Derailing progress – the pitfalls of nationalist rhetoric for Britain’s railways.

The Trade Union Congress (TUC) has been campaigning for the renationalisation of Britain’s railways, citing how different services are owned or part-owned by the Dutch, German, Italian and Hong Kong governments and asking why the British government doesn’t own these. It concludes with the TUC calling for the British government to renationalise the railway services.

I take umbrage with the language used by the TUC. Framing this as “foreigners shouldn’t own our stuff” plays into the hands of nationalists, giving power to those who want to cut Britain off from the world and transform us into a regressive hellhole. With historical evidence showing us that fascists are all too happy to court working people and drive a wedge between “us and them”, weaponising these arguments opens for xenophobia and indifference to become more significant than they already are among the trade union movement.

There is no opposition from me to nationalisation, of course, provided the argument for it is sound and no alternatives pose greater returns for the British people. Social democratic scholar and former Labour MP Tony Crosland wrote in his book “The Future Of Socialism” of the left’s deifying of nationalisation. He argued how regulation might be the superior alternative, as the privately-owned organisation always has to work to prove itself to maintain the contract, while the state-owned organisation has more room for becoming apathetic regarding the quality of service as it has no competitors.

However, the organisations running our railways aren’t technically private; they’re state-owned organisations that foreign governments own. But this is the crucial point: they operate in the UK. We can regulate and hold them to a high standard. And if they can’t meet these standards, then we consider nationalisation. The case must be evidence-based and common sense rather than “we don’t want foreigners taking our industries”.

My point is all well and good, but if you have a corrupt government, then it doesn’t matter what the ownership model of the railways is; the service will never be as good as it can be.

But that isn’t the case for Britain, right?

Oh, bugger.

* Jack Meredith is a Welsh Liberal Democrat member.

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22 Comments

  • I wouldn’t really care who owned the railways if they could guarantee that: a) a given train will turn up at all, b) that it will then travel all the way to my destination.

    From experiences over the last year or so with Avanti (just awarded a new contract), and Trans-Pennine Express, neither of the above is a given.

  • …and if anyone from the TUC or unions involved could tell me what 15 months of strikes has achieved (bar causing misery for passengers and making it impossible for would-be travellers to plan ahead), I’d love to know. I can’t imagine this Saturday’s strikes and next week’s overtime bans will have any more effect on the rail firms than all the previous ones.

  • Sandy Smith 28th Sep '23 - 4:48pm

    To be fair to the TUC, I think their point was more ‘why does it make sense for Dutch taxpayers to own Britain’s railways but not British taxpayers’?

  • Jenny Barnes 28th Sep '23 - 5:32pm

    ” what 15 months of strikes has achieved (”

    The government has spent money subsidising the rail companies and refusing to let them agree a deal with the unions to make sure that striking doesn’t achieve anything. Same with the NHS. Spent more on agency staff to cover than would have been needed to meet at least some of the demands.

  • The government has created a haze around who runs the railways today, the reality is that the railways today follow the same ownership structure as the “nationalised” Manchester buses that were lauded at conference.

    The DFT sets the fares, keeps the farebox revenue, defines the service and the number of trains the operators are allowed to run the service, that has seen many operators fleets reduce in size. The private operators are simply paid a fee to run the trains, and run the stations, and even then in the way the DFT define as has been shown in the proposals to close ticket offices.

    The control is such that the operators, who many demonise as foreigners owning our railways are not allowed to so much as sneeze without the DFTs prior approval.

    What we have today is a state controlled passenger railway, and have not had a private one since operators were moved to management contracts in the early days of the pandemic.

  • @Jenny Barnes: I’m not sure that the ‘Spent more on agency staff to cover than would have been needed to meet at least some of the demands” argument stacks up, since that statement doesn’t give any indication of the timescale. The money spent on agency staff and other expenses for the strikes is for all practical purposes a one-off payment, which will last until the strikes end and then no longer need to be paid. But if the Government gives in to the union’s demands, then it will have higher railway (or NHS) expenses in perpetuity – since it’s a pretty safe bet that future union demands will be based on whatever they got after the current strike. And that’s even before you take into account that if the railway (or NHS) workers get higher wages from striking, that makes it more likely that workers in other industries will demand higher wages – with all the inflationary pressures that entails. Whatever you might think the merits are of the strikers’ demands, Government is really in a bit of a damned if you do, damned if you don’t dilemma here.

  • @Jenny, ‘the government has spent…’
    Indeed. But that doesn’t answer the question: ‘what have repeated strikes achieved for rail workers?’
    Which so far is ‘nothing’.
    What is the point of repeatedly doing something that is always destined to fail in its aim?

  • Peter Martin 29th Sep '23 - 8:59am

    @ Jack,

    “I take umbrage with the language used by the TUC.”

    Fair enough. So please quote what they actually said.

    “foreigners shouldn’t own our stuff”

    I doubt it was this even though you’ve used quotation marks.

    “However, the organisations running our railways aren’t technically private; they’re state-owned organisations that foreign governments own.”

    The thing is that we don’t usually have a vote in other countries. Whereas we do for our own. So they may as well be totally private.

    “if you have a corrupt government, then it doesn’t matter what the ownership model of the railways is”

    If so then we’re stuffed in any case. We can’t then expect the necessary regulations you suggest for the non-nationalised industries.

  • Jack Meredith 29th Sep '23 - 11:52am

    Hi @Peter Martin,

    My apologies, I had included links referring to the initial point, which no longer seem to be included in the article.

  • Mick Taylor 29th Sep '23 - 9:49pm

    SOME of our so called privatised rail companies are owned by people outside the country, but so are car companies, utilities, football teams and so on.
    BUT at least 4 railway companies and Network Rail are now owned by the state and are offering a far better service as a result. So the railways are already part renationalised. So, the correct way forward is to bring back into public ownership every rail operator once their current contract ends. Government would no longer be subsidising rail companies to pay shareholder dividends, but all the money currently being paid to the railways could go towards running a better railway. [Hint. It’s far more than was ever paid to British Rail]
    Of course we should look for a different structure for rail with much more involvement of employees and passengers and we should seek to expand railways rather than contracting them. If we take the environment seriously then we should be providing a railway service that enables people to travel cheaply and on smart trains that turn up on time.
    The private sector has proved it can’t do it, because it has to pay out millions to its shareholders.
    It’s time for a national railway once again and only nationalisation can achieve this.

  • Peter Martin 30th Sep '23 - 8:39am

    @ Mick,

    Yes I think this is the sensible approach. It a policy which was also advocated by Labour a few years back but this created accusations of extremism so they’ve gone quasi – Tory as a response!

    No-one is seriously suggesting we nationalise all industries including football clubs and car industries. So it isn’t about excluding foreign owners from the UK economy. If they want to buy shares in whatever they like that’s fine providing the process is regulated in the national interest.

    At one time the sensible view was that if there was genuine competition in the sector, industries should be in private hands, but if there was a monopoly, or near monopoly, they should be in the public sector.

    So, for example, there’s no need to nationalise companies who make cars because we can switch from one to the other if we don’t like what any one is offering. On the other hand there is, at most, only one gas and electricity supply to our houses so there is a need with the utilities. There’s no real alternative to the railways when it comes to moving commuters in and out of the cities so the case for nationalising them is strong too.

    It’s no way being xenophobic to make these arguments.

  • Peter Watson 30th Sep '23 - 9:35am

    “Framing this as “foreigners shouldn’t own our stuff” plays into the hands of nationalists”
    I thought it was framed as foreign governments own our stuff, so we do have some form of state ownership that can be successful (and even acceptable to those otherwise opposed to nationalisation!), so why can’t it be our state that does the owning?
    Though obviously concerns are often expressed – even in Lib Dem circles – about foreign ownership, private or otherwise, when it impacts our independence and self-sufficiency for essentials like food and energy without it necessarily being xenophobic and nationalistic.

  • Dieter Helm is professor of economic policy at the University of Oxford who has been writing about the issues of nationalisation of public utilities for years. It does not make for comfortable reading Lessons from the Thames Water debacle
    ” All the utilities need massive investment to make them fit for purpose. Water needs billions to sort out sewage treatment, pipes and supply shortages. Electricity needs a massive investment programme to achieve net zero by 2035 (or 2030 under Labour plans) and secure supply.
    The money will have to come mostly from outside the UK…the fundamental facts are that the UK runs a massive external current account deficit. Foreigners need to lend us the money to buy more than we sell so that we can live beyond our means, prop up the fiscal deficit, and pay for all the shiny new net zero infrastructure, better sewers, HS2 rail links, airport expansions and the completion of the fibre and mobile networks.
    Tinkering will not fix this. We need a fundamental reset and we need the investment. We will have to pay the costs of investment or be forced to do so through higher taxes. That would be a big hit on standards of living in the middle of a cost of living crisis. But net zero investment is going to cost. Cleaner rivers are going to cost.
    It is not impossible to fix all this but renationalisation is a red herring. Neither Conservative ministers nor Labour have come to terms with the fact that no one else will pay for all this. They both set targets, promise cheap, secure low-carbon power and clean rivers, while being unwilling to spell out uncomfortable truths about the cost. Until they do, bet instead on more ad hoc sticking plasters, more Thames Water-style casualties, postponed net zero targets and a further widening of the gap between the problem and delivering the solution”.

  • Peter Martin 30th Sep '23 - 4:33pm

    @ Joe

    “Foreigners need to lend us the money to buy more than we sell so that we can live beyond our means….”

    No one is forcing them to. It’s their choice. If they want run a surplus in their exports they do have to recycle the extra money they take in so that it can continue. This explains their ownership of UK capital assets. They also choose to suppress domestic demand with high taxes to divert resources to their export sector and keep their currency lower than it need be.

    Countries like Denmark, Germany and the Netherlands could have a more valuable currency and lower taxation if they chose to. But they don’t.

  • Peter,

    I think Professor Helm may be alluding to the oft quoted mantra “We cannot have Scandinavian quality public services and American level of taxes”.
    Countries like Denmark, Germany and the Netherlands do have high levels of state services provision and taxation. That is what enables these social democracies to provide the high quality public services and social services that many commentators are calling for.
    If the Euro or Danish Krone appreciates against the pound we may import lower volumes of goods or services into the UK, but the relative price of those imports will be higher and the cost to overseas investors of acquiring UK capital assets like railway franchises will be lower.
    What is required is an export driven improvement in the UK terms of trade to reduce the trade deficit.. If import prices rise relative to export prices, we say there has been a deterioration in the terms of trade. Generally, this leads to a decline in living standards as imported consumer goods become more expensive.

  • Peter Martin 1st Oct '23 - 9:47am

    @ Joe,

    Yes Prof Holm is correct. There is obviously a relationship between the level of taxation and the quality and quantity of public services. This point is made often enough on LDV. There is also the hardly ever point about the relationship between the current account deficit and the levels of taxation. Any country which ’tilts the table’ to produce a trade surplus has to do two things:

    1) Increase taxes to reduce domestic demand

    2) Depress its own currency to both reduce domestic demand and increase external demand.

    Denmark does the latter quite openly with the Krone by pegging its level at a lower than market value. Germany and the Netherlands use the euro which is a weaker currency that either of these countries would have if they had their own freely floating currencies.

    We would need to do both ourselves to increase exports without imports also increasing. In my opinion we should do what we can to increase exports and just leave imports to do what they will.

    Anyone of course is quite entitled to have a different opinion. But if you want to reduce the trade deficit you will need to explain how you will restrict imports.

  • Peter Martin 1st Oct '23 - 12:54pm

    Possibly some might think we’ve strayed off topic.

    However the issue of the extent of foreign ownership of our national assets is directly related to the inflow of foreign capital. The current and capital accounts will always balance. So if we have a deficit in our current (trading) account we’ll see a surplus in our capital account.

    This is money used to buy up factories, wind farms, rail franchises etc. It’s why we see English football clubs like Newcastle United owned by some foreign sovereign wealth fund whereas clubs in the German Bundesligia tend to be domestically owned. Only a couple of the 20 clubs in the English Premier League have British owners. The rest are the property of the mega-rich from the US, Asia and the Middle East.

    It’s a matter of opinion as to whether this is a good thing. I’d agree with Jack when he says “…they operate in the UK. We can regulate and hold them to a high standard” even when we don’t consider nationalisation of assets to be appropriate.

    It may well be more appropriate for the railways, and there’s always going to be some disagreement about that, but the issue is much wider than just the railways.

  • Peter Hirst 12th Oct '23 - 3:47pm

    Making a profit is inherently inconsistent with running public services such as transport, utilities and nature reserves. It can work with safeguards and a public ethos within the company. It helps if there is competition and a strong regulator. If it fails then public ownership should be the fall back. The challenge is to make publicly owned services efficient.

  • @peter – “ The challenge is to make publicly owned services efficient.”
    Taking the perennial favourite, the railways, I wonder what would happen if all operators were social enterprises (of which there are a variety of forms, so potential to avoid a one size fits all approach). So keep the regulator and keep a level of comparative competition, but remove the “investors” and tightly cap executive pay given there is no correlation between executive pay and performance, if anything excess pay is encouraging a particular macho and divisive executive culture.

  • Jenny Barnes 12th Oct '23 - 5:21pm

    A recent “Timeshift” documentary on BBC on the railways covered the period from post war up to shortly after privatisation, with a little on the current situation. It seems that BR was doing pretty well just before privatisation, with 125 diesels, and a fair amount of electrification of the north south mainlines. London to Manchester in 2 hours. I suspect that very little investment has taken place since, apart form what has been largely wasted on the Birmingham/Old Oak Common boondoggle. 125s are still in service 30 years on. Why has the Western region not been electrified for example? When BR was in public ownership they seemed to care about engineering. Now it’s more about getting rid of ticket offices.

  • @Jenny I agree that BR had become much better managed in the few years prior to privatisation. But to quibble on one point: You say you suspect very little investment has taken place since privatisation: In fact, there’s been a huge amount of investment since then: Quite a few new or re-opened lines including for example, HS1 to Kent, Ebbw Vale, Tweedbank, Okehampton, and through trains Birmingham to Rugeley and Marylebone to Oxford. Upgraded lines – most notably the West Coast Main Line. Lots of electrification such as – GWR to South Wales, London to Corby, and a bunch of lines around Liverpool and Manchester. And although you mention that the old HST 125s are still in service, that’s a bit of an exception: The vast majority of stock in use today is much newer. Also, safety standards have massively improved (when was the last time we had a major rail crash with lots of fatalities? In BR days major accidents were much more common).

    Of course most of that was initiated by the Government and you could argue would have happened anyway, but it’s not true that there’s been little investment since privatisation.

  • @ Simon R Simon, you mention Tweedbank. I assume by that you mean the Borders Railway to just beyond Galashiels on part of the old Waverley route.

    I think you’ll find the route this was (and is) a product of the public sector rather than a product of privatised investment. Furthermore, the train operators, Scotrail, have been in the public sector since April this year (after Abelio failed to meet contractual obligations).

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