As the 2015 General Election approaches, the principle challenge for Liberal Democrat policy makers will be to come up with distinctive policies which don’t trade in our party’s radicalism while allowing us to trade on our experience as a serious party of government.
One policy which we can be confident won’t be pursued by either of the other two parties is that of re-nationalising the railways.
Readers familiar with my previous posts on this site would be surprised to see me advocating nationalisation as a policy.
The traditional economically Liberal view is that the ideal state for a market is to have “thousands of little buyers and sellers” (Adam Smith, The Wealth of Nations) and that monopolies, whether state or privately controlled, are the most socially damaging market construct.
However, as with most aspects of the Liberal tradition this is a view with nuances of its own, and in the 21st century we should adopt Keynes view that “The State should provide only those things which the market cannot provide” (JM Keynes: The End of Laissez Faire.)
The contention of this article is that a 21st century railway cannot be provided by the market.
This is because use of the railway instead of motorised transport is now a social rather than an economic good. This means it’s better for society that you use the train, rather than the car. In such situations it is better that the state controls the railways, as the transport market is no longer merely an economic construct, rather it is an instrument for delivering the greater good.
The mantra of the arch-privateer is that greater competition delivers greater outcomes for society as whole – but the railways are private monopolies, rather than competitive markets, and there is no way one can have competition on an individual train route. This makes the railways uniquely unsuited to the private model.
The macroeconomic benefits of less gridlock on the roads, making it cheaper and quicker to get goods to market, place a different perspective on the economic debate around nationalisation.
The environmental impacts of greater railway usage will help deliver the government’s goals in this area.
For those goals to be achieved one must run the railways as a long term project, which is exactly what the current franchise system prevents, as the competing tenders focus on delivering short term profits.
The principal objection to a renationalisation is cost, but this can be ameliorated simply by allowing the existing franchises to run down. As this means bit part renationalisation, the lessons learned from the first franchise reclaimed can be applied to later ones, which is the sort of empirical approach that sets Liberals apart from the two ideological parties.
I’m not advocating recreating the old British rail monolith. All back office functions, catering and procurement could be done by firms competing for the contract, while the areas which deliver the social goods, track maintenance drivers and train attendants be run as part of the state.
This approach combines the best of both worlds, using the commercial market where its power can be harnessed for the greater good, the public sector to deliver long term social objectives.
* David Thorpe is a member of the Liberal Democrats in Newham, and works for an economics publication.