REPLACING Scotland’s rail rolling stock over the next few years will be a test of the Scottish government’s progressive credentials. To their credit in recent years, they rightly took ScotRail, Scotland’s train operating company, and the Caledonian Sleeper back into public ownership. Nevertheless, profiteering from our railways is still alive and well via rail rolling stock companies, known as Roscos. Their continuing parasitic role in leasing trains to train operating companies, including ScotRail, represents one of the last failed legacies of the complete failure of rail privatisation.  

Since their creation, Roscos have been a license to print money for their original, as well as current, owners who bought them for a pittance before selling them on for huge profits to foreign banks and pension funds that now own them. These Roscos, and the more recent use of PFI to replace rail rolling stock, have enjoyed massive public subsidies to help their accrual of huge profits, none of which is reinvested back into rail services.  

It is instead transferred into shareholder dividends, often these profits are sent off to offshore tax havens to avoid paying tax, meaning that they avoid paying into the same tax yield, which, from their various public contracts and subsidies, they then profit from. This, in any other language, is naked racketeering taking place in plain sight.  

Set against this economic vandalism, Aslef, following on from A Vision for Scotland’s Railways that we published with other rail unions four years ago, was proud to commission a new report that set out a new vision for public financing of Scotland’s rail rolling stock.
As Scotland looks to replace our trains in the coming years, we believe it’s time to reject the failed model and introduce instead a public financing model, using green bonds and the Scottish government’s borrowing powers. This would save ScotRail hundreds of millions of pounds, all of which could be reinvested into rail infrastructure, staff, and reducing fares, making our trains more affordable and encouraging the shift from road to rail travel in the process.  

We are grateful to Professor Andy Cumbers and Grace Brown from Glasgow University for writing a report that sets out a vision for a new public financing model for the purchase of new trains now and in the future. They pointed out how there is no logical, economic reason why the Scottish government should continue to use any of the flawed, private models to finance our rolling stock, or indeed any other public good or service. Now is the time to reject this exploitative legacy of privatisation, and once and for all rid our railways of this last bastion of profiteers.  

Private extraction of public money is one of the great political and economic failures of our times. Corporate welfare via PFI schemes and the likes of Roscos in rail have only benefited financial vultures, which is always at the expense of the public good. Our report sets out how public financing of Scotland’s rolling stock will save a minimum of 40 per cent and how PFI-style contracts are generally up to 70 per cent more expensive than publicly financed investments. As a result of paying Roscos and contributing to their profiteering, our report shows that 25 per cent of every ticket purchased goes towards them. That is a scandal.  

If we rejected this neoliberal orthodoxy, which prioritises profits over people, we could instead reduce fares by 25 per cent and encourage more people onto trains, which would help Scotland meet its climate targets while at the same time growing our economy.  

The Scottish government has the power to borrow. It should use the borrowing powers at its disposal to issue green bonds. Across the world (including England, Germany and the Netherlands), green bonds have successfully raised billions. They are a successful model of financing green public projects that help provide the investment to improve public infrastructure, grow economies and meet environmental policy objectives.  

Aside from huge capital extraction from public to private one of the other problematic features of the current private involvement is the lack of transparency around the financing of these trains, which means it is often difficult to know and have a full understanding of just how much is lost to the public purse and exactly how much could be saved.  

In our report, it was calculated that the procurement of 69 new passenger trains could save up to £364 million over the course of a 30-year contract. This figure is based on financing from the current government bond levels compared to the current cost of private capital. This is a substantial saving.  

Transport Scotland, which we were pleased to see at the launch of the report in the Scottish Parliament, responded to the report by suggesting to us that we had underestimated the cost of trains and should be careful about how we use this data. However, their advice has only emboldened and strengthened our arguments, while again highlighting the need for more transparency and accountability around the cost of Roscos and PFI-type leasing contracts for Scotland’s trains.  

They suggested that any new train would cost circa 3.5 times more than the figure we have used. If that is the case, then any savings that issuing green bonds would bring would be 3.5 times more. This would therefore be up to approximately £1 billion, if we use their figures and compare them to the current cost of bonds compared to private borrowing rates.  

The fleecing of our railways by profiteers serves no-one but the venture capitalists who siphon off their profits, just as the private involvement in our schools, hospitals, roads and prisons is. The Scottish government should once and for all remove the profit motive out of our railways (as well as all other public services) and use the savings to improve our rail services, reduce ticket prices and invest in rail infrastructure. I urge the Scottish government to pass this test of their progressive credentials and reject this failed orthodoxy of the past.