1. Both (UK & Scottish governments) have defence plans that will limit our ability to achieve our ambitions on the world stage. On the contrary, the SNP would place Scotland in a far less aggressive and overstretched position that would allow it to be more of a force for peace and less of a failing post-empire power like the UK that has yet to find a purpose for itself or for its nuclear arsenal.
2. There is only one mainstream party wanting to leave NATO: the SNP. And, as long as membership requires deployment of nuclear weapons on our soil, that will remain so. But we are fully commited to working with NATO in non-nuclear actions which has included EVERY NATO ACTION TO DATE.
3. How will Scotland get its way in the world if we leave the UK? Same way the Irish and every other small country does—by finding common cause with friends and ganging up on the big boys. As it is, the UK habitually sells Scotland short (nukes on the Clyde; decimation of our fishing; highest petrol price when we make the stuff, etc etc)
4. How does it help the world’s poorest people? By spending £2bn on conventional defence instead of our £3.5bn as part of the UK’s idiotic ‘global’ posturing, we could double our share of the present £11.5bn UK foreign aid budget at a stroke.
5. How do we strengthen Scotland’s businesses by separating from the third largest economy in Europe? We already out-manufactiure and out-export our sluggish English friends per head. By NOT dealing through (selfish) London, we gain direct access. By joining the Nordic Union we’d be in close contact with six of the world’s richest economies.
6. How can we be a force for good by getting out of the UK, the fourth biggest military budget on the planet? Because the UK has a daft, unbalanced military budget 2/3rds of which is unusable. Eschewing carriers, global deployment ordnance, heavy tanks and (especially) nuclear subs (none of which have been used in the conflicts cited) we get a flexible armed forces, geared for Scottish defence and usable as part of an Allied force for 1/3^rd the per capita price.
7. We are currently one of only five countries out of 198 in the world with a permanent seat on the UN security council. Good luck: you can keep it. We may support the UN but it’s one of the world’s least effective and influential organisations when it comes to doing real good.
8. Separation is a powerful idea, but a 19th-century idea, entirely unsuited to the complexities of influence in the 21st century. Oh, really? So the 150-or-so countries gaining their independence in the last century are thrawn and/or willfully misguided?
9. If Scotland leaves Britain the Clyde and Rosyth would be in a foreign country to the Royal Navy, which has never built a warship in a foreign yard. So, er, what’s this MoD contract for ships that’s just gone to South Korea? When asked about that very decision, the MoD stated they place orders on quality, delivery & price.
10. In today’s complex world we need strong defences at home and overseas. Time to wake up and smell the coffee. Your big £40 bn budget was no protection against 7/7. America’s $700 bn (!) budget and 15 carrier task forces were no protection against 9/11. Get your head out of the gunboat era.
11. Additional thought: If the UK is such a good deal and Eire is now such a basket case, why are they not clamouring to come back into the fold?
12. Final thought: If being in the UK’s so great for our defence business, how come Belfast’s Short Brothers got so little before being bought up in 1989 by the Canadian multinational Bombardier? Eat my shorts, indeed.

Shipyards on the Clyde BEFORE Labour Got Their Hands on Them