It’s taken longer than getting a 100 year old locomotive into steam, but at last the Labour party has produced a document setting out its policy on rail. That is in itself is something of a miracle. The government in waiting has produced very little by way of policies on any of the important matters that it will have to deal with at some point later this year and to choose to issue a statement on rail suggests this will be a keynote policy in the forthcoming hustings.
Forget, for the moment, the detail which is fine but rather underwhelming. The coverage in the media of the announcement shows why the Labour leadership allowed this statement to be issued. The statement emphasises the fact that the railways are being renationalised and this was widely picked up by the media. And this happens to suit the wider Labour agenda.
Keir Starmer has spent the past couple of years reining back on the radical Corbyn agenda which he inherited and which he repeatedly stressed he was largely maintaining. In fact, one by one, like wagons toppling off an embankment with a broken rail, those commitments have been chalked off leaving people wondering what Labour is for and what changes it would make after winning an election.
Therefore, as ever, the railways have become something of a political football. The statement itself is in fact far less radical than suggested by the ‘Labour to renationalise the railways’ headline. The appearance of seeming radical will appeal to left of centre voters without frightening the mass of those of a more centrist tendency. For a start, the key component of the industry, the assets that make up the track and rest of the infrastructure, were renationalised nearly two decades ago after the collapse of Railtrack. While there was a period in legislative limbo when the government tried to pretend that Network Rail was a private company, that pretence was ended in 2014 when the reality of the fact that it had been renationalised was finally recognised.
Secondly, there is no question that this new structure is a second coming for British Rail. The old BR was an integrated organisation that ran everything from train services to lost property, engineering to catering. It owned the trains, maintained all the tracks and infrastructure, had all kinds of subsidiaries operating ferries, hotels and sundry other services, boasted a world class research organisation and was able to innovate and experiment.
In contrast, Great British Railways, a name that seems to be favoured by Labour despite its Borisonian origins, will be a far more modest organisation. The only vaguely far-reaching part of Labour’s plan is, in fact, to take back the franchises contracts as they run out. And even that, Louise Haigh the shadow transport secretary has emphasised, might take up to five years, the whole of Labour’s first term, because they will be allowed to run their course. Actually, I suspect it won’t take that long because the remaining operators may just throw in the towel when they realise that the return to a more lucrative franchise structure simply ain’t going to happen.
This is neither new nor particularly radical. It is merely a continuation of a policy made during Jeremy Corbyn’s time as leader and reiterated several times at subsequent Labour party conferences. It does, of course, make perfect sense, even if it gets up the noses of Rail Partners, the industry group led by the former Labour adviser Andy Bagnall. The frailty of the franchising system and its tendency to allow operators to make tidy profits while ensuring they face very little risk was all too exposed by the pandemic and was quickly turned into a management contract system, with fares revenue going to government rather than the private operators. Reviving the franchise system with risk being handed back to the private operators is not really an option, as the inability of the Tories since the end of the pandemic to find such a system without a return to the old structure, which was discredited by the May 2018 timetable fiasco. The difficulty can be shown by the fact that Mark Harper, the transport secretary, has signally failed to restart the bidding process for the four contracts currently being run by the government owned operator of last resort, despite numerous promises to do so. demonstrating the impossibility of drawing up a contract which would both transfer risk and guarantee state control.
Therefore Labour’s plan to end franchising once and for all is to be welcomed as it offers a far better opportunity to bring about the reintegration of the industry, which is widely perceived to be essential in improving performance and reducing cost. But there is still uncertainty about what this new structure will look like and who will be in charge.
I have been involved in a bit of a spat with my old pal Peter (now lord) Hendy, the chairman of Network Rail, over this issue as he complained about my argument that putting Network Rail at the top of the Great British Railways structure is a mistake as it is an engineering organisation, not customer facing. Hendy argues that this Network Rail is the only organisation capable of running the railways and that I am wrong to keep ‘pedalling the story about an NR takeover’ He argues it is unavoidable for NR to be the at the heart of the new structure and that it is not ‘engineer led’ because many of the senior staff are not engineers. My view is that if it looks like a duck and quacks rather loudly, it probably is a duck.
Labour has in fact been somewhat circumspect about revealing the role of Network Rail in the GBR structure. Indeed, in an interview for the BBC Newscast podcast, Haigh seemed to go much further in expressing about doubts about giving Network Rail the reins at GBR. She said that Labour’s reforms were needed because ‘the current system doesn’t work in the interests of the passenger, so that is why we have set out a really detailed plan today that will reform our railways top to bottom …so we are abolishing Network Rail’. Hmmm, but has she told Lord Hendy that. She goes onto stress that the core idea is to ‘bring together decisions around track and train’. So big doubts about the future of the role for the NR behemoth.
That suggests rather more radical intent than set out in the document which actually does much to pander to those who want to see a strong private sector role in the industry. In particular, by giving her keynote speech at Trainline, Haigh was certainly implying that she is not reviving the idea of GBR becoming the sole ticket agency, as set out in the original Williams Shapps document but later scrapped by Harper. Moreover, Labour seems to support the expansion of open access services suggesting that they boost the number of rail travellers when, in fact, the evidence on this is mixed: The report says ‘Open access has a proven track record in driving competition and better passenger outcomes in countries whose services are run predominantly by public operators. Such operators make the most of network capacity’. In fact, that is not true. The open access operators often run shorter trains to marginal destinations that may well prevent a coherent timetable from being set. In fact, they can be very disruptive as various operators compete for what is a limited number of paths and lead to what planners call a ‘sub optimal’ pattern. You can either have a coherently planned railway or allow it to be at the mercy of market forces, but you can’t have both.
Labour’s plans are clearly work in progress and what emerges once the party is in government may look rather different from what is set out in this document. The real barrier to progress is that for the next few months, the railways are in the hands of a government that has given up trying to govern.
Where has £400m gone?
There was an astonishingly revealing session of the Commons Public Accounts Committee which was examining the National Audit Office report into the stalled and stumbling rail reform process. Bernadette Kelly, the permanent secretary at the Department for Transport, crowed about the fact that the reform process had so far cost just £400m rather than the forecast £1.2bn. Jolly good, and she goes onto say that the impact of not having spent the other £600m has not had much of an impact. In other words, spending it would not have saved much money in the long run.
But that begs an obvious question. Has the £400m spent on rail reform achieved much? Indeed, on what has it been spent. When asked this, Andrew Haines, who was giving evidence alongside Kelly, said that ‘a significant part of the costs are employment costs’. In other words, it seems that most of this has been spent on reorganising Network Rail, rather than on the longer term restructuring of the rail industry. Haines reported that 10 per cent of the ‘managerial headcount’ had been taken out and workforce practices on track maintenance modernised. Obviously, the idea is that in the longer term, by getting rid of what Haines called ‘arcane’ work practices, there will be massive savings but surely this is about changes that Network Rail should have been carrying out anyway, rather than as part of a wider restructuring? Only asking, gov.