Friday, September 02, 2016
Should we renationalise the railways?
The privatisation of the railways was always a contrived attempt to prove that a particular brand of capitalist ideology could work in any circumstances. As an economic and social experiment it failed spectacularly.
One reason for this failure was that the operating and capital costs meant our railways were always going to need a public subsidy and that as such operators were actually competing to see who could operate at the lowest cost to the exchequer rather than against each other.
Another reason was that it is impossible to actually deliver straight competition in service delivery. The trains operate on a fixed infrastructure and there is no room for more than one operating company to compete on identical routes. Thus the franchises were effectively private monopolies based on geographic entities.
Despite the many tweaks to the model, including the effective renationalisation of the infrastructure company as National Rail, privatisation has continued to serve us badly. The much needed investment in the lines also known as electrification has been government-led and not, as the model would suggest, brought about in response to customer demand.
More disturbingly, the cost of subsidies remains high whilst the profits of rail companies soar. Effectively taxpayers are pouring money into shareholder dividends.
All of this has come to a head with the controversy over the allegedly appalling service offered by Southern Rail leading to 'travel chaos' (I say allegedly as I have never personally experienced it), and now the scandal that they have actually been delivering this 'chaos' as a massive profit, in excess of a recent bailout from the UK Government.
The Independent reports that company which jointly operates the troubled Southern rail franchise, has seen full-year profits soar 27 per cent to almost £100 million, just one day after the Government handed Southern a £20 million "bailout" package.
They add that the Go-Ahead Group, which owns 65 per cent of Southern operator Govia Thameslink Railway (GTR) alongside Keolis, also saw revenues rise 4.5 per cent to £3.4 billion. The man in charge of this company saw his pay rise to £2.16 million this year, from £1.96 million in 2015, despite GTR having the worst punctuality record of any franchise in the country, with almost one in five trains late.
GTR also runs the "Gatwick Express" - the least punctual line in the country, which notched up 8,100 late services in the first six months of 2016.
Irrespective of whether a publicly-owned company could deliver a better service or not (it could hardly be worse), the economics of this particular franchise are crying out for it to be re-nationalised. We should not be pouring public money which has been set aside to deliver effective transport options into the pockets of private shareholders.
And while we are at it, isn't it time that the whole experiment with a privatised railway is put out of its misery?
One reason for this failure was that the operating and capital costs meant our railways were always going to need a public subsidy and that as such operators were actually competing to see who could operate at the lowest cost to the exchequer rather than against each other.
Another reason was that it is impossible to actually deliver straight competition in service delivery. The trains operate on a fixed infrastructure and there is no room for more than one operating company to compete on identical routes. Thus the franchises were effectively private monopolies based on geographic entities.
Despite the many tweaks to the model, including the effective renationalisation of the infrastructure company as National Rail, privatisation has continued to serve us badly. The much needed investment in the lines also known as electrification has been government-led and not, as the model would suggest, brought about in response to customer demand.
More disturbingly, the cost of subsidies remains high whilst the profits of rail companies soar. Effectively taxpayers are pouring money into shareholder dividends.
All of this has come to a head with the controversy over the allegedly appalling service offered by Southern Rail leading to 'travel chaos' (I say allegedly as I have never personally experienced it), and now the scandal that they have actually been delivering this 'chaos' as a massive profit, in excess of a recent bailout from the UK Government.
The Independent reports that company which jointly operates the troubled Southern rail franchise, has seen full-year profits soar 27 per cent to almost £100 million, just one day after the Government handed Southern a £20 million "bailout" package.
They add that the Go-Ahead Group, which owns 65 per cent of Southern operator Govia Thameslink Railway (GTR) alongside Keolis, also saw revenues rise 4.5 per cent to £3.4 billion. The man in charge of this company saw his pay rise to £2.16 million this year, from £1.96 million in 2015, despite GTR having the worst punctuality record of any franchise in the country, with almost one in five trains late.
GTR also runs the "Gatwick Express" - the least punctual line in the country, which notched up 8,100 late services in the first six months of 2016.
Irrespective of whether a publicly-owned company could deliver a better service or not (it could hardly be worse), the economics of this particular franchise are crying out for it to be re-nationalised. We should not be pouring public money which has been set aside to deliver effective transport options into the pockets of private shareholders.
And while we are at it, isn't it time that the whole experiment with a privatised railway is put out of its misery?
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There are more options than the black-white of continuing as we are vs nationalisationn under a central management authority (ie the revival of BR)...
It is reasonable to say since central management in the form of the Department For Transport, are the architects of the Southern Rail contract, why should these people gain more power from their own incompetence? And centralised nationalisation would be very likely to maintain and reinforce the London-centricity of the railway network and its planning.
However, regionalisation - in the form of public ownership by devolved administrations - could be well worth exploring.
It is reasonable to say since central management in the form of the Department For Transport, are the architects of the Southern Rail contract, why should these people gain more power from their own incompetence? And centralised nationalisation would be very likely to maintain and reinforce the London-centricity of the railway network and its planning.
However, regionalisation - in the form of public ownership by devolved administrations - could be well worth exploring.
# posted by 
: 11:51 AM
: 11:51 AM
I'm with Matt that we need some more imagination on this than recreating BR.
Having a single, central National Rail has been one of the best things for the railways in decades - they've been able to concentrate on infrastructure and not get distracted by designing trains (APT) as BR did, and they've been able to learn lessons from mistakes in one part of the country to apply elsewhere - lessons from Liverpool and Glasgow electrification successes are being applied to get Bristol and Cardiff back on track. So I'm not sure I want to decentralise infrastructure.
But I'm entirely convinced that the ROSCOs (rolling-stock leasing companies) are a complete waste of money, and we should run a straightforward nationalised one. Much of the subsidies end up in their pockets; for many years they made more in profits than all the TOCs combined.
My inclination for TOC franchises would be to have a public option (ie let DOR bid) rather than purely private or public models - and to look at what we can mutualise there.
But I'd also want to look at regional transit operators running local services (either directly, or through a management contract) - we already have Merseyrail and London Overground operated this way, so why not have the Cardiff Valley lines the same way.
The longer distance stuff clearly can't be regional (which region does a London-Edinburgh train belong to?) and the long-distance services seem to be where franchising works best, as they have to compete with flying, driving, coaches and there are usually alternative routes on another franchise, where local/commuter services are very much a case of a captive market.
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Having a single, central National Rail has been one of the best things for the railways in decades - they've been able to concentrate on infrastructure and not get distracted by designing trains (APT) as BR did, and they've been able to learn lessons from mistakes in one part of the country to apply elsewhere - lessons from Liverpool and Glasgow electrification successes are being applied to get Bristol and Cardiff back on track. So I'm not sure I want to decentralise infrastructure.
But I'm entirely convinced that the ROSCOs (rolling-stock leasing companies) are a complete waste of money, and we should run a straightforward nationalised one. Much of the subsidies end up in their pockets; for many years they made more in profits than all the TOCs combined.
My inclination for TOC franchises would be to have a public option (ie let DOR bid) rather than purely private or public models - and to look at what we can mutualise there.
But I'd also want to look at regional transit operators running local services (either directly, or through a management contract) - we already have Merseyrail and London Overground operated this way, so why not have the Cardiff Valley lines the same way.
The longer distance stuff clearly can't be regional (which region does a London-Edinburgh train belong to?) and the long-distance services seem to be where franchising works best, as they have to compete with flying, driving, coaches and there are usually alternative routes on another franchise, where local/commuter services are very much a case of a captive market.
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