Why we should renationalise the railways.
*This post was originally published in 2013, before East Coast was pointlessly privatised.
So recently I had the dubious pleasure of reading an article on the BBC which presented two points of view on whether or not to nationalise the railways. Now I’ll admit I’m something of a leftie, so I was always going to come down on the side of the nationalisation chap, but my massive initial bias aside, what really irritated me about the privatisation argument was something that never fails to get on my nerves.
Bad statistics and appalling reasoning.
For anyone familiar with South Park this is well demonstrated in the episode “Medicinal Fried Chicken”. Essentially, for the uninitiated, South Park closes their KFC and replaces it with a medicinal marijuana clinic. In order to get a doctors referral for this marijuana the menfolk of South Park decide to give themselves testicular cancer. At the end of the episode, the local doctor argues that KFC had massive health benefits because since its closure the cancer rate has gone through the roof.
Now, anyone can see this reasoning is ridiculous, as it completely fails to take into account the underlying links between factors. This is something the railway privatisation argument does in spades, and, to add insult to injury, without the catchy Hoppity Hop tune they played in South Park.
So what am I complaining about? Well let’s take the privatisation chap’s key (and only) argument; passenger numbers increased when private companies ran the railways. Hence privatisation is brilliant. What we’re clearly going to need to is a nice graph; which is here thanks to wikimedia commons.
The graph shows the number of passengers travelling by rail from 1830 to 2010. In the period before 1923 the railways were run by private companies, though between 1914 and 1921 the vast majority of railways were under government control. The increase in passenger numbers before 1923 was undoubtedly incredible. But was this down to the fact the railways were private companies? Probably not.
Until the start of the twentieth century the railways were the unrivalled means of transport in Great Britain. Contemporary long-distance alternatives were effectively only horse drawn stage coaches (slow and expensive), the canals (not known for their passenger services), or coastal shipping (a tad useless inland). None of these were really able to compete. The railways, promoting suburbanisation and offering cheap fares to a population with rising incomes, were effectively bound to pick up the traffic because they were generating it. The only rivals to the railways that really emerged were electric trams and motor buses, and these only made inroads after 1900 and really only affected short distance travel.
Perhaps the real lesson of this period was how competition damaged the railway companies. The London Chatham and Dover and the South Eastern Railway slugged it out in the south of England for some 40 years. The result wasn’t two lean competitive railways, but two companies on the verge of bankruptcy with notorious services. Railways had been pointlessly duplicated which cannibalised the traffic and hit revenues. In 1899 the two companies threw in the towel and merged into the South Eastern and Chatham Railway, monopolising the railways in Kent.
Competition it seemed was more the disease than the cure.
In 1921 it was decided to “group” the railways into the so-called Big Four; the Southern, London & North Eastern, London Midland and Scottish, and Great Western. The reason for this our erstwhile privatisation chap claims was to protect profits. Well, not quite. The Act which introduced the grouping actually states the intention was ‘…the reorganisation and more efficient and economical working of the railway system of Great Britain…’ Total nationalisation was potentially on the cards as well, but seen as going too far. By 1948, however, Labour was in power, the Second World War had badly damaged the railway infrastructure, and nationalisation was seen as the only cure. On 1st July 1948 British Railways arrived on the scene.
Until 1955 it was all going rather well, but in that year the railways recorded their first operating loss. The losses failed to stop thereafter. Passenger numbers also started to plummet.
Was this the result of “state bungling” as our privatisation chap would have it? Well, perhaps it had more to do with the railways new nemesis, the car. Car ownership jumped by 250% between 1951 and 1961, increasingly drawing people off the railways. Certainly there was bungling on British Railway’s part, the modernisation plan of 1955 introduced a host of unreliable diesel locomotives, but ultimately the real issues were a capable long distance competitor and rising costs in labour and infrastructure. Attempts to solve the issue produced the notorious Beeching Report in 1963 which saw just under a third of Britain’s railways closed. Even this didn’t stem the losses, and by 1968 the idea of subsidising the railways to protect their social benefits emerged.
It’s difficult to see how private companies would have fared any better. Under the current system railway companies (or rather “Train Operating Companies”) don’t pay out for the majority of infrastructure, this is undertaken by Network Rail, relieving them of a large portion of the crippling costs British Railways faced. In fact the debt Network Rail accumulates is now estimated to hit £50 billion by 2020.
But wait, in the 1980s passenger numbers started to pick up. Privatisation chap didn’t mention that.
You see British Rail (as it was now called) wasn’t utterly incompetent. In 1976 the Intercity 125 arrived, increasing speed and comfort on long distance routes.
Passenger numbers took a dive in 1987, but that can probably be explained by this.
I totally advocate watching the first two minutes worth of this, firstly because you realise just how similar the news is 25 years later, secondly, Nigel Lawson never looked so amusing, and thirdly, it makes me appreciate Chris Morris’s brilliant news satire The Day Today all the more.
Passenger numbers recovered, but British Rail wasn’t around to see it, privatisation set in in 1994.
Did privatisation really boost passenger numbers? The link is pretty dubious. Countless other factors were in play and to suggest such a simple relationship is pretty foolhardy. The latest jump in passenger numbers is probably accounted for in the rising costs of owning a car and the growth of London (which has the lion’s share of railway journeys). Even with fares rising over the rate of inflation, it’s still easier to take a train into the city than a car. I seriously doubt anyone would put themselves through travelling on the railways in rush hour if it was cheaper and easier to drive.
What privatisation did do, however, was rapidly increase government subsidies to the railways.
So much for saving the taxpayer money.
Furthermore many of the private operators are owned by foreign state run railway systems, such as the German Deutsch Bahn or France’s SNCF. Ultimately the money spent on the railways here winds up subsidising these railway systems abroad.
This fits well with the current government’s two key policies of pointlessly spending as much taxpayer’s money as possible and giving money to Europe.
So is there a case for nationalisation today? Definitely. In fact parts of the system are already nationalised. East Coast is owned by the state and in 2011-12 paid back to the Government around £187 million, the second highest total (not bad considering the last private operator of the line went bust).
If one also takes into account the spending by Network Rail on maintaining the railway itself, then East Coast actually comes out as the best value for money.
But perhaps rushing off to bring back British Rail isn’t quite what’s needed.
Rather we should heed the words of the 1905-6 Royal Commission on London Traffic;
‘…it is essential that the railway system as a whole, should be supervised, in its growth and development, on definite, consistent, and carefully framed principals, directed towards the achievement of a clearly conceived result.’
The current franchise system fails completely in this regard.
Instead one should look at the renaissance that Transport for London (TFL) is currently unleashing.
I do not refer to London Underground (though that’s operating better than ever) but its little brother, London Overground.
The Overground is something of a half-way house between nationalised and franchised. TFL are in overall control, but a private company runs the day-to-day services under a concession agreement. They do it pretty well to, with an exceptional service and increasing passenger numbers.
Anyone who travelled on the North London line, for example, before the Overground took it over will know exactly what I mean. Whenever I have a conversation with someone who had to travel on Silverlink Metro their eyes glaze over as they flashback to the unending horror and a solitary tear rolls down their cheek.
The success of the Overground largely lies in the fact it’s operated by a public concern that seeks to benefit the public at large (the Overground extensions have vastly improved the means for travelling around London), has a consistent plan on how to deliver this, and does it at a reasonable price.
In fact they’re now planning to take over the line to Enfield where I live. That can’t happen fast enough. I’m fed up of triumphantly getting a seat of the train (having elbowed every other man, woman and child out of the way) only to have it fall off and pitch me to the floor.
As such I’d suggest that if nationalisation is to be done, let it be done on the lines of the London Overground. Let private companies in if necessary, but keep them under a strong leash. We don’t need a re-run of the original British Railways, but a series of publicly owned concerns tied in with their local areas or focused on inter-city travel, with a regulator on top to make sure it’s all connected in some fashion.
*All the sources I’ve used are given as links below. Yes, I’ve left stuff out. What about the LPTB some may cry, or Sectorisation, or freight?! Well frankly this blog post is long enough. Heck I doubt even a couple of people will make it this far. If you did and are outraged, do feel free to accost me on twitter. If you want a deeper analysis of the situation this report is probably best.