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
    +1

    Comment number 342.

    #300 thebluecube

    BT was privitised 29 years ago in 1984 (not 40 years ago as you claim).
    Yes, technology has developed over that time but you forget party lines were virtually unknown in other countries, in the US you could buy a wide range of plug in handsets whereas we only had the option of a hardwired standard GPO handset or a trimphone (£££). Plus competition has lowered call rates.

  • rate this
    +3

    Comment number 341.

    Never mind the railways, the industry most in need of renationalisation is electricity generation. The CEGB planned ahead, ensuring continuous power supply, the private companies just plan for short term profit

  • rate this
    +105

    Comment number 340.

    Its simple, I've travelled all over France, Germany, Spain and Portugal by rail - all state owned ...the services are cheap with transparent, simple ticket pricing (rather than the bewildering array of nonsense you get in the UK), punctual and FAST...

  • rate this
    +4

    Comment number 339.

    It is disappointing that the arguments presented here are so one sided. The case for public ownership is informed and backed up by details. It is compelling. The argument for privatisation is unfortunately a history lesson with no facts to support the ideological argument. Are there any facts?

  • rate this
    -1

    Comment number 338.

    33.mrxavia
    Private companies are there to make a profit, railways should be there to provide a service

    If a company is well managed it is possible to provide a good service AND make a profit. The current situation with the railways isn't working but it would be too expensive to re-nationalise. Scrap the franchise model and open ALL routes to competition from multiple rail companies.

  • rate this
    +2

    Comment number 337.

    The Labour Party did not vigorously oppose privatisation: in 1994, a strong message from Labour that they would reverse it if elected would have stopped it happening.

    The division of track from operating companies was ludicrous. So was the grant of the rolling stock to leasing companies, which charge the operators vast amounts for leases. That's why there are often too few carriages!

  • rate this
    +5

    Comment number 336.

    Ian Taylor gives good reasons for nationalisation, and looks like he'd give more with space.
    Ben Southwell gives interesting info but no evidence for private rail.
    Success only = profit. He'd struggle to fill more space.

    Most of Europe wouldn't stand for this blantent 'government' looting'. Partly because their media doesn't only represent big money and quote rightwing think tanks.

  • rate this
    +5

    Comment number 335.

    There’s a simple rule about services and private companies, If they pay dividends, you pay more. When a foreign company buys a British company, the profit is lost and the little reinvestment that gets put back in is never enough and we always has to subsidise the re-development.
    Its socializing the costs of private profit, its one of the biggest scams that “capitalists” are pulling off atm.

  • rate this
    +9

    Comment number 334.

    The fact that Deutsche Bahn (the German state owned - Naionalised - railways) can profit from the UK's network and plough those profits into the German network to me is madness. How can this be allowed to happen? would it not be better if that money was put back into our own infrastructure to make improvements?
    Totally ridiculous and it's time to call off the failure that is privatisation.

  • rate this
    -2

    Comment number 333.

    Let's also renationalise BT, British Airways, Thomas Cook, Pickfords, Unipart, Heathrow Airport, MG Cars and National Express too.

    However, the main reason we can't renationalise ANYTHING is because it would cost £billions and the country is skint.

    But don't let trivial practicalities like that get in the way of your ideological dogma.

  • rate this
    +4

    Comment number 332.

    UK railways are so inefficient because they were designed & built so long ago & homes etc have grown up around them enclosing them making them unviable for the BEST efficient trains systems in the world.

    HS2 is a chance to change that, instead this ONCE in a lifetime opportunity is being wasted, no freight line to be built alongside it, just a line to carry the suited & booted, what a waste.

  • rate this
    0

    Comment number 331.

    A hybrid may be the answer - like London buses. A national timetable is created by a central authority and private companies bid on a set of train movements for one train set at a time for, say, a 3 year period. This would introduce true competition, allow smaller companies to compete, and vastly reduce subsidies required.

  • rate this
    +3

    Comment number 330.

    I think the state has a responsibility to its citizens, which includes providing a transport network. So yes, I support nationalisation. Sorry if that sounds grown up.

  • rate this
    -1

    Comment number 329.

    What! and put the moronic unions back in charge. Thought we had lanced that particular boil

  • rate this
    +3

    Comment number 328.

    "diversity, competition and open markets." Just the sort of received-opinion buzzword twaddle you'd expect from a 12 year old.

  • rate this
    -5

    Comment number 327.

    Whatever we move to (or keep), taxpayer subsidies should end. The cost of the railways should be borne entirely by those who are using them, not paid for by all regardless of whether they use them or not.

  • rate this
    +7

    Comment number 326.

    292.Mitchie
    Now it is much less a burden on the taxpayer
    ---
    There's one small error in your argument - it's not true.
    If you had read/understood the article you would know that the taxpayer burden has increased. But don't let facts get in the way of your world view.
    Once again, HYS proves we need adult learning centres teaching reading comprehension.

  • rate this
    +3

    Comment number 325.

    This, like the Royal Mail, need to be nationalised, purely to preserve the service - as a business those areas providing little or no profit will go. Unfortunately we have unions who like nothing better than holding the country to ransom by striking and demanding inflated pay for their members. Regrettably greed will rule the day whichever way it goes - a sad reflection on Britain.

  • rate this
    +1

    Comment number 324.

    The introduction of a truly free market is the only way to guarantee fair competition. Re-nationalising would just lead to a bloated entity like the NHS (running at a huge cost to the taxpayer; you and me).

    To anyone who is pro-nationalisation: do you really want the government running this?

  • rate this
    +5

    Comment number 323.

    273. Peter Hall
    ...As De Gaulle may have said to state ownership, "Non, non, non!"
    __
    Actually the French (and the Germans) have state owned rail networks far more integrated and efficient than ours. Our problem seems to be lack of joined up thinking on transport caused short-termism and compounded by vested interests. No strategy. At all

 

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