Britain’s rail system is working OK for once. So the Competition & Markets Authority wants to stuff it up

Choo choo: another busy day at King's Cross. Image: Getty.

The current British rail system*, for the first time in about a century, works quite well. Performance figures and passenger numbers are around all-time highs, and subsidies are around the lowest level since the collapse of Railtrack in 2001.

So naturally, almost everyone in the political sphere, from left to right, is trying to break it again. The recent report from the government’s competition quango, the Competition & Markets Authority (CMA), is the worst of a bad bunch of proposals.

Although some people wilfully obscure it, the structure of the rail network is quite simple. In short, government-owned Network Rail owns and operates the tracks; train operating companies (TOCs) like South West Trains are contracted by the Department for Transport (DfT) to run passenger train services, based on government tenders (“franchises”); and privately-owned freight operators pay a charge to Network Rail to use its tracks.

There are a few complications, of course. Charter trains (steam excursions, football specials) can use the tracks by paying a charge like freight companies do, so long as there’s spare room. And there are special arrangements for services controlled by devolved governments, such as London Overground and Scotrail.

There’s also a weird, hybrid class of passenger train operator, created during the Major government’s privatisation process at the Treasury’s insistence: the “Open Access Operators”, such as Grand Central. These work like charter trains, except instead of using spare room, they are given timetabled paths that take capacity from TOCs. They aren’t under tender to the DfT and don’t have public service obligations, and so can run profitable services without paying the government; as a result, the services they run tend to be cheaper and better than TOC services.

The UK subsidises its railways less than almost anywhere, which means that – although you can pick up bargain off-peak advance fares – peak fares on popular services are high. But this has been true since British Rail, at least (Citymetric pay rates are sadly not quite high enough to warrant the work required to track down per-mile journey rates in pre-WWII days, as fun as that would be). The railway is also running at capacity on many of its popular routes, due to favourable geography, soaring house prices, road congestion, and decades of under-investment prior to the current era.

Together, these factors mean that if you’re a peak-time rail commuter, you probably wanted to punch me when you read this article’s first sentence. When you’re paying a lot of money to spend an hour each way with your nose in someone else’s armpit, the fact that the journey is costing the taxpayer less than ever isn’t much comfort.

If you’re a grumpy left-leaning commuter, your eyes may well turn to the profiteering bastards with their name on your train. Never mind that TOC profits only account for 3 per cent of industry costs; if it wasn’t for those GreatSouthCentralLink bastards, your train would be as cheap and empty and reliable as the Swiss one you once caught on holiday. Abolish them and let the government run the trains!


And if you’re a grumpy conservative commuter, the fault is clearly with the Blairite socialists who brought back British Rail after Railtrack went bust. Fix the Attlee government’s original mistake and bring back the Big Four, running their own private trains on their own private tracks with proper wooden dining cars!

There are politicians on the left and on the right who are willing to lobby each of these views. Both sides are probably wrong, but there are decent arguments in favour of both.

If you’re a rabid Thatcherite ideologue, however, the problem is that the trains weren’t privatised competitively enough. Instead of TOCs, all trains should be open-access, competing against each other day-by-day and train-by-train with no inter-available tickets, like that nice Grand Central train you caught to your meeting in York.

This view is outright silly. As Sir Patrick Brown, permanent secretary at the DfT in the 1990s, said on a documentary broadcast in October 2002: “I don’t think any of us in the Department of Transport thought that open access… could have any part in the privatisation. But you couldn’t say so.” (BBC 4, “Witness to History: Privatising the Railways”.)

The railways aren’t like roads: train and track operators need a close working relationship (whoever owns them); paths are scarce and time-dependent; and boosting frequencies is pointless if trains aren’t turn-up-and-go. It’s worse still for people on less-used routes: the miserable failure of the bus industry outside London shows how badly the “competition plus subsidy for the uncompetitive bits” model works, even without the complications of rail.

It should be very worrying, then – no matter what your political views – that ahead of the Treasury’s rail review, the CMA has published a report which says that the future of rail lies in open access operators.

Like the people who drove the original failed privatisation, the CMA is made up of finance and business people with no transport background. If the government listens to their advice, it will be yet another rail disaster.

*By “British” I mean the system controlled by Network Rail in England, Wales and Scotland. The Northern Irish system is very different and not geographically connected to the rest of the network; London Underground and various regional metro/tram systems are also run and operated separately.

 

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Two east London boroughs are planning to tax nightlife to fund the clean up. Will it work?

A Shoreditch rave, 2013. Image: Getty.

No-one likes cleaning up after a party, but someone’s got to do it. On a city-wide scale, that job falls to the local authority. But that still leaves the question: who pays?

In east London, the number of bars and clubs has increased dramatically in recent years. The thriving club scene has come with benefits – but also a price tag for the morning clean-up and cost of policing. The boroughs of Hackney and Tower Hamlets are now looking to nightlife venues to cover these costs.

Back in 2012, councils were given powers to introduce ‘late night levies’: essentially a tax on all the licensed venues that open between midnight and 6am. The amount venues are expected to pay is based on the premises’ rateable value. Seventy per cent of any money raised goes to the police and the council keeps the rest.

Few councils took up the offer. Four years after the legislation was introduced, only eight local authorities had introduced a levy, including Southampton, Nottingham, and Cheltenham. Three of the levies were in the capital, including Camden and Islington. The most lucrative was in the City of London, where £420,000 was raised in the 2015-16 financial year.

Even in places where levies have been introduced, they haven’t always had the desired effect. Nottingham adopted a late night levy in November 2014. Last year, it emerged that the tax had raised £150,000 less than expected in its first year. Only a few months before, Cheltenham scrapped its levy after it similarly failed to meet expectations.


Last year, the House of Lords committee published its review of the 2003 Licensing Act. The committee found that “hardly any respondents believed that late night levies were currently working as they should be” – and councils reported that the obligation to pass revenues from the levy to the police had made the tax unappealing. Concluding its findings on the late night levy, the committee said: “We believe on balance that it has failed to achieve its objectives, and should be abolished.”

As might be expected of a nightlife tax, late night levies are also vociferously opposed by the hospitality industry. Commenting on the proposed levy in Tower Hamlets, Brigid Simmonds, chief executive at the British Beer and Pub Association, said: “A levy would represent a damaging new tax – it is the wrong approach. The focus should be on partnership working, with the police and local business, to address any issues in the night time economy.”

Nevertheless, boroughs in east London are pressing ahead with their plans. Tower Hamlets was recently forced to restart a consultation on its late night levy after a first attempt was the subject of a successful legal challenge by the Association of Licensed Multiple Retailers (ALMR). Kate Nicholls, chief executive at the ALMR, said:

“We will continue to oppose these measures wherever they are considered in any part of the UK and will urge local authorities’ to work with businesses, not against them, to find solutions to any issues they may have.”

Meanwhile, Hackney council intends to introduce a levy after a consultation which revealed 52 per cents of respondents were in favour of the plans. Announcing the consultation in February, licensing chair Emma Plouviez said:

“With ever-shrinking budgets, we need to find a way to ensure the our nightlife can continue to operate safely, so we’re considering looking to these businesses for a contribution towards making sure their customers can enjoy a safe night out and their neighbours and surrounding community doesn’t suffer.”

With budgets stretched, it’s inevitable that councils will seek to take advantage of any source of income they can. Nevertheless, earlier examples of the late night levy suggest this nightlife tax is unlikely to prove as lucrative as is hoped. Even if it does, should we expect nightlife venues to plug the gap left by public sector cuts?