20 Comments

• paul barker 22nd Nov '12 - 12:05pm

  Why restict these regional authorities to controlling only rail ? Transport needs to be integrated as it is in greater london by Transport For London. That TFL model could at least be extended to other major conurbations without complex legislation.

• Geoffrey Payne 22nd Nov '12 - 12:51pm

  I really don’t know how it can be said that privatisation saved the railways. It certainly made the much more expensive given the need for the operators to make a profit. The so called meddling from Whitehall is largely about trying to keep prices under control. Most railway lines do not face any like for like competition so there is little incentive to reduce ticket prices. Transport prices in general are going up because of the price of fuel, but rail ticket prices in the UK are higher than the rest of Europe.
  Having said that I generally agree that a regional solution is a good idea and suitable for some railway lines, although for the inter city services I think that will still have to be operated nationally.
  There is nothing in the article about the need to tackle climate change – a matter that is obviously linked to transport policy and the need to provide a better alternative to travelling by car.

• Anders 22nd Nov '12 - 1:11pm

  @Geoffrey Payne

  Have you forgotten how poor quality the rolling stock and many of the stations were under British Rail? Although there are things worse under privatisation, I think it is worth highlighting the improvements that have at least made travelling by rail a much more pleasurable experience now than it used to be. Ticket prices have gone up due to the need for train operators to make a profit, but the same motive has also massively increased the passenger numbers (I accept it isn’t the whole reason for increased passengers, but it is part of it).

  Whilst a privatised rail network in its current form may be run in the interests of the private owners, the old nationalised railway was partly run for the benefit of the people who worked there. Neither of these are right, but I do think there is a bit more focus on what is good for the customer now than in the past.

  (Declaration of interest – I did spend five years working for a private train operator that made a profit, had very high satisfaction ratings, doubled the number of services it ran, introduced lower fares and had higher than average growth).

• Tom Papworth 22nd Nov '12 - 2:01pm

  Thank you, Richard, for a useful contribution to this debate.

  Your desire to “provide some historical context” is certainly welcome, and it is important to point out to those who still believe in the efficacy of state planning that “the government, run-down and eventually consolidated” the railways between the wars, effectively paving the way for the 1948 nationalisation.

  I think you have missed one crucial point, however, which is the impact of the motor car on passenger railways. To put it bluntly, burgeoning car ownership between the wars did for passenger rail what the railways did to canal freight in the mid-C19th. The unavoidable fact is that railways suffered from creative destruction, as did so many features of the British pre-war economy. Rather than trying to save the railways, we should have allowed the uneconomic routes (most short- and medium-distance routs outside commuter-belt London) to go the way of the horse-drawn coach. Sadly, governments can’t help but try to save failing industries.

  I am not sure that this problem would be solved by merely devolving authority to a lower tier of government, however. No matter what governmental tier is in charge, decisions about infrastructure and funding will still be based on political, rather than economic, choices – which means it will be politicians making decisions in pursuit of votes, rather than entrepreneurs making choices in pursuit of customers.

  Having said that, the other crucial lesson of golden era of railways (which were all built by private entrepreneurs, it must be remembered) is that the capital costs are not recovered through ticket prices but are recovered through land prices. The way to make money out of building (as opposed to operating) railways is to capture the land-value gain from the development. A prime example of this is the Metropolitan Line, which was built by the Metropolitan Railway company, which bought land in rural Middlesex, connected it to London by building the Met Line and then sold the now-vastly more valuable land to developers, who built some of London’s nicest suburbs.

  If we want to see a renaissance in rail that does not require massive taxpayer subsidy, we need to reform planning laws and encourage railway companies to invest in infrastructure in response to demand, which they can generate by connecting newly-built developments to existing towns and transport routes.

• Tom Papworth 22nd Nov '12 - 2:12pm

  @Geoffrey Payne:

  Measuring the cost of rail in the era of British Rail and privatisation is not a like-for-like comparison. During the BR period, the approach was one of “managed declined”; governments of all stripes took a “capital consumption” approach, allow infrastructure and rolling stock to age so as to keep costs down. Conversely, there has been a substantial investment in the railways in the past 15 years (albeit too much of which has fallen to the taxpayer).

  As for the statement that “rail ticket prices in the UK are higher than the rest of Europe”, that is entirely due to subsidies. I find it disgusting that people on low incomes (who are much more likely to work within walking distance of home, or to travel to work by bus) are being taxed to subsidise train users (who are generally more affluent commuters and long-distance travellers).

  Railways would face stiffer competition, of course, if the government did not stifle their main competitor – the motor car – by restricting road building. The failure to develop Britain’s road network over the past 20 years has done more to put up rail costs than any train-related policy.

  While finding a “better alternative to travelling by car” would be great, if your only objection is Climate Change, would it not be preferable to find a “better alternative to reducing carbon emissions” – such as, for example, building more carbon-efficient engines or shifting to other power sources (electric; hydrogen fuel cells), rather than attacking the whole of private transport, which is far more efficient and pleasurable than ‘public’ transport (as demonstrated by the real choices of the vast majority of citizens every day)?

• RC 22nd Nov '12 - 3:10pm

  I never cease to be amazed at how wrong headed some contributors to this debate can be. Do people really exist who have not travelled on railways in other European countries and who know nothing about economics or UK transport history?

  “Privatisation saved the railways.”

  This one is an absolute corker. It is utterly untrue. The absolute opposite of the truth. What evidence is there for this in any way whatsoever? If there has been any improvement, it has come about through massive increased amounts of publicly funded infrastructure investment, vastly increased subsidies to the network coupled with additional funding from rapid increases in fares.

  “The 24,000 mile network was halved by successive governments, each bringing their own wasteful investment projects and upheavals. Long-term, profit-driven investment by private companies had been exchanged for the short-term, vote-driven schemes of politicians.”

  This is a bizarre and tendentious interpretation of UK rail’s postwar history. In fact, the network was slashed to the bone under Dr Beeching, whose activities were commissioned by Tory transport minister Ernest Marples. His commercial interests lay, surprise, surprise in roadbuilding. Margaret Thatcher, who never travelled by train, delivered the coup de grace with a long period of underinvestment including the axeing of the APT project.

  “15 years later and much has been improved with regards to franchises – despite the headlines. ”

  So ignoring the chaos and meltdown in the franchising process which has been ongoing for years, this is simply to be dismissed as “headlines”. Again, where is the evidence for this improvement?

  As for Tom Papworth’s contribution, I will refrain from commenting other than to say that we will have to agree to disagree. His belief that the free market and anything private is somehow innately superior to any form of public ownership and that government intervention, in this case in transport, is inherently “bad” seems to sit very badly with (1) The widely observed reality across most well run European countries; (2) what I understand our party’s position on the matter is i.e. agnostic and certainly not ideologically wedded to either side.

  Would Tom not perhaps feel more comfortable among his ideological brethren in the Conservative Party?

• Charles Beaumont 22nd Nov '12 - 3:16pm

  I strongly support regionalism. But with the railways there must be a question as to whether it’s the best option. I note that lots of countries that are larger than the UK and which have pretty good railway systems (France, Germany) do not operate a regionalised structure. In part isn’t that because a high-functioning railway network is a strategic enabler for the national economy? The argument that subsidies are bad because only high-income people use the trains is surely a circular one – at present the trains aren’t affordable to those on low incomes. Subsidy could change that. The lack of integrated transport planning is surely hitting our overall economic competitiveness. It means that there is more congestion, higher logistics costs and a workforce that is less mobile. It might be difficult for a regionalised railway system to make the right strategic decisions on this. However, it would be impossible to argue that the current system works well, so something needs to change!

• Tom Papworth 22nd Nov '12 - 3:35pm

  @Charles Beaumont: “The argument that subsidies are bad because only high-income people use the trains is surely a circular one – at present the trains aren’t affordable to those on low incomes. Subsidy could change that. ”

  The problem with this approach is that we have seen it fail before. Labour’s decision to make national museums free for all visitors did not result in a flood of low-income visitors to museums; it resulted in an increase in middle class visitors to museums, who no longer had to pay. (Disclosure: My wife worked at the Natural History Museum and managed their visitor survey).

  In the railway context, many of the most important lines are already working at capacity. Subsidising ticket prices, which I infer is what you are suggesting, might get a few more low-income people onto the platforms; whether they can board the already-rammed trains is another matter. Meanwhile, higher rate taxpayers in Enfield will be overjoyed to find that their nearly-£2,000/year Travelcard is now being reduced in price courtesy of general taxation.

• Cogload 22nd Nov '12 - 5:00pm

  Germany and France do operate a regional policy for their railways. A large part of the German network is tendered by the Lander to operators other than DB.

  @ Tom Papworth, The transport industry does not really work like that. For instance, railways shift far more passengers/ hr than the road industry and roads are a colossal waste of space, especially in a densely urbanised country. Besides, it would be nice to see the road hauliers pay their way; they don’t.

  And finally privatisation saved the railways. Not really, it did bring it to it’s knees though in the breakdown after Hatfield and the floods which followed….

  But I actually agree with the writer that a lot of the running of passenger trains should be returned to the regions, with funding left to the regions. Local democracy can then choose which services to run and how to run them, at the same time there will have to be some serious supply side changes to the biggest cost i.e. manpower. There will have to be a fundamental change to the roles of driver, guard and signaller and this will require the unions to be confronted.

• Richard Shaw 22nd Nov '12 - 5:00pm

  Thank you for all the comments so far. If any readers feel a little short-changed by my brevity I apologise, but I had to keep to the word limit – my original draft was at least three times as long. 😉

  I’ll address the subjects of the comments , rather than responding to each individual comment.

  Transport Integration
  I don’t think it is necessary to have a single body controlling both bus and rail in order to achieve integration. Following the idea of subsidiarity, the responsibility for bus/rail integration should lie with the local authorities within whom the buses operate. As I hinted above, there is already the case for the metropolitan counties, which being densely populated with much interdependency between nearby towns and cities, cooperate through Passenger Transport Executives and Integrated Transport Authorities to coordinate bus, tram and train services. Bus services are much more localised than railways and their integration (or not) with rail services does not concern areas where they don’t operate. For instance, Sheffield City Council might need to liaise with Derbyshire County Council to ensure a bus from Chesterfield to Sheffield connects with a train service but they probably don’t need to bother Leicestershire County Council or any others with their hypothetical RRTE.

  London and TfL is a case in point, with its comprehensive tube, rail and bus network and high degree of dependency between boroughs. It makes sense therefore, like PTEs in the metropolitan counties, to have a single body to allow the local authorities to act together – hence why I suggested it could have a RRTE of its own or even subsume all powers and responsibilities into the GLA. In more sparsely populated areas like North Yorkshire the responsibility and powers for buses should lie directly with local authorities.

  Intercity traffic
  I don’t think there’s any need for national coordination of intercity services. The British Rail operating regions I spoke of correlated to the Big Four companies of the interwar years and contained a fairly distinct network of lines, notwithstanding the routes they operated jointly. For instance, the West Coast Mainline fell completely within the London Midland Region, as did the Manchester to Sheffield routes. As such most intercity traffic is self-contained within each RRTE. Longer distance and cross-country services can be organised by the RRTEs concerned, as was done in British Rail days.

  The impact of motor transport
  Motor transport from the 1920s to the 50s did have a measurable impact on the railways, predominantly when it came to goods traffic, the primary source of income for the railways. Cars were still a luxury and were not yet mass transport, however the influx of cheap, WWI army surplus motor lorries did erode much of the local traffic away from the end of the war. What really hurt though was the Government restrictions on how the railways could or should handle goods traffic, undermining their competitiveness. For instance, the railways were eventually not allowed to own their lorries and provide an integrated service. The Government maintained their “common carrier” status, meaning the railway companies had to take anything they were asked to transport by the public. The railways were forced to advertise all of their rates. This meant that the railways could not decline unprofitable traffic and motor lorry companies could easily cherry-pick the most profitable.

  A series of long strikes in the 50s also helped drive traffic onto the roads. As for canals, they continued well into the 1950s and 60s to compete and carry non-perishable goods, such as coal – which burns just as well after 1 days journey by rail as 14 days by boat and which has a steady demand. The cold winters of the 50s is what really helped finish them off.

  Network decline
  The first Beeching Report (Part 1) in 1962 did infamously cut the railways back and in dramatic effect, however the network was already being cut from the early 30s, more cuts from the 50s and with route closures and major downgrades in every decade up until privatisation. The second Beeching report asked for massive investment and new network building projects and yet was practically ignored by all. It’s really not a case of being the fault of any single party – both the Conservative and Labour parties are to blame for mismanagement and delivering cheap fares through being cheap in general.

  I look forward to further comments and will try to address as many points as possible.

• Rob Heale 22nd Nov '12 - 7:34pm

  I also dispute the notion that “privatisation saved the railways”. Also, there is no reason why a form of public ownership cannot be combined with a regional framework – though we should pay due attention to the issue of safety and that of practical journey planning. It seems to me that all sorts of options are possible and not just the black and white ones that the author appears to be suggesting. One might to be to introduce a more regionalised railway in which the state has, say, one-third ownership, employees of the rail companies one- third and private owners one-third.

• Max Wilkinson 22nd Nov '12 - 7:42pm

  Here’s a short piece of realistic dialog to sum up the problem with our privatised railway firms:

  Me: I’ll have a return to London Paddington, please.
  First Great Western: That’ll be .
  Me: I’m so outraged I will use one of your competitors instead.
  First Great Western: We don’t have any.

  Therefore, First Great Western can charge as much as it wants to take me to London (toothless Government regulation limiting price rises to TWICE the rate of inflation, notwithstanding).

  We need a setup that’s run for the public good and charges reasonable prices. The road network is grinding to a halt, and a better, more affordable train service has to be part of the solution. Regional bodies might be the solution, but the starting point should be to move away from the current system, in which travellers are held to ransom. The free market can’t solve this one.

• BIGDAVE 22nd Nov '12 - 8:46pm

  RC, you are correct, some of the contributors appear to have zero knowledge of Britain’s railway history. It is true of course that railways in Great Britain were privately financed – and as an investment such finance was an utter disaster. Nobody made money in any meaningful way from railway investments. Britains ‘railway mania’ was just that – manic, and an example of unbridled and un-regulated laissez-faire capitalism at its worst. Railway lines were built everywhere, many from nowhere in particular to somewhere else that was nowhere in particular. Virtually all railway companies lost money, they tended to be swallowed up by bigger companies who went on to……lose more money. The ‘railway mania’ reached its peak in the year 1846 and when like all manic financial bubbles, the bubble burst [the promotion of the railways was hugely encouraged by MPs who themselves invested heavily in railway companies ]. In 1846 “no fewer than 272 Acts of Parliament were passed, setting up new railway companies, and the proposed routes totalled 9,500 miles of new railway. Around a third of the railways authorised were never built – the company either collapsed due to poor financial planning, was bought out by a larger competitor before it could build its line, or turned out to be a fraudulent enterprise to channel investors’ money into another business”. So it is fair to say that after 1846 it dawned on investors great and small that the railway companies were not a golden goose – quite the reverse in fact. By the year 1923 the railway companies had had enought and begged the government to step in. In that year “Grouping” of the railway was introduced by Parliament. All railway companies were condensed into four big companies. Twenty-five years after that the ‘big four’ had themselves had enough and the whole industry was nationlised.

  Why is all the above relevant? Because successful railways throughout the world are virtually never run “for profit”. They don’t make money anywhere in the accepted free-enterprise (or capitalist) sense. The countries (and this DOES NOT include Britain) that have the best railways run them as a necessary national asset, and tend to put in huge amounts of state investment. Britain has never made up its mind; we want the railways (we invented them!) but we don’t want to pay for them. The result? we have ended with the very worst of all worlds – a railway that is (in my opinion) a national disgace, overpriced, under-invested and generall fourth-rate. I challenge anyone to travel on European railways, to return to British (privatised) rail travel and not feel thoroughly ashamed!

• Roland 23rd Nov '12 - 12:25am

  @RC
  ” If there has been any improvement, it has come about through massive increased amounts of publicly funded infrastructure investment, vastly increased subsidies to the network coupled with additional funding from rapid increases in fares.”
  So are you saying that without the kick in the bottom that privatisation gave the government, the (Conservative and New Labour) governments would of made these levels of investment? From what I saw privatisation forced the government to act and hence it is correct to say that “privatisation saved the railways”…

  @BigDave
  Yes Lewis Carrolls words “They threatened its life with a railway-share;” had some basis in truth.

  I’m not so sure about European railways being so good compared to our own, but then I have travelled off the beaten track in both Europe and Japan and without hesitation say that the Japanese railways leave the Europeans standing …

• Roland 23rd Nov '12 - 1:11am

  My thanks also to Richard for a constructive contribution to the debate.

  I doubt that RRTE’s on their own would be able to deliver the national strategy, so I see there being a need a central/national organisation; naturally outside of the DoT. I’m also skeptical about the RRTE’s raising funds via local taxes (just thinking about how the £1.4Bn rolling stock procurement that the DoT managed to mess up would be handled in your organisational model).

  I would want to make the RRTE’s more publicly accountable and hence have them setup as companies (CIC’s?) to enable members of the public to become members/shareholders and hence elect directors – ie. preventing these organisations from becoming invisible, unelected and hence largely unaccountable quango’s like the regional planning authorities …

  A potential advantage of the RRTE’s is that they have the potential to be more interested in ‘local’ transportation issues and hence should have the remit not just to run the existing network but also to enhance it, so that it is better able to support developments that have occurred since Beeching …

• Geoffrey Payne 23rd Nov '12 - 1:39pm

  @TomPapworth because of the lib dem policy of raising tax thresholds, it cannot be said that low income people are paying for the subsidies of the railways, should they be introduced.

• Oranjepan 23rd Nov '12 - 5:22pm

  Tom P,
  you’ve made some good points, but for many of the reasons outlined above it is impossible to argue that transport operates in a free market, and because the constraints on competition are not merely regulatory increases in competition will not drive pricing in the way you suggest.

  A comparison between roads and rail is vital. But it strikes me as perverse to complain about public subsidies for rail driving up rail prices and then argue for more roadbuilding, which has a far more extensive network and is subsidised to a far greater extent.

  To put this in context there are about 10,000km of railways controlled by Network Rail compared to over 12,000km of trunk roads alone (among nearly 47,000km of main roads and 344,000km of paved roads) in the UK.

• Richard Shaw 24th Nov '12 - 11:44pm

  re: ‘Privatisation saved the railways’
  Several commenters have taken issue with the above observation I made, based mostly on the cost of fares. However, I regard ‘Saving the railways’ as being the integrity of infrastructure, rolling stock, volume of traffic… the overall viability, as being different to whether passengers are paying more to travel and whether the prices of their fares are fair, are too high or were, in the past, too low. What is historically undeniable that the period of nationalisation was a period of, as Anders pointed out, managed decline. The original and principle source of income for the majority of railway companies was goods traffic and that this income was supplemented by passenger traffic, which was sometimes subsidised by goods traffic receipts. British Railways stopped being profitable in the early 50s, mostly through loss of profitable goods traffic and despite costly investments in marshalling yards, new rolling stock and so on, never made a penny again. The running down of the network was a result of wanting to deliver both cheap fares and minimise losses to the treasury.

  Privatisation did indeed bring bigger fares but it also brought investment in infrastructure and rolling stock. For example, freight traffic has boomed and companies like EWS/DB Schenker and Freightliner have spent millions on new wagons and locomotives (e.g. over 400+ 3200hp Class 66’s were delivered between 1998-2010) to replace ageing 1960s diesels – some of which were then refurbished and brought back into use because there still weren’t enough to cope with the increase in freight traffic brought about by better infrastructure and rolling stock. I maintain that the network is in better shape now than it would have been had privatisation not taken place.

  Whether nationalised or privatised you won’t get cheap fares for nothing – the choice seems to be either cuts to investment, inequitable taxpayer subsidies or a combination. But the point of my piece is not about fares, not directly anyway. It’s about how we govern and make the railways more responsive to passenger needs and make spending more equitable and encouraging long term investment, such as the Chiltern Trains’ franchise in which they get a longer franchise term based on performance and in return for them spending £100m+ to upgrade the Marylebone to Oxford line. Devolving decision making should make those decisions better, and if not, at least limit the scope of any fallout, both to the network and to the travelling public.

• BIGDAVE 25th Nov '12 - 9:09pm

  Richard Shaw. Your use of the word “subsidy”, I am afraid, reveals a very British attitude to railways. Nowhere else is the world (apart from the USA perhaps) is the gap between railway revenue and and the cost of running the said railway regarded as a “loss” requiring a “subsidy”. The word you should be using is “investment”. Any government that injects investment into their railway system is investing in the safe, efficient and environmentally-friendly transportation of freight and passengers – thus taking pressure of over-used and incredibly inefficient road transport. If ‘Beeching’ had not have happened this country would not have lost thouands of miles of precious transport infrastructure that was the legacy of several generations’ work and investment. That so many towns and villages lost their rail connection was a genuine tragedy, of couse there were railway routes that were underused beyond all hope, but the great majority of route-miles closed by Beeching would be a transport godsend in 2012, for both freight and passengers.

• Richard Shaw 26th Nov '12 - 9:33pm

  BIGDAVE,

  Any externally sourced monies (or money shifted from another part of the business), to make up for the difference between income and outgoings in revenue, to maintain viability, is a subsidy. Whether or not something’s better for the environment or not doesn’t change that – it’s still subsidy. Investment is capital expenditure, e.g. building infrastructure, buying new trains, etc. in order to improve returns through, for example, fuel efficiency, improved capacity and hence increased revenue and hopefully increased profits. Holding down fares to make travel cheaper for the same quantity of people is subsidy. Increasing capacity so that more people can travel and possibly eliminating the need for subsidy is investment. Investment has a lasting effect, subsidies only have an effect while they’re maintained. I don’t think it’s a peculiarly British definition but I’m happy for you to provide sources saying otherwise.

  But all that’s a bit irrelevant really because I didn’t argue for or against subsidies – I was arguing about the structure of who should be in control of the railways and that groups of local authorities would be better than the Department of Transport. I don’t know why you’re arguing against Beeching; I wasn’t arguing in favour of it . In fact I referred to it as “colossal waste and network decimation”. However I believe we should not be too harsh against the Doctor himself, for 50-year foresight of the needs of the nation is a rare gift.