Rail Nationalisation

Rail Nationalisation

Jan Peake, a Crewe & Nantwich Labour Party member, talks about the recent rail strikes and if nationalisation can really work.

The south end of Crewe railway station.
Crewe railway station.
Photo: Matt Buck (https://www.flickr.com/photos/mattbuck007)

Last week we saw the longest rail strike since 1968 with hundreds of trains cancelled on the Southern Network across South-East England. This follows weeks of a bitter dispute between the RMT union and the parent rail company Gavia Thameslink Rail (GTR). During this time regular commuters and dependants of the rail service have suffered cancelled services and disruptions resulting in long delays.

The reason for the dispute is a plan from GTR to utilise CCTV cameras and driver controls to remove the need for train guards. This is seen by those within the industry as further increasing health and safety risks where overcrowding is already an issue. And why would GTR wish to push ahead with this move despite the negative press, disruptions to customer service levels and health and safety concerns? Profit of course, a privatised rail service has a legal duty to maximise their profits for shareholders rather than put passengers first.

A lot of us do not rely upon the rail service for frequent travel, maybe just the occasional city visit to avoid parking or congestion charges and traffic delays as a result of already stressed road networks. As a result, the true cost of rail privatisation remains unseen to most of us. Recently I had a need to visit London on a business trip and the best all round solution for my colleagues and I was a London Midland slow train from Crewe, purchased in advance for a very reasonable price. We had topics to discuss and this environment would suit the need and removed the risk of traffic delays. Our lack of rail experience soon became apparent when 5-minutes before the train was due to depart the service was cancelled, as was the following London Midland train due to a “lack of rolling stock”. In a town that at its peak employed 20,000 people in the rail industry! Too late to do anything else our only choice was to purchase new tickets from another provider (Virgin) offering a much faster service which ensured we would arrive on-time but at a price increase of nearly 400%. My brief insight into the pitfalls of “public” transport was enough to inspire me to look into the truth behind privatisation of the rail network and share some of the reasons a Labour government would look to nationalise the rail network.

Lets look at the myths behind the success of rail privatisation:

Myth 1: Privatisation has created passenger growth

  • More likely this is due to long-term growth in GDP, changing commuting patterns as employment has concentrated around major urban areas and increases in motoring costs
  • The 59% increases in passenger growth could also have been stimulated by the 300% increase in public spending subsidy since privatisation

Myth 2: UK rail privatisation has resulted in new investments and innovation

  • Over 90% of new investment in the railways in recent years has been financed by public sector body Network Rail, and comes mainly from taxpayer funding or government underwritten borrowing
  • Genuine at risk private investment in the railway in 2010-2011 lay somewhere in the range of £110m and £380m, most likely at the lower end. In the same year, other sources of income for the railway from public money and the fare box contributed £10.6bn
  • The average age of trains is higher than it was in 1996, despite the increase in usage there has only been a 3% increase in new carriages

Myth 3: UK rail privatisation has resulted in cheaper and better services for passengers

  • The cost of running the railway has more than doubled in real terms since privatisation from £2.45bn per year between 1990 and 1995 to approximately £5.4bn per year between 2005 and 2010
  • Official figures show that all but one of the private train operators in the UK receive more in subsidies than they return in the form of franchise payments
  • The top 5 recipients of public subsidy alone received almost £3bn in taxpayer support between 2007 and 2011. This allowed the recipients to make operating profits of £504m, over 90% (£466m) of which was paid to shareholders.

So, can public ownership really work?

Network Rail, the organisation that is in charge of Britain’s railway infrastructure is currently in public ownership but the government is looking to break it up and sell off its parts. This is to close a funding shortfall where between 2002 and 2014 it borrowed substantial amounts of money to pay for rail infrastructure upgrades. The government chose to ignore the growing debt and now has a £41bn problem. And again is looking at a short term fix that is not in the interest of the taxpayers. The saleable assets being considered provide a long term source of income. The estimated loss to Network Rail over 10-years is £10bn.

In 2009 National Express walked out of their franchise contract, returning the service to public ownership and run publicly by Directly Operated Railways. East coast mainline was highly successful in public ownership, boasting a 91% customer satisfaction rate. East coast also required less public subsidy than all of the privately run lines which only made up 1% of the lines income compared to an average of 32%. East coast paid back £1bn to the treasury, money that could be invested back into the railways. It was also the most efficient franchise in the UK according to the Office of Rail Regulation. Despite this success it was re-privatised in March 2015 meaning any future profits will go to the shareholders.Putting the public back in control of our railways need not cost a penny, each line could be brought back into public ownership as the private sector franchise expires. According to the YouGov polling, 66% of the public support bringing the railways into public ownership.

France has a largely publicly owned rail system and in 2013 provided fares that were half as expensive as those in the UK with the same level of government subsidy.

The Labour Manifesto

The Labour manifesto transport section outlines their plan to create an affordable transport system that puts the public first and where discussions about services are taken closer to the passengers who use them.

  • Rail fares will be frozen next year to help commuters while we implement reforms. A strict cap will be introduced on every route for any future fare rises and a new legal right for passengers will be created to access the cheapest ticket for their journey.
  • We will legislate so that a public sector operator is allowed to take on rail lines and challenge the private train-operating companies on a level playing field.
  • We will review the franchising process to make sure the Tories’ franchising fiasco is never repeated.
  • We will create a new National Rail body to oversee and plan for the railways and give rail users a greater say in how trains operate.
  • City and county regions will have more control over the way buses are operated in their area. They will be able to decide routes, bear down on fares, drive improvements in services, and bring together trains, buses and trams into a single network with smart ticketing.

This current manifesto under a Labour government will bring about a fairer and more affordable transport system that allows for reinvestment into the network, create a sustainable transport system without having to worry about shareholders profits. The governments of Germany, France and the Netherlands all have major stakes in our private rail service. If other European governments see profit opportunities from the current franchising solution, then this is surely something that Britain can make great again.