All the hoo-ha on Labour’s plans for the renationalisation of the railways is misplaced. The railways are in a transitional period for reasons well beyond the structural transformation envisaged by the new government and that is a far more significant in the long term than bringing the franchises back into public ownership.
The role of the railways is changing and those in charge of this vital part of our transport system need to ensure they are adapted to cope with this new situation. Most notably, the age of the strap hanging commuter rushing to take the same train every day is now a vision of the past just like those between the war pictures of their bowler-hatted predecessors.
The evidence from statistics on passenger numbers is irrefutable. The world has changed permanently. In particular, new patterns of work have greatly reduced the number of passengers travelling with season tickets. Whereas pre-pandemic, a third of the income from ticket sales was generated by commuters on season tickets, this has now fallen to a new low of just 13 per cent.
This change means the railways have to adapt to a new situation which challenges many long-established practices. Much of the rail network, particularly in and around major conurbations, has been designed around the rush hour such as timetables, ticket pricing, and even carriage design. Now the railway needs to adapt to the fact that most users can now choose whether and when to use the railways.
In a way, there is some good news. Providing extra trains at peak times, especially on lines that were already jammed pack, is an expensive business. The rolling stock is only likely to be used productively a couple of times per day and facilities such as station concourses and platforms are costly to expand.
There has been one big compensation. For reasons which the rail industry’s leaders have been unable to explain, there has been a significant increase in the number of leisure travellers. New working practices, together with the ubiquity of excellent internet connection means that many of these ‘leisure’ passengers are in fact workers who pre-Covid would have had a season ticket. Not only are they working just two or three days per week, but also they can spend a couple of hours on the computer at home and then take a later, and consequently much cheaper later service. Despite a return to five day working by some office workers, this trend is not going to be reversed. Measures such as the promotion of four day working in legislation being brought in by Angela Rayner the deputy prime minister, will further reduce the number of season ticket purchases. However, there has, too, been a noticeable increase in genuine leisure travellers, sick of congested roads and attracted by various cheap deals offered by the more innovative rail companies.
The longer term implications of this change in passenger patterns have, however, not yet been realised. Take, for example, the way that major repairs have been carried out. Traditionally, lines have been shut down for the weekend late on Friday night and reopened in time for the Monday morning rush hour.
The railway has long relied on this steady and predictable income from season tickets as its financial bedrock. Without it, the railway managers will have to work to build up passenger numbers and think of themselves more commercially. There is some urgency needed. Before Covid, railway operations – that is the services but not taking into account investment – were making a healthy profit, returning some £2bn to the Exchequer. Now with passenger numbers down, and costs increased, not least because of the decision to settle the long running and crippling train drivers dispute, the situation is reversed and railway operations are in need of a £2bn subsidy.
And here’s the rub. This is happening just as the new government has committed itself to taking back the operation of service in house. Gone, ministers hope, will be the Avantis, Go-Aheads and Arrivas of this world, to be replaced by Great British Railways, a state run rail company. The Conservative opposition has criticised this renationalisation arguing the state run organisations do not have the skills and the incentives to try to attract new passengers.
History here is instructive. The old British Rail, faced similar pressures under the strictures of Mrs Thatcher’s government in the 1980s. BR responded by breaking itself into three strongly branded passenger organisations – InterCity, Network SouthEast and Regional Railways – which ran the trains as well as being responsible for the infrastructure, the structure which will be adopted by Great British Railways. By the time the railways were privatised in the mid 1990s, InterCity was highly profitable and a nationally known brand while, remarkably Network SouthEast managed to break even thanks to strong marketing of its off peak services. The new Great British Railways will need to learn from this experience if it is to succeed.
Given that the passengers needs to attract are very much a discretionary market as they may otherwise choose to drive or not travel at all, the railways need to offer a better and more customer focussed service. Better informed and friendly staff, guaranteed wifi, improved food offerings, clean and better lit stations, above all, simpler and better value ticketing policies – the list is endless but the overall message must be clear. We want your custom and we will strive to keep it. That’s a real challenge for an industry that has long been used to having a captive market of commuters as its bedrock.