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Partial privatisation clearly isn’t good enough: we need truly private railways

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It is extremely disheartening to see the country that gave the world the railways so vastly inept at running them. It is also rather painful that, in addition to our inadequate rail system, we seem totally incapable of understanding what kind of structure we currently have in place and how to improve upon it.

Last week I wrote at this blog about grammar schools and how the argument surrounding them has been deliberately skewed to fit a certain agenda, and that we weren’t arguing about what we were ought to be arguing about. The railways debate is similar in this regard. We are told something about our railways (that they have been privatised) that isn’t true, and have to put up with figures in authority arguing over how to potentially make them worse, at considerable expense to the taxpayer.

On Tuesday evening’s edition of ‘Newsnight’, after the announcement of Jeremy Corbyn’s plans to reinvigorate British transport, Labour’s shadow Transport Secretary Andy McDonald failed to make the case for the renationalisation of the railways. He moped and moaned about a relatively small amount of money being paid to TOC (Train Operating Company) shareholders in the form of profit, to the tune of more than £200m last year, a tiny figure when compared with the over £9bn raised in passenger revenue.

Because, despite its obvious failings, what has been called privatised rail (a franchise system, which isn’t ideal for the running of any railway system) has benefitted the rail industry. In truth, Britain’s railways are only very partially privatised, and as the Adam Smith Institute have shown in the following series of graphs:http://www.adamsmith.org/blog/regulation-industry/what-would-we-consider-a-successful-railway-system privatisation within the rail sector has consistently boosted passenger usage numbers, satisfaction and efficiency. It is particularly interesting to see many of the counter arguments to this fact (such as the cost of driving and government subsidy) so swiftly debunked.

And here is the key: *partial privatisation* clearly isn’t good enough. Far from having private railways, we have a centrally directed or publicly regulated system of rail; insurmountably different to a free market one. Network Rail, at fault for much of the country’s infrastructure complaints, is a publicly-owned company set up by the last Labour government. All tracks, stations and signalling are serviced by the state. Let us also look at subsidy within the industry (necessary in many cases, but also a clear sign of state intervention). Pages 2 and 4 will be particularly helpful for readers:

http://orr.gov.uk/__data/assets/pdf_file/0005/18842/rail-finance-statistical-release-2014-15.pdf

You may also note that while direct state support is in relative and nominal decline, these figures were provided by the Office for Rail Regulation (ORR). Also, you guessed it, an extension of government. Britain’s railways are in large part financed and regulated by central government – and thus out of the hands of the privateers responsible for certain franchises.

So what would a further-privatised train and rail network look like? Well, personally, I’d like to see a more vertically integrated system, whereby Network Rail is privatised and TOCs are able to operate in track, station and signalling maintenance on the routes and services that they provide. This is how railways were initially organised in the nineteenth century, with small, private companies overseeing both service and maintenance. This, it seems, would allow for better communication within the system, as TOCs would not have to rely on the efforts of a separate body (who have largely proved themselves to be incompetent) to deal with issues concerning rail infrastructure.

Also, I am always baffled by the lack of competition between providers. Why are contracts necessary, for instance? And why must the government administer them? There is some limited competition between Virgin and London Midland on part of the West Coast line, and similar choice between First Hull Trains, East Coast and Grand Central between some destinations on the line to Edinburgh, so why is intra-route competition not much more common?

Of course there are physical limits to the number of services that can be run on a track at one time, for reasons concerning health and safety, but it would strike me as being reasonable to suggest that many more routes across the country, even smaller, inner-city services, could benefit by introducing more than one provider. Particularly if state subsidy is slowly withdrawn, multiple companies being allowed to run identical services would ensure that natural market forces could dictate the cost of travel.

If you look at the period between 1829 and the early twentieth century, predominantly free marketers and private capital are pumped into Britain’s growing rail industry. A large part of the problem today emanates from the fact that much of our rail infrastructure is Victorian. Britain’s railways are by far the most expensive to run in Europe, and for this very reason.

Our railways face many challenges. But they have not been ‘privatised’, in the traditional sense of the word. Anybody who bothers to look at the extent to which the government is involved in their running will slowly come around to the same conclusion. Which of course begs the question: how do we renationalise already-public railways?

This post was originally published by the author: https://norgroveblog.com/2016/08/18/how-do-we-renationalise-already-public-railways/

About Oliver Norgrove

Profile photo of Oliver Norgrove
Oliver is a 20 year old Conservatarian Leave supporting student of journalism at University of the Arts, London. He is a researcher and blogs in his personal capacity at norgroveblog.com. He resides in Bexley, London, United Kingdom.

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