First privatised under John Major’s Government between 1994 and 1997, customer rail services are divided into regional franchises run by private companies. These companies, of which there were 25 initially, bid for seven or eight year contracts for the franchises across the country. Twenty years after privatisation, train fares have not risen uniformly; season tickets rising around the same as inflation (55-80%), whilst single tickets have risen by 208%. Although privatisation was hoped to create competition, therefore meaning reduced travel prices for customers, the number of different train operating companies has dramatically reduced, with major firms such as National Express and Stagecoach running multiple franchises.
When rail services were first privatised, it was intended that the private firms would fund investment in rail infrastructure through private borrowing. Although it was agreed rail would always have to involve some form of government subsidy, the balance between this and private funding has been a constant conflict from the offset; both pro and anti-privatisers agree that the current balance is incorrect and inefficient. Government spending received by British Rail almost trebled from 1994 to 2005, from £1,627m to £4,593m, despite a lack of real investment in improving infrastructure within this period. Privatisation has therefore led to the cost of the railway doubling in real terms for the tax payer, causing the supposed benefit of this privatisation system ‘costing the tax payer less’ to become completely unfounded.
Moreover, nearly half of the so called ‘privately owned’ companies running UK train services are actually owned by French, German or other European national operators. As Christian Wolmar wrote in November 2011, “The British railway system is slowly being renationalised, but not by our own government. Rather, it is being taken over by foreign state-owned railways that now have an interest in almost half the franchises”. The German government’s Deutsche Bahn, the largest state owner of British railway, has announced they’re “skimming profit from the entire Deutsche Bahn” to invest “in the rail network here in Germany”. If the rail system is profitable, then surely the UK should nationalise their rail network keeping that investment within Britain to make the much needed improvements to it, instead of Germans benefiting from the overpriced rail fares faced by Britons every day. This argument can similarly be used for the renationalisation of other sectors, with over 65% of people supporting the nationalisation of Royal Mail and the energy sector in a recent survey by YouGov.
East Coast main line is the most damming case against the privatisation of train services. The train line was nationalised in November 2009 after its two private owners left the job, leaving publicly owned Directly Operated Railways to keep it running. A recent report by the Office of Rail Regulation reveals, however, that the line is the most efficiently run franchise when considering its reliance on taxpayer funding. Moreover, it is reliant on just 1% government payments, with the other franchises ranging from 3 to 36%. Despite this clear sign that rail nationalisation prospers over privatisation, the Transport Secretary Patrick McLoughlin announced plans in 2013 to resell East Coast to the private sector, claiming “Now it is the right time that we invite bidders to put forward proposals for investing in and improving services” even though East Coast has a record of improving customer satisfaction to a higher level than ever before.
The opposition have grasped at this serious blunder by the government; Labour’s shadow Transport Secretary Marie Eagle said “Considering the East Coast service makes one of the highest annual payments to the Government, receives the least subsidy and is the only route on which all profits are reinvested in services, it makes no sense for the Government to prioritise this privatisation”. Rail nationalisation does not look likely to be implemented anytime soon however, with none of the main three political parties committing to renationalisation as of yet; another sign of consensus politics between the UK’s three main parties creating little real choice for the electorate.
The Green Party, however, are supporting the renationalisation of the rail network with their MP Caroline Lucas launching a Private Member’s Bill last year with the backing of over 50 Labour and Plaid Cymru MP’s. According to the Greens, nationalisation would not only allow an ‘increase in investment, re-open lines and reduce fares’ but would create a more ‘integrated green transport system’. With the ever rising price of rail fares, the spiralling government subsidies and prospering publicly owned rail networks, in the UK and abroad, it’s hard to argue against a renationalisation of rail in the UK.
Contributed by George Waddell