Rail 683 The railways are being renationalised – by foreigners 2

November 18th, 2011 Rail Magazine

In a way, it’s funny. The Brpitish railway system is slowly being renationalised, but not by our own government. Rather, it is being taken over by foreign state-owned railways that now have an interest in almost half the franchises, and in one of the three open access operators as well.
This has been highlighted by two further incursions in recent weeks, although the issue has barely been picked up in the national media – even in the jingoistic Daily Mail (which recently warned that French unemployed workers would be invading Kent thanks to new Lille-Canterbury trains, even though providing such a service is fraught with difficulties and unlikely to be cheap enough for the jobless).
First, there was the successful bid by Abellio – the bizarre name given to the overseas arm of Dutch railways – for the short Greater Anglia franchise that will run from February next year to the summer of 2014. Abellio, which already runs Northern and Merseyrail in joint operations with Serco, outbid Go-Ahead and Stagecoach to take over the franchise that had previously been run by National Express (ruled out at an earlier stage).
Then there was the announcement that Grand Central, the open access operator running trains to the north out of King’s Cross, has been taken over by Arriva, aka Deutsche Bahn, which is less coy about using its name in the UK than the Dutch (aka Nederlandse Spoorwegen, admittedly a bit of a mouthful).
Let’s dispense with the notion, tweeted to me by several people, that DB will close down Grand Central as it did Wrexham & Shropshire. That’s clearly a nonsense since, unlike with Wrexham, DB does not run the main franchise on the same lines. Of course, that could happen if it bids for East Coast, but that thought is for another day.
Rather, Arriva clearly sees open access as a potential growth area, especially in light of the recent review by the Office of Rail Regulation that wants to encourage more operators to come forward (more of that in a future column).
DB already has a controlling interest in Chiltern and a half share with the Hong Kong-owned MTR in London Overground, while through Arriva it operates the CrossCountry and the Wales franchises. The French have been here for rather longer, in the form of the part share owned by SNCF in Keolis, the joint venture partner with Go-Ahead in Govia (which has three franchises – Southeastern, Southern and London Midland).
So we have the Germans, the Dutch and the French, and now the Spanish are keen to join in the fun as well.
Renfe, the Spanish state-owned operator, failed to pre-qualify in previous attempts because the Department for Transport decided that the company did not have sufficient local knowledge, and barred it from bidding.
But Teófilio Serrano, the president of Renfe who was visiting London earlier this month, told me that the company intends to pursue the British market: “It is the main market in Europe. Most others are for public service obligation railways, while in the UK all the train services are available for franchise.”
The company is now looking at franchises such as Great Western, East Coast and c2c, all of which are coming up in 2012 and beyond. As an aside, there really does not seem much point to the pre-qualification requirement in franchising, as it slows down the process – if Renfe did not have enough knowledge initially, surely it would have developed it during the course of preparing the bid.
The subtext of Serrano’s thinking is clear – Britain is an easy touch for these foreign operators as we are the most open economy. But does this do UK plc any good at all?
Actually, this foreign invasion by state-owned companies is not funny, it’s tragic. Rather, it is a reflection of the way that we are happy to open up our economy to foreign interests, who in response protect their own markets. It is just like the rolling stock market, where Japanese companies are allowed to bid but make it impossible for their European rivals to sell to their home market.
I am not being xenophobic – the foreign influx has undoubtedly brought in some new ideas. Nor am I suggesting that these foreign operators are not capable of doing a very good job – indeed, Northern won Train Operator of the Year at last year’s National Transport Awards.
But while Northern’s funding for the Cyclepoint at Leeds station, where people can hire bikes easily, was an example of innovation, there have also been criticisms about overcrowding and lack of accurate information. Indeed, that mirrors the performance of most of these foreign-owned franchises – they have been good in parts, but not set the world alight.
So exactly why is the Government allowing this quiet takeover to happen, without any discussion of the questions it raises?
And there are several. Firstly, these state-owned railways do not have transparent accounting systems. That means it is easier for them to borrow money cheaply, allowing them to outbid commercial rivals. If, as expected in the forthcoming franchise review, investment becomes a greater requirement of franchise bids, that will give them an unfair advantage.
Secondly, if they do manage to make a profit out of the franchise (which, after all, is the whole idea), then the money leeches out of the British rail system into (effectively) the coffers of foreign governments. Would it not, at the very least, be better if the money went into our own Treasury’s empty pockets?
Thirdly, by depriving home-grown companies of the chance to operate British franchises, it removes the opportunity for them to gain expertise for future bids both here and abroad. It is interesting that Arriva, the most successful of the bus companies in gaining franchises in Europe, has now been taken over by a state-owned firm.
Finally, if foreign state-owned firms can bid, why can’t the Department’s own Directly Operated Railways, which currently runs East Coast, remain a player in the industry? It would, as I have suggested in the past, act as a benchmark for costs.
This is an issue that should be picked up by the Commons Transport Committee, which under the chairmanship of Louise Ellman is showing signs of having teeth, as witnessed by the recent HS2 report that asks searching questions of the Government’s strategy. It should ask what are the benefits of this laissez faire policy or, specifically, what is the strategy behind allowing our railways to be dominated by state-owned foreign companies?
In truth, solid as they are, they are not the whizzy gung-ho capitalists that the privatisation was supposed initially to attract. We may indeed be grateful for that, but this quiet invasion suggests that the Department does not have a clue in answering my famous question: “what is franchising for?”
Can the purpose really be to allow foreign governments to make a profit out of our railways? Answers, please.

Don’t tell Philip Hammond
Now that Philip Hammond has gone to pastures new, I can relate a story about level crossings from my friend from Cycling England days, Phillip Darnton, who recently visited Thailand.
Readers may recall that the one time I was invited in for a cup of tea to discuss transport with Hammond (no sign of a free cuppa from new SoS Justine Greening), he asked me why trains always had priority at level crossings. He explained that at times he would see 50 cars waiting for a two-coach train that might be carrying just a dozen or so passengers.
My gast was truly flabbered, and I blurted out something about the history of railways stretching back to the days of the Liverpool & Manchester, and how this had always been the case since trains were timetabled and difficult to stop, while cars were far more flexible in this regard. I was pretty confident that whatever ‘petrolhead’ Hammond might ask of his civil servants, it was unlikely that he could change the policy.
But my friend Phillip tells me that when he took the train on the 50-mile trip between Bangkok and the old capital Ayutthaya, the train stopped several times to allow the road traffic to pass, and then proceeded slowly over the crossing.

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  • MikeB

    Totally agree! The thing that irks is that it seems British commercial companies, involved in rail or bus operations, are deliberately being kept out of Europe by the “big boys”. Arriva have been successful with bus and train networks in  a number of countries but, since being acquired by Deutsche Bahn, can no longer be considered British. National Express do have a bus network in Spain and Portugal but this has been due to the fact that their majority shareholders are the Cosmen family of Spain. The other major British train operators have tried to enter the European market but, in most cases, the big state-owned rail companies have kept the doors firmly shut. As a result, the likes of Stagecoach and First Group have given up and are now concentrating their efforts across the Atlantic.

  • montmorency

    Don’t DB run a good portion of our freight as well?

    Not that I mind too much. Let them run the lot as far as I am concerned (including the tunnel service, or a tunnel service).

    Then we could buy a through ticket from London to Köln, for example.

  • @JeffGazzard what are you referring to?

    Retweet Reply Favorite (about 28 minutes ago)
  • @CallyOrange fraid not. But there's a bloke called Christian whose getting married

    Retweet Reply Favorite (about 21 hours ago)
  • @holdmch cheep cheep

    Retweet Reply Favorite (about 21 hours ago)

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