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
    0

    Comment number 962.

    The main poiints to remenber are:
    (1) Privitisation Has increased the cost to the taxpayer in addition to the very expensive cost of the privatisation itself
    (2)_Competion within the industry is very difficult to achieve. The real challenge is against other forms of transport.
    (3) Ben Southwood refers to early days. What happens now is more important. It is not clear how he would proceed.

  • rate this
    0

    Comment number 961.

    The usual absolute twaddle about real competition being the answer. In 1984 we were all told this would be great when we had bus deregulation. The opposite happened after no time at all and bus service still awful compared with. The most successful rail systems in Europe are all state run! Enough said

  • rate this
    0

    Comment number 960.

    MR.TRUCULENT SAYS!
    As mentioned the East Coast line is Nationalised. So should the rest of the Railway network. Mr Branson runs the train service on the west coast, but he has no power over the rail line, as this is run by a separate organisation Network Rail. We should have done the same as the French after WW2, build fast lines and trains. Instead the UK decimated our rail system.
    E&OE

  • rate this
    +1

    Comment number 959.

    950. Centurion
    I have sympathy with the re-nationalising of the railways but....
    Think Bob Crow, what good if we own them but they dont run, thats how it was before, it was terrible!!
    __
    Think positive! I'm sure that the nationalised East Coast is unionised, no? And, per the article, runs on less of a subsidy than the rest...

  • rate this
    +2

    Comment number 958.

    Should never have been privatized, nor should any of the utilities and Royal Mail should not be the next to go, is only a matter of time before the tories sell off the NHS if we are unfortunate enough to have an out right win by the tories in 2015. God I hope not

  • rate this
    +1

    Comment number 957.

    Let us look at some of the brilliantly run private sector service companies which are such a sterling example of delivery of efficient value for money services - G4s, SERCO, the Banks, PAYDAY lenders... Ah..............?

  • rate this
    0

    Comment number 956.

    Natural monopolies should be in public ownership - water, electricity, gas, and the railways. There is no competition in any of them!

  • rate this
    +3

    Comment number 955.

    948 Raymond P
    "profits reinvested"!?
    Is that before or after shareholders?
    That's a very important factor,so it does "matter"who runs the railways!?

  • rate this
    -2

    Comment number 954.

    Those clamouring for re-nationalisation are driven by vested interest & political leanings or they have no memory of just how truly awful the nationalised industries were.Train services in this country are poor; their definition of punctuality is totally corrupt, they are made lazy by subsidy, risking none of their own capital, & too long franchises. Fix these issues as other countries have done.

  • rate this
    +1

    Comment number 953.

    @ Justin150
    http://dataportal.orr.gov.uk/displayreport/report/html/7cff3127-a5cc-4173-ac78-016db2339811

    If you can't be bothered to find one, there it is. Office of Rail Regulation. Since 2004 the average of all fares across all operators has increased by 51.3% whilst RPI ran at 29.9%.

    Still stand by the 50% since 1984 figure?

  • rate this
    +1

    Comment number 952.

    935. Justin150
    Inflation 1984 to now (roughly) is 166%
    Average wage has gone up by 261%
    House price by about 450%
    Newcastle/London off peak train fair by less than 50%
    Does that help?
    __
    Knew I'd seen it somewhere. Scroll down.
    http://www.bbc.co.uk/news/magazine-21056703
    I wouldn't use house prices - no one can afford them anyway - and wages are linked to the same bubble

  • rate this
    +1

    Comment number 951.

    By the quality of Ben Southwoods argument I would say Oxford has dumbed down quite a bit.

  • rate this
    +3

    Comment number 950.

    I have sympathy with the re-nationalising of the railways but.....if you used British Rail then you will remember just how many times they went on strike, our unions are very shortsighted, think of the London tube drivers (olympics!), how long before they go driverless and with good reason. Think Bob Crow, what good if we own them but they dont run, thats how it was before, it was terrible!!

  • rate this
    0

    Comment number 949.

    918 Daniel says that the nationalised railways were run better and cost less. British Rail was a byword for inefficiency; there were fewer trains, and they were less punctual. It's true that walk-on fares are much more now than they were (allowing for inflation) but, believe it or not, many season ticket prices are less, and advance tickets cost far less than they did then.

  • rate this
    0

    Comment number 948.

    Time to Stop arguing about who should run the railways - What's important is how best to invest for the future of rail transport in the UK for passengers & freight.
    We need
    - frequent, fast and efficient services
    - consistent and affordable fare structures
    - profits reinvested back into infrastructure improvements

  • rate this
    +1

    Comment number 947.

    Those wanting a return to a Nationalised Rail Service obviously were not around when we had one before. No one used it because it was very expensive, usually dirty and the staff couldn't care less. ASLEF and NUR took it in turns to strike. Oh and British Rail sandwiches were a national joke!

  • rate this
    +3

    Comment number 946.

    Whatever we do, get rid of the franchise system - it is the worst of both worlds. I'm in favour of re-nationalisation, but proper privatisation would also be better than the ridiculous current situation. Why do the franchises have to have route monopolies? The government owns the tracks, nationalise the trains or let the companies compete properly *on the same routes* like airlines do.

  • rate this
    0

    Comment number 945.

    935. Justin150
    Newcastle/London off peak train fair by less than 50%

    Does that help?
    ---
    Not really comparing apples and pears.

    A single to Exeter in 1995 was £37.50 but is now £114.50 - a rise of 205%.

    But then comparing individual fares does not give an accurate representation of how fares have changed. I'd suggest you find a more reliable statistic.

  • rate this
    +1

    Comment number 944.

    An appalling paper-thin job littered with 'biz school-boy' preconceptions and inaccuracies.
    More worrying is that this is the stuff the Government listens to and chooses to believe.

  • rate this
    +2

    Comment number 943.

    935 Justin150
    Thanks!
    The point I was making was as your calculations clearly show,the cost of rail travel(depends on which company & line etc)can,could be of little relevance to your actual ability to pay.
    Average wages(mean average?)

 

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