Rail 959: Why it’s only the state that can sort out the railways

The railways are suffering from a series of intermingled crises and as Nigel Harris argued so cogently in the last issue, it will take a lot of innovative thinking for them to emerge unscathed. The railways are essentially under state control and therefore it is up to the government to work out ways of solving the problems created by the pandemic, the shift in working patterns, the strength of the trade unions and the limitations of the private sector.

I’ve been reading Mission Economy, the latest book from the economist Mariana Mazzucato who has long argued that the neoliberalism ethos created by Reagan and Thatcher more than a generation ago was always bound to lead to a crisis. It is beyond the scope of this column to write about the failings of the world economy but it is undeniable that this wider crisis has arrived. You don’t have to be a red hot socialist – or even one at all – not to agree with Mazzucato that the way a small number of very rich people have accumulated ever increasing proportions of the world’s wealth is an unhealthy trend. And so is the fact that most working people have seen little increase in their income for decades, and yet profits from capital gains remain less taxed than income from working.

These changes have gone hand in hand with a disdain for government. The state, in the eyes of the neoliberals, is only there to deal with crises and problems, rather than being an innovative force. And that mistaken notion has caused many of the problems being endured by both the wider economy and the railways. Yet, as Nigel has pointed out on several occasions, it was the vaccine roll out that was led by government which has largely saved us from potentially a far worse fate from the pandemic. Yes, the private sector responded, but the project was led by government.

It is only through similar innovation that the railways can be saved from a fate of ever worsening services requiring ever increasing subsidy. Mazzucato points to the remarkable success of really groundbreaking projects such as the decision of John F Kennedy to land a person on the moon within the 1960s. The budget was virtually infinite in the knowledge that governments can create money, something that Mazzucato points out to counter the usual monetarist theorists from the Reagan-Thatcher supporters. While many people suggest the project was a waste of money, Mazzucato points out that much of the tech we use today – not least the very concept of ‘software’ emerged from that programme. Her key argument is that one should not look at budgets and then say what can we do with this amount of money – but rather, what do we need and how can we fulfil that need?

What is the relevance of this type of thinking to the various crises on the railways? The answer Mazzucato would argue, is to work out what is the mission for the railways. The Guardian  recently quoted me in an editorial suggesting that the question that has never been answered is ‘what are the railways for?’ Instead, billions are poured into the railways essentially because they are there and no one can summon up sufficient little grey cells to try to answer that fundamental question.

The core of the answer must be that the railways are a service that enables people to travel across the country in an environmentally sustainable and affordable way. The notion that the railways have to be commercially viable must be junked once and for all, in the same way that we pay for education, defence, health and social services. Of course there is a commercial railway but there is a social one which plays a vital role in the economy – the railways create jobs by enabling people to get to work and reduce congestion on the roads, saving motorists millions. They are useful in numerous other ways even though they require subsidy.

My book, British Rail, a new history, which has just been published, sets out how BR changed its whole structure in order to meet changing demands. It was precisely the sort of mission that Mazzucato talks about, as innovation was a key part of the transformation of BR. Instead of the railway being governed by two different sets of barons – the regional bosses in charge of operations and the engineers who rarely sat at the same table with them – the railway became properly integrated into three passenger businesses: InterCity, Network SouthEast and Regional Railways – as well as three freight sector. For the first time, the managers in charge of these sectors were able to make all the operating and investment decisions needed to run and improve the railway. Of course they had to work to a budget, but there was considerable leeway and innovative managers like Chris Green who at a various times worked for all three sectors were able to find sufficient flexibility in the system to introduce radical changes.

Moreover, there was a further set of improvements to bed in this new structure. A system called OfQ, Organising for Quality, was introduced in the early 1990s, and created what was the most efficient and commercially driven structure in BR’s half century of existence. This new system which showed how it was possible to run a state-owned organisation successfully was barely given time to settle in before it was then completely destroyed by the ideologically-driven and senseless privatisation.

We are now back to square one. As I mention at some length in the book, it was not necessary for me to point out all the weaknesses of the privatised structure. The White Paper setting out the reasons for creating Great British Railways did the job for me. However, the fundamental problem is that this is a government more interested in ideology and cheap political points (such as Grant Shapps repeating the ridiculous trope about BR sandwiches) than in creating a genuinely innovative new structure as Mazzucato would argue.

And worse, the unions are falling into the trap of making it easy for the government to push for the kind of cutbacks they don’t want. Much as I am a staunch trade unionist – having been a member of the NUJ for nigh on half a century –I would counsel against taking action at this point. As Nigel suggested, this is a time for genuine negotiation on both sides. Again, there are lessons from BR which shed 10,000 jobs in every year of its existence. Beeching, in particular, recognised the value of offering good terms of redundancy for workers as a way of quelling industrial action. Even though strikes have started, it is not too late for both sides to sit down with genuine open minds.

The problem is that the likes of Shapps and his boss Boris Johnson are eager for a fight with the unions. They are being deliberately provocative so that they can portray railway workers as ‘troublesome trots’.  Rather than falling into that trap, the unions should be putting forward ideas of how to attract people back to the railways and embrace innovation which will both destroy and create jobs. So far, however, it has been a dialogue of the deaf and any hopes of innovation seem very far off.




The Basic Fare


One of the key issues for Great British Railways will be to sort out the fare structure. Innovation and courage are essential. Everyone agrees that the current system is far too complex and unworkable, and is incomprehensible to everyone but Barry Doe – and even he, understandably, struggles to explain the logic behind it.

So without wishing to tread on his territory, here is a potential starting point for any reform: there should be a basic fare for any journey between two stations on the network – the best possible solution would be to use the current off peak return divided by two. This Basic Fare would be very widely advertised and be available on as many services as possible. Given that peak services are no longer worthy of the name, very few trains should be designated as such.

The Basic Fare would essentially be based on mileage, though this might be varied in different regions as a form of ‘levelling up’. Season tickets would be based on a certain number of ‘Basic Fares’. But then, here’s the clever and more difficult bit. Extra amounts would be added on for, say, a faster service, a peak time train, or first class and vice versa – there could be reductions for slower services, for poor rolling stock, railcards or people travelling in pairs or as families. The whole railcard system could be scrapped – and instead older and younger people would always qualify for discounts on the basic fare, as would people travelling together. Moreover, the extras for, say, peak time travel, would be calibrated. So there could be a £10 extra train on the shoulders of the peak, and a £50 extra one at the busiest time. And these would be clearly advertised as such.

The whole idea would be to create a system that was both flexible and simple. The top crazy fares of several hundred pounds for 200 mile journeys would be scrapped, as would the ridiculously low £10 fares at the other end of the scale. Advance booking would qualify for a discount, but then if people took the wrong train, the cost of their journey would only be topped up to the Basic Fare or to the appropriate fare on a peak train – this would reduce the fear factor of buying advance tickets.

The crucial aspect is that each of these would be explicit and properly explained, so that people knew exactly what they were getting, and why they were paying a particular amount.

This radical change is made feasible because government now holds all the levers – it just has to be brave and make a decision to radically change the whole structure. So, can we start a campaign for a Basic Fare? Can anyone object to this as a coherent approach of making a start to break this ghastly deadlock over fares that has gone for decades? Yes, there will be winners and losers, yes the Treasury may lose out – but I doubt it. By making fares transparent and clear, the public would respond by jumping on trains.





Scroll to Top