Rail 700: Renationalisation never seems to go away

It’s amazing how much attention plans to renationalise the railways always attract. The latest suggestion came in a report produced by Transport for Quality of Life, Rebuilding Rail, and received considerable coverage in both press and broadcast media, including a big piece in The Observer and an appearance by both Phil Haigh and myself on BBC Breakfast.

The reason is that nationalisation remains popular. The privatised railway companies have never managed to win over the majority of the public to their cause, and they remain the butt of considerable criticism, some fair and some unfair. The public dislike the complex structure, the ridiculous branding, the feeling they are being ripped off and the fact that the private firms at times behave with as little regard for ‘customers’ as the worst of British Rail staff.

Therefore the words ‘renationalisation’ touch a nerve and elicit interest among news editors. This time, though, there were other reasons why the report attracted wider attention. First, the privatisation of the railways is seen by many people in the wider context of the neo-liberal approach to economics that has prevailed since Margaret Thatcher was elected in 1979 and which is now being discredited through the bank crisis and the austerity programme. As an author of history books, I can see how the fashion in economics has swayed over decades between laissez faire liberalism and more interventionist approaches. We have been at the far end of that spectrum for some time with our political leaders emphasising that ‘private is good, public is bad’, deregulation is the solution to all ills and anything that cannot be monetised is worthless.

Therefore the notion of renationalisation reflects the zeitgeist. This time, too, the report published to stimulate the debate was particularly well-argued and well-written.  It was not one of those dashed-off two week consultancy jobbies that are a smokescreen for the political convictions of those who have commissioned them (a game, incidentally, played by all sides in the debate over railway politics). Quite the opposite.  It was written by a couple of independent transport experts, Lynn Sloman and Ian Taylor (Declaration of interest: I’m quoted twice, but they talked to dozens of other people).

Of course its conclusions  may be seen as predictable since it was sponsored by the unions but It is a serious piece of work, the kind of analysis which might have been produced if someone more able to stand up to political pressures than Sir Roy McNulty had produced last year’s analysis into the structure of the industry. Even those wedded to the status quo or some minor variant of it would do well to read it.  The analysis is far more incisive than the mishmash of contradictions put out by McNulty after his efforts had been put through the political wringer. They argue that the privatised rail franchises should be phased out, the railways reintegrated and passengers given a greater say in the running of services. They analyse the experience of other European countries and point out, as I have done many times, that there would be no great cost to reintegrating the railways back in public ownership. There is even a table that looks at EU legislation and what would be feasible under it in order to dismiss that canard about European legislation not allowing integrated operations.

The third reason why the report attracted attention was the response by Labour.  In the old days of New Labour this sort of report would simply have been ruled out of hand with a remark such as – ‘ of course the present system is not ideal but the last thing we want is more upheaval’ (I cannot resist saying, as an aside to an aside, that this consideration never seems to apply to the health service which has been subject of reorganisation laid upon reorganisation ever since I was drinking NHS issue orange juice in square bottles with blue caps).

Not so now. Maria Eagle was quoted in The Observer as welcoming the report with the words ‘Under the current system we have unaccountable train companies given a licence to print money to operate a monopoly service at high cost to passengers in an industry that still relies on £4bn from taxpayers every year’.

It was, though the next thing she said that actually will resonate further – even with the Daily Mail: ‘Increasingly franchise are run by subsidiaries of the German, French and Dutch state railways’… If one or more of the big franchises coming up is won by these companies, I suspect the interest in the press, even rightwing papers, will intensify because of the contradiction that their nationalised businesses are allowed to run the railways but not ours.

So will any of this happen? It is noticeable that in the responses to The Observer article which trailed the report, many people have no faith in Labour’s commitment to change anything radically in the railways given that the party had ample opportunity to do so during its 13 years in office and failed patently to do so.  Ms Eagle, too, did not actually fully endorse the report’s findings.

However, times are changing. On the same day that details of the report emerged, Labour found itself in a 14 per cent lead and there was renewed criticism of the crazy Public Finance Initiative which has crippled parts of the NHS. While the neo-liberal model of economics espoused by both main political parties is still flavour of the month, every banking scandal and every poor set of employment or output figures represents weakens support for it. The battleship of Reagonomics might not be sinking but it is beginning to leak under increased public scepticism about its viability and  therefore it is no longer certain that a Labour government would be quite so acquiescent of retaining structures that are clearly inappropriate. Remember, it was the Tories that accepted the Private Public Partnership for the London Underground had to go.

Indeed, already Network Rail is effectively renationalised. Moreover, the notion of alliances between train operators and Network Rail put forward in the McNulty report is being realised. Tim Shoveller, the long time Stagecoach operator, is now in charge of both operations and infrastructure for the area covered by South West Trains. There are still many issues to be sorted out and this arrangement is still fraught with possible risks. Nevertheless, this may well serve as a model for others that are largely separate from others and have one main operator. Moreover, the franchise network is being redesigned to accommodate this, with, for example, ten new East Coast franchise possibly incorporating many regional services on the route. In a separate development,   Chris Gibb, Virgin Trains’ Chief Operator, has been seconded to Network Rail because of poor performance on the Rugby – Euston section. So the distinction between Network Rail and the operators is being blurred and no one knows how far this will go.

It is not, therefore, inconceivable that an incoming Labour government would go one step further and simply not let franchises that expire. However, with many franchises about to be let for 15 years, it may be that timing will defeat any such radical plans. That does not stop people still thinking fondly of recreating a nationalised railway but even if they get their wish, it would be a very different beastie from the British Rail which elicits such conflicting memories.



Cleaner windows at Network Rail?


Sometimes modern business jargon seems almost like a parody of itself. In the real world, surely someone just appointed as ‘Head of Transparency’ would, be responsible for cleaning the office windows. Not so in the corporate world that we now inhabit. The appointment of  Network Rail’s new head transparency, Mark Farrow, is indeed welcome but one wonders what, once a few bits of information have been published, he will be doing all day long. The press release announcing the creation of his job talked of producing real time running data, costs of major projects, executive directors expenses and assessments of high risk level crossings.

While I commend the effort, it strikes me that this is pretty basic stuff that should have been available a long time ago. Moreover, Mr Farrow rather blew holes in his toes when he said in his opening statement in the press release: ‘We won’t be able to publish everything people suggest – there will be some times where security, cost or commercial confidentiality issues will intervene – but we will do everything we can to keep the scheme’s content fresh, relevant and informative’. So he’s already telling us what he is not going to do. I’d rather hear from him that he is going to bust a gut to get everything out there and challenge the ridiculous rules about ‘commercial confidentiality’ which are irksome in an industry that still absorbs £4bn or so of public money every year. Oddly, the press release did not give his salary… now that would have been a start. Indeed, if he is going to trot out the ‘commercially confidential’  excuse at every turn, then there’s not much chance of change. The fact that the publication of passenger numbers on particular routes is not possible because the figures are ‘commercially confidential’ is one of the nonsenses of the present set-up in this semi privatised industry.  Mr Farrow’s appointment suggests, too, that the so called ‘company members’ who are supposed to hold the company to account have not been up to the task. Network Rail is clearly trying to pre-empt any  wider reform, but if Mr Farrow’s rather weaselly press statement is anything to go by, the company and Mr Farrow will have to try harder.

  • Nvelope2003

    Renationalisation of the railways, like comprehensive schools, seems to be very popular with those who do not use the railways/state schools. Maybe they want to drive away those dreadful common people who fill the trains so that they can have them running empty to give them the chance of a better seat if they ever had to go by train.

  • Fledermaus

    But the railways ARE nationalised, right now!There is much more control over the railways now, than there was pre-1993.Consider, idiots in DafT get to SPECIFY THE INDIVIDUAL TRAIN SERVICES
    they get to tell oepratos HOW MANY TRAIN-SETS THEY CAN HAVE
    they can tell them whether they are ALLOWED TO BUY/RENT NEW TRAINS (or NOT)
    and so on, and on …..

    If this isn’t nationalisation – direct state control, will someone please tell me what it IS?

  • RapidAssistant

    erm – no actually.  I am a regular railway user, and I am abhorred by this perpetual mess that John Major created, and that subsequent politicians have resolutely refused to put right out of dogged ideology.  I think you will find the thousands of people who have joined the “Bring Back British Rail” lobbying group are also regular rail users as well. 

    This privatisation has been a failure for one fundamental reason – they were privatising an inherently loss making industry, and the ludicrously complex structure was created to sweep this inconvenient truth under the carpet.  Until something is done about that – nothing will improve.

  • RapidAssistant

    You need to turn that around on its head.  We have direct state control, but still a quasi-privatised railway – the result being the two sides working to cross purposes – the civil servants being taken to the cleaners whilst they play with the national trainset on one hand, and the private TOCs on the other who cry foul whenever attempts to expose them to market forces subsequently hold govt to ransom every time things don’t go their way.  Result? – the taxpayer keeps signing the cheques.  Which makes a mockery of the “private” railway.

    British Rail was a nationalised company, but run at arms length from government by a board of experienced managers that knew how to run a railway, but were ultimately crippled by the lack of ££s coming from the Treasury.  Partly due to the fact that back then we were still in a climate when roads were definately in, rail was out.

  • Fledermaus

    Can I add something I forgot … Fares levels – about to be announced in the nice quiet period in August.
    SET BY THE TREASURY with  DafT as the front-man, or woman, as the case may be?

  • Boldfield

    The real reason BR was privatised was to get the money to bribe the country with tax cuts so the Tories could win the next election. Of course they failed as it took too long. Now it is such a lucrative method of siphoning off public money that nationalisation will be resisted at all costs. The Tories will and the Liberals will never admit the public sector can be more effective, it is like a religious belief they will just not listen or believe any criticism

    All the profitable routes are constrained by track capacity so there is very little scope for timetable change and no possibility of competition.

    Cross subsidy from the profitable routes to unprofitable ones (feeding passengers to the main lines) impossible with franchising so the taxpayer has to pay subsidies.

    Why are the walk up off peak tickets are so expensive when the advance tickets so cheep, Don’t they want to increase the number of off peak passengers?

    The TOC’s  talk about customers but the real customer is the DfT and the passengers have no choice.

    It is not in the interest of the operators to reduce over crowding especially on the commuter trains as this increase their payments to NR with out guaranteed extra income.

    Bringing back BR will allow:-

    It will be possible to simplify the ticketing system. Currently impossible as every one has to agree.

    Reduce the expensive practice of using consultants (who have their own agenda) as in-house expertise can be cultivated.

    No cost to the taxpayers and the passengers of bidding and comparing franchises.

    All the extra staff managing the contractors, operators and payments can be cut. This must be a major expense as the biggest cost is labour.

    NR will not have to pay compensation for carrying out maintenance and infrastructure improvements which benefit the operators. This is crazy way of minimising delays to passengers.

    A new BR will save billions per year and the cost could no longer be hidden by “commercial confidentially”.

    Projecting the profit/loss trends of BR there would be no need of ANY SUBSIDY.

    BR could increase freight by offering door to door service.

    BE could plan and make cost effective decisions about rolling stock. No more feast and famine on procuremnent and we might be able to get away from paying £3 million per coach and more flexibility on train length. All which will save money


  • RapidAssistant

    To the people who believe that us pro-renationalisation brigade are just a bunch of diehard lefties who are ideologically against the private sector involvement in the railways I say this:

    Private sector involvement in a public service only makes sense if there is a genuine profit to be made.  As I said further down this thread, this is the biggest flaw of rail privatisation.  The franchising system and all its associated safety nets was created primarily to disguise the fact that the railways are inherently loss making, and as I said – and to sweep this inconvenient truth under the carpet.  Contrast this to the other Thatcher privatisations, British Telecom, British Airways, British Gas – BP – all have gone on to be hugely profitable enterprises.  Largely because they weren’t inherently unprofitable in the first place.  With the exception of the TSB I suppose, which has found its way back under public ownership through the bailout of Lloyds/HBOS.

    In the railways all these ludicrously complex financial arrangements to create this “artificial profit” have ended up becoming counterproductive and landed us with the worst of both worlds – overregulation on one hand which has wiped out any incentive “innovation”, and private sector companies all too willing to exploit the malleability of the contracts.  To be honest, FGW should have been allowed to go bust as well, and Adonis should have had the backbone to enforce the cross-default clauses on National Express.  The unions haven’t helped either – on one hand they scream “renationalise”, yet at the same time they have leveraged the fragmented structure to drive up wage costs.

    So there is a lot wrong, and sadly a lot of it irreversible.

  • jim south london

    Watching the Commons Transport Select Committee on TV
    They got all the Union guys on there Bob Crow etc.
    They are saying all the subsidy are basically going straight to the shareholders dividend.
    And non of the profits are going back into investment.
    Point is you still have to pay Capital Gains on profits from Share Dividends.So the government gets it back.

    Unions have a bit of a point .They will eventually have to bring back some nationalization.
    But babies and bathwater you have to keep some private elements just to keep the discipline of the market place.

    The word profit shoud,nt be a dirty word.

  • montmorency

    Yes, we definitely don’t want the Treasury running the railways….or the NHS, or anything else if it comes to that. The Treasury is the bank that likes to say “NO”.

    The railways are a public good, and should be run for the public good. That doesn’t mean to say they should be run directly by government….that way lies madness. We want, as you said “a board of experienced managers that [know] how to run a railway”, BR wasn’t perfect, of course. We can make it better than BR, or in other words, take the best of BR and combine it with the good things about the private sector (there must be some). We don’t want big-brother, heavy-handed top-down nationalisation. And even BR was run as separate regions, so there was a certain amount of fragmentation even then, I guess.

    The laughable (if it weren’t so sad) thing is that the whole “shortage of money” thing if completely artificial. It’s mostly caused by our debt-based money system. Have a look at the Positive Money website for more info.

  • montmorency

    What discipline would that be? The discipline that ran up a property bubble through unsustainable lending, and ended up with several banks going bust, or would have, had not the public sector stepped in?