Rail 783: Renationalisation is a long term aspiration

By the time you read this, we will know who is the new leader of the Labour party. Mystic Wolmar says it will be Jeremy Corbyn, the once 200 – 1 outsider but if Mystic was so good at predictions, how come he did not put a bet on then? However, even if it is not Corbyn, the issue of rail nationalisation is likely to exercise the Labour party over coming months, given that it was such a prominent issue during the hustings and that the influence of the Left in the party has increased.

One could consider this was all irrelevant given that the Labour party will not be in power till at least 2020 – and some say even longer than that if Corbyn is elected. However, first there is only a 12 seat Tory majority and the referendum is going to tear the party apart as much as Labour’s defeat has done for them. So the future is uncertain. And secondly, the issue of nationalisation does not half scare the horses. You only have to look at how Stagecoach has battled to prevent bus reregulation on Tyneside, resorting to the courts and much public criticism of Nexus, the local transport authority, to see that this is an issue which greatly concerns the private operators.

Andy Burnham, too, has promised to renationalise the railways but he has merely reiterated the Labour Party line from the last election that there would be a public sector bidder for each franchise. This is, as I have previously written, the worst of all worlds, wasting taxpayers’ money and keeping the system that results in extra costs because of complexity and inflexibility. It was, dare I say, the type of policy that cost the Labour Party the election as it was not properly worked out, satisfied neither Right nor Left of the party and was difficult to explain to the general public.

Anyway, Burnham is unlikely to win – I would put Yvette Cooper down as second favourite as she has recently upped her game (Another Mystic fail? – ed). So what does Corbyn mean by renationalising the railways and what benefits is he hoping for? Corbyn, unlike many MPs, does understand the railways. He has been a very pro-rail campaigner in Parliament, actively supporting the Barking – Gospel Oak line that goes through his Islington North constituency and getting behind a host of other campaigns. I have seen him at Railfuture events in Parliament and discussed the finer points of bringing passenger services back to Wisbech.

Therefore, he does know what he is talking about. He has stated publicly that he would not only want to see the train operators brought back into public control, but also renationalise the rolling stock leasing companies. The aim would be to reduce ‘rip off fares’ and to reintegrate the industry on the model of Transport for London.

Details, at this stage, are inevitably sketchy but would any of this work? First, on train operations, the solution is relatively simple and not costly. It would be quite feasible, and legally possible within existing legislation, to take back train operations from the private sector. It would be daft to do this while contracts were still in force since that would require compensation payments to be made, but it would be easy to simply wait until the contracts ended. However, the bad news for Corbyn is that many of the franchises are currently on short term extensions and during this Parliament most of these will be let, probably on 7 year contracts – so it will not be until towards the end of a Corbyn Prime Ministry – which is unlikely to start before 2020 if at all – that many of the services could be taken back in house. Therefore the promise of renationalisation on the easier part will take some time to fulfil.

Moreover, who knows what arrangements there will be for franchises by that time? The Conservative government is currently considering devolution plans for the Northern franchise and others, and may well have given local authorities the sort of powers Corbyn is suggesting. While I, too, strongly support integration and feel the TfL model is the right one, applying it everywhere in the country will not be easy.

The idea of taking back the rolling stock companies is much more problematic. I certainly agree with Corbyn that this was one of the daftest aspects of privatisation creating added complexity and adding enormously to the cost of running the railways. There were crazy anomalies like the 1938 Tube stock being leased out at a cost of three quarters of a million per year – since resolved – and Pacers, long written off, costing around £25k in leasing costs (and plus double that for maintenance). However, changing this system will inevitably be costly. Bringing the stock back into public ownership would require billions that could be better spent elsewhere and is both politically and practically impossible. The solution is to let the leases run out – but by then both Corbyn and I will probably be pushing up daisies in many cases – and let any new contracts on the basis of state ownership of the assets. In any case Roscos have gone out of fashion with ministers now preferring manufacturers to form consortiums with banks to provide new stock as with the IEP.  That may well be the daftest deal in railway history but neither Corbyn or anyone else is going to manage to unravel it.

So taking back the Roscos is not a workable proposition. The same goes for the energy companies which Corbyn also has his eyes on and which require much tighter and simpler regulation such as all having the same tariffs to allow for genuine competition and that too is the lesson for Corbyn in relation to the railways. strong regulation may not be such a sexy sound bite but it can be just as effective.

The core premise of all this is that taking back the railways will allow for cheaper fares. This is by no means self-evident. Fares on season tickets and off peak returns are set by the government already and have been used as something of a milch cow, especially on hard pressed commuters. A Corbyn government would be able to control these anyway. He would, however, be able to impose controls on the peak fares, which are something of a scandal, but that could be done without taking the operations into public ownership.

Then there is Network Rail. Well, in fact, of course that is already nationalised and is in trouble – there is no causality necessarily there but it does show that he has to be wary of suggesting renationalisation will cure all the problems of the railway.

Like Corbyn, I have long believed that privatisation of the railways was an expensive mistake and that a heavily subsidised strategic industry reliant on big capital investment and providing a public service that is often in a monopolistic situation sits happily in the public sector.

There would be some savings in terms of the profits extracted by the private operators – say £250m per year – and in cutting back on the crazy bureaucracy. Moreover, most important, it could lead to the creation of a new British Rail type organisation, running the operations as they came back in house as well as Network Rail. Integration, as the ill-fated South West Trains alliance showed, is pretty much impossible under the present system but is undoubtedly the way to run a railway. My advice to Corbyn, therefore, is not to make rash promises about renationalisation, but to approach it in a steady way, under the banner of creation a more rational and accountable system. However, we are where are, in that horrible business expression and unpicking some of the crazy structure of the railways would be costly and often not worthwhile.

 

 

French customer service

 

 

One of the often cited objections to renationalisation is that BR provided a terrible service and nationalised concerns cannot be customer friendly. This is patent nonsense and any meeting with Guillaume Pepy, the long term boss of the French SNCF will disabuse one of that myth.

So it was interesting to hear of the experience of Peter, one of my tennis partners, who travelled to southern France on the TGV recently. On the way out, the Eurostar – majority owned by SNCF of course – was delayed through the tunnel and he was impressed that staff came through the train asking about onward journeys from Paris. They endorsed his ticket to Toulouse, ensuring he could take the following train, but thanks to the fact that they also paid for a taxi, he and his wife managed to get the train they were booked on.

On the way back, from Marseille, the TGV broke down in a tunnel and had to reverse back to a station where they changed trains. During the delay, meals were brought out for all the passengers – long life food but nevertheless, he says, perfectly palatable as well as plenty of water as it was hot. He consequently missed his Eurostar back, but they were put up in the Ibis near the Gare du Nord and got the first train back in the morning. Needless to say, he was impressed with the service. I doubt if any privatised British company provides meals to passengers who are stuck and pays for hotels if ongoing connections are missed – or please disabuse me.

 

 

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