The case for re-nationalising Britain's rail network

We'll have all this lot back for a start. Image: Bruno Vincent/Getty.

Labour leadership hopefuls Jeremy Corbyn and Andy Burnham have both spoken of re-nationalising the UK’s railways, and the case for national ownership of such a crucial piece of a country’s infrastructure is the source of much debate. But the evidence suggests that integrating the UK’s expensive and fragmented rail network under public ownership could save hundreds of millions and also provide a better service.

At a smaller level, Transport for London shows the success of an integrated network run by the public sector. If a similar model was applied to national rail, all profits made in the sector would be reinvested, fares could be cut and government subsidies reduced. This compared to how costly and inefficient privatising the national rail network has been.

The latest two YouGov Surveys indicate majority support for taking rail back into public ownership. Opposition to the idea has fallen from March to August.

The overwhelming reason for this is a belief that rail fares would go down as a result. For example a YouGov Survey of 2014 found the top three reasons for re-nationalising the railways were that:

  • Railways would be accountable to the taxpayer rather than shareholders;
  • Rail fares would go down;
  • It would be more cost effective overall.

Only a third think ticket prices would go up under public ownership. Half think the fares would fall. Image: Survation, May 2014.

The belief is justified. In 2013, journey prices were 23 per cent higher in real terms than in 1995, the year rail was fully privatised. Research by Transport for Quality of Life indicates creating a unified publicly owned railway could save enough to fund a 10 per cent cut on regulated fares, which constitute half of all tickets sold, including season and day return tickets.

This month trade union campaigners Action for Rail suggested regulated fares rose 25 per cent between 2010 and 2015 alone. Prices have risen fastest on long distances, which are often unregulated.


A costly experiment

Today’s part public, part private system is a reflection of the Great British rail privatisation experiment. The 1993 Railways Act split responsibility for physical rail infrastructure and the train services. Railtrack, a for-profit company, took on infrastructure; meanwhile, the passenger rail network was split into 25 companies, each to be run by the private sector.

Infrastructure has since been returned to public ownership. After four fatal rail accidents around the millennium exposed Railtrack’s dangerous under-investment and spiralling project costs, Network Rail, a not-for-dividend company, was created to replace it. Its high dependence on subsidy and government-guaranteed borrowing then required its reclassificaion from a non-profit company to a central government body.

The result of all is this total rail subsidies have increased from around £2.75bn in the late 1980s to around £4bn today. An integrated network could reduce excessive costs of fragmentation through cooperative working, coordinated planning and knowledge sharing.

Total subsidy to the rail network in each financial year. Subsidy include Network Rail and Train Operating Subsidy, 1995-2012. Prices shown are 2012 prices. Source: House of Commons Transport Committee (2013) Rail 2020 - Seventh Report of Session 2012-13.

There has also been significant growth in Network Rail debt – from £9.6bn in 2003, to £34bn in 2014. The debt has grown in an effort to upgrade the under-invested infrastructure inherited from Railtrack, but also due to the cost of servicing existing debt. With Network Rail now a central government body, rather than borrowing from the City, it can do so through the Treasury, which is slightly cheaper.

Passenger rises

In terms of the rail network, privatisation was meant to bring “higher quality of service and better value for money”. But the hope that private sector management efficiency would mean that the system could run without subsidy has not been fulfilled.

As the graph below shows, at no point in recent history has the British railway network managed to cover its costs. On average, passenger fares have made up 60 per cent of total rail income in the past 25 years – peaking at 85 per cent in the year the network was privatised.

Indeed, the 1992 White Paper on rail privatisation, drafted to inform the 1993 Railways Act, recommended that rail infrastructure remain publicly owned as there was no record of profitability.

Passenger fare revenue as a percentage of total GB rail system revenue. Source: A Bowman (2015) An illusion of success: The consequences of British rail privatisation.

 

Supporters of privatisation point to the growth in passenger numbers as evidence for its success. Average annual passenger numbers rose 4 per cent between 1997 and 2012 compared to 1.73 per cent between 1982 and 1996, and the annual journeys per head rose from 14.9 in 1997-98 to 22.4 in 2010-11.

But passenger revenue has not been able to cover costs, despite this significant growth, which has outstripped European peers. And the rise in passenger numbers is arguably symptomatic of wider trends such as urbanisation, centralisation of employment and non-car lifestyle choices, particularly of millenials, rather than credit to the privatisation of the rail industry.

These lifestyle changes are reflected by growth in the frequency of journeys over individual journey distances, as shown below.

Overall gowth in rail passenger travel per person 1995-2010. Image: Le Vine and Jones (2012) On the Move.

The route to nationalisation

Britain’s railways could be taken back into the public sector one piece at a time, at no cost. As franchises expire, contractual break points are reached, or franchises under-perform, routes could be taken back into public ownership. By 2020, eleven current franchises will expire.

 

Source: Department for Transport - Rail Executive (2015) Rail franchise Schedule, July 2015.

If franchises were taken back under public control as they expire, an integrated rail network could grow as shown in the map below:

 

Image: Nicole Badstuber. Original map: Barry Does (2015) 2015 Great Britain National Rail Passenger Operations - 31st edition. Franchise expiry dates: Department for Transport (2015) Rail Franchise Schedule July 2015.

Savings to be made

Nationalising the railways has the potential to bring a number of obvious savings to the UK government.

1. Shareholder dividend payments

The latest dividend payments by the train operating companies amounted to approximately £200m a year. Instead of being paid to shareholders, this amount could be reinvested into the railway and reduce the taxpayer’s contribution.

2. Subcontrators

Transport for Quality of Life estimates that £76m a year could be saved on private subcontractors by re-creating the staff positions in house.

3. Bidding costs

Under the current system, the various train operating companies bid to run each rail franchise. The problem is, central government ultimately pays for the costs involved in these bids: the train operators are not directly reimbursed for the incurred cost of bidding, they will recoup it by factoring it into the franchise price.


Scrapping the bidding process would cut this cost, which was conservatively estimated to be £15-20m per franchise competition in 2010 (though the competition for Great Western’s services in 2012 cost a total of £40m). So, if three franchises are up for renewal a year from now until the end of 2019, between £45m and £120m could be saved by scrapping these competitions and managing the rail routes under one umbrella.

4. Administration costs

If the franchising system was abolished, more than £2m a year could be saved on in-house Department for Transport administration costs. Cutting the external consultants and contractors involved in franchise specification and procurement would save the department an additional £4m a year.

Additional savings could be reaped from an integrated structure such as getting rid of duplicate senior management and marketing.

In other words, the case for re-nationalising all of Britain’s railways is a strong one. Privatisation has proven extremely costly – and an integrated national network would be better value for both consumer and government.The Conversation

Nicole Badstuber is a PhD researcher and research assistant in transport policy and governance at University College London, University College London.

This article was originally published on The Conversation. Read the original article.

 
 
 
 

Barnet council has decided a name for its new mainline station. Exciting!

Artist's impression of the new Brent Cross. Image: Hammerson.

I’ve ranted before about the horror of naming stations after the lines that they’re served by (screw you, City Thameslink). So, keeping things in perspective as ever, I’ve been quietly dreading the opening of the proposed new station in north London which has been going by the name of Brent Cross Thameslink.

I’ve been cheered, then, by the news that station wouldn’t be called that at all, but will instead go by the much better name Brent Cross West. It’s hardly the cancellation of Brexit, I’ll grant, but in 2017 I’ll take my relief wherever I can find it.

Some background on this. When the Brent Cross shopping centre opened besides the A406 North Circular Road in 1976, it was only the third large shopping mall to arrive in Britain, and the first in London. (The Elephant & Castle one was earlier, but smaller.) Four decades later, though, it’s decidedly titchy compared to newer, shinier malls such as those thrown up by Westfield – so for some years now, its owners, Hammerson, have wanted to extend the place.

That, through the vagaries of the planning process, got folded into a much bigger regeneration scheme, known as Brent Cross Cricklewood (because, basically, it extends that far). A new bigger shopping centre will be connected, via a green bridge over the A406, to another site to the south. There you’ll find a whole new town centre, 200 more shops, four parks, 4m square feet of offices space and 7,500 homes.

This is all obviously tremendously exciting, if you’re into shops and homes and offices and not into depressing, car-based industrial wastelands, which is what the area largely consists of at the moment.

The Brent Cross site. Image: Google.

One element of the new development is the new station, which’ll sit between Hendon and Cricklewood on the Thameslink route. New stations are almost as exciting as new shops/homes/offices, so on balance I'm pro.

What I’ve not been pro is the name. For a long time, the proposed station has been colloquially referred to as Brent Cross Thameslink, which annoys me for two reasons:

1) Route names make rubbish modifiers because what if the route name changes? And:

2) It’s confusing, because it’s nearly a mile from Brent Cross tube station. West Hampstead Thameslink (euch), by contrast, is right next to West Hampstead tube.

Various other names have been proposed for the station. In one newsletter, it was Brent Cross Parkway; on Wikipedia, it’s currently Brent Cross South, apparently through confusion about the name of the new town centre development.

This week, though, Barnet council quietly confirmed it’d be Brent Cross West:

Whilst the marketing and branding of BXS needs to be developed further, all parties agree that the station name should build upon the Brent Cross identity already established. Given the station is located to the west of Brent Cross, it is considered that the station should be named Brent Cross West. Network Rail have confirmed that this name is acceptable for operational purposes. Consequently, the Committee is asked to approve that the new station be named Brent Cross West.

Where the new station will appear on the map, marked by a silly red arrow. Image: TfL.

That will introduce another irritating anomaly to the map, giving the impression that the existing Brent Cross station is somehow more central than the new one, when in fact they’re either side of the development. And so:

Consideration has also been given as to whether to pursue a name change for the tube station from “Brent Cross” to “Brent Cross East”.

Which would sort of make sense, wouldn’t it? But alas:

However owing to the very high cost of changing maps and signage London-wide this is not currently being pursued.

This is probably for the best. Only a handful of tube stations have been renamed since 1950: the last was Shepherd’s Bush Market, which was until 2008 was simply Shepherd's Bush, despite being quite a long way from the Shepherd's Bush station on the Central line. That, to me, suggests that one of the two Bethnal Green stations might be a more plausible candidate for an early rename.


At any rate: it seems unlikely that TfL will be renaming its Brent Cross station to encourage more people to use the new national rail one any time soon. But at least it won’t be Brent Cross Thameslink.

Jonn Elledge is the editor of CityMetric. He is on Twitter as @jonnelledge and also has a Facebook page now for some reason. 

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