Why not... nationalise the railways?

 
First Great Western train

A look at eye-catching policy ideas that are often talked about but never seem to feature in UK general election campaigns.

The background

Britain's railways were nationalised by Labour in 1948 and returned to private hands by John Major's Conservative government in 1993.

Labour was initially committed to renationalisation but the policy was dropped when Tony Blair came to power in 1997. Track, signalling and stations were taken out of private hands, and put into a not-for-profit company, Network Rail, after the collapse of Railtrack in 2002.

Labour has yet to reveal its transport policies for the next general election, but they are not thought likely to feature rail nationalisation.

Green Party MP Caroline Lucas has launched a private members' bill to allow the train companies to "fall back" into public ownership, which is supported by a number of Labour backbenchers and Plaid Cymru MPs.

The train companies insist the debate about nationalisation is solely driven by the unions.

Ian Taylor: The case for nationalisation

In 1993, Britain's railway was broken into pieces and handed, mostly as local monopolies, to profit-taking companies.

The cost of the railway to the taxpayer has subsequently more than doubled in real terms, a rise out of all proportion to the 33% increase in train services over the same period.

The cost rises stem from wastage as shareholder dividend pay-outs, other inefficient private sector financing and inefficiencies created by fragmentation of the railway.

Ian Taylor
  • Ian Taylor, co-founder of Transport for Quality of Life think tank
  • Formerly manager of environmental consultancy services for the Centre for Alternative Technology
  • Has also worked for Greenpeace and Oxfam
  • Transport for Quality of Life's clients include the Department of Transport, local authorities and the rail unions

The wastage amounts to over £1bn per year, enough to cut fares by 20% if the railway were reunified as a public company.

Instead, fare increases on the privatised railway threaten to turn it into a "rich-man's toy", as this government's first Secretary of State for Transport put it.

Unbeknown to most passengers, one portion of our railway, the East Coast mainline, is still run by a publicly-owned company, Directly Operated Railways, which picked up the pieces after its two private sector predecessors walked off the job.

Recent calculations by the Office of Rail Regulation revealed how the public money that helps maintain the rail tracks or directly supports rail services splits between the train companies and showed that DOR receives less subsidy than any other rail franchise operator. DOR's success is a glaring embarrassment for the Government, who now intend to privatise it post-haste, even though that will increase costs to the taxpayer.

Most other rail franchises in the UK are, ironically, also run by companies that are wholly or partly publicly owned, but by other countries. Deutsche Bahn is foremost - they even run the Royal Train - and the German Government have said "We're skimming profit from the entire Deutsche Bahn...it is invested in the rail network here in Germany". So, if you are reading this on an overcrowded train with a ticket that made a painful hole in your wallet, take heart from your generous contribution to improvement of Germany's fine publicly-owned railway.

Ben Southwood: The case against nationalisation

The UK's railway network was built privately and competitively and by some way its most successful years were the private eras between 1830 and 1922 and 1994 to the present.

Returning it to centralised state control would be a step backwards and a mistake.

Instead we should end the practice of franchising, which creates private monopolies, and allow real competition and diversity.

Ben Southwell
  • Ben Southwood is a researcher at the Adam Smith Institute
  • Previously economics correspondent for City AM newspaper
  • He has a degree in Philosophy, Politics and Economics from Oxford University
  • The Adam Smith Institute is an independent free market think tank known for its work on privatisation and tax reform

Our system began with the first steam train in 1825, and despite costly government licenses, investors built the bulk of today's network (about 6,000 of approx 11,000 miles) in just three or so years, between 1844 and 1846.

Journeys rose to from about 500 million a year in the 1870s to 1.5 billion just before the First World War. After the war, David Lloyd George judged that rail firms profits were too low due to too much competition, and decided to merge nearly all the UK's railway firms into just four firms, practically monopolies.

Between 1923 and 1947 the so-called Big Four government-supported firms ran the roost and journeys fell to about 1.2 billion by the onset of the Second World War.

After the war, these and others were consolidated further into British Rail. Under British Rail, there were steadily fewer and fewer journeys per year—from around 1 billion in 1948 to only 750 million by 1995, just before the onset of the franchising system.

Now there are deep flaws with franchising, and undoubtedly it has been lucky, coinciding with higher congestion, fuel prices, and a renewed rise in London as the UK's economic centre. But the sharpness of the change since 1995 is undeniable.

Since then journeys have spiked dramatically, rising every year to close on the 1.5 billion not seen for almost a century.

The solution to our current problems is not more state bungling, it is a return to diversity, competition and open markets.

 

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  • Comment number 102.

    This comment was removed because the moderators found it broke the house rules. Explain.

  • rate this
    +22

    Comment number 101.

    In response to Ben Southwell:
    - The private building of the network actually led to some shoddy building and duplication of routes not seen on other nations railways.
    - Passenger numbers dropped as competition from cars and buses increased, this had nothing to do with railway ownership.
    - The subsidy paid to BR was at its lowest immediately prior to privatisation, and has since risen.

  • rate this
    -1

    Comment number 100.

    Most times I advocate sensible solutions but in this one instance I hope BBC will allow a bit of latitude. Let's reform the LMS, LNER, SR and GWR and have trains that look like trains again run by great men the equivalent of Bulleid and Gresley.

  • rate this
    +9

    Comment number 99.

    @RememberTS
    If you are going to delve into history, then remember the reasons for nationalisation in 1947, the railways were spent after 6 years of year and the private companies could not afford to operate the service anymore. Remember too, that the current "private" service is being subsidised by you & I, so that shareholders can get a dividend?

  • rate this
    -34

    Comment number 98.

    The union needs to be put firmly in it's place, Bob Crowe is employed by them to get the best deal possible and that is what he does AND HE IS VERY WELL PAID FOR IT!

    The government should stand up for itself when these lazy railway workers come to them holding their hands our for more pay - 2 classic examples are the 2012 Olympics & pay rises otherwise strike action in the midst of a recession...

  • rate this
    +22

    Comment number 97.

    Why in this country are we so obsessed with privatisation when it clearly doesn't work. Are any of the utility companies better for privatisation ? Are the railways better ? No. A small number of people make huge amounts of money out of it though. And blame the unions for what might happen if we do renationalise just for good measure. Those profits must be protected

  • rate this
    +7

    Comment number 96.

    As Grinning Tory Boy says, the railways were built by private enterprise - and there were then several booms and busts as the system shook down into something workable. What we have now is a system of private monopolies designed for shareholders not users: private enterprise *doesn't really work* for essential infrastructure. Look at what happened to the Tube.

  • rate this
    +5

    Comment number 95.

    I don't mind them being privately owned (charities are privately owned). I mind that they are run for profit.

    Profit is basically getting others to give you more than you give them. It is intrinsically anti-social.

  • rate this
    +6

    Comment number 94.

    The railiways suffered years of underinvestment prior to privatisation. BR could have provided a far better service than we have now given the levels of cash thrown at private operators. Especially since everything on the railway now costs a multiple of what it is worth due to the vastly reduced capacity to cope with in house resources..

  • rate this
    +8

    Comment number 93.

    I work for one of the largest TOC's and agree the railway should be a public entity. Yes it will take a lot of work but in the end the railway as a whole will work better.
    Run as a 'not-for-profit' organisation for at least the first 10 years will enable those that use it benefit.
    After all, private companies are businesses, they are there to make profit... at the expense of the public of course.

  • rate this
    -74

    Comment number 92.

    I well remember the nationalised railways. You never wore light clothes for a train journey, they ended up black. Regular late running. Staff with really bad attitudes and if you complained, well tough luck, we're nationalised, you can't touch us. Come to think of it there was no one to complain to. Renationalise and the only ones to profit will be the unions.

  • rate this
    +10

    Comment number 91.

    BR could only have dreamed of getting the massive subsidy these private companies are getting. The simple fact is key infrastructure like railways and energy production are better off in public ownership and can be run just as efficiently if not more so like the east coast line. As for BS argument, all public transport declined at the end of the war due to the rise of the private car not just BR.

  • rate this
    +14

    Comment number 90.

    Unless we want ticket prices to keep on rising to fund huge pay packets and share holders, then absolutely re nationalisation should be on the table.

    Privatisation clearly has not worked for many of our utilities as they price out the very people that use them, same as trains.

  • rate this
    +5

    Comment number 89.

    I see one argument here and one history lesson from a boy with a cheesy grin and a degree favoured by that other bunch of pontificating layabouts scared of real work - politicians.

    Renationalise. It can't be worse than it is now, and at least it won't be subject to profiteering. Subsidies of our infrastructure funding infrastructure of foreign states that own them should end this debate.

  • rate this
    -7

    Comment number 88.

    85.HTompson
    "Stop demonising the unions" Bob Crow demanded a bonus for tube staff during the Olympics as they would have to work harder to make it a success, the demands included bonuses for those even on holiday. With logic like that nationalisation would be a disaster, with strikes and even more expensive fares to pay for ever increasing pay rises and perks. With bob crow around, no thanks

  • rate this
    -14

    Comment number 87.

    I travel quite a lot on the railways and I love it, but I've always been railway mad, but re-nationalise the railways? I don't think so, political suicide that would play in to the hands of its opponents who'd soon be beating on about political interference, rampant union militancy, lateness, lack of investment, high fares etc. No! The truth is, the British people don't like state involvement!

  • rate this
    +9

    Comment number 86.

    Just compare the thoughtful and relevant case 'for' by Ian Taylor with the political dogma irrelevance of Ben Southwell. The case for is argued on fact and example; the case against is merely 'competition must be better than public ownership' - absolute cobblers.

  • rate this
    +5

    Comment number 85.

    Renationalise - now! Stop demonising the unions and work with them. Start providing services for the good of the nation not the profit of the few ( and the german transport system.
    Our railways are an expensive disgrace!

  • rate this
    +5

    Comment number 84.

    "He has a degree in Philosophy, Politics and Economics from Oxford University" - PPE Degree LOL - Ignored.

  • rate this
    +7

    Comment number 83.

    I note the usual one sided views from the Adam Smith Institute. The dramatic fall in passenger trips between 1948 and 1995 more or less mirrors the rise in personal car ownership. Freight has also fled rail. These rail damaging trends were encouraged by road building programmes which radically changed the cost/convenience equation. Rising congestion and costs are turning the tide not rail policy.

 

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