Margareta Pagano: Happiness, Mr Cameron, is a new British Rail

Privatisation produced complication not competition. It let commuters down

I suggest David Cameron and his cabinet cronies get out of their chauffeur-driven cars and hop on to some of Britain's overcrowded and overpriced trains if they want a truly realistic response to their latest wheeze, the happiness survey.

They should start by talking to commuters on the 6.34 from Audley End to Liverpool Street Station – jam-packed, and often without working loos or running water, who pay £3,604 a year for the privilege. After last week's news that rail fares will go up by an average of 6.2 per cent next year, I guarantee they will tell officials with their clipboards where to run and jump.

The latest uproar over fares follows the Government's decision to change the way it funds the railways. It has lifted the cap imposed by Labour that limited train operators to increases of not more than 1 per cent above the retail price index. From 2012, fares can rise by 3 per cent above RPI, which is now around 5 per cent.

Commuters won't like it but there is logic to the coalition's decision; the Government is allowing the train operators to raise more money from travellers so that it can reduce the subsidies paid by the taxpayer. While this seems fair, the upshot of the decision by Philip Hammond, Secretary of State for Transport, to lift the cap means that some train operators could push up fares by as much as 30 per cent over the next few years. In these tough times, such hikes could be the last straw for many commuters and travellers, although it's interesting that passenger numbers shot up by 9 per cent in the third quarter of this year, and are predicted to double by the end of the decade.

In return for the fare increases, George Osborne, the Chancellor, agreed to Hammond's request to honour Labour's £8bn investment plans for new carriages, Crossrail, Thameslink and other projects. This, at least, is good news.

But all the squabbles over fares disguise the real truth about Britain's railways, which is that the system introduced by the Tories is over-complicated and inefficient. There isn't a railway system in the world that makes money but the UK's network is more expensive than most. This is how it works: the railways cost £12bn a year to run. Half of that comes from money raised from fares and the balance comes from the taxpayer. Network Rail – the state-backed company with £24bn of government guaranteed debt – spends £6bn a year on maintenance; £3.5bn of this comes from the Government and the rest from the franchise operators who pay access charges to use the track.

Another £1.5bn of public money goes to the seven companies that, between them, operate the 20 franchises around the country.

The Tories broke up the railways because they wanted more competition but the structure they created is so incoherent this has been impossible to achieve. Instead, we have a nightmarish situation of cross-subsidisation. On top of that, short-term operating franchises ensure the private companies have no incentive to put in long-term investment.

There is only one way to repair this and that's to restore vertical integration, renationalise the railways and create a new British Rail company. One of the ironies of so-called privatisation is that the railways are more regulated than ever before; so a new BR should be run at arm's length, through an independent trust. As Christian Wolmar, the UK's rail guru, told me last week: "It's time to face up to the truth: make an honest woman of Network Rail; and bring in the train operators and let them run down their franchises, so we don't have to pay compensation. Then we can start up again with a new British Rail."

What we need now is joined-up, long-term strategic thinking; not knee-jerk politicians tinkering with one of the nation's most prized pieces of infrastructure. If Cameron really wants to make us happy, he should admit that his Tory predecessors got it horribly wrong and put Wolmar in charge of a new commission to bring back British Rail – complete with all those lovely uniforms.

At the same time, he should ensure that the bankers are taxed heavily on this year's bonuses and use the money to subsidise the fare increases. The bankers have taken us for a ride, now it's their turn to pay for ours.

Adam Posen called Mervyn King 'excessively political'. What's his real agenda?

Does Adam Posen know something we don't? Why did the American economist feel it helpful to attack the governor of the Bank of England, Mervyn King, in public at this week's Treasury Select Committee and accuse him of political bias immediately after the election. In a stunning intervention, Posen, a member of the Bank's Monetary Policy Committee (MPC), claimed he and "at least one other" had not wanted to support King's statement on the coalition's fiscal austerity package – in May's Inflation Report – which Posen said was "excessively political". Who is the other committee member? We should be told.

One thing is for sure, this was no off-the-cuff remark at a banker's cocktail party, although there is no doubt that there will be no shortage of bankers offering to send him a case or two of Krug. A glance at Posen's CV reveals a few clues. He is a fellow of the Peterson Institute – budget of $10m – has advised banks and governments around the world, and sits on the Panel of Economic Advisers to the US Congressional Budget Office. He's close to the Fed's chairman, Ben Bernanke, and with economist Paul Krugman, backs Bernanke's expansionist monetary policies.

So what's he up to intervening in UK domestic life? Could it be – it's only a theory – that Posen is against some of the banking reforms being discussed that Mervyn King is so enthusiastic about? And could it be that, knowing he cannot speak publicly about his differences with King on upcoming policy, he's making himself famous in advance of the bloody battle that is to come, when the Independent Banking Commission reports, over splitting up the banks? Or is his intervention really a warning shot across the bows for the Republicans in the US, warning them not to intervene in financial matters there. While Posen is hailed as a great economist – Krugman says he's a must-read – at no stage did he warn us about the financial collapse. Whatever the reasons driving Posen, I think he's one to watch.

Life and Style
beautyBelgian fan lands L'Oreal campaign after being spotted at World Cup
Arts and Entertainment
Chocolat author Joanne Harris has spoken about the financial struggles most authors face
Arts and Entertainment
Characters in the new series are based on real people, say its creators, unlike Arya and Clegane the Dog in ‘Game of Thrones’
tv'The Last Kingdom' is based on historical events
Arts and Entertainment
filmSir Ian McKellen will play retired detective in new film
Life and Style
Justin Bieber performing in Paris earlier this year
Arts and Entertainment
Martin Freeman and Lauren O'Neil in Jamie Lloyd's Richard III
theatreReview: The monarch's malign magnetism and diabolic effrontery aren’t felt
ebookA unique anthology of reporting and analysis of a crucial period of history
Arts and Entertainment
'Molecular Man +1+1+1' by Jonathan Borofsky at Yorkshire Sculpture park
Glamour magazine hosts a yoga class with Yogalosophy author Mandy Ingber on June 10, 2013 in New York City.
newsFather Padraig O'Baoill said the exercise was 'unsavoury' in a weekly parish newsletter
people'She is unstoppable', says Jean Paul Gaultier at Paris show
Alexis Sanchez and apparently his barber Carlos Moles in Barcelona today
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

SharePoint/C# Developer - Aberdeen - Circa £40K + benefits

£30000 - £40000 per annum + excellent benefits: Deerfoot IT Resources Limited:...

The benefits of being in Recruitment at SThree...

£18000 - £23000 per annum + Comission: SThree: SThree, International Recruitme...

HR Advisor - 6 months FTC Wimbledon, SW London

£35000 - £40000 per annum + Benefits: Ashdown Group: HR Advisor - 6 Months Fix...

IT Manager - Tolworth, Surrey - £40,000

£37000 - £40000 per annum: Ashdown Group: IT Manager - Tolworth, Surrey - £40,...

Day In a Page

The true Gaza back-story that the Israelis aren’t telling this week

The true Gaza back-story that the Israelis aren’t telling this week

A future Palestine state will have no borders and be an enclave within Israel, surrounded on all sides by Israeli-held territory, says Robert Fisk
A History of the First World War in 100 Moments: The German people demand an end to the fighting

A History of the First World War in 100 Moments

The German people demand an end to the fighting
New play by Oscar Wilde's grandson reveals what the Irish wit said at his trials

New play reveals what Oscar Wilde said at trials

For a century, what Wilde actually said at his trials was a mystery. But the recent discovery of shorthand notes changed that. Now his grandson Merlin Holland has turned them into a play
Can scientists save the world's sea life from

Can scientists save our sea life?

By the end of the century, the only living things left in our oceans could be plankton and jellyfish. Alex Renton meets the scientists who are trying to turn the tide
Hollywood targets Asian audiences as US films enjoy record-breaking run at Chinese box office

Hollywood targets Asian audiences

The world's second biggest movie market is fast becoming the Hollywood studios' most crucial
Grindr founder Joel Simkhai: 'I've found love on my dating app - and my mum keeps trying to hook me up!'

Grindr founder Joel Simkhai: 'I've found love on my dating app'

Five years on from its launch and Grindr is the world's most popular dating app for gay men. Its founder Joel Simkhai answers his critics, describes his isolation as a child
Autocorrect has its uses but it can go rogue with embarrassing results - so is it time to ditch it?

Is it time to ditch autocorrect?

Matthew J X Malady persuaded friends to message manually instead, but failed to factor in fat fingers and drunk texting
Westminster’s dark secret: Adultery, homosexuality, sadomasochism and abuse of children were all seemingly lumped together

Westminster’s dark secret

Adultery, homosexuality, sadomasochism and abuse of children were all seemingly lumped together
A History of the First World War in 100 Moments: Dulce et decorum est - a life cut short for a poet whose work achieved immortality

A History of the First World War in 100 Moments

Dulce et decorum est: a life cut short for a poet whose work achieved immortality
Google tells popular music website to censor album cover art in 'sexually explicit content' ban

Naked censorship?

The strange case of Google, the music website and the nudity take-down requests
Howzat! 8 best cricket bats

Howzat! 8 best cricket bats

As England take on India at Trent Bridge, here is our pick of the high-performing bats to help you up your run-count this summer 
Brazil vs Germany World Cup 2014 comment: David Luiz falls from leader figure to symbol of national humiliation

David Luiz falls from leader figure to symbol of national humiliation

Captain appears to give up as shocking 7-1 World Cup semi-final defeat threatens ramifications in Brazil