The price for Porterbrook plc is wrong. Here were a group of British Rail employees plus some corporate middlemen who borrowed money to buy a set of earmarked assets. The risk was minimal, the element of skill negligible: no enterprise, no imagination, no innovation. All they needed to know was that they were sitting on top of millions of pounds' worth of rolling stock without which there would, literally, be no rail service. After six months of sitting, Stagecoach comes along and makes an offer that pays off all of Porterbrook's borrowing and leaves pounds 84m to spare. Eighty-four million pounds for what? For no exercise of talent, nothing foregone - they are getting money for the accident of being in the right place at the right time. (We recorded yesterday the chagrin of one employee who resigned a couple of months too early to share in the spoils.)
But let's be crystal clear why this transaction is wrong. If one leg of the case for privatisation was to bring in capital for investment in stock or improved service, ask what conceivable benefit to railways does this pounds 84m profit represent - not a single extra carriage, not a single new engine, not a lick of paint on a wagon door. If another leg of the argument was about breaking up the rail industry for the sake of competition, what on earth is Stagecoach - already suspiciously strong in the provision of coach services ostensibly in competition with rail - doing buying up a train-leasing outfit? Wasn't the idea that service providers should be kept separate from owners of rolling stock? Next, presumably, we will see service operators taking over track; we will then be squarely back at stage one with a price-gouging monopoly, but with none of the benefits of nationwide integration that British Rail offered.
This sale and profit is bad for the national interest in cost-effective transport, for the dangers it poses the railways. But it is bad, too, for the Tory party and not only for the way it exposes the short-term incoherence of Tory thinking about privatisation. It is especially bad for a party that prides itself on communing with the British public's highly developed sense of fairness.
There is in public opinion a deep strain that strictly assesses the worth of those who receive public money and assistance. That fact has now been recognised by Labour, which has, for example, been tailoring its benefits- to-work policy accordingly. The parties are now broadly agreed: people deserve social benefits only in proportion to their willingness and capacity to work.
But now here comes the Conservative government condoning a situation in which ''deserve'' does not figure. What is the worth of Sandy Anderson, managing director of Porterbrook plc, as he counts his millions? What the Conservatives fail to see is that we make judgements about fairness on a continuous basis; we do not apply different scales at different times. The small corruption of the benefits claimant who defrauds the state receives the same censure as the City slicker who cheats on his income or corporation tax.
What the Government is damaging is our underlying conviction that the "system" is fair. By privatising in the way it has and - now - failing to condemn failure and excess, ministers undermine their own capacity to stand as the guarantors for equity elsewhere. If the Tory state is such a milch cow, why shouldn't the self-employed, or housing benefit claimants behave accordingly and squeeze the teats until they are cracked and dry?
The public, by and large, applauds good fortune and just rewards. Self- made millionaires and rich inventors; well-off actors and entrepreneurs - they are all a cause for celebration. The National Lottery has been such a great success because people cheer when the wheel of chance spins and some lucky beggar walks away with millions. That is the outcome of a game we subscribe to every time we buy a ticket. But public money is not a game. Hard tests of desert ought to apply to those who get state handouts - and the ranks of those with their palms outstretched include the chairmen and chief executives of companies grown fat thanks to the underpricing of national assets. Capitalism may appear, after the demise of Communism, to be robust because unchallenged. But markets are only as effective as the belief that surrounds them. The Conservatives, ostensibly the party of the free market, are sometimes among its worst enemies.Reuse content