Go on Ed, be brave and end franchising
Politicians sometimes need to be brave and this is one such moment for Ed Miliband over the future of the railways. He is being pressed hard by swathes of his own party to end the present policy of franchising out the whole network and instead take back into public ownership the franchises as they run out.
He should do it. For once, radicalism and the public mood are at one. Rail passengers have never warmed to the Arrivas, Stagecoaches and even Virgins that run today’s railway. They know instinctively that an industry that needs £4 billion in subsidy annually and is a vital part of the nation’s infrastructure has no business being run by short-term franchisees whose profits come out of taxpayers’ pockets.
Normally, capitalism rewards business either for taking risks or for investing, but the operators do neither. If they start to lose money, they simply throw the towel in, as happened with National Express on the East Coast in 2009.
There are other huge downsides to the franchising system. The process is costly and the fiasco two years ago over the West Coast main line franchise meant the Department for Transport had to haul in dozens of expensive consultants. Even now most franchises are being let as single-tender awards where negotiations are held with only one company, the incumbent. The whole competition element that is supposed to drive down costs is nullified.
Taking back the franchises as they run out and handing them over to a new organisation (called British Rail — or perhaps, if that is too retro, Rail Britain) would actually free the railways from this overbearing control.
There are risks, though. Insiders tell me there is already a £350 million gap in the railways budget, which means fares might not be held down as much as supporters of renationalisation suggest. Money for investment, too, might be a problem given Ed Balls’ austerity policy. Opponents will accuse Mr Miliband of going back to old Labour days.
Nevertheless, the advantages for him in going for a policy of gradual renationalisation outweigh those risks. He has been brave in taking on both energy companies and private landlords. Taking on the train companies fits in with the zeitgeist. Go for it, Ed.