Opinion: We are still living with the consequences of nationalised railways today. Turning back the clock will make matters worse.

Northern trainIn a letter to the Observer a group of Labour PPCs, including my opponent Joshua Fenton-Glynn, have proposed that the Labour should nationalise rail services.

This idea displays an ignorance of the true cause of the problems with UK railways that beggars belief. Almost every issue with rail transport can be traced not to privatisation per se, but to nationalisation, or the insufficiently liberal privatisation foisted upon us by the Major government.

In the 1980s investment in rail was at an all time low, due entirely to the nationalised nature of British Rail. During this period the infamous “Pacer” diesel multiple units were created – the body of a leyland bus mounted on a freight wagon underframe with an underpowered diesel engine attached. In Calder Valley we still suffer the heavy use of these units, 30 years on from their creation to plug a short-term gap in rolling stock availability, and several years on from when they were supposed to be decommissioned.

To suggest that nationalisation of the rail services is a fit remedy to the ills which were caused in the first place by a nationalised rail service is sheer madness.

The real solution for UK rail is not privatisation but Liberalisation. As  Jennie Rigg  pointed out only yesterday, the current franchising system does not promote competition between Train Operating Companies, but instead effectively grants a TOC a regional monopoly over services. Instead of franchises, the real way to address the problems of UK rail – increase investment, continue electrification, replace rolling stock and bring downward pressure to bear on ticket prices – is to discontinue the current system and instead use the model of the Open Access Operators to provide services.

Open Access Operators bid only for specific slots in the rail pattern, not for exclusive rights to a section of network as a whole. This generates the genuine competition that the current franchise system lacks, as well as providing a real incentive for infrastructure enhancement that is missing under both the current franchise system and the old, dead, state monopoly system proposed by the Labour Party.

It was nationalised British Rail that oversaw massive cuts to the stations such as Elland which should never have been closed, and it is the current franchise system which provides no impetus at all for the investment to reopen them. An Open Access system would provide a genuine competitive edge to the rail network rather than the stagnant cartel operations we suffer at the moment.

Joshua Fenton-Glynn and the rest of his Labour PPC signatories are dead wrong, both on the cause of the problems in UK rail, and on the solution.

Bring on a Liberal mass transport system. The UK will be better for it.

* Alisdair Calder McGregor is a member of the party's Federal International Relations Committee.

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  • What a load of rubbish! Our party should be campaigning heavily for renationalisation, or at least a form of resocialisation. The ideas presented here owe much to a neoliberal view of economics – continuation with this brings further inequality (see Piketty, Spirit Level etc) and will ultimately ruin the world. Wake up and smell, if not the coffee, at least the not-so-faint smell of burning.

  • Max Wilkinson 5th May '14 - 10:01am

    How could we achieve the necessary competition on a single line to ensure a privatised system could work?

  • A rail journey is a non-fungible good so no matter what ‘liberal’ scheme you dream up – and this one seems particularly bonkers – you place the passenger at the mercy of a private monopoly. Re-nationalising as the current contracts come to an end is the least worse option.

  • Alisdair McGregor 5th May '14 - 10:25am

    @Robin Wilde – The UKs railway service (as distinct from the infrastructure, which I believe forms a natural monopoly and must remain under public ownership) is fully privatised (yes, even East Coast – the franchise was handed back, not abolished)

    What needs to be done, as I explain above, is a greater liberalisation of the privatised system, to increase the competitive impetus for increased investment and quality of service.

    @Tim13 – your proposal, like that of the Labour Party, is illegal under EU law . Please see http://www.nortonrosefulbright.com/knowledge/publications/8972/eu-rail-liberalisation-the-fourth-package-of-2013-reaching-the-final-destination

    @Max Wilkinson – Excellent Question, I’m glad you asked it. The solution is simply to do what the existing Open Access and Freight operators already do, and bid individually for rail access slots. Rather than the current franchising system, which effectively hands a monopoly to the eventual victor for 5-10 years, direct biding would ensure that service competition drives direct investment into the rail infrastructure.

    The only real loser is the exchequer, which no longer receives the franchise payments from the TOCs – but this will be linked to the expected lower operating costs of the new Liberalised system and result in a fall in ticket prices.

    Quite frankly I regard the exchequer no longer skimming the franchise payments from the TOCs as a good thing, as I think we have to get away from treating the UKs railways as a cash cow to fund other government spending and return them to a state of prioritising their customers first and foremost.

  • That still doesn’t sound like real competition to me. Neither do your complaints about nationalised rail sound like they’re anything inherent to the system, unless you’d like to say that all nationalised services are underfunded and all privatised services are not.

  • @Alisdair McGregor

    I can’t believe you’re actually trying to defend this proposal seriously. How can this possibly be made to work when there are major investments in rolling stock, setup costs etc. Operators have to have some degree of certainty about the services they will operate in order to make these investments. How will bidding for tiny chunks of service operation provide this? And who will administer and enforce this system in regulatory terms? It will be both administratively impossible and lead to impossible complication and lack of co-ordination, with a massive increase in costs. If one operator is delayed in fulfilling their slot, who is going to handle the resulting knock-on effects for all the other multiple operators?

    And if fares are lower, why should rail companies want to invest anyway, if their return on investment is being reduced?

    This whole thing smacks of neo-liberal ideology gone haywire and, as with Jeremy Browne’s Race Plan, takes us further up a dismal ideological cul-de-sac.

  • Bernard Salmon 5th May '14 - 10:38am

    One possible problem with the open access system you describe is that companies would have an incentive to try and cherry-pick the most profitable routes (ie the main commuter routes) and not bid for less profitable off-peak or rural services. The only way to avoid that would be to bundle together peak and off-peak slots, which then begins to look rather like the current franchising system.

  • Nick Barlow 5th May '14 - 10:38am

    Can you point to an example of where a system like this has been used for passenger rail on a large scale and been successful? Because it seems to me that there are plenty of examples of nationalised railways running well – the lack of investment under British Rail seems to me to be more a result of the failings of Government rail policy and British Rail management than nationalised railways per se, given the investment other countries managed around the same time – I’m not aware of privately run ones (especially on the model you propose) with the same reputation.

  • @Allistair McGregor There are ways around EU law – Réseau Ferré de France, the French rail infrastructure company, exists purely as a nod to the EU, and awards all its contracts to the state-owned SNCF – maintenance, train operations, the whole shooting match.

    That said, I do not agree with renationalisation, which is left-wing reactionary dogma.

    The Open Access Operators concept you propose is an interesting one, and like you say, may create more competition and therefore better service on an area of the network currently served by one (monopoly) operator.

    However, I do see how this system would increase infrastructure investment. The only way that tends to happen is either 1, through award of a long-term franchise where the TOC can get its money back through the farebox, e.g. Chiltern Railways, or 2, through the TOC operating both infrastructure and rolling stock, which was how our railways came to be built back in Victorian times.

  • A tube comes along every 2-3 minutes. Would we really want these operated by separate companies? Would tickets be valid on all tubes? Commuters value turn up and go services.

  • I think much is being made about the prospective transfer of the ECML back to a private operator, after the success of the public operator. The logic of the argument being along the lines, if the public can run one franchise then it must be even better if it ran all franchises… I suggest that we have seen in broad terms both what a pure play state operated railway would morph into and the risks of a pure play private sector operation. Currently it seems with both sectors involved we seem to be getting service and investment! So to me the question is if the public operator is to no longer operate the ECML then which of the other franchises could benefit from a period in state control?

    The advantage of this approach is to follow a business adage, you only outsource what you know, so by having an active public operator, we help to ensure both contracts and the delivered service are fit for purpose.

  • Alisdair McGregor 5th May '14 - 10:57am

    @RC – Yet the system I’m proposing seems to work for both the Open Access & Freight operators in the UK

    @Bernard Salmon – This is a point which often comes up when dealing with this proposal. My response (as ever) lies in opportunity cost to the operator. Having a train and not running it costs money without bringing any in. I’m sure that an operator will seek to maximise efficiency (that’s one of the benefits of this proposal), but there’s no logic to not running a service.

    That said, I’m sure the highest bid price for a slot will be for the services to specific destinations in the peak.

    @Nick Barlow – Quite simply, the answer is no. All too many rail systems in the world persist in either the franchising or nationalised model, and neither works very well. This proposal is innovative in that respect, although based on the successful and popular operations of Open Access Operators in the UK.

    I don’t believe “never been tried before” to be a valid objection, though. 😉

  • Alisdair McGregor 5th May '14 - 11:10am

    @Will Mann – at the moment, Franchise fees go to the exchequer, which then spends it as it wishes, occasionally putting some back for infrastructure investment. nder the model I propose, track access fees would be ploughed right back into the investment budget.

    @TimLeunig – There’s no reason why ticketing wouldn’t remain unified. The current national ticketing system works perfectly adequately, and I wouldn’t propose changing that. There’s also no reason to suppose different operators would refuse to co-operate with such a scheme – here in West Yorkshire all rail and bus operators will accept the West Yorkshire Metro card scheme – so it works not only cross-TOC, but across road & rail!

    @Roland – a lot of the supposed profitability of East Coast is down to it NOT having the same obligations towards the exchequer as a regular franchise. If all of the franchises had no franchise fee to pay, they would look equally healthy!

  • Alisdair
    A way would be found to operate a nationalised system under EU law. However, surely, if it is indeed currently illegal then you should be recommending an EU law change. Another way of reforming the EU perhaps? Several, if not the majority of railways in the EU operate as state owned businesses.

  • @ Alistair
    “@RC – Yet the system I’m proposing seems to work for both the Open Access & Freight operators in the UK”

    You’re *seriously* saying that operating a freight service is the same as operating a scheduled passenger service????

  • “The current national ticketing system works perfectly adequately”

    Oh dear, oh dear, oh dear……

  • “All too many rail systems in the world persist in either the franchising or nationalised model, and neither works very well.”

    Yes, I mean, what do the Swiss know about running railways, eh? Bunch of amateurs…what a shambles they’ve ended up with.

  • You have potential service providers “bidding” for slots. Who designs the slots? How are the bids evaluated? Do they bid a sum of money and the highest one wins? Is the sense and likely quality of the proposal taken into account? Who does the evaluation? Is it just a fragmented version of the franchising system? There is no mention of subsidy. Is it simply expected to become unnecessary overnight?

    Where do the service providers get their rolling stock? From the leasing companies who can currently reallocate units from the north to the more profitable south? Will the government continue to announce purchases of rolling stock and allocation of older units to northern services but only when the shiny new ones are available for Thameslink (for example)? You say that the system will give “real incentive for infrastructure enhancement”. By whom? Paid for by whom? Buying a few slots on lines which are also used by other providers will not make you want to improve signalling etc.

    Does Network Rail continue as it is? Who has the responsibility for looking after stations? What about slots for which there is a demonstrable demand but no bidder because they don’t constitute a viable business? Does the franchiser accept lower bids or lower quality? Who has a responsibility to ensure supply for the unpopular slots and when a provider goes bust?

    Does HS2 suit this model?

  • Oops. While I was cobbling together my long list, some of its questions began to be answered.

  • Nick Barlow 5th May '14 - 11:28am

    “All too many rail systems in the world persist in either the franchising or nationalised model, and neither works very well.”

    I think you may need to clarify what your definition of ‘works well’ is – from my experience, French and German railways work well.

    And ‘never tried before’ in itself isn’t an objection but ‘this has never been tried before, but I reckon it will work’ isn’t a very good reason to do something either.

  • This proposal is a prime example of the worst kind of policy-making. People start off with their chosen ideology (free market + competition is the best solution for any problem) and then they arrange the facts to suit their preconceived ideas, discarding the ones that don’t fit or are contradictory. It happens time after time. In fact, there have been studies done in the US to show that people do this. They make up their minds, and then look at the facts. I had hoped my party, the Lib Dems, would be relatively free of this kind of approach, but sadly it is not the case.

  • Andrew Emmerson 5th May '14 - 11:42am

    @RC – You accuse someone of making up their mind and looking at the fact – you’ve done this with state controlled monopolies. What’s worse is there’s a long history of this to tell you how truly bad it was! So Pot, Kettle, black.

    Perhaps some of you should get out of the commenting business until you can come back and be polite, because your macho name calling and posturing is deeply unpleasant and makes this site inaccessible for those who don’t want to have to deal with keyboard warriors.

  • @robinwilde indeed. And the article doesn’t read too weirdly if we change the words to be about the nhs.

    I still find it odd that nationalising the railways is one of the most popular policies in the uk, and that none of the three parties push it. I could believe it’s a bad idea, but from his comments on the current ticketing system alone the author of this article won’t convince me.

  • Matthew Huntbach 5th May '14 - 11:55am

    The author seems to have started with the maxim “competition drives up quality” without considering how or why this sometimes works, and also the many examples where it doesn’t.

    Mostly we have seen that putting out public services to tender results in bids where cost cuts have been made by employing low quality employees who will work for a low wage. Any incentive to improve quality comes from the fear aspect – people are afraid of losing their jobs if they don’t perform – and this does not seem to drive up quality at all, as people who are working through fear do not do a good job. The companies bidding for these services operate on the basis that as they are essential, the government will always bail them out if things go really bad. The whole system of bids and contracts provides plenty of well-paid jobs for lawyers and accountants, a huge bureaucratic overload. If there is real competition, it often seems to be done on the basis that who wins is who splurges out the most on advertising rather than real quality, so job creation scheme for the ad-men as well.

    Funnily enough, the political parties keen on these things do seem to have a lot of people in top positions who come from a lawyer/accountant/ad-man background. Is that just a coincidence?

  • Nick Barlow 5th May '14 - 11:57am

    Jennie – there’s a difference between ‘I reckon it will work’ and ‘I reckon it will work and here’s some reasons why’ when it comes to persuading people to try something new.

  • @Andrew, this parliament actually set up several research briefings into privatisation following the franchising disasters. These briefings found that up until the mid-70s to early 80s (I wonder why it was this period when things went wrong), our public owned system was doing really well, then suddenly a succession of bad policies saw the system start to collapse, which justified the privatisation of the system – and well, it has been broken ever since.

  • Nick: true, but I think Alisdair DOES give reasons. The fact that you might not agree with them is a sprays point 😉

  • We should move towards the French model of always awarding franchises to the state-owned option unless a private company offers something exceptional. It is reasonable for private companies to pay a fee for running a public service.

  • Peter Chambers 5th May '14 - 12:18pm

    I would recommend anyone wanting to debate rail privatisation to read ‘On The Wrong Line’ by Christian Wolmar.
    http://www.christianwolmar.co.uk/books/on-the-wrong-line/ Many of the arguments on this thread are dealt with, and in particular Open Access is debunked. Unlike roads and airways, the author argues convincingly that the “rail wheel interface” is not suitable as a contracting platform. Possibly his most convincing arguments are quotes from exasperated free marketeers during the final days of Railtrack. They tried, they failed, they learned the lessons, they got the bruises. It turns out that putting trains on track is a highly integrated business requiring planning and optimising. It is not suitable for any sort of ‘spot market’.

    A consequence of this is that a large optimised organization that can achieve this requires considerable financial stability, usually achieved by either national ownership or long franchise periods, which amount to public or private monopolies respectively.

    It may be that British Railways was the worst way of running the railways, apart from various others that we have tried from time to time.

  • nvelope2003 5th May '14 - 12:44pm

    The only train operator as distinct from publicly owned Network Rail ,apart from Northern Ireland Railways, which is still fully in public ownership is the London Underground which is subject to repeated strikes or threats of strikes just like nationalised British Rail used to be. They have just called off the latest strike, no doubt to the relief of commuters, but there will be costs in setting up alternative bus services etc.

    The £4 billion subsidy which is constantly referred to goes mostly to the publicly owned Network Rail to improve the system after long periods of neglect or wasted investment in the past. Most of the franchised train operators have to pay premiums to the Treasury.

    Alisdair McGregor’s proposals are in an interesting contribution to the debate over the railways. All over the world outside the US railways cost the taxpayers huge sums of money and even in places like Germany and France, apart from a few prestige High Speed lines are not very good. It is not good enough to say that as they are a public service they should not be expected to run without subsidy. They lose money because they do not provide what the public wants or needs and revenues from users are not sufficient to cover their costs. Tesco and Sainsbury etc provide a much more valuable public service, namely food, but are not loss making.. Even 80% of bus services are provided commercially and the rest are often operated for political reasons and sometimes do not seem to have any rational justification.

  • nvelope2003 5th May '14 - 12:48pm

    I should have mentioned that the London Overground , DLR and London buses are operated by private companies and were not on strike. Enthusiasts for public ownership might like to bear this in mind.

  • nvelope2003 5th May '14 - 12:57pm

    Liberal Al:

    The system has been broken ever since ? and which system would that be ? the privatised railway operators who have doubled the number of passenger journeys since 1997 after years of remorseless decline since nationalisation in 1948 ?
    Private railway freight operators who have revived a dying mode of freight transport ?

  • Not for lack of trying.

    The idea that only nationalised services are prone to strikes is just wrong.

    And while I’m replying, the subsidy to franchises is greater than the franchise payments. The money the government grants National Rail would have to come from the franchises, as they’re the only customer. Ignoring it and claiming the franchises are net payers is a little disingenuous. It would be similar to the government subsidising MRI machines and then claiming privatised hospitals are profit making.

  • Nvelope2003, DLR staff were striking only the other month. As for the defence of privatisation, this is just going to become an argument of ‘it is better’, ‘no isn’t’.

    So a few quick points:

    – population growth and the need to commute to work (due to raising housing costs) have probably created the raised in customers travelling by train, not privatisation.

    – customer satisfaction is at an all-time low, so far from ‘fixing’ the problems of under-funding, it has made them worse.

    – many rail-lines, especially in the South-West, are still using outdated, environmentally unfriendly trains due to lack of investment by the rail-companies.

    – you speak of decline? However, research conducted by this ‘Right-wing’ parliament actually shows that the services were working well until the Tories came to power in the mid-70s, so the people on your side have conducted research showing that not to be true.

    – French and Germany both constantly rate higher than the UK for quality of service

    – the London Underground makes a profit despite having much investment put into renovating it. The strikes may be a problem, but that is more due to the short-sightedness of tube unions than its public ownership. Plus, as the DLR strikes prove, the private owned lines are not free from the threat of strikes.

    I am happy for someone to come up with an alternative to public ownership as a solution to our rail-systems problems, but right now, no one has.

  • Nik Porteous 5th May '14 - 1:46pm

    I would concur with Alisdair, both in that the system we have now is an inefficient and expensive fudge and full scale renationalisation, though popular, I don’t believe to be the answer.

    I think in all policy areas, transport especially, there must be more effort in studying what actually works, then adapting and adopting. On my travels abroad the German railways are the best I have encountered, and to my knowledge that is a hybrid of private and public operation.

    Back to these shores, as is rightly pointed out, Open access operators have been a great success on the ECML, filling gaps in service that give passengers greater choice, as well as seeing profitable businesses and job creation. East Coast is probably the only franchise TOC that genuinely has to compete, and I for one believe that it why, in part, it has been successful. The competition element is important, but we should be careful of falling into Tory thinking that the only competitors can be (or should be) private for-profit companies. With Open access proving successful, the logical next step is to ensure that as far as possible the infrastructure and franchises themselves allow real competition from open access operators.

    To this end, it may be prudent to allow franchises to be run down and have 3 or 4 years of them being run by Directly Operated Railways (DOR), whilst streamlined franchises are drawn up alongside infrastructure upgrades that open up much more of the tracks to private operators who can run services to compete with a reduced state offering in areas that support that model, There are of course areas such as rural Scotland, Wales, Yorkshire and the West Country where services won’t ever be profitable. In these areas, the only realistic approach should be publicly run services, recognising the societal benefit, not just economic benefit, and real investment paid for by a reduced state offering on mainline routes such as the ECML where a market approach can work.

    Pragmatism, and evidence based policy is whats needed. No Tory ‘private is best’ and no Labour ‘public is best’.

  • Peter Davies 5th May '14 - 2:04pm

    I regularly travel on one of the three competing services from London to Birmingham (London Midland, Chiltern and Virgin) and I am certain that competition has produced improved services here. That model can’t be used in many places because Beeching removed most of the ‘wasteful duplication’ in routes. In London, there is a slow movement from selling franchises (where franchisees collect fares and pay for infrastructure) to TFL receiving the fares and contracting an operator to run specific services to specific standards. This currently happens on DLR and London Overground and it seems to be working well. I could see this being used on much of the national rail system especially where there are PTEs to take it on.

  • Bernard Salmon 5th May '14 - 2:09pm

    @Alisdair McGregor
    Having a train and not running it costs money without bringing any in. I’m sure that an operator will seek to maximise efficiency (that’s one of the benefits of this proposal), but there’s no logic to not running a service.

    Yes there is – if the costs involved in running the service exceed the cost of not running it, then operators will not run it. It seems to me that in order to ensure there is a mix of peak, off-peak and rural services – as well as allowing operators to make the necessary investment in rolling stock – the ‘slots’ you propose would have to be a certain size and feature a mix of services. I’m struggling to see how this would make the significant improvement in rail travel that you claim to want, as it doesn’t seem that different to the franchise system we currently have. The other alternative is that there would be reductions in off-peak and rural services.

  • nvelope2003

    Alisdair McGregor’s proposals are in an interesting contribution to the debate over the railways. All over the world outside the US railways cost the taxpayers huge sums of money and even in places like Germany and France, apart from a few prestige High Speed lines are not very good.

    This argument often crops up in these debates. While French (and to a lesser extent, German) regional lines are slow and often irregular this is because of the geography of the country (centres of dense population separated by large stretches of lightly populated countryside) it makes less economic sense to invest heavily in these. There would be even less investment if they were run for profit.
    The geography of the UK, parts of Scotland excluded, is very different. Population centres are relatively close together so it makes sense to invest in regional links, e.g. the several million people who live along the transpenine route make a compelling case to make sure that this line, if ever nationalised, maintains constant investment.

  • Stephen Howse 5th May '14 - 2:26pm

    “A rail journey is a non-fungible good”

    And that, in a nutshell, is why this wouldn’t work.

    If I have a meeting in London at 10am then I need to get the train that gets me to that 10am meeting on time, end of.

    “Pragmatism, and evidence based policy is whats needed. No Tory ‘private is best’ and no Labour ‘public is best’.”

    Agreed. Always remember that markets, like the state, are social constructs. The best solution is the one which best serves society as a whole, that aggregate of 60 million individual interests and preferences.

  • Stephen Howse 5th May '14 - 2:35pm

    “This idea that there is never a choice which train to catch is a total straw man.”

    Some of the options you put forward aren’t actually trains, though. You’re right to point out that the choice isn’t just between trains, but between using the train and using other forms of transport – but given that trains are greener than cars and planes, we probably ought to be encouraging people to use the rail network, not pricing them off it or failing to provide the services they need.

  • Alisdair McGregor 5th May '14 - 2:35pm

    I’m back from delivering focus leaflets now, so I can answer some more points, if points have been made:

    Those people who are constantly quote various foreign examples may wish to study Japan, which has an entirely private rail network. With a track mileage around have that of Germany, it carries ten times as many passengers. It’s also worth noting that Japanese Railways are exceptionally punctual.

    @Ed Wilson – the slots are a necessary consequences of safe railway working practices, which were worked out in Victorian times. By and large, despite the technological improvements to signalling methods, signalling procedures haven’t changed much.

    Your question about stations is also interesting. I would like to see local councils be able to take a much bigger hand in the running of their local railway station. Where I live in Hebden Bridge, the station is the gateway to a thriving area of small businesses and a hub for the walking, climbing, cycling and canal boat tourism sectors. Yet the contact between the town council and the station operations is minimal. Apart from the actual trackside operations, I would like to see more direct local involvement in the local transport access.

    @Matthew Huntback I am not a Lawyer, I work in IT. Your point regarding fear is interesting – there is an argument that railways should be forced to pay compensation to passengers or to their employers for late running trains, as extension of the principle of the Delay certificate in use on Japanese and Germany railways.


    @Nik Porteous – you make a fair point about East Coast being the only major operator with a direct competitor over its route. I fully agree with your call for a pragmatic approach – this article is an expression of what I see as an alternative to the false dichotomy being propogated by some (including my Labour opponent) that the options are the status quo or a return to full nationalisation.

    @Peter Davies – Again, very interesting on the effects of competition on your rail choices. Beeching however, could be a whole different article.

  • Stephen Howse 5th May '14 - 2:38pm

    I’m not necessarily pro-renationalisation, by the way – I just don’t think the current system is the best we can come up with and I don’t think this proposal overcomes the problems we already have.

    What about mutualising the railways – would it be possible for the government to offer shares to the public to encourage investment, with a modest dividend paid out and profits (and this is the crucial bit) actually reinvested in the network?

  • Alisdair McGregor 5th May '14 - 2:41pm

    @Stephen Howse – actually there’s a Mutual Open Access Operator trying to start up in the west of England


  • Stephen Howse 5th May '14 - 2:45pm

    @Jennie – No, I don’t, but thanks for the petty reponse. That’s definitely how to convert someone to your way of thinking. Well done you!

    @Alisdair – Interesting – I wasn’t aware of that! Thanks for the link, I’ll do some reading and see how it’s going to operate in practice.

  • Alex Macfie 5th May '14 - 2:46pm

    The National Rail ticketing system is quite an elegant solution that ‘squares the circle’ providing for ticket inter-availability between different operators so that through tickets are available exactly as they were in BR days, while also allowing a degree of competition where this is appropriate. So I can buy a through ticket from Kingston to Oxford, a journey that necessarily involves the services of 2 or 3 operators, and need neither know nor care who operates the train that I am on at any point in the journey. And I can also travel from London to Birmingham and have a choice of 3 operators, and can either buy an operator-specific ticket or a ticket that is valid on all routes and operators. The biggest problem is perhaps the anomalies caused by different companies pricing different flows, such that it is often cheaper to buy separate tickets than one through ticket, yet use the same trains.
    Indeed I think the National Rail ticketing model would be an excellent model for an integrated ticketing system for the highly fragmented EU cross-border rail network, for which it is currently extremely difficult to buy end-to-end tickets.

  • @ Andrew Emmerson

    “You accuse someone of making up their mind and looking at the fact – you’ve done this with state controlled monopolies. What’s worse is there’s a long history of this to tell you how truly bad it was! So Pot, Kettle, black.”

    Having looked at the historical evidence of both privatisation and the situation in other countries I have concluded empirically, *based on that evidence*, that the privatised system does not work and is an inferior solution to the best publicly-run systems. So, in fact it is quite the opposite of what you are saying. As I have made clear elsewhere, I am completely agnostic on whether the state or private enterprise should be engaged in providing a public service , as long as it*actually works*. Private railways * do not work* and breaking them up and making them even more atomised and uncoordinated, as is suggested above, is only going to make the matter worse.

    “Perhaps some of you should get out of the commenting business until you can come back and be polite, because your macho name calling and posturing is deeply unpleasant and makes this site inaccessible for those who don’t want to have to deal with keyboard warriors.”

    Robust, trenchant and forthright criticism of someone’s ideas and depth of knowledge on a topic because they run contrary to clear historical evidence and appear to display a lack of regard for known facts is not “macho name calling”.

    Moreover, I would like to pick apart in greater detail some of the statements made in this article.

    “In the 1980s investment in rail was at an all time low, due entirely to the nationalised nature of British Rail.”

    I am bewildered by this assertion. Railways were starved of investment by the Conservatives because they disliked public transport on ideological grounds (the word “public” is the clue) and were determined to run it down in preference to road-based transport. If they had been left entirely to the private sector, without any subsidy, they would probably have closed down entirely apart from a few key lines. In that case, investment would have been almost zero. So the argument that lack of investment was entirely due to public ownership is probably the opposite of the truth.

    “It was nationalised British Rail that oversaw massive cuts to the stations such as Elland which should never have been closed”

    When starved of funding and investment by an indifferent and, under the Conservatives, hostile government seeking ways to run down the system, that is. Elland was closed in 1962 under the infamous transport minister Ernest Marples, whose company, Marples Ridgway had big interests in roadbuilding and therefore no interest at all in promoting competing forms of transport.

    The whole lesson from successful public transport operations in other countries is that they are *integrated*. What Alistair Calder McGregor is proposing is that rail be *disintegrated*. Open access hasn’t worked with buses, so why should this system work with trains?

    “Instead of franchises, the real way to address the problems of UK rail – increase investment, continue electrification, replace rolling stock and bring downward pressure to bear on ticket prices”

    Again, how would this proposal do any of these things, when the overall system is dependent on either the state or the farepayer for funding for investment? If ticket prices are going to fall, this will decrease the returns on investment enjoyed by rail companies and so reduce their willingness to invest.

    What Directly Operated Railways has shown is that publicly-owned operators can be successful, for instance on the East Coast Mainline, where private franchise operators have failed. This is the conspicuous example staring the government in the face and why they are so desperate to privatise it as before the next election – because it disproves the contention that private train operating companies are the best solution when compared with public operators. Instead of agreeing to this re-privatisation, we as a party should be looking at DOR as a benchmark for how to go forward, while also considering at other countries like Switzerland as a model for development.

    Abandoning our opposition to publicly-run railways would be a major vote-winner. The race is on now to propose the best structure and form of governance for a post-private railway. Best we get our thinking caps on and come up with something to go into our next manifesto, or be caught on the wrong side of political history on this one. Come on Lib Dems, let’s not move even deeper into an anti-statist cul-de-sac. Instead, we need to think of new ways of delivering public services through the public sector.

  • “Those people who are constantly quote various foreign examples may wish to study Japan, which has an entirely private rail network. With a track mileage around have that of Germany, it carries ten times as many passengers. It’s also worth noting that Japanese Railways are exceptionally punctual.”

    This factually inaccurate. There are many parts of the Japanese rail system that are publicly run. Though, you are correct that Japan does provide examples of successful private rail-lines, as well. However, they do not use an open-access system that you propose and their success comes from the companies and regional governments working together to build private corporations that developed integrated communities along the railway lines. This allowed the rail-lines to achieve profitability by diversifying their profits into real estate, retail and numerous other businesses enterprises. The rail-lines themselves were often unprofitable.

    Whilst I would be happy to see this kind of system used in the UK, due to the kinds of companies that are currently dominating our rail industry, I cannot see it happening.

    Another thing that needs to be noted here is that much of the Japanese rail system relies on profits from suburban commuter trains that criss-cross metropolitan areas. Our cities – outside of London – are not big enough to sustain such a system.

    If we are looking at East Asian examples, due to the above point, I would suggest that Taiwan is a better example. This is a highly successful and diverse rail-system that is publicly run.

  • Alex Macfie 5th May '14 - 3:38pm

    European cross-border rail services are ALL ‘open access’, in the sense that there is in general no legal obligation for national train operators to extend their services the few kilometres across the border to connect with each other. So sometimes they do, and sometimes they don’t. On many such routes (e.g. between UK and France), long-distance travellers are reasonably well catered for, while local services are neglected or non-existent.
    Based on this observation, I do not think that a rail network based on only open-access services would be viable. As others have suggested, operators would cherry-pick the most profitable routes, and ignore the rest. We need either franchising or a publicly-owned service to ensure consistent service provision.

  • Andrew Suffield 5th May '14 - 4:01pm

    Any incentive to improve quality comes from the fear aspect – people are afraid of losing their jobs if they don’t perform – and this does not seem to drive up quality at all, as people who are working through fear do not do a good job.

    I’ll just observe that this attitude exists only in an incumbent dinosaur, usually one which is enjoying massive state subsidy.

    Everybody else gets their incentive to improve quality from somewhere else: they want to be better than the dinosaur, so that all the customers will want to come and use their service instead.

    The lesson here is that state-supported incumbents are bad for everybody. How about we stop trying to create them?

  • nvelope2003 5th May '14 - 4:04pm

    A degree of fear is essential. Without it there would be no spur to do anything . People work because they are afraid they will not have anything to eat, a house to live in and clothes to wear. People do not normally play loud music at 3 am because they are afraid their neighbours would make a fuss and possibly smash their equipment or call the police.

    Those who are so critical of Alisdair McGregor’s proposals seem to be afraid that any change will cause the collapse of the railways when the example of Japan shows that there might be a better way. We will never know unless we try it. The present system does need reform but not toward the failed method of more state control. Trains are not particularly green compared to say buses as they sometimes run with only a handful of passengers on them because the Government has stipulated that a train shall run at a certain time regardless of any evidence of substantial need, when a small bus might suffice.
    I had to use British Railways a lot in the from the 60s to the 90s . They were not exactly user friendly with endless delays and dirty carriages. That Committee of Parliament must have been somewhere else at the time or maybe just looking at the statistics which did show a fall in subsidies, probably because BR kept cutting services, especially for freight and parcels . Apart from Germany and Sweden Continental trains were not much better.

    Package Four of the European Regulations on liberalising the railways does make it quite clear that tenders have to be sought for the provision of railway services although there are some allowances for assessing value for money. Re nationalisation would therefore be illegal as previously stated.

  • nvelope2003 5th May '14 - 4:13pm

    Might it be that rather than proving publicly owned railways are better, the management of East Coast are using the ways of the private franchises to operate their bit of the railway in order to make it appear that publicly owned is best. They do have an interest in this as they fear that if they do not then DOR will be closed down.

    BR was not all bad but to pretend that it was better than the present services is quite frankly absurd.

  • The privatisation of the Japan National Railways remains a controversial decision 27 years after its implementation. The densely populated regions of Japan in Honshu have the traffic levels to support private operation, but the more far flung regions as in Hokkaido do not, and it here that privatisation has clearly compromised safety with chronic under-investment in repairs, maintenance and infrastructure development.

    I am very much with those that favour looking at what works in other countries. Christian Wolmar’s books ‘Broken Rails’ and ‘Down the Tube’ are worth a read for a history of the constant reorganisations that have plagued the UK rail system since the Beecham reforms.

    ‘Down the Tube’ ends with some comments from Susan Kramer on the Public Private Partnership, who’s experience of commuting on the tube brought her into politics in the first place.

    “… PPP is a misnomer which breaches the Trade Descriptions Act. Partnership? It is not a partnership. If it were a partnership, you would create a company to run the tube with both the private and public equally at risk. A partnership is two equals coming together and sharing equally. This is not what has happened. How does the word partner come into this apart from the fact that it alliterates with public and Private?”

    One feature that might be usefully adopted from the Japanese experience is allowing employers to reimburse public transport commuting free of tax. Introducing this tax concession at the same time as bringing in a land value tax might get us a long way towards break-even operating costs as well as the level of public investment we need in infrastructure.

  • Passing through 5th May '14 - 6:33pm

    “BR was not all bad but to pretend that it was better than the present services is quite frankly absurd.”

    Well given how widely popular renationalisation is with the electorate that seems to be the opinion of most of the British public.

    So who do we go with, the experiences of tens of millions of voters or the dogma of free-martketeers who contend that the reason the privatised rail system is so unpopular was that it wasn’t privatised enough?

    With the party on single figures in the polls a little bit less dogma and a little bit more listening to the public might be sensible.

  • Not for profit companies like those found in Netherlands and Switzerland seem to me to be the way to go. Many of the advantages of both a private company and a nationalised service.
    The fact is that train services are not open to competition, unless you wish to build several parallel rail lines for different companies. Trains are not profitable companies to run, they will always require subsidy, so why not just nationalise?

    Mr McGregor, I’m afraid that to blame a lack of investment on nationalisation is absurd. A private company is interested in profit, it will not invest in unprofitable lines (and I mean once they have already been given their subsidy). Only the government will provide real investment in our rail infrastructure.

  • nvelope2003 5th May '14 - 7:08pm

    Passing through: BR was very unpopular with the voters and although there are many articulate and vocal railway enthusiasts who probably do not use railways very much the voters, who for the most part rarely use trains, read all these stories in tabloid newspapers about the inevitable failures that occur with all human endeavours. Yes trains break down and so do cars and buses and planes but we do not hear much about them. I use trains regularly and find them perfectly satisfactory apart from the occasional glitch. BR fares were high and they have increased in line with inflation but recent increases are the result of both governments attempting to reduce the taxpayer contribution in favour of making the users pay a greater proportion of the cost which is perfectly reasonable but apparently not to the minority of people who actually use trains. Why do train passengers expect someone else to pay their fares when they would not expect the to pay their food or drink bills ? This is the main reason for hostility to privatisation but a nationalised railway would have exactly the same problems and the Government would get the blame every time something went wrong.

    The voters also want the restoration of the death penalty for murder and by a huge majority the restoration of grammar schools but I cannot see many people on LDV pressing for these policies to be implemented. Be careful what you wish for.

  • As someone who has been proudly involved with an open access operator for the past 15 years (as well as franchises), I cannot recommend that model for all passenger services in this country. For most local services, a direct contract would be more suitable, given the need to specify them in some detail and then give them a varying degree of subsidy. Open access services do have a part to play, but if they are to expand, the rules on track access charging need to be altered, in order to recover a greater proportion of infrastructure costs for which the Treasury currently funds NR through Direct Grant.
    The current franchise system is trying to be two conflicting things at once, firstly ensuring predictability of the finances to/from the Treasury and then trying to give the impression of a totally private operation. In reality the Government retains a huge degree of control and bidding for franchises has become fiendishly complicated and expensive.
    It is this part of the system that needs a good looking at but away from the private vs public argument. It is all about the shape of the service, who specifies it, who funds it and then how it is procured. I am not at all convinced the DfT are the right people to be controlling and funding local services, especially in major northern cities and regions such as rural East Anglia. They are far too remote and make too many mistakes.
    BR had its faults and it’s successes. There were severe interface issues even then as inter departmental walls could be extremely thick! Successive Governments could also be a pain. If it wasn’t Ernest Marples, then the malign influence of the TGWU on Labour governments did cause us on BR a fair few problems.
    The one certainty was that the Treasury always had a tight grip on the money and even the recent fare hikes are a direct consequence of their long held wish to see the passenger pay a higher proportion of the costs of providing and maintaining the network. Privatisation has just provided a method of shifting blame onto the contracted out tax gatherers that are the TOC community!
    The history of the railways since 1948 has been littered with periodic changes in structure, all of which have been hugely disruptive. We don’t need radical upheaval again, just gradual change to a simple but sustainable position in which open access and locally procured contracts sit alongside and within DfT strategies and contracts.

  • Paul Pettinger 6th May '14 - 1:13am

    Jennie wrote ‘I am very much of the left and in favour of redistribution and all that’

    I thought you disliked the Social-Liberal Forum?

  • Matthew Huntbach 6th May '14 - 1:18am

    Andrew Suffield

    Any incentive to improve quality comes from the fear aspect – people are afraid of losing their jobs if they don’t perform – and this does not seem to drive up quality at all, as people who are working through fear do not do a good job.

    I’ll just observe that this attitude exists only in an incumbent dinosaur, usually one which is enjoying massive state subsidy.

    My observations are that this attitude is widespread in situations where competition is introduced, your dismissal of it seems to be based more on ideological rigidity, as evidenced by your choice of language, than by proper consideration of how competition works in human terms.

    I am, of course, very aware of the other side, which is lack of competition and feeling of job security leading to complacency and so poor service. The balance needs to be got right. However, my experience is what is needed most of all is a culture of pride in providing a good service. Staff who are employed in short term and on low wages will not have that – this is a reason why contracting out state services to the lowest bidder has often resulted in poor service.

  • Matthew Huntbach 6th May '14 - 5:24am


    Why do train passengers expect someone else to pay their fares when they would not expect the to pay their food or drink bills ?

    If it is beneficial to the environment that people travel by train rather than by car, then it is worth my while to subsidise others travelling by train because I share in the benefits of a better environment.

  • Let’s not forget how awful customer service was on so much of the nationalised railway system, as sadly has been the case in other parts of the public sector where it seems difficult to provide universally good and caring service. In that respect my overall experience of the many different railway companies has been 85% whereas during the nationalised period it was less than half that.

  • There is some hoary old nonsense written on here. Ok, how many of the contributors have actually worked for a railway, anyway?

    And secondly, how do you square an OA operator who pays marginal cost for using track access to working to the public service requirement which is deemed by the government to be a minimum standard on all lines?

    Perhaps a googling of the Peterborough process will reveal why this idea was canned by the Treasury in the run up to 94. They wanted to auction slots every 8 weeks!

  • Matthew Huntbach 6th May '14 - 10:36am

    Before adopting any solution to a problem, I think one needs to be aware of how that solution would work in human terms, that is in terms of actual people interacting with actual people, because, underneath that’s how it will work. As Mrs Thatcher so wisely said “there is no such thing as society, only people”, and she might equally well have added “there is no such thing as the market, only people”, or even “there is no such thing as a business corporation, only people”, because all such abstractions and mechanisms will only work if and as the people that are part of them make them work.

    We must also be aware of the possible ways in which the proposed solution could go wrong. This is standard risk analysis, which any competent business person would want to undertake before going ahead with a new venture.

    What concerns me about so many of the free market freaks who seem to be taking over our party is that they don’t work like that. They seem to be driven purely by slogans. If Alasdair McGregor had given me the impression that he really had thought through how this would work in human terms, and had thought through how it might go wrong, and after that had weighed up the balance and come to the conclusion that it was on the side of his proposed solution, I’d have respected him more. Yet the shrill way in which he has put his argument doesn’t give me that impression, so it leaves me with little respect for him. For example, he readily puts the problems of British Rail in the 1980s as down to “nationalisation” as if it was the nationalisation itself which caused them, rather than the deliberate decision of the government of the time, which made no secret of its hostility to public transport, not to spend much money on railways.

    We now have had plenty of examples of “liberalisation” as Alasdair McGregor calls it, since all the government we have had since 1979 have been pushing that way. So we are in a position to take an objective view on whether it works and how it works, and the reality is that while there have been some successes and some failures, on the whole it has not quite delivered the super-efficient wonderful services that those who pushed them said it would. I remember I was a councillor when PFI was being heavily pushed by the Blair government, and if you tried to argue against it, you were shouted down and accused of being some sort of “dinosaur” who was stuck in some outdated socialist mode of thinking didn’t appreciate how this “private sector know-how” was bringing in investment and skills that would be so beneficial. Now, however, we see what a poor deal most of these PFI agreements were, hugely expensive in the long run, and locking us in long-term agreements on service provision which could not be escaped from when they proved to be poor ones. I also noted just how much putting these things out and agreeing the terms and all that involved in terms of fees to lawyers and accountants, with the bids going to the big firms who could afford expensive lawyers and accountants and so fool the council into thinking they had a good deal.

    When I started in politics, my views were to the left, but I was very much put off every variety of socialism I encountered, because so much of it seemed to be based on crude sloganising, and at best hand-waving excuses as to why the idea when tried in practice never seemed to have delivered what they promised, and when tried in extreme forms delivered something very nasty indeed. When I argued with these people and their response was often that the problem was that it hadn’t been tried in an extreme enough form, and the people seemed to have little feel for the human side of things, I knew I never wanted to be part of them. Now I find this same sort of attitude held most strongly by people in the very party I joined because I didn’t like that crude sloganeering – some of the crudest lacking in human feeling sloganeering I am coming across these days come in this forum from people whose names come with the LibDem logo next to them.

  • David Evershed 6th May '14 - 12:15pm

    The infrastructure of the railway is owned and operated by Network Rail Ltd which is a ‘not for profit’ private company without any shareholders but regulated by the Government. So it is effectively already nationalised. Since it is a monopoly, it is hard to see how it could operate as a ‘for profit’ company.

    There can be and is competition between the companies that run the trains. The current arrangement may not be ideal and has been poinetd out on this web site there are other alternatives that should be considered before resorting to nationalisation of the operating companies..

  • Robin Bennett 6th May '14 - 12:21pm

    Despite some posts being over-long (and in my case therefore largely unread) while others nit-pick or go off the rails, this sort of discussion brings out the best of LDV as a forum for ideas without political hang-ups or personal abuse. Alisdair wins my vote on this issue, not least because his detailed responses to critical posts.

  • Tony Rowan-Wicks 6th May '14 - 1:18pm

    I agree Robin, let’s keep our comments short and not dominate the comments of others too much. This thread is a good idea to explore but it is made hard reading by our dear long-winded members.

  • I disagree.

  • Nick Collins 6th May '14 - 2:04pm

    In the 1980s investment in rail was at an all time low, due entirely to the nationalised nature of British Rail.

  • Nick Collins 6th May '14 - 2:09pm

    “In the 1980s investment in rail was at an all time low …..”


    ” …due entirely to the nationalised nature of British Rail. ”

    Not true. Due to the policies/prejudices of the Thatcher government.

    BTW please ignore my previous comment which somehow posted the quote without my rebuttal thereof.

  • >“In the 1980s investment in rail was at an all time low …..”

    I wonder whether this is where Labour are coming from – they know the next government is going to have to make cuts and so are looking for “cash cows” they can milk in an attempt to reduce the pain they are going to have to inflict on people.

  • Network Rail is a not for dividend organisation and is formally nationalised from September after a change in accounting rules.So it is a public sector company.

    The pacer trains which the OP derided were part of a BR modernisation plan in the 80’s. Along with a lot of station and line reopenings and more than a few electrification schemes.

  • Matthew Huntbach 6th May '14 - 4:30pm

    Alisdair McGregor

    @Matthew Huntback I am not a Lawyer, I work in IT. Your point regarding fear is interesting – there is an argument that railways should be forced to pay compensation to passengers or to their employers for late running trains, as extension of the principle of the Delay certificate in use on Japanese and Germany railways.


    I fail to see how this connects with what I wrote, but anyway, let’s comment on it as it is.

    The article you quote does not mention financial compensation, it seems to be just a certificate that is handed out as proof of lateness. I myself have dealt with such things, when I was Chair of my university department’s Exam Board, if students arrived late for exams we asked them to get a letter from London Transport confirming their claim, and I have to say London Transport did provide these letters on request. However, students were always told they must arrive in good time, so this procedure would only be used if students were seriously delayed. 15 minutes, as the article you quoted says is the practice for Paris might be when we would start considering it a valid extenuating circumstance.

    If there were financial compensation for this, under your proposed system might this not be even more of a job creation scheme for lawyers, with companies responsible for one slot trying to argue that the blame fell on the ones for the preceding slot which blocked the way and so on? Maybe you aren’t familiar with how it works in London, with huge numbers of trains converging onto the central terminus station, so if one breaks down, all the other behind get delayed. Or who is to be blamed for the most usual cause of delays, points failures and signal failures? More worryingly, suppose the fear of having to pay financial compensation due to these delays causes companies to be lax on safety procedures when these things happen? Consider where I live in south-east London where travel is by overground lines which frequently get blocked by fallen trees and the like. Might this not cause companies to be reluctant to bid for the slots in my area, or perhaps they would just raise their prices to compensate? Or might they not just cut the number of trains running, as the fewer trains running, the easier it is to get round delays caused by a blockage? Maybe if someone throws themselves under a train, another common cause of delays, the lawyers could sue their estate to pay for the compensation.

    Perhaps we would find that people would deliberately get on trains which are running later in order to claim compensation. Imagine – it flashes up on the board that a train is delayed and there’s a sudden rush of people to get on that train. If the snow starts falling, which always causes serious delays where I live, or there’s a storm and lots of fallen trees, everyone comes out to catch trains even if they wouldn’t normally in order to get the compensation.

    The certificate shown in the article doesn’t seem to have any passenger’s identity on it, so perhaps a market in these things could develop. Maybe if I had one but the lateness wasn’t a serious issue for me, I could get a handsome price for it from someone else who needed it to prove lateness when actually it was their fault. On the other hand, wouldn’t it cause more delays if we were all waiting in a queue to give our identity when these things were being issues?

    You say you work in IT. Doesn’t this mean when you’re developing software systems you have to think of all the ways they might work or go wrong when put in practice? It’s what I’m always telling my students (I teach computer programming), in any system they develop they really must think through all possibilities. What are called “computer errors” are really programmer errors, because someone writing the software didn’t think through all the possibilities.

    Oh, and being picky, the last letter of my surname is ‘h’, not ‘k’. It’s a long established West Midlands surname, the -bach ending being a feature of some placenames round that way, Sandbach in Cheshire is an example. See here (yes, I can use HTML as well).

  • Matthew Huntbach 6th May '14 - 4:32pm


    yes, I can use HTML as well

    Well, obviously I can’t, as the tags sem to have gone, try again, here

  • Alisdair McGregor 6th May '14 - 6:16pm

    @Robin Bennett – thank you, I generally try to regard comment threads as something to be engaged with, not ignored.

    @Matthew Huntbach – you seem to be ignoring the general point that the impetus is to provide an incentive for the TOC not to run the service late. I’m well aware of the domino effect in rail operations. I’m also well aware that Japanese railways manage to provide a service that performs to high standards of punctuality. It can hardly be doubted that a TOC under such pressure to perform would exact similar upward pressure to the infrastructure provider to ensure that the service would be deliverable. That can only be a good thing for infrastructure investment, resilience and capacity.

    I apologise profusely for spelling your name incorrectly, please forgive me.

  • Andrew Colman 6th May '14 - 8:51pm

    The big mistake was not privatising the railways, but fragmenting the railways ownership into many bits. The railways should have been privatised in one piece or not at all. What was done was equivalebnt to privatising BT but having separate owners for every telephone line. Had BT been privatised in this way it would be a disaster.

    The railways should be brought back into one piece with one timetable accountable to elected representatives of the travelling public. Off course there should be private involvement, but the railways should be considered as a single entity competing against road transport

  • Getting back to the subject of the article, the problem with any TOC carrying out significant investment is that they are thinly capitalised vehicles so guarenteeing investment in assets with lives of 30 years upwards becomes problematic if you haven’t got a public sector contract or long access rights behind it. If TOCs had a bigger asset base, such as owning infrastructure or rolling stock, it becomes much easier but then you are starting to look at integrated structures again!
    Also can I please make a plea about repeating political myths such as the railway being starved of investment in the 1980’s. We actually did very well in the 80’s and all the financial strictures of the early 1980’s were more than reversed later in that decade. For us on BR, it was a time of relative plenty.

  • Alisdair McGregor 6th May '14 - 10:51pm

    @Andrew Colman – that’s illegal under EU law. Quite aside from being, as I’ve explained above, a terrible idea for investment in the railways.

    @Andy Wylie – personally I think there is an argument to be made in terms of combining ROSCOs & TOCs, but that’s the kind of decision that is down to the companies concerned.

  • Comparing open access operators to franchised operators shows a massive flaw in logic, franchised operators provide both profitable services and those that only exist out of social necessity. Open access operators only exist on services that have potential to be profitable, comparing northern with grand central is no evidence base for liberalisation of the railways. By further liberalising the market you would be allowing operators to focus precious paths on duplicated profitable services whilst many rural lines and stopping services would suffer.

    One could argue competition between operators does exist within the fanchising process. However, questions must be asked why Intercity could run nationalised at a profit , but in competative environment at a cost to the taxpayer.

    High fares, and increased restrictions are a result of demand management, caused by a lack of capacity, and state micromanagement of private operators more so than private companies profits.

    Given that liberalisation of the market would bring about social disbenefits the choice must be between the status quo, or nationalisation.

  • Matthew Huntbach 7th May '14 - 6:36am


    Saying “it wasn’t nationalisation that was the problem, it was the Govt of the day” is basically saying “nationalisation caused the problem”. At least it does to me, although clearly not to you.

    OK, so why do you believe in democracy? Or perhaps, do you believe in democracy? If you cannot trust the people to elect governments which do not do stupid things, maybe we should not have democracy. I note that an anti-democratic philosophy which achieved some prominence in the early decades of the last century is sometimes written up as “at least it got the trains to run on time” where it was the philosophy of the government in Italy at that time.

    Now I could bring up various cases where private business has failed to provide good service. Consider G4S in its provision of security services to the London Olympics. Or the string of financial product mis-selling scandals where people were sold insurances and pensions and the like which were not in their best interest. If I were to use your sort of line, I would then conclude that this means the private sector is always bad, we should not put anything important in private hands. That would be simplistic, however, I think you would agree.

    So that was my real point – I want to look beyond the slogans “private good and public bad” and vice-versa, that was why I was asking for consideration of how it actually works on human terms. I am not making a dogmatic insistence on state control of everything, I’ve always been pragmatic on that position, and so has the Liberal Party been right back to the 19th century. Gladstone himself introduced legislation to nationalise the railways, did nationalise the telegraph system, and Joseph Chamberlain came to fame for his taking into local state control the gas and water services. That is why I am saying that this shrill “private good, public bad, put everything into the hands of private business” line, which we are seeing increasingly coming from those people most proud of displaying their affinity to the Liberal Democrats is NOT quite the continuation of authentic 19th century liberalism that they like to claim.

    Your line that a bad thing happened under nationalisation, therefore nationalisation always causes bad things fails as a logical line unless you can show more clearly how it happens and that it always happens. That was just what I felt about socialists, they had great theoretical lines about why their system was good, but their explanation at human level was really rather weak, and their failure to explain why it went wrong in reality in a way that suggested they understood its problems and so knew what safeguards to put in place if their philosophy was pushed forward again convinced me they were people too much happy with the safety of the theories but with little connection with the real world, and hence very dangerous people to have in any governing role. The shrill lines used by you and Alasdair McGregor ring much the same alarm bells with me.

    If Alasdair McGregor wants to convince me of his ideas, he has clearly gone about it in the wrong way, just winding me up rather than making me think perhaps there is something in what he suggests. Maybe that’s something he needs to consider. Meanwhile, though I’m hanging on to my Liberal Democrat membership, I’m glad I’m not living in Calder Valley, because from what he’s written here, I really would not want to vote for him, because he really does sound like a right-wing Tory when it comes to economics.

  • Matthew Huntbach 7th May '14 - 6:51am

    Alisdair McGregor

    It can hardly be doubted that a TOC under such pressure to perform would exact similar upward pressure to the infrastructure provider to ensure that the service would be deliverable.

    How? In what position would it be to exert upward pressure? Surely the reply would be “Well, you put in the bid for the service, so you deal with it”. It looks to me like you are proposing a system where there will be endless buck-passing with no-one actually taking responsibility. I don’t see anything in your proposals which would mean a company would have the sort of long-term view that might encourage the sort of long-term investment which is needed for a good railways system. Rather it seems to me the incentives would be to make a quick profit even if that is at the expense of the long-term view. Company A puts its efforts into providing a swish service on its trains, while Company B puts its efforts into pleading for long-term investment on the infrastructure. Which one gets the customers?

  • Matthew Huntbach 7th May '14 - 7:07am

    John Kelly

    Let’s not forget how awful customer service was on so much of the nationalised railway system, as sadly has been the case in other parts of the public sector where it seems difficult to provide universally good and caring service

    And customer care in the banks? They are shelling out billions in compensation for selling customers useless products. Plus ever tried to use their counter services recently? Or call centres? Just a couple of years ago I wanted to invest some money in one of a bank’s products and I ended up running out screaming at them, their service was so bad. Similar with telephone operators, my wife was left in tears at the poor customer service from the mobile phone company she used to use, because of the uselessness of their call centre and the arrogant and ill-informed way they handled her questions – end point was there she was actually crying down the phone at them and so they end the call by saying “Thank you madam, is there anything else we can do for you today?”. Right now I am dealing with a pass-the-buck issues between competing companies in communications – phone line provider insists it’s the service providers fault and vice versa.

    I don’t want to play wheeler-dealer. As Stephen Howse puts it, if I want to catch a train to somewhere I want to be able to turn up at the station and catch the next train that goes there. I don’t want to be made to feel I have to do extensive research into what is the best option, looking up comparison websites, and all that. I don’t want to be endlessly trading, swapping this provider with that provider because this time this provider is supposedly better, that time that provider is supposedly better. Why do you market freaks want to force me to do that? Maybe you find it fun, I don’t. I have better things to do in my life.

  • geoffrey payne 7th May '14 - 7:45am

    The USA have never nationalised their railways and they are awful. In the UK most commuters that go into London are staunch Tories but even they support nationalisation. The main problem is that travelling by train is too expensive.
    I think there is too much ideology on this thread. Usually free markets are better than nationalisation but sometimes not.

  • Phil Wainewright 7th May '14 - 8:53am

    Well said, Matthew Huntbach.
    The whole argument between public vs private ownership is a complete red herring and one that Liberal Democrats of all people should not be distracted by.
    The common theme to the successful examples being held up in this thread – Swiss Railways, Japan, London Overground – is that they are the result of people working together to deliver a better service to the communities they serve. That is the objective that matters and it comes from leadership and commitment, not from some sterile concept of free market competition or socialist dogma.

  • In the real world this,would hand even more power to the infrastructure provider so increasing the gap between passengers and other rail customers and the organisation which will be planning and delivering services.

    But I expect this sort of idea will become more typical of the Lib Dems as the Orange Bookers exert more and more power in the party.

  • David Evershed 7th May '14 - 12:26pm

    Just to summarise:

    1. The rail infrastructure is owned by Network Rail which is effectively a nationalised company. Because of the monopoly position of the rail network it is hard to see a ‘for profit’ company alternative.

    2. Train fares are already subsidised by general taxation. The only issue is how much should rail travellers be subsidised – remember that the commuter lines need less subsidy than the long distance journeys.

  • nvelope2003 7th May '14 - 1:07pm

    The problems of the railways stem from their insatiable and unending need for subsidies from the taxpayers and from Government borrowing because there is either insufficient need for the services presently provided or the users are not charged the true cost which for railways is very high.

    Railways were built by private firms to offer faster transport than canals and horse drawn vehicles could although these lingered on in some areas until the 1950s but were almost entirely superseded by motor vehicles which were much more flexible and faster overall even than the railways. Richard Beeching was right in his analysis even though this was uncomfortable news for people, including me, who come from a railway backgound. Even both my grandfathers recognised this and they both ceased work in the 1930s.

    There is a need for some railways in large urban areas like London, Birmingham etc and some fast long distance services but the rest of the network is largely an anachronism. Journeys by rail count for about 7% of total travel, mostly in London and the South East. One or two franchises such as SWT make a surplus after all costs including track and signalling have been included. Some of the others could do so but large sums are needed to maintain little used rural routes which offer little benefit as few people use them and they can abstract passengers from the much more useful local bus services which serve more places than the trains.

    The honest answer would be to convert some long distance routes for use by High Speed trains . A nation with huge borrowings cannot afford to spend billions on an under used railway system just to keep enthusiasts happy but if the majority of people want to do that then who am I to tell them they are wrong ?

  • nvelope2003 7th May '14 - 2:56pm

    Regarding the assumed environmental benefits of railways it is said that only 10% of the capacity of trains from London to the North between 0700 and 100 is used. How can this be environmentally friendly ? Trains use huge amounts of energy and High Speed trains even more. Of course trains are nice and I love them but are they more important than the many other things which are needed ?.

    If an individual or business needs a service or equipment it is wise to follow the normal practice of inviting quotes or tenders to get the best value for money. This would clearly apply to the government’s requirements for the provision of railway services. How would the taxpayers know if they were being overcharged if this is not done ?

    The operators should also have to bear the cost of track and signalling as in the original franchises to make the true costs transparent. If a “not for profit” or state owned operator gets into financial difficulties who will bear the losses ? When GNER and National Express overbid for the East Coast line they had to bear the losses themselves .

  • nvelope2003 7th May '14 - 2:58pm

    The second line should read between 0700 and 1000 in the morning

  • Alex Baldwin 7th May '14 - 5:23pm

    Taking the train here in Montreal has really opened my eyes as to what a rail service CAN be like.
    1) The trains are big (double decker) and look like they were designed to punch through icebergs. Very reliable.
    2) There are enough seats for everyone, even at peak times.
    3) Tickets cost the same at any time of the day. Travelling for an hour from the countryside to the centre of the city costs $7.
    4) You have to validate your ticket before you get on the train, so you can’t reuse the same return ticket every day for a month (some people have to do that to cope with UK rail fares).

  • George Carpenter 7th May '14 - 5:47pm

    I’m not one of these socialist wackjobs who think that centralised Government ownership is always best.
    However, I’ve seen a few blog articles by Lib Dems regarding rail nationalisation recently and they’ve all been rather vague. This is the same. Calling for a “liberal”, as opposed to a privatised or nationalised service, which no one really seems to know what the heck it is.
    All I know and what many people know is that fares have rocketed, whilst costing the taxpayer 3 times as much. It is simple, rail is a natural monopoly and therefore should be in Government hands, or at least privately run with Government having majority shareholder control, like the French and German systems.

  • Alex Macfie 7th May '14 - 5:56pm

    @nvelope2003: But trains from the North to London are likely to be full at that time in the morning. But (and surely you must realise this?) the trains to get to the North to carry passengers to London they have first to get there from London where they last ended their journey ferrying lots of passengers there. It’s the same for peak-time services on most lines: the bulk of the flow is in one direction, but the trains in the counter direction still have to run in order for the trains to be where they need to be.
    And surely you must have noticed the internal contradiction in this bit about rural train services:

    few people use them and they can abstract passengers from the much more useful local bus services

    This reminds me of immigrants both scrounging off the state and taking our jobs! Anyway your arguments were discredited long ago. The Beeching-era closures largely ceased in the early 1970s because it was found that they weren’t actually producing any savings. There are good reasons for this. Although the branch lines aren’t very profitable, they also don’t cost very much to run and maintain, relative to the commuter and long-distance lines. And they act as feeders to the main lines. Take away the branch line that people use to get to the main line and onward to the big city, and the people who used them will probably not railhead; they will just drive all the way.

  • Alex, I agree with your sentiment regarding branch and secondary lines but the main reason the closures ceased was that the Government of the day finally realised that the whole system was never going to be profitable and that these minor lines had a social value which warrented their retention. Sure, some savings on rail could have been made but the overall cost to UK PLC would have been greater, for the vast majority of the lines involved.
    That remains, effectively, the current policy and why a large degree of public sector involvement, funding and control is still desirable. To those that say that these (regarded as) socially necessary services could be better provided by open access operators, you are very wide of the mark. They are not cheap to run (staff, rolling stock mtce, fuel costs) and the revenue sometimes doesn’t cover those Opex basics, let alone any of the Capex.
    The question of whether these services can be, or should be, provided for ever is another debate. But one that I would like determined locally, not in Whitehall.

  • Alisdair McGregor 8th May '14 - 12:26am

    @Matthew Huntbach – you can hardly accuse anyone of being undemocratic, when precisely the point that is being made by MatGB is that when a democratically elected government changes, policies towards state industries will change. THAT’S A PROBLEM WITH THE STATIST APPROACH.

    @George Carpenter – Disagree entirely. TRANSPORT as a whole is not a natural monopoly, and rail is just one aspect of transport. I’ve also been quite clear on how I would achieve a liberal rail system by moving away from franchises (which are just state-granted monopolies) to Open Access Operator usage.

    @Alec Baldwin – I’d love to see a bigger loading gauge for the UK rail network, but the wholesale changes to clearances it would require means essentially a complete rebuild of the railway infrastructure. That would be very costly.

    What I would do, were I Minister for Rail, would be to require new structures built alongside or over railways to comply with the Betuweroute loading gauge (big enough for double stack containers). After 30 – 50 years, most of the infrastructure would became of a standard that your could then do the rest in a final push.

  • Once I thought the answer would be to run the railways like the roads and coaches. Any operator could pay the state controlled owner of the railway network to run their train. The idea of Open Access Operators could be seen as a development from this. In economic theory terms a perfect market has lots of suppliers who offer similar products to meet a large amount of supply. The railways is not any area where this can happen and so there can be no pure free market solution.

    Alisdair Calder has suggested that these Open Access Operators would want to run their trains to maximum efficiency. However it is unlikely that a train would be operated on a popular route and a unpopular route. Therefore there would be some cherry picking. With a free market it is usual for new suppliers to enter the market, with the railways there is a limited number of journeys that can take place between two places on the same route. Building an alternative route by an Open Access Operator would be impossible under the described scheme. It would take years for the railway track company to build new capacity.

    Therefore while private companies can provide train transport a near monopoly is likely to develop where it is difficult for new suppliers to enter the market. These private companies could make profits but there will not be sufficient competition to drive down prices. In this type of market state operators are an option as is a highly regulated market, but a liberal market is not the solution.

  • Matthew Huntbach 8th May '14 - 3:33am

    Alasdair McGregor

    @Matthew Huntbach – you can hardly accuse anyone of being undemocratic, when precisely the point that is being made by MatGB is that when a democratically elected government changes, policies towards state industries will change. THAT’S A PROBLEM WITH THE STATIST APPROACH.

    If the people elect a different government then government policies will change, and that’s a problem. Yes, so that’s an argument against democracy. So why do you say it isn’t?

  • Matthew Huntbach 8th May '14 - 4:18am


    Therefore while private companies can provide train transport a near monopoly is likely to develop where it is difficult for new suppliers to enter the market. These private companies could make profits but there will not be sufficient competition to drive down prices. In this type of market state operators are an option as is a highly regulated market, but a liberal market is not the solution

    This applies to many things in the modern world. The sort of services that big companies provide require huge complex systems. So new suppliers can’t just come along overnight and challenge them. The level of investment required to provide a challenge is so huge that it just won’t happen. For example, Microsoft products are poor in many ways, yet we use them because they have become the standard, a challenger to Microsoft and all its products can’t just come into existence overnight. The big supermarket chains are an example of the market working – markets in consumer products work best when the product is frequently purchased and its quality relatively easy to assess – yet the number of supermarket chains is small, and the level of investment that would be required to start a new one from scratch is such that it doesn’t happen.

    That is why theories and principles about the use of markets which may have been appropriate in the 19th century, when things were on a much smaller scale may not be appropriate now. That is why those who call themselves “19th century liberals” or “classical liberals” or “authentic liberals ” or whatever, even if they are not being selective in what they quote from the past are fooling themselves (assuming they genuinely believe in it rather than are being paid by vested interests to promote it) if they don’t consider how the changes in scale might affect things.

    The fundamental aspect of liberalism is about personal freedom. If market economics contributes to that, it is a useful tool, but we should consider it a tool to be used when appropriate, rather than a fundamental. The traditional liberal phrase was “free trade” which most clearly expresses the idea that people who want to exchange goods and services in a mutual agreement should not be prevented from doing so. It is not primarily directed towards “competition driving up quality”, that is a beneficial side-effect, not what it is all about, at least when looked at in terms of liberalism.

    Reliance on services provided by big companies or by the state – there is no need to draw much of a distinction – reduces our freedom in someways as it is a reliance, but increases it because of the opportunities it supplies. If I was a peasant farmer with enough land to grow crops and keep livestock to feed me, in some ways I would be as free as anyone could be as I would have no reliance on anyone else. But I would be spending all my time on farming, it would be a life with little in the other freedoms that a more advanced society provides.

    The debate on the extent to which market solutions work need to be on these terms, not on the terms “If you don’t accept them, you’re an old socialist dinosaur, yah-boo-sucks”. The problem with Alisdair McGregor’s (got your name right this time – having complained about you getting mine wrong, I note I’m not being careful enough about yours) original article was that it seemed to be too much taking that approach. The use of the word “liberal” to mean an argument for markets based primarily on the supposed effectiveness of competition in improving performance rather than on personal freedom worries me, and we are seeing a lot of that nowadays. The argument about whether competition drives up quality is a separate argument than the argument about liberalism, therefore there is no reason liberals should feel forced to take one side or the other. The mechanics of how it works need to be taken into account. It applies more in some situations than in others.

  • nvelope2003 8th May '14 - 1:01pm

    Alex Macfie:
    Of course I know that positioning journeys can often be lightly loaded. I spent most of my working life in public transport. The lightly loaded trains which are going North in the morning were also coming South lightly loaded the previous evening. Only the trains coming to London in the morning and departing from London in the evening have good loads. There would seem to be a good case for thinning out the northbound morning and southbound evening journeys in favour of extra journeys if required in the opposite direction.

    The position of rural trains and buses has nothing whatsoever to do with immigrants although it is surprising how many are driving buses in rural areas where jobs are said to be in short supply. They are normally very good too people too.

    As I made clear I am not in favour of closing down any railways and would like to see some reopened because that is what people want and we live in a democracy but we should not be under any illusion that this is a costly choice which means other, possibly more desirable, things will have to be sacrificed to achieve this.

  • nvelope2003 8th May '14 - 3:34pm

    Geoffrey Payne:
    I assume that you mean US passenger services are “awful” but maybe that is because most Americans seem to want to go everywhere by car, however long the distance, even shunning planes. Distances are much greater there so trains have little chance of competing with planes except over short journeys. US freight railways still carry vast quantities of freight for the same reason that US passenger services do not – long distances. But in Continental Europe rail freight, even over long distances, is very low and most attempts to increase it have been resisted by state owned companies and unions because of vested interest in the present inefficient methods. I suppose they are just hanging on to get inflated redundancy payments like the bosses of the Co-op and the assets will be sold off or scrapped. Hopefully this will give an opportunity to private sector operators in the future as has happened in the UK.

    Train fares have always been high because the necessary safety requirements mean that railway costs are extremely high. This was the case under BR and would be so under whatever system was introduced. Those Tory commuters just want someone else to pay their fares – wouldn’t we all – but it is not unreasonable that those who benefit directly from a service should pay most of the cost. One of the curious effects of Government control of the railways is that a small amount of fare money from the South East subsidises trains in the provinces.

    Timetables on rural routes do not always reflect the travel needs of users, especially at peak times and on Saturday mornings. On my local line because of signalling issues the provision of an unnecessary additional train to the regular hourly service on Saturdays adds extra stops to the journeys and makes them longer. Would a commercial operator do this ? This train has to run about 75 miles empty each morning. So much for the environment.

  • @ Matthew Huntbach – You are quite right, what applies to the railways often applies today. I sometimes think that those who advocate more privatisation do not understand the basis criteria for how the microeconomic free market should work, with lots of suppliers and easy entry into the market coupled with the consumers knowing what prices are being charged by all suppliers.

  • Toby Fenwick 8th May '14 - 9:18pm

    On the narrow question of route clearance, clearing the UK to take double stacked containers is not going to happen anytime soon. Currently, most parts of the network require vehicles no higher than 13′ 1″, and to operate the higher 9’6″ containers requires special clearance or special wagons. Double stacks range in clearance height from about 18′ to something over 20′ – an additional 5-7 feet(!) of clearance.

    The cost savings from double stacking would take generations to pay off the cost of the re engineering. A total non-starter.

  • Alisdair McGregor 8th May '14 - 9:52pm

    Matthew Huntbach 8th May ’14 – 3:33am
    “If the people elect a different government then government policies will change, and that’s a problem. Yes, so that’s an argument against democracy. So why do you say it isn’t?”

    That’s not an argument against democracy, that’s an argument against statism.

  • Alisdair McGregor 8th May '14 - 9:55pm

    @Toby Fenwick – I did say there was a timeframe of 30-50 years, during which you enforce a future-proofing standard for all new and replacement infrastructure, until eventually you are in touching reach of setting the whole thing into the higher loading gauge.

    Of course, you also only have to do that on the major routes. There’s little point on branch lines and light freight lines.

  • @Alisdair – I suggest you look at the strategic rail freight

  • @Alisdair – I suggest you look at the strategic rail freight. Re-gauging of key freight routes to support the W10 standard (capable of carrying intermodal containers 2.9m high x 2.5m wide, has been part of the strategy since 2004. However, I do not expect within the next 100+ years for the entire rail network to be re-gauged. However, there is no guarantee that these larger containers can or will be transportable throughout Europe, due to the wide variety of loading gauges in use…

    Personally, I regard many of the efforts to modify the established international standard for intermodal containers as attempts to destroy the standard. This can only result in increased transportation costs and greater restrictions on the movement of containers (due to incompatibilities the changes introduce). Hence I see no real reason to support any attempt to establish a new “future-proof” standard which will probably be changed again for reasons of “future-proofing” within the next 30~50 years.

  • Toby Fenwick 9th May '14 - 1:55pm

    @Alisdair: Roland it spot on – W10 (let alone W12) enhancement is slow, prioritized onto the main intermodal routes (e.g. Felixstowe – Nuneaton, Southampton – Midlands) and is expensive. Whilst overbridges could in theory be dealt with on a rolling programme as they are life expired, your proposal also requires either routings without tunnels, or wholesale reconstruction of all of the tunnels on the main and any diversionary routes. This would be mind-blowingly expensive for the (finite) benefit of running double-stacked container trains.

    Let’s continue to pragmatically clear to W12 (2.9m x 2.6m / 9’6″ x 8’6″) with new construction, and UIC GC on the high speed network. Interestingly, it is providing UIC GC clearances from the Channel Tunnel to the Midlands and Scotland for freight that will drive the HS1-HS2 link, rather than direct Manchester – Paris passenger services. But that’s an argument for another day.

  • A leading Labour MP interviewed on the BBC today said that what the party wanted was for the East Coast line to stay as it is in the public sector and that the other franchises should be more closely monitored to make sure they did what they had promised or they would not be renewed. He also seemed to say that there should be incentives for franchise holders to invest and they should be compensated by the next franchise holder for any equipment installed if the franchise went to another company after 15 years.

    Seems reasonable enough I would have thought. It is always a good idea not to keep all your eggs in one basket and not restrict operations to only one form. One franchise might try an idea which improved efficiency and that might be taken up by the others if it worked. Some people here seem to think that every time the least thing goes wrong the state should nationalise it. Not sure that would be much help as public ownership seems to work better if there are some private firms as well (even if they are just there to pay the taxes to make up for their rival’s losses) .

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