As we approach the sixth anniversary of the timetable chaos that triggered off the restructuring of the railways, we are nowhere nearer finding out what the industry will look like in the long term. The Tories’ plans set out in the draft bill which places Network Rail at the top of the restructured railway have not found favour with Labour despite much lobbying on the part of the duo at the top of the organisation, chairman Peter Hendy and Chief Executive Andrew Haines. In a desperate attempt to remain relevant, the rail minister Huw Merriman has asked Labour to consider a bipartisan approach to the restructuring but has been rebuffed by the shadow rail minister, Stephen Morgan. Labour is set to publish its own ideas ‘shortly’ which could mean anything from days to weeks, but meanwhile the Tories’ proposals have faced some ‘friendly fire’ from their own side.
A recent edition of my podcast, Calling All Stations (series 2 episode 18), featured a lengthy interview with Steve Norris, the former Tory transport minister who was one of the key architects of the privatisation model created by the Major government of 1992-7. I have known Norris since covering those events thirty years ago and have always considered him as one of the more thoughtful and considered Tory politicians. Indeed, shock horror confession, given my Labour leanings, we even meet up occasionally to chew the cud.
That does not mean we agree with each other any more than we did at the time, even though we both have a passion for the iron road, but when I saw in a tweet that he was highly critical of the current government’s plans for Great British Railways, I thought he would make a great subject for the podcast. And so it proved. Norris is always good value and certainly does not adhere slavishly to the latest Tory line (you will find, for example, Labour politicians who are less vitriolic about Boris Johnson than Steve Norris).
He was particularly critical of the idea of creating Great British Railways and, in particular, to put Network Rail at the top of the railway tree. He argues there is no sense re-creating a kind of British Rail organisation and reckons the ‘guiding mind’ concept is rather Orwellian, but does want to see the Department for Transport taken out of day to day management of the system. Of course, he was not any more enamoured with Labour’s plans to bring the bring the train operators back into public ownership. Norris’s favoured solution is long term franchises, lasting 20 years or more, with some kind of light touch regulatory regime. There would, too, be more scope for the open access operators and he would like to see many parts of the network, such as in Scotland and Wales, and on Merseyside and in East Anglia as integrated railways where both services and infrastructure would be run by the same people. In other words, it is pretty much the model he helped to create by three decades ago with a bit more integration and longer franchises.
However, as I have often pointed out, that did not really work that well. There was always the problem of how to incentivise the private sector without allowing it to make super profits or, on the other hand, to restrict its potential to use its private sector freedoms to boost passenger numbers. And as we saw, Covid effectively killed off that model by showing it was impossible to have a genuine privatised model for an industry that has to be kept running even at times when people are being told not to use the railways.
However, where Norris and I disagree the most strongly is over his statement that ‘I am absolutely clear that incentivised private operators are going do more to get people on the railway than private sector workers who don’t give a damn’.
And that’s right of centre thinkers like Norris are so wrong. They promote this fundamental idea that the public sector is bad and backward-looking while the private sector is full of amazing entrepreneurs ready to risk all to make money. As I show in my recent book, British Rail, BR did indeed have very strong innovative managers in its last decade of existence many of whom, such as Chris Green, were successful in the private sector, too. State organisations can be successful if they are given the freedom to operate without day to day interference from government.
This is well backed up from a study by a German academic on the experience of privatisation who gave a paper at a conference I was speaking at in Brussels in early April. (As an aside, returning to Brussels where, in European Union days, I had been a frequent visitor did make me all nostalgic for the days when I didn’t have to get my passport stamped before jumping on Eurostar).
Dr Tim Engartner’s analysis, based on an in depth study of the performance of railways across Europe in the past 30 years, is enlightening. He argues that the emphasis on creating rail markets – in other words competition within the rail industry between different players – has not improved the share of the railways in relation to other modes. Quite the opposite. On freight, for example, the share by rail has actually decreased while for passengers there has been no increase. That, he argues, is because so much of the energy has gone on intra-rail competition rather than by coordinating efforts to boost the market share of the railways.
He notes that it is no coincidence that it is Switzerland, where the state has actively worked to increase market share and where investment levels per head are the highest, which has been most successful in attracting more people to rail. It is not only the strong support of government that has helped the Swiss achieve this, but also the high degree of integration in the industry. In other words, bringing track and train together is essential for boosting usage, something that runs completely counter to the idea that on rail competition is the key.
The most fundamental point is that rail is a long term business. In a sense Norris is right that a longer term approach is needed but he is wrong to suggest this is best delivered by the private sector. You only have to look at what is happening to the utilities privatised during the Thatcher era such as electricity and water to realise that those long term considerations sit unhappily in the private sector. Engartner summed it up brilliantly: ‘The rail sector continues to be characterised by high fixed costs and an immense need for long-term investment. This multi-generational time horizon is in irreconcilable tension with the short-term profitability interests of capital-market-oriented companies, whose success must be reflected in the next quarterly figures according to the wishes of shareholders’.
Labour must bear this in mind when it finally comes out with its rail plans. Being in hock to private companies needing to make short term profits will always end in tears. Any new structure of the railway needs to recognise that fundamental truth
Decarbonising rolling stock
As emphasised in the accompanying piece, the key to success in the railways is long term thinking. This has been all too apparent with the present concerns about the future of Altstom’s Derby plant which many of us saw coming years ago. While it can be possible for some industries to function without a long term plan, the railways cannot as the ridiculous situation of having allowed four rolling stock assembly plants to have been established in a nation that can barely provide sufficient demand for one.
The Rail Industry Association has produced additional evidence for the need of a coherent strategy with a thoughtful document outlining how the rail industry can reach net zero by 2050. It goes by the rather unwieldy title of Delivering a lower cost, higher performing, new zero railway by 2050 but that should not deter people in the industry from studying it.
The essence of the argument is that there must be a plan to work towards the net zero aim, based on both infrastructure and rolling stock requirements. In particular the RIA places a lot of faith in the idea of using battery trains for less well used lines, obviating the need for electrification. Personally, I remain unconvinced if this is a viable policy especially as the sustainability of the production and disposal of batteries remains questionable, but at least RIA has set out ideas for debate, something that has been absent from government policy despite the efforts of the Tory MP Chris Skidmore who eventually resigned his seat as his thorough analysis was ignored by party leaders.
There is one crucial hole in this argument which is based strongly on electrifying much of the network and using battery trains for less well used lines which is that the sources of electricity still rely heavily on fossil fuels. Therefore, if the aim of a net zero railway is to be achieved, the ridiculous ban on onshore wind farms must be reversed, something that remains despite promises by the Tories, notably Liz Truss, to scrap it. That merely demonstrates that a strategy for railway decarbonisation has to sit within a wider context, something which so far is barely being discussed. Another big issue where Labour needs to show intent before the election, rather than trying to couple a plan together after it is elected.