Train cooperative on track in SW England?

Paul Gosling reports:

Electrification of the London to Swansea rail line is good news for public transport users in the South West and the Government’s approval for Network Rail to meet the £1 billion cost is a demonstration of real commitment not just to the rail system, but also to combating climate change.

But for many people away from the main urban centres, what is needed is more than just faster journey times to London. They demand connectivity that reduces rural isolation, makes journeys faster, cheaper and easier and improves the economic prospects of smaller towns and villages.

This is where Go! Co-operative comes in, which is not only one of the newest co-ops to be established, but also the most recently established train operating company. Its prospectus for raising capital is about to be published, with the ambition of raising a quarter of a million pounds over the next two years.

Go! Co-op intends to be the fifth train operating company taking advantage of the principle of open access to rail lines that is enshrined in legislation and which is intended to increase the provision of services by sharing existing lines. This provision enables additional services to operate alongside the main rail franchises. Existing open access rail operators include Heathrow Express and Hull Trains.

However, Go! Co-op would be the first open access train provider running as a multi-stakeholder co-operative that brings together the interests of commuters, workers and the communities that would be served, via their local authorities. It is backed by some heritage railway operators.

The co-operative’s business planning is already well developed, thanks to seed-corn funding supplied by Co-operatives UK and the Co-operative Group, through the Co-operative Fund, backed by practical support from the Somerset Co-operative Services.

Go! is looking at various routes, including local branch line operations and longer cross country services. Some of these involve open access services on Network Rail lines, while others would operate in partnership with heritage rail and other independent railway owners.

At this stage, it is not possible to say which routes will be pursued — detailed studies on line capacity and passenger demand are needed first, as well as more negotiation with potential partners.

The chair of Go! Co-op is well known co-operative activist, Tim Pearce — the South West regional organiser for the Co-operative Party until he retired three and a half years ago.

“Existing train services run to London,” explains Mr Pearce. “Our intention is to serve other communities that don’t have good connections to anywhere. Cross-country connections are important. We are looking to potential routes in the south of England on existing rail networks.”

The Go! Co-op initiative has been given extra impetus by the recent publication of the Association of Train Operating Companies’ (ATOC) document Connecting Communities, which supports the principle of much improved connectivity for isolated communities by making greater use of lines that, at present, run few services. “We are interested in underused and also closed lines and closed stations, but that’s a lot of money,” says Mr Pearce.

“We are interested in the electrification, but that is a long time ahead, at least five years. It does raise interest in the rail network and the South West is getting a fairer crack of the whip than it has in the past.

“We want to develop routes in the South, but including the North. We are hoping to develop routes from the South to the Midlands, servicing the West Midlands conurbations, developing links where they don’t exist.

“We are trying to raise money from potential commuters and from councils along the rail lines. We will run it as a multi-stakeholder co-op.

“The communities that benefit will have control over the service. We envisage a scenario where the guy who pushes the trolley can be on the board. I have been very impressed by the results of [societies’] board elections where you get electricians and so on elected to the board.”

Mr Pearce’s involvement in the project arose from a motion put forward to Co-operative Party Conference in 2007, which called for the mutualisation of Network Rail. “We have made some progress there,” says Mr Pearce. “We still hope to get a result from that and are fairly optimistic.

“We then organised a conference last year [on Network Rail mutualisation]. That was successful. It had a lot of rail people and Co-op people there. Basically the idea [for Go!] started to gel about that time and because of that conference.” With that momentum established, one of the founders the project — Alex Lawrie of Somerset Co-operative Services — invited Mr Pearce to get involved.

The timetable for progress is as impressively ambitious as the project itself. The co-op has already been authorised by the Financial Services Authority to raise the funds. It is also working with the FSA to develop rules that allow for withdrawable and transferable Industrial and Provident Society share capital raised from members and outside investors. Outside investors will have enough voting power to protect their investment, but in accordance with co-operative principles the passenger and employee members between them will have effective control.

Go! believes, given the example of the major fund raising achieved by windfarm co-ops, that it can raise the necessary investment. Assuming it does so, it hopes to gain route authorisation some time next year and begin services in 2011.

Ultimately, Go! has aspirations even beyond this — its motivation is to improve connections between communities, not just to run rail services. So it would also like to be involved in running bus services that feed the rail services and perhaps operate bike hire and car clubs.

It is one of the most impressive and ambitious co-operative projects to come forward in many years. But it is also firmly grounded in a sense of realism — it deserves wide support.

Why the energy giants fail to pass on savings

The Campaign for Public Ownership has issued the following press release explaining why we shouldn’t be too surprised:

Here we go again. A newly published report by the watchdog Consumer Focus says that Britain’s privatised energy companies are over-charging customers and failing to pass on billions of pounds of savings made from the falling price of gas and electricity, it is reported. Consumer Focus states the fall in wholesale prices has saved energy companies around £1.6 billion, but this has not been reflected in average domestic bills.

Energy bills rose by 42% last year, with the average household paying £1,293 for the year.

The Campaign for Public Ownership believes that the only long-term solution to the problem of energy company profiteering is to restore the energy companies to public ownership.

The problem lies in the ownership structure of the energy companies. All of them are Public Limited Companies, whose overriding aim is to maximise profits for shareholders. That’s what PLCs do. Instead of reacting with horror to the entirely predictable news that PLCs are putting the interests of shareholders before Britain’s long-suffering energy consumers, we should instead be calling for the government to take the one step that will lead to lower energy prices in the long term. Restoring the energy companies to public ownership will mean that prices can be lowered, as there will be no shareholder dividends to pay.

THE CAMPAIGN FOR PUBLIC OWNERSHIP
Interviews and all media enquiries:
Email: publicownership@hotmail.co.uk

The Campaign for Public Ownership is a newly formed cross-party organisation which aims to harness public dissatisfaction with privatisation and campaign for a reversal of the disastrous policies of the last twenty-nine years. The Campaign seeks to expose the cost to the public of privatisation, and highlight the inefficiencies and profiteering of the privatised companies. We also strongly urge that the British government does not give a penny of taxpayers money to a privately owned company without the public receiving equity in that company. The Campaign will seek to counter the negative propaganda about public ownership put about by those with a vested financial interest in privatisation. It’s time to bring to an end to the Great Privatisation Rip-Off.
http://campaign4publicownership.blogspot.com/

John Lewis Partnership – socialism in action

As capitalist-owned enterprises lay off workers and cut wages, the worker-owned store John Lewis – consistently voted one of the best for customer service by consumers – pays out a 13% bonus to staff. Why? Because they own the business – they won’t be asking themselves to take a pay cut!

I’m not saying that John Lewis is some kind of paradise in a sea of exploitation – it isn’t, but clearly, workers owning the enterprises in which they work is no impediment to building successful businesses (sales are up!) and responding to consumer demand (Waitrose are brining out a budget range, for example) whilst at the same time “sharing the proceeds of growth”, to coin a phrase.*

From Wednesday’s Guardian:

The annual bonus paid to John Lewis’s 70,000 staff has shrunk by almost a third after profits at the partnership were hit by the recession.

But staff still cheered the news that they will receive a bonus of nearly seven weeks’ pay, down from 10 weeks’ pay a year ago.

Because John Lewis is owned by its staff, every one of them – from the boardroom to the shop floor – receives the same percentage payout. This year it is equal to 13% of basic salary for staff at the Waitrose supermarket chain and John Lewis department stores.

At the John Lewis store on Oxford Street this morning, more than 1,000 shop staff hung over the balconies to learn what their annual bonus would be.

In the well of the atrium, Noel Saunders, managing director of the store, worked the crowd like a game show host, hinting the highest partners could expect was a 12% payout.

At 9.28am, as partners counted down from 10, his assistant Paul Thomas – who has worked in the floor coverings department for 20 years and was selected for scoring excellent results from mystery shoppers – fumbled with the envelope before pulling out a giant card bearing the figure 13%.

As customers peered through the doors, partners erupted, celebrating the bonus payment after a tough year on the shop floor.

The total bonus payout for 2008 is £125.5m, down from £180m for 2007.

“The key difference is this is a genuine bonus based on profit-sharing,” said Andy Street, managing director of John Lewis. “The word ‘bonus’ has become discredited in the economy, but for us it is something to celebrate. Our partners have worked harder than ever to achieve these results.”

The feel-good atmosphere pervaded all six floors with no grumbles from partners that the bonus fell short of last year’s bumper payout.

“Last year, 20% was a fantastic result, but in the current climate we are really happy to get a bonus as we see people around us losing their jobs,” said Charlotte Deane, who will use her bonus to catch up with her sister, who is travelling in California. “However much it is, it is a bonus, not a benefit, and I feel lucky to get it.”

Most staff canvassed expect to use the extra cash on a holiday. Indira Vakeria said she was planning a trip to India to visit her parents. “We are really pleased with 13%,” she said.

The company reported that its profits fell by 26% in 2008 to £279.6m. Chairman Charlie Mayfield warned that 2009 would be “another very difficult trading year”.

“Trading conditions worsened markedly during the year as the problems in the financial sector reduced consumer confidence to a low level,” he said.

The partnership conceded it would no longer be able to hit its target of opening 10 stores in 10 years. It has already opened four, including branches in Liverpool and Cambridge, but beyond its new Cardiff store this autumn, and a shop at the Olympic site in Stratford slated for 2011, it said its aggressive growth plan would be “delayed”.

The company said it remained optimistic that two stores across the Irish Sea, one in Lisburn in Northern Ireland and one in Dublin, would open as planned but warned that other projects, including stores in Crawley and Portsmouth, might be held up. Retail schemes around the country are being mothballed as property developers grapple with funding shortfalls and collapsing asset values. Mayfield said the retailer was “working actively with developers to maintain our rate of growth” and remained committed to the expansion plan.

It is just over a year since John Lewis first admitted that its sales were being hit by the high street downturn. By the autumn, when the UK economy was contracting, the company was reporting double-digit falls in weekly sales.

* Please, don’t misunderstand me, I doubt that the Tories – expected to win the next UK election – will fulfill their promise of “sharing the proceeds” by forcing Tesco to become a cooperative. This is something the unions need to take up with New Labour, though…

XL collapse exposes chaos of capitalism

Saturday’s Morning Star has a very informative editorial which details how and why the tour operator and airline XL went bust:

Madness of the market

ONCE again, capitalism has shown its cuddly, people-friendly face with the collapse of holiday giant XL Leisure Group.

Around 85,000 people stranded abroad, several hundred thousand advance bookings dishonoured, staff finding out that they didn’t have a job in mid-flight, over 1,700 jobs potentially vanishing and the Unite union not even being informed by the company that it was in trouble with its refinancing arrangements after a major bank pulled out on August 14.

And yet, in the full knowledge that it was, indeed, in trouble and desperately trying to arrange a bail-out, the companies in the group continued to take people’s cash and make bookings that there was precious little chance that they could honour.

Not that this implies any dishonesty or deliberately dodgy dealing by the companies. Far from it – at least in the terms of the market economy.

The logic of capitalism meant that they had to continue trying to trade their way out of trouble and that same market-oriented logic said that they could not allow any hint of trouble to become public knowledge because people would obviously then cease to book with the companies, thereby sealing their fate.

Indeed, as late as August 31, a company spokesman was saying that “the XL Leisure Group is experiencing strong trading, with bookings for 2009 already outperforming last year.”

But, as for the long-suffering passengers, they inevitably get the sticky end of the deal and, the less well off that they are, the stickier it becomes.

Granted, customers well off enough to book full package deals through travel agencies are covered by the CAA air travel organisers’ licensing scheme and will be offered repatriation flights or their money back if they have an advance booking.

And, if they booked by credit card, their card insurance should cover them.

But people not having credit cards to book with, or booking a flight only, because they could not afford the full package, will face an extra fee to get home.

And it’s not only the passengers. The staff have an even worse situation to deal with.

No jobs and an industry that is contracting by the day, with airlines such as Alitalia and Zoom either collapsing or in terminal decline and a resulting glut of unemployed staff on the jobs market.

So, who is to blame for this situation?

In 2004, the Times reported that a major British bank “is poised to become the largest oil trader in the City of London as banks rush to profit from the soaring oil price and booming oil speculation market.”

In 2008, that same bank pulled the rug out from under XL because of financing associated with fuel. In other words, a major oil speculator shuts XL because the company can’t pay the price for fuel that the speculators have driven up.

And the bank’s partner in financing XL – a major Icelandic bank – acquired the still-profitable French and German XL subsidiaries on Friday morning after the rug-pulling exercise, in what can only be described as a perfect example of asset-stripping, although it would probably claim that it was saving what could be rescued from the stricken company.

But the fact remains that, if the company was stricken, it was the banks that did the striking.

Talk about having your cake and eating it.

It is difficult to imagine a better example of the amoral chaos of market capitalism or, for that matter, a better reason for social ownership of banks and big businesses generally.

Follow

Get every new post delivered to your Inbox.