Is Profit becoming a dirty word?

Private operators and their behaviour is often scrutinised by politicians, yet these politicians often overlook the fact that it is their own policies leading the operators into taking the actions they do, as our Westminster mole muses.


Two letters in The Times on the same day last week caught my eye. One was from Martin Griffiths of Stagecoach [pictured] in his capacity as Chairman of the Rail Delivery Group, the other from Barry Humphries, formerly of Virgin Atlantic but writing on behalf of the British Air Transport Association.

Martin Griffiths was correcting critical comments made by politicians (mainly Labour) about train companies, pointing out that annual fare increases made by operators are primarily a consequence of the policies of successive governments, and train operators make very small profits (contrary to the impression given by some politicians) with operating margins of around just 3%. These are dwarfed by the returns operators give back to the Treasury – some 1.7bn in 2011-12.

Barry Humphries was rightly taking David Cameron to task for criticising airlines for putting up fares during school holidays, pointing out that the aviation industry is highly competitive, that reducing fares in one period will merely result in an increase in another, and that fares could be reduced if not for the high level of Air Passenger Duty the government requires airlines to pay – this duty in the UK is the second highest aviation tax in the world.

The point is, performance and behaviour of private operators is often influenced directly by government policy, not their own commercial policies or objectives.

Yet politicians are quick to criticise private operators to try and get support and approval of the electorate without, conveniently, acknowledging that their own policies drive operators’ behaviour.

Bus operators often suffer the same fate, with politicians – both local and national – often distorting reality to try and make a case for stronger regulation.

I guess it is just an occupational hazard, and really all one can do is quietly point out to politicians when they get things wrong, and hope they take note. The bus industry – led by the Confederation of Passenger Transport – has been very effective in this respect.

Of course, sometimes politicians just think that as a matter of principle certain services, such as public transport, should be in the public sector. I have no difficultly with that. I quite admire those politicians who have strongly held principled views (within the bounds of decency).

It’s the dishonest politician I can’t bear. I’m not saying they deliberately lie, but it’s the way they either distort reality, or conveniently ignore certain aspects of their policies, that I find so depressing.

Equally depressing is the growing tendency to attack the private sector, almost for the sake of it. ‘Profit’ seems to be an increasingly dirty word, or an unacceptable thing.

Little account is taken of the enormous investments private companies make or the employment opportunities they provide. I’m old enough to remember how bad so many public services were before privatisation. Remember how long it took to get a new phone line installed when moving house? Or when British Rail was a national laughing stock?

Is every private company faultless? Of course not. There have been high profile examples of pretty questionable practices (a major coffee shop chain avoiding corporation tax comes to mind).

Let’s root out bad practice, for sure. Let’s ensure private sector operators are properly regulated where regulation is necessary.

But let’s put a halt to this trend to bash the private sector for the sake of it.