Pretty much everyone seems to have an opinion about the railways, even those who don’t travel by train. I’ve worked in the railway for quite a long time now, spanning the nationalised British Rail and the current privatised structure. The current structure often frustrates me, but there have been some good things in recent years as well. The growth in passenger numbers over the last 15 years couldn’t have been dreamed of when I started work, for example.
However, what frustrates me most is that no-one, as far as I know, has ever evaluated whether the benefits of the current structure are outweighed by the disadvantages (I realise that this is a more general fault in public policy making).
The principal advantages of the current structure are that letting contacts for providing services allows the market to be tested, and for options between bids to be compared. Competition between bidders may also encourage innovation or promote control of costs. The contracts themselves and the long-term funding structure now in place give certainty to passengers, the government and the train operators themselves. Short-term falls in revenue don’t result in train services being withdrawn (which British Rail did in the early 1990s recession), and the industry can plan with reasonable confidence for the medium term.
The first disadvantage is the cost of the system. Replacing a single integrated organisation with a large number of separate organisations, all of which want to make a profit, has predictably increased costs. Managing contracts between the different parties requires many staff in Network Rail, the train operators and the Department for Transport (DfT). The cost of bidding for a franchise is now high. This cost, and the requirement for support from parent companies to prevent insolvency during the course of the franchise prevents community groups and other social enterprises bidding, something all political parties have tried to encourage.
As an example Network SouthEast, the British Rail organisation providing services in south east England, operated without public subsidy in 1993/94, covering both the costs of operation and track & signalling, at the cost of some steep fares rises during a recession. Although different methods of calculation make a comparison more difficult, only three train operators in the entire country managed to operate without any form of subsidy in 2013/14. Put another way, for the same money, we could achieve more or decide to keep fares lower; or the same results would cost less if costs were less.
The second disadvantage is the sheer difficulty in getting anything done in such a fragmented industry. Contracts give certainty to all parties, but can be time-consuming to change if circumstances change. Network Rail plans for long-term development of the network, DfT long-term specification and funding plans, refranchising and the timetable production process all have different timescales, which seem to coincide more by luck than by judgement. As a result, achieving any meaningful change is often frustrating difficult. No wonder passengers are often frustrated at the slow pace of progress.
So what should we do? As I indicated at the start, no-one has ever assessed whether the benefits of privatisation have outweighed the disadvantages. Therefore, I suggest that the party commissions a genuinely independent study on this subject. To me this would have advantages whatever the conclusion reached. If it concluded that privatisation had few benefits, the party could attack the Tories as ideologically obsessed, whilst perhaps remaining attractive to Labour voters who like some of Jeremy Corbyn’s policies, but are worried by his more radical proposals. On the other hand, if it concludes that overall, privatisation has been beneficial, the party could paint Jeremy Corbyn’s Labour as being ideologically driven. Either approach could build common ground with any potential coalition.
Let’s find out what works, and stop being constrained by either the present or the past.
* George Stephenson Junior is the pseudonym for a Lib Dem member who wishes to remain anonymous for professional reasons.
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28 Comments
We reorganised the railways in the 1920s, nationalised in the 40s and then denationalised in the 90s. By the end of the 80s we realised how foolish Dr Beeching’s axing of so many branch lines was. We need to look at future transport developments. What impact will driverless cars have on passenger rail transport? The argument between private or public rail is a discussion from the past.
It was not the closure of some branch lines which was wrong but the closure of alternative main lines or their reduction to single track routes or terminating them short of their intended destination.
I think the rise in passenger numbers is far less to do with rail ‘improvements’ than road congestion….Try getting into any major city, within an hour’s rail travel, by car……
The current government is the one that re-privatised the East Coast Line even though it was, as a nationalised company, giving one of the best returns to the exchequer….
I am with Corbyn (and two thirds of the electorate) on this matter…
nvelope, the distinction between ‘branch lines’ and ‘secondary routes’ in many rural areas was a hair’s-breadth calculation based on semantics. Many ‘secondary routes’ (eg the Oxford-Cambridge route) carried the low-volume stopping services which were typical of ‘branchlines’.
Many minor routes were clearly highly precarious, and the preservation lobby’s criteria of ‘it’s historically important and architecturally interesting and it goes through pretty country’ was (arguably) flawed, or at best an emotional appeal to the public that lacked enough hard-headed business sense to be heard. But it is certainly true that in the 60s and 70s efficiency gains being achieved by the operating authorities which could have enabled several minor lines to remain in usage and not be completely lost to the network were ignored by governments operating to an ideological agenda.
expats
Would you still be on Corbyn’s side if you lived in Birmingham and wanted to travel to London?
Currently you have a choice between:
Virgin – quick but expensive
Chiltern – slower but comy
London Midland – slow but cheap
Would a renationalised operation offer that choice?
Chiltern is comfy not comy!
crewegwyn 2nd Nov ’15 – 5:35pm……expats………….Would you still be on Corbyn’s side if you lived in Birmingham and wanted to travel to London?……Would a renationalised operation offer that choice?…
What it would offer me would be the chance, as used to exist with BR, to turn up, buy a ticket and get on a train…BR also used to offer cheap day returns, even cheaper off peak and evening tickets….
For years I used to commute from Manningtree to London…..In later life I regularly travelled Waterloo/London….My son commutes to London and his complaints confirm that my memories of BR are not ‘rose-tinted’…
Should read…Waterloo/Bournemouth
expats: You can still “turn up, buy a ticket and get on a train” on the UK National Rail network. Retention of a national rail network with ticket inter-availability and through ticketing is one of the things that was forced on the government when BR was privatised in the 1990s. Walk-up fares are still divided into peak and off-peak; only the names of the ticket types have changed. BR was also already offering cheaper fares on specific routes or trains (e.g. there were specific Network SouthEast tickets not valid on InterCity trains on the same route), as well as cheap advance tickets with specific-train booking. What has changed since then is that the range of tickets has widened, and walk-up fares are more expensive in real terms than they were.
The easy availability of walk-up through tickets and general ticketing philosophy that “a train is a train is a train” is not true in some other countries. For instance, on French TGV services you always have to book a seat on a specific train service, and exchange your ticket if you want to travel on a different service. And theirs is a state-owned enterprise. Don’t blame everything on privatisation!
If we are going to Commission an Independent Study then the author should take into the account the European Dimension as Transport Policy is a shared Competence between the EU and the Member States , Article 4 TFEU. Title 6 Articles 90-100 TFEU deals with Transport.
EU Directive 91/440 is the first EU Rail legislation, the directive separated operations and infrastructure and this directive it can be argued play a role in what model/structure rail should take. Directive 91/440 is part of The First Railway Package. Since then there have been two more Railway Packages and there is a Fourth which is currently going through the Ordinary Legislative Procedure at the moment. It is worth mentioning that the First Railway package has been recasted establishing a Single European Railway Area under Directive 2012/ 12/EU. As for the Fourth railway Package it aims to open up to competition, to introduce competitive tendering for contracts and other stuff.
Considering how EU cross-border rail services are looking now, we should perhaps be grateful for the way the UK passenger rail system is set up, with minimum service levels, and safeguarded through ticketing and inter-available tickets. EU rail policy seems to focus too much on “competition” making little attempt to promote the benefits of an EU-wide rail network. We should as a party have a policy on this. Unfortunately with just one MEP (thanks Clegg!) as a party we don’t have much influence over EU policy.
Like crewegwyn, I think competition has worked on the London-Birmingham routes. Monopoly franchises like most Home Counties commuter services have not worked as well. TFL concessions like the London Overground and DLR are generally applauded. The author is right that we need to look at what is working where without ideological blinkers.
I agree we should push for a proper business review of our experience with the privatisation of both passenger and freight rail services. However, getting the terms of reference right will be very important: is the review about delivering service (to users and the wider economy) or is it about delivering revenue to the Treasury?
I suggest the study needs also to look at the franchising renewal system and whether the rules that have been applied have really benefited the railways and their users – I’m thinking here of Midland Mainline (part of National Express) and Directly Operated Railways, both of whom ran a very successful franchise (very high levels of punctuality and passenger satisfaction) yet did not have their franchise renewed. The renewal process is a key part of the market, because of the high costs involved in bidding and the length of franchises, the potential market for those wishing to bid is highly restrictive and in fact largely consists of the existing operators, in fact any new entrant probably has as part of their business plan, the takeover of the existing franchise holder’s staff etc.
Digression: “We should as a party have a policy on this. Unfortunately with just one MEP (thanks Clegg!) as a party we don’t have much influence over EU policy.”
I suggest that even if every single UK MEP was a LibDem, the UK LibDem party would still have little influence over EU policy. Likewise even if the UK LibDems could influence the ADLE, they would only garner 70 out of 751 MEPs.
Hence the challenge with having influence over EU policy, isn’t so much about actual numbers of MEP’s but the party’s ability to use other channels to influence the European Council; who currently set EU policy.
Excellent point Roland, that is just how I used to achieve stuff at Council, stopped bothering trying to get things through committee, went and talked to officers and persuaded them.. Then they stick it on the priorities list as their recommendation… true political manoeuvring.
but we must desist from talking in terms of positioning for some future coalition. Whether it is likely or not, we really must present ourselves as a Party of Government, and be setting out our stall with what we would do in the event that we become the Government.. not by any reference to any other Party. By rights both the other two parties should be exposed by our media for their faults and flaws, if our media did their job right we would be presented as the sound government in waiting… any discussion of coalition must be side-lined until election night..
No, EU policy is set by co-decision, not exclusively by the Council.
The railways are useful but most people who need to travel have a car because public transport is not available 24/7/365
As soon as they get a car they have to use it for everything except perhaps commuting to London. I hear a great deal about overcrowded trains and have experienced it sometimes but from about 0930 to 1530 trains are often lightly used but the roads are full of vehicles. Whatever the system of ownership railways are very expensive to operate as they need exclusive use of the track and complex and colossally expensive signalling systems for safety reasons. If such systems were required on the roads to reduce accidents to the low level achieved by railways, at least in the UK, then railways would be able to compete with the car effectively but this is unlikely to happen as it would upset the voters. In order to keep costs down the operators have to provide a service which is less than ideal, hence all the complaints. The same applies to other forms of public transport such as buses or planes yet people think nothing of getting in their cars to go to a shop 5 minutes walk away many time each week. Better stop complaining I think.
We must back privatisation. Nationalisation simply does not work at all. Improvements have been massive since privatisation, whether it is the extremely popular voyager service on Cross Country, replacing the old state built rolling stock, the TFL London Overground concession.
I also favour fully driverless trains and all safety functions automated, with non unionised on board customer service team members from Serco or G4S acting as cabin crew who can concentrate on dealing with customer needs.
Network Rail also must be privatised.
@Stimpson: There is one problem with your satirical caricature. London Overground does actually work well.
>No, EU policy is set by co-decision, not exclusively by the Council.
Regardless of how policies get introduced and fleshed out, the number of UK LibDem MEP’s is largely irrelevant to the influence the UK party has in Europe, although having MEP’s does give it a voice within the EU Parliament. Hence, the UK LibDems have to get better at lobbying the EU, if it really wants to be heard in the right corridors…
@Stimpson –
>”Improvements have been massive since privatisation”
Well yes, but let’s not overlook the amount of public money that has had to be spent to make the railways attractive to private investors…
>”I also favour fully driverless trains and all safety functions automated”
Might be nice, but much much cheaper to employ people, given we have so many of them, who are also much more adaptable than any IT system.
>”Network Rail also must be privatised.”
Why? Given the evidence of, Railtrack, how would this be an improvement on the current situation?
You’ve not made a case for not undertaking a study.
Privatisation has not been perfect but it would be unwise to assume that the big growth in passenger numbers would have happened under BR. This growth was totally unforeseen and it would be a very brave (or foolish) Government which would do anything to put it at risk. If it ain’t broke, don’t fix it.
Does the Labour Party plan to renationalise railway freight services. I have been unable to find any information on this but maybe someone on this forum would know. Maybe not as freight does not have the vote !
@nvelope2003 – passenger numbers did increase in the 1980’s, only falling back during the early 90’s “down-turn”. Looking at the pre “down-turn” trend and the post down-turn trend, I don’t see any significant difference in the rate of passenger growth. No I would suggest that an ulterior motive for privatisation was to straight-jacket the government into on-going investment in the railways! I suspect if left much longer, the “creaking infrastructure” would have failed…
Totally agree about the absence of any mention of freight, it is almost as if it doesn’t exist; but then it does use in parts a substantial rail network that isn’t shared with passenger services…
Roland: Yes passenger numbers did rise and fall under BR but nothing like the rise seen since 1997. Under BR they fell during recessions and rose in the boom years but recently they have just kept on rising and hopefully they will continue to do so. The only places where there was drop were those where there was disruption caused by major infrastructure works but this was followed by big increases.
nvelope2003 – I think I’m not communicating clearly!
If you look at the rate of growth through the 80’s and compare it to what we see post 1994, we see similar rates of growth (although since 2010, growth seems to have accelerated). My point was that passenger numbers were increasing, and hence privatisation has probably given us a network capable of serving these numbers without catastrophic failure!
What is is also interesting is that the outbreak of WWI effectively heralded the decline of the railways that was seemingly only bottomed out in 1982.
So I think we are in agreement, but I don’t attribute privatisation as being the cause of increasing passenger numbers, only the delivery vehicle that addressed the increasing demand.
Stimpson – the (not-totally-proven) ‘success’ of Tory PART-privatisation in the 90s does not justify further measures of privatisation.
We do NOT have a fully private railway system (thank goodness).
And, as I keep pointing out, there are many forms of potential increased public intervention or regulation in the railways that are NOT ‘nationalisation’ in the same way that BR was.
Even if Corbyn came into government tomorrow committed to rebuilding the railway structure of the late 40s (which he is not), I cannot really see the SNP allowing BR to be reinvented in its historic form; surely we would have two or three ‘national’ companies with Scotland and probably Wales in some way separate.
Private or public, in terms of the railways, is not an either-or, binary choice. The question is surely, what mix of private and public might work any better than what we have, can we substantiate this, how would we manage the transition and fund it, does any new structure need to be consistent and uniform across the UK, and does it need to be centrally or regionally managed or a mixutre of the two and to whom is it accountable?
Thanks to everyone who commented- didn’t expect the article to be published so quickly, so I’ve only just got round to reading them. It just confirms my view that everyone has an opinion on the subject! To address some of the points raised:
Terms of reference for a review: Yes, it’s vital to get these right, and I would suggest they should be set around what is likely to give the best outcome for passengers (and freight operators). However, I hope that I’ve demonstrated that the current system is also very expensive, so this should be taken into account. Some of the comments about whether public or private is best demonstrate well why a properly independent review is necessary, as many people have quite fixed opinions. I expect that my view is fairly clear, but if it could be demonstrated that the current system is better, I would probably change my opinion (reluctantly!)
Passenger growth: I think it’s fair to say that the causes of passenger growth over the last 15 years or so are not well understood, but seem to be independent from any changes to the industry’s structure. Societal changes seem to be underlying this growth, so no-one can say that it would/wouldn’t have happened under BR; or that it is a direct consequence of privatisation. The best commentary on this I can find is on the Railnews website at http://blog.railnews.co.uk/?p=276
EU legislation: Directive 91/440 only requires separation of accounting for operations and infrastructure, not functional separation. This is a myth which has been around for a long time, but it has no influence on whether a railway has to be privatised or not- most other European railways remained nationalised, although there are now ‘open access’ freight and passenger operators in some countries. The Fourth Rail Package does require compulsory tendering of contracts, but doesn’t state whether these should be public or private. As Morgan-Ross Inwood states, it’s currently going through the European Parliament, so it’s unclear whether it will be passed, or in what form. My feeling is that it’s more about freight and international passenger traffic, both of which have been more tricky to make work.
All this goes to show that we should review whether the disadvantages of the current system outweigh the benefits, or the other way round, whilst remaining open minded- which is my main argument