Wednesday, 28 May 2014

A return to British Rail? Labour plans to renationalise trains - what are the consequences?

Post war British Rail saw a dramatic long term decline in rail use: this characterised the whole post war nationalised industry experience. Getting rid of British Rail has resulted in three key things:
- increased investment in the trains and its infrastructure
- allowed competition to improve services
- doubled the number of rail journeys by rail users.
Ask any train professional and they all say the same. The state has a poor long term record of running railways. British Rail was a disaster.

Where are we now?
All the track, signals, train pathway timetabling and stations are owned by a monopoly business largely financed by taxpayers and entirely owned by taxpayers. The train companies lease trains and run services over the nationalised tracks under strict controls from the Rail regulator and the Transport Department. They have to conform to five year centralised plans, and they gain near monopoly rights to use given regional track systems. The only element of competition in the whole thing is the competition for the franchises. The majority of the revenue to sustain Network Rail comes in the form of taxpayer financed subsidy.

When the railways were privatised a two tier structure was set up. There was a privatised monopoly track owner, and regional monopoly train franchise holders. This greatly limited the amount of competition introduced by privatisation, but even this limited competition administered a shake up and reversed .

Nationalisation plans by Labour:
Today the East coast mainline franchise is run as a nationalised monopoly, and Labour is looking at doing the same for some of the other franchises as they expire were they to win the next election. That would be a good way to stop the modest cost and price competition we currently enjoy  and would help limit innovation. For four decades a fully nationalised and integrated monopoly industry presided over large cash losses for taxpayers, high  and rising fares, declining train usage, little innovation and poor service levels. Why would a future completely nationalised BR be any different?

Simple question: are we all prepared to pay more to run the new British Rail? And will it be better. I know of no person who works in the rail industry who supports a return to British Rail. Labour is clueless as to how to pay for this, and naïve to expect a better service.

Fares for commuters on crowded routes into our main cities are too high and service levels not good enough. Too many cross country and mainline express trains fail to attract nearly enough paying passengers, whilst a limited number of trains and routes beyond the commuter lines suffer from overcrowding. We need more innovation, not less, more competitive pressure to do more for less as the airlines have done, new thinking on how to improve service and allow more of us more of the time to choose the train for our travel. That requires a more competitive industry with more private capital and management, not a return to BR days.  Where challenger railway companies have been allowed they have helped lower prices and improve the range and quality of services.

3 comments:

  1. The problem with both sides of the argument is that it promotes dogma. None of us who regularly use the East Coast mainline would argue that it is not run efficiently, well and repaying it's way.
    I believe there is a place for a mixed economy where essential public services remain under public ownership and control. No greater public service exists in our country than the NHS. Compared to countries such as the USA which have a fully privatised system, the NHS is more cost effective, efficient and more to the point equitable.
    At a time when wage gaps are widening, keeping such an essential service in public control is the only way of ensuring quality treatment reaches the less affluent.
    Renationalise the railways, maybe not, but we should think long and hard before for selling off our most treasured and essential services.

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  2. Dear Guy We are all grateful I am sure that you have consistently put rail on your agenda. And you accurately realise that today it is only the train operation that is private and that the railway is once again effectively nationalised. However when you write "Ask any train professional and they all say the same. The state has a poor long term record of running railways. British Rail was a disaster." I cannot agree with that at all. Numerous studies showed BR to be at the top of the nationalised rail systems in Europe (for instance https://www.google.co.uk/search?q=Intercity+story+chriris+green&ie=utf-8&oe=utf-8&aq=t&rls=org.mozilla%3Aen-GB%3Aofficial&client=firefox-a&channel=sb&gfe_rd=cr&ei=D9mGU5b4CcXR8gffjYHIBw#channel=sb&q=Intercity+story+chris+green&rls=org.mozilla:en-GB:official) . BR design achievement was rewarded by a full volume from the Danish Design Council http://www.goodreads.com/book/show/9999588-british-rail-design .

    As I talk to managers I would suggest the support is 50/50. There are very many who think the present system is very wasteful and expensive and operationally chaotic. There are others who have worked out that the various layers provide endless ways to make money. They have adapted to the new order and done well and in many cases provided creative and effective solutions. Chiltern Railways is an example.

    For my money, the real way to test the situation is indeed to leave East Coast in the public sector. Various people have said opportunity should be taken to benchmark a nationalised operator against private ones. I think that makes sense although as Hexhome says the real problem here is dogma. Non dogmatic and surely benchmarking has merit. Dogmatic says the East Coast HAS to be private for otherwise the whole project is dead in the water.
    Robert Forsythe

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  3. What we have at the moment isn’t full privatisation – it’s a ‘half-way house’, largely because successive governments haven’t had the courage to ‘let go.’ In many respects, the railway is ‘micro-managed’ by the DfT, who define almost everything from fares to rolling stock, as well as influencing where any investment will go.

    While I can see the merits of Robert’s suggestion of leaving the ECML in state hands as a ‘benchmark’, surely a really bold experiment would be to completely privatise, for example, the West Coast line – everything from tracks to trains, and letting the market set all the fares. The limiting factor would be the capacity of the WCML, so perhaps we should consider auctioning off each individual train path to the highest bidder – perhaps encouraging more operators into the market. They would then bid for the rolling stock, and compete with each other on fares. A privatised rail track company would be incentivised to build more capacity so as to meet increasing demand.

    Now that’s what I would call a benchmark!

    Tom D

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