Rail 719: Brussels should not determine rail policy

The announcement restarting the franchise process – for the second time – after the West Coast omnishambles put the spotlight yet again on the system but readers will be relieved to know that I will refrain from rehearsing, yet again,  the arguments over the UK rail structure which I have discussed many times before. Instead, I will try to place the context in the debate currently raging fiercely in Europe which may ultimately have a profound effect on the way we run things here, unless of course we leave the European Union (Mystic Wolmar says: no chance).

I travelled to Brussels on the pleasant but too fast Eurostar service (I was just getting down to a serious piece of work when we reached Lille) to help advise the Green MEPs of which there are 56 across Europe, on how to respond to the fourth Railway package. This is EU shorthand for a bunch of measures intended to further liberalise the rail market and, in particular, to entrench the separation between infrastructure managers (like Network Rail) and train operators.

As with most European measures, this is fraught with controversy and differences between member states (countries to you and me, the EU jargon is catching). The key EU word is unbundling, and both French and German railways are opposed to the idea for different reasons. The French did ‘unbundle’ technically with the creation of their infrastructure arm, RFF, but as it subcontracts most its work back to the main company, SNCF, the system remains unified and there is no talk of privatising SNCF. The unbundling has, in fact, been blamed by many French railway people for the decline in freight but in fact here the Railfreight Group argues quite the opposite, saying that it is restrictive practices in the French system which has limited the scope for freight.

In Germany, the huge DB, which of course owns Arriva and DB Schenker here, has retained a bundled structure, owning both the infrastructure and the operations, though there are many private passenger and freight operators. However, while the French Greens are relatively happy with the present situation, the German Greens are adamant that DB should be broken up, citing examples where it has threatened closure of a line, only for it to be revived by a private operator.

Just to complicate matters, DB Netz, the infrastructure provider, is highly profitable, and has sent huge sums back up to the DB holding company, which have then been used to acquire companies such as Arriva, Transdev and Veolia. They see this as an effective privatisation of the infrastructure and therefore unbundling DB would be a way to reprivatisating Netz.

Still with me? I must say, I too find it strange that a nationalised company (it still remains majority publicly owned) like DB – and indeed SNCF and the Dutch NS, can be buying up assets across Europe in other EU countries. However, none of this will be solved by trying Brussels imposing a unified structure on Europe’s railways.

All this is, though, highly instructive from a wider political point of view. Those of you who are Eurosceptic will be delighted to hear that much of the motivation for the actions of the politicians is based on their own experience at home. There is very little European wide thinking and therefore we get swept up in policies to tackle problems we do not have. For example, the emphasis on unbundling is because of a dislike of the old state-owned rail companies in Europe, many of which are, indeed, inefficient. However, that really should be tackled as a management issue, not a structural one.

The big message from all this is that there is no ‘one size fits all’ structure appropriate for the various railways across Europe given their different histories, cultural norms, state of their networks and experiences. The ideal solution will differ according to these and many other factors. As an example, the experience of splitting up the railways in Sweden, the first country to go down that path, is completely dissimilar from that of the UK and was implemented for different reasons, notably trying to create a level playing field between road and rail, not something that motivated the separation here.

I am not a Eurosceptic, but I am deeply concerned about attempts by Brussels to impose more and more federal structures in the name of liberalisation and stimulating competition. Already rules governing urban transport have been passed which could force local authorities to put all services out to tender by the end of the decade, although, as ever, the precise implications are unfair.

Regionalisation is another example of how a defined rigid procedure from Brussels would result in a disaster. While in France, Germany and the UK where passengers have already benefitted from better services in all the devolved areas such as Merseyside, Wales, Scotland and London, it seems a good idea, but elsewhere it could lead to unexpected consequences. In Belgium, for example, a local MEP said at the meeting that it would be a disaster as it is already a small country and devolving services to the two main regions, Flemish speaking Flanders and French speaking Wallonia would be totally unworkable as they would never agree on any co-operation. Belgium, of course, had no central government for a year and a half leading up to December 2011 precisely because of their inability to work together (they did not fare too badly, perhaps we could try that here…on second thoughts…)

Europe, though, remains driven by a neo-liberal federalist ideology that has not been affected by the collapse of the banking system and European economies since 2008. It is summed up by the first sentence of the conclusion of the 4th package discussion document: ‘The low efficiency and quality of some rail services are mainly the result of low competition, remaining market distortions and suboptimal structures.’ In other words, they are still on that elusive search for perfect competition and a pure market which I learnt about in my days studying microeconomics rather too long ago and has never been found.  Have they not learnt, for example, that the railways face competition from all kinds of other modes? That on-rail competition is very difficult to foster, except in certain corridors and even then its benefits are unproven? That railways need continued subsidy and therefore liberalisation can lead to increased costs, as has happened, for example, in the postal sector? And finally (though I could say a lot more) that the situation in the UK is replete with ‘sub optimal’ structures?

With European elections coming next year, the 4th package will fall unless the first reading is completed before then and I think that will be   The whole Euro mess is about the fact that what is a basic good idea – a free trade area and lots of cross European links and arrangements – has become a project led by hardline federalists to create a pan European nation with a neoliberal ideology based on competition and the free market. Of course the railways could benefit from more integration, unified technology, easier border crossings and so on, but what the railways do not need is diktats from Brussels on how to run their affairs.


Sleepers pleasure


While on the subject of loss-making railways, I happened to have spent a night on both British sleepers in the past month, the Night Riviera from Plymouth and the Scotrail service between Euston and Edinburgh. And what a pleasure it was. The service on both occasions was excellent, the trains on time and it was relatively cheap, certainly a better deal than a hotel for the night. Waking up to watch the snow covered heather of Lanarkshire fly by at 6 30 am on a rare sunny day in March from the comfort of a warm bed, cup of tea in hand, must count as one of my best railway experiences.

Both trains happen to be operated by FirstGroup who must be commended for having improved the service. Whereas there was a time when both services were the victim of neglect and were being run down, with the idea that they would be scrapped entirely, there is now no question of that. The Cornish services were saved in 2005 by a campaign in which ex Rail staffer Andy Roden played a prominent role.

The Scottish sleeper services are to be separated out into a new franchise in the control of the devolved government but their importance to the Scottish economy is recognised which should guarantee their future. I say ‘should’ because isolating out the trains in a separate small franchise poses a risk of some clever clogs penny-pinching minister in the future highlighting that each journey costs £x (it was reckoned to be £450 per passenger on the Highland sleeper, dubbed brilliantly as ‘the Deerstalker Express’ by campaigners  when it was threatened with closure during the privatisation process) and press to save money by scrapping the trains.

Sleepers from an important part of railway services in many countries. I happened to have travelled on French, Russian and American, as well as British, sleeper trains in the past six months (is that a record?), and they have all been very well used. And each time I have had a fine night’s sleep. Of course these services will always require a measure of subsidy, but that is in a way a product of the way that the industry is structured and priced. They provide a vital service for business people travelling to and from the far ends of the British Isles and encourage tourism. Scrapping them would have a far wider damaging economic effect than the savings that would be made. On the other hand, Investing in the services, as is happening in several places across Europe, would probably pay for itself as more people would use them – the trains are 40 years old and showing it – but will the Department, and the Scottish government have the courage to invest in a 21st century sleeper service?


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