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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  • rate this

    Comment number 302.

    Government agencies are not efficient and would be wasteful, so i cant see the pros for nationalisation. possibly a 51/49 with 51% publically owned might provide a better option. I travel to london weekly and passenger numbers have increased to the point where no seats for a 45 minute journey. 40 pound to stand...:(

  • rate this

    Comment number 301.

    The days of British Rail and the GPO were not those of utopian glory but a strike bound club run mainly for the benefit of their staff. Of course private companies pay dividends (the evil fiends), that's how business works.

  • rate this

    Comment number 300.

    283 ADS
    Just another example of cart-before-horse thinking
    That was 40 years ago, technology has changed all around us
    Real competition has changed how 'phone' systems work & are operated
    Old BT was part of that technology development

    There is NO competition on railways
    They are all private monopolies
    If I don't want to use Virgin between London & Glasgow I CAN NOT travel by the quickest route

  • rate this

    Comment number 299.

    Cars pay around 350% tax on fuel, plus VED. Trains receive vast amounts of subsidy from tax-payers. Yet it STILL costs more for most journeys to travel by train than car, certainly if two (or more) are travelling together. How can this be? How come train travel is so economically inefficient?

  • rate this

    Comment number 298.

    These two sets of analysis are unbelievably weak. I was especially unimpressed with the statement; "The wastage amounts to over £1bn per year, enough to cut fares by 20%". This is surely pure fantasy.

    If the BBC is going to run storys like this then get serious analysis not junk.

  • rate this

    Comment number 297.

    283 ads
    Your comments about party lines, these were due to technology. That has advanced many times since then. Mobile telephones were unheard of at that time.
    The railways are prohibitively expensive and over crowded and yet we are still funding them thru subsidises to private companies. At least if we owned them we would be taking the profit.

  • rate this

    Comment number 296.

    Anyone wanting a return to BR obviously never took a journey in the 70's and 80's - dirty trains, nil service, mass cancallations with no explanation. Not perfect now, but a lot better. Another example of where privatisation has improved things I will give you one.- BT. No longer does it take 6 months to get a line and you can phone Australia now for the same price as next door then.

  • rate this

    Comment number 295.

    Once again we have seen that the Government are privatising profit, and nationalising the risk
    Private franchises ARE subsidized (£3.88bn in 2012), paying back just £1.17bn, (with anything more going to shareholders) with companies pulling out if they 'can't make a decent profit', (see East Coast), rather than paying forfeit.
    I mostly support privatisation, but this is just selling profit.

  • rate this

    Comment number 294.

    262, yes you can get a ticket for that price if you book ahead, unfortunately most business people do not always get notice of a meeting in London and therefore pay a huge £300+ if travelling before 10.00 am. Most business starts at 9.00 which the means the 5.58 from Preston to London is a massive £300+, if you can give notice it is cheaper but you can't always do that.

  • rate this

    Comment number 293.

    Ben gives us a history lesson, says there are flaws with the franchising system and that a free market would solve it without any supporting evidence other than historical anecdotes. Ian Taylor states his case using relevant examples from the current day. He highlights the fundamental point that privatisation is costing the tax payer more than state ownershp and is providing a lesser service.

  • rate this

    Comment number 292.

    Re Point 240: It's a well made point - BR had income reduced to make it less of a burden on the taxpayer and it provided an appalling service in ancient trains with rude and ignorant staff. Now it is much less a burden on the taxpayer in modern trains, with well motivated staff who are polite and helpful. BR was an easy target because it was so appalling.

  • rate this

    Comment number 291.

    Nationalisation failed and now privatisation is failing too.Rather than re-Nationalise I would like to see tighter control of the operators and let them bid on service and not so much on price.

  • rate this

    Comment number 290.

    I've spent a lot time traveling between London and the south west and find both Great Western & Southwest Trains are both tired outfits in terms of performance, punctuality and passenger satisfaction. It upsets me to think that these companies are making money while we suffer!
    Bring back non profit BR or hand the whole thing over to Virgin Trains.
    Either would be better than we have now!

  • rate this

    Comment number 289.

    It well seen that most comments are from prejudice and not actually reading the article ...It tells you the public part of the rail network is working better than the private bit,and the profit from the private bit is being invested abroad,no in Britain.That is fact,not belligerent drivel.

  • rate this

    Comment number 288.

    I think the railways should be re-nationalised. At the moment the only people who benefit from the system are shareholders in the Train Operating Companies - the taxpayer subsidy for the railways has increased in real terms since privatisation, and train fares have gone through the roof. It's appalling politicians won't listen to the majority on this, but since when did they act in our interests

  • rate this

    Comment number 287.

    Anything that starts to reverse what Thatcher started and her lot finished is a good idea.

  • rate this

    Comment number 286.

    We were made late for our meeting in London with a Private Rolling Stock Owning Company because the driver of the Privately operated train stopped work at an intermediate station.

    At the meeting to discuss safety, the Technical Manager treated us to the words

    "We haven't killed enough people yet"

  • rate this

    Comment number 285.

    Ben spends 90% of his article talking about the railways from 1825 to1947/8. Then, in the last 10% he accepts that there have been "deep flaws" regarding franchising before saying we should have more of the same. Great argument. Not! He makes no real link between franchising and increased passengers.

  • rate this

    Comment number 284.

    Privatisation has simply failed.

    Fares are much more expensive, there are less frequent services to less destinations, overcrowding is at an all time high, there has been very little expansion of the network and investment of public money in the network is still enormous. The most staggering issue is that, despite this massive failure the franchise contractors are still making profits.

  • rate this

    Comment number 283.

    #12 Chipper

    Yes, Telecoms! Remember how the telephone service was in the old GPO days? Party lines. No choice of handset. Prohibitively expensive rates for anything other than a local call.


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