The franchise farce must end

Delays, cancellations and overcrowding – the railways are going through a particularly bad patch just as the Christmas rush is building up. Chris Grayling, the Transport Secretary, announced plans to improve the railways with ‘passengers at the heart of the service’ but these were quickly dismissed by critics as doing nothing to address the fundamental problems affecting the network.

The best railways in the world are those in Japan and Switzerland which combine very heavy use with amazing punctuality and high frequency. How do they do it? They have large railway companies which are in charge of all aspects of the railway, from maintaining the tracks and signalling to running the trains. That enables managers to operate services and plan investment with a long term perspective that ensures future demand is met.

Contrast that with the mess we have in the UK. The tracks and signalling are run by Network Rail, a state owned company, while the operations are in the hands of a couple of dozen private operators such as Stagecoach and Arriva, many of which, strangely, are subsidiaries of foreign state railways such as French SNCF and German DB. Just to make things more complicated, the trains themselves are owned by three private leasing companies and the major maintenance work, known in the business as ‘renewal’, is carried out by engineering firms.

This makes for confusion, inefficiency and the waste of millions of pounds of taxpayers’ money. To give one example, when lines are closed at weekend to make improvements to the track, Network Rail has to pay millions in compensation to the train operators. Yet, the work is being carried out for those companies’ benefit so that they can provide a more reliable and faster service. It is as if your kitchen fitter had to pay you for your inability to prepare meals for a couple of days while they install your new cooker.

There’s no end to these nonsenses on Britain’s railway today, frustrating passengers and pushing up the bill for taxpayers who pay over £4bn per year to subsidise the service. The high cost of maintaining and renewing the railway is also down to this ridiculous split between operations and infrastructure.

This is why rail fares have risen well above inflation for more than a decade. With roads increasingly congested and more and more young people not bothering learn to drive because of the high cost of insurance, the railways are effectively exploiting a monopoly. Many people have no choice but to take the train and pay the high fares.

The chaos and enduring industrial dispute on Southern rail can also be put down to the lack of a overall fat controller to run railways. The strikes have been caused by unions resisting the Department for Transport’s requirement to remove guards on from the trains, and exacerbated by the private operator, Govia, going about the task in a ham-fisted way. Contrast this with the way that guards were removed on the London Overground lines, run by Transport for London, where negotiations were successfully carried out with just one token day of strikes. If there were one company in charge, without interference from the Department, it would be far easier to sort out such disputes.

It is, in short, no way to run a railway.  Grayling actually knows that the solution is to bring back together the services and the infrastructure to create one unified railway. He actually announced on Tuesday that he would like to see the private companies and the publicly owned Network Rail work much more closely together. A couple of new franchises would be run by ‘alliances’, he said, but this falls far short of what is needed.

Because of the Tory legislation that privatised the railways in the mid 1990s, Grayling can’t bring the two aspects of the railway, the services and the infrastructure, together in the way he would like. It would need a new Act of Parliament and there simply is not the Parliamentary time, nor the political will, to do this. Grayling says that change needs to be ‘evolution rather than revolution’ but he is wrong. Railways have traditionally functioned as a single entity and they work much better in an integrated way, and the present mess requires a radical rethink.

The whole system of franchises and contracting out is wrong-headed and needs to be scrapped. This is not about renationalisation. A new integrated rail company could be either owned privately, as in Japan, or publicly, as in Switzerland but the key point is that it would be responsible for all aspects of running the train service. Until this happens, passengers will continue being bombarded with announcements from train operators blaming delays on Network Rail, effectively saying ‘it’s nothing to do with us, guv’.

The solution is in the government’s hands, but it will take a braver minister than hapless Chris Grayling to bring it about.

  • RapidAssistant

    What’s getting in the way is Tory right-wing ideology, since an integrated railway will be too much like British Rail. One of the great ironies is that they’ve hid behind EU competition rules to keep the franchising system in place. When/if Brexit happens, this will effectively disappear, but will they exploit such “taking back control” – I fear not.

  • Paul Holt

    The Girl On The Train, and its sequel The Girl On The Rail Replacement Bus.


    is the UK taxpayer subsidy greater now that railways are privately owned by foreign state pension funds etc????

  • Indeed

  • Keith

    The irony for the Tories is that an integrated operation could be one way to make private ownership work.

    But something else slipped out in the Grayling announcement – references to “England’s” rail network. Hadn’t heard that before. So even if we could integrate the system, there would still be a 3-way split across the nations. We seem to be in a mess which constitutionally, no-one has the power to resolve. Even the US sensibly has Amtrak at federal level.

  • John P Hughes

    EEC Directive 440/91 is the basis of the requirement to separate railway infrastructure from the operation of train services. This Directive allows EU member states to implement this separation only for ‘accounting’ purposes; but to do that one needs in practice to have two different subsidiaries in a Group Company, each of them showing their accounts in public.

    Some Continental European countries have this ‘separation’ under a single national railway administration – Germany, Netherlands, Austria and (after a scrapped venture into a fuller ‘separation’) France. Others have a separate infrastructure company with some of the problems seen in the UK – Spain, Belgium, Denmark, Sweden. Ireland has managed to put off ‘separation’.

    For Britain, the position ought to be simpler. The Government could state that when we leave the EU, the 1991 Directive will cease to apply and we will be looking at that point to re-integrate track and train.

    Chris Grayling as Opposition transport spokesman at one time during the Blair Government came out in favour of vertical integration. He has now spoken out in its favour having reached the Secretary of State’s position. (Whereas several Conservative Secretaries of State between 2010 and 2016 were silent or negative about it.)

    Grayling was a leading ‘Leave’ politician in 2015-16. One would expect him to be saying now that a benefit of the UK leaving the EU is that there will be no European restriction any longer on restoring the vertical integration that we had, very effectively, under British Rail’s Sectorisation, 1982 to 1994. He has not yet said this but he may be biding his time and will do after Article 50 notice is served by the Government in March 2017.

  • Beth Williams

    Another excellent reason for Britain to leave the EU as soon as possible.

  • Charley Nash

    Compared with the current UK rail set up British Rail was an efficient organisation one example are the main line electrification schemes undertaken by British Rail compared with the Great Western electrification scheme. We need a strong regulator to hold both the rail operators, Network Rail and the Government to account whether rail operators are in private or public ownership. A current example of what a good regulator needs to question is the acceptance of huge clearances on the Great Western electrification scheme where previous experience and experiments involving steam engines under live wires show the the huge clearances are not required. Network Rail had the opportunity to get a derogation from the EU rules but the bureaucrats at Network Rail and the Department of Transport mindlessly followed EU rules.