Chris Grayling isn’t privatising the railways – but his weird partisanship will hurt them all the same

We couldn't bring ourselves to use a picture of Chris Grayling for the third day running. Image: Getty.

Transport Secretary Chris Grayling this week announced that he was going to give UK rail infrastructure body Network Rail a whipping. Its Oxford-Cambridge East West Rail project will now be built by a separate organisation, and future rail franchises will be more “vertically integrated”, with “joined-up teams” running tracks and trains.

The news was reported as a return to private control of infrastructure, much to the Telegraph’s glee and the Guardian’s horror. But to understand what this means requires a quick recap on how the railways in Great Britain work.

I’ve written about this in these pages before, but here’s the quick version. Network Rail owns and runs the tracks. Grayling’s Department for Transport (DfT) is in charge of franchised train operating companies (TOCs), which compete by tendering – like an auction – for the obligation to run a level of service defined by the DfT on a set of routes defined by the DfT, in exchange for a monopoly of services on those routes. TOCs pay Network Rail to use its tracks. Some tracks are only used by one TOC; the busiest tracks are used by several TOCs at the same time.

Freight and open-access operating companies, which are all for-profit, just pay Network Rail directly to use its tracks. All freight and open access services run over track that’s also used by one or more TOCs. Network Rail is in charge of the links between the different companies involved: it manages the national timetable; it calculates who’s running trains where and how much they need to pay; and ,when things go wrong, how much it costs and whose fault it is.

Like Newton’s laws, this simplified model is wrong in various ways that don’t matter here. The only important one, which I’ll come back to, is that some TOCs are commissioned by the devolved governments, rather than the DfT.

This system, which has been going in its current form for about 15 years, has various advantages and disadvantages over the previous ways that railways in GB have been structured.

Its advantages over the immediately previous system with TOCs and privately-owned tracks are extremely clear. The infrastructure is no longer owned by property developers, but by a public sector body; Network Rail has tended to be safety- and performance-led rather than financial results-led; and it has rebuilt the nationwide operational expertise and leadership that was lost under Railtrack.

Its advantages over the system before that, where British Rail was a single national public sector operator, are harder to judge, thanks to the major changes in technology, costs, rider numbers and public expectations over the last 25 years. But we do know that it’s moving far more people, making them much less late, and killing or injuring them much less, than British Rail did, while also carrying more freight.

(As an aside, it’s also paying its staff much better than they were paid in the BR days. My personal view is that this is a positive: good pay is entirely fair enough for a highly skilled, safety-critical industry that requires deeply antisocial hours. It’s noticeable that very few of the people who claim otherwise tend to follow through and quit their 9-5s for railway jobs.)


The main problem is that the current setup is expensive. Net government subsidy paid – although it’s fallen a lot over the last few years – is still much higher than for British Rail. And although services run well, that isn’t much comfort for delayed commuters paying high fares (even though those fares are high mostly because the subsidy remains low compared to other countries).

So how will Grayling’s plans help? The short answer is they won’t do much at all. Aligning NR and TOC operating teams has been tried on South West Trains and in Scotland, with uninspiring results; and it’s unlikely the new initiative will be much different. Although old hands drone on about vertical integration, the track operator must be able to work with multiple train operators, and NR is set up to do this as efficiently as possible

Similarly, the East West Rail announcement is being spun as a change – but as a separate agency with some public and some private funding, it’s actually similar to most major new-build projects like HS1, Crossrail and HS2. It’s likely that, as with HS1, Network Rail will take over operations once the line is complete.

The most worrying part of Grayling’s speech was actually rather hidden: he has ruled out further devolution of franchise commissioning to local governments. This change has had a positive impact on services wherever it’s been carried out, most noticeably London and Scotland – so why would anyone oppose it?

The answer was revealed starkly in London’s Evening Standard in a leaked letter Grayling wrote to former London mayor Boris Johnson in 2013: because he doesn’t want Labour to get control of things, and most English cities are Labour-supporting, most of the time.

So the lack of reality behind Grayling’s latest Network Rail announcements is a relief. But his pettiness and spite is far more worrying for the long-term future of the industry.

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Worried Guildford will be destroyed by Chinese trains? Then you might not be very nice

A South West Train at Waterloo. Image: Getty.

Despite the collapse of everything else that more-or-less worked in 2008 Britain, before the Hunger Games years began, some things remain constant. One of the things that’s near-mathematical in its constancy is that, when a new train contract is let, people on both sides of the political spectrum will say extremely stupid things for perceived partisan advantage.

This week saw the award of the contract to run trains to the south west of London, and unsurprisingly, the saying stupid things lobby was out in force. Oddly – perhaps a Corbyn-Brexit trend – the saying of egregiously stupid racist lies, rather than moderately stupid things, was most pronounced on the left.

As we’ve done to death here: rail in Great Britain is publicly run. The rail infrastructure is 100 per cent publicly owned, and train operators operate on government contracts, apart from a few weird anomalies. Some physical trains are owned by private investors, but to claim rail isn’t publicly run would be like claiming the NHS was the same as American healthcare because some hospital buildings are maintained by construction firms.

Every seven years or so, companies bid for the right to pay the UK government to operate trains in a particular area. This is the standard procedure: for railways that are lossmaking but community-important, or where they are within a major city and have no important external connections, or where there’s a major infrastructure project going on that’ll ruin everything, special measures take place.

The South Western England franchise is not one of these. It’s a profitable set of train routes which doesn’t quite live up to its name. Although it inherited a few Devon and Dorset routes from the old days, its day job involves transporting hundreds of thousands of Reginald Perrins and Mark Corrigans from London’s outer suburbs and Surrey, Hampshire and Berkshire’s satellite towns to the grinding misery of desk jobs that pay a great deal of money.

(If your office is in the actual City of London, a fair trek from the railway’s Waterloo terminus, then you get the extra fun of an extra daily trip on the silliest and smelliest Tube line, and you get even more money still.)

Anyway. The South Western concession went up for auction, and Scottish bus and train operator First Group won out over Scottish bus and train operator Stagecoach, the latter of which had run the franchise for the preceding 20 years. (Yes, I know 20 isn’t a multiple of 7. Don’t ask me to explain, because I can and you wouldn’t enjoy it.)

First will manage the introduction of a bunch of new trains, which will be paid for by other people, and will pay the government £2.2bn in premiums for being allowed to run the service.

One might expect the reaction to this to be quite muted, because it’s quite a boring story. “The government does quite a good deal under which there’ll be more trains, it’ll be paid lots of money, and this will ultimately be paid back by well-paid people paying more train fares.” But these are not normal times.


First Group has decided for the purposes of this franchise to team up with MTR, which operates Hong Kong’s extremely good metro railway. MTR has a 30 per cent share in the combined business, and will presumably help advise First Group about how to run good metro railways, in exchange for taking a cut of the profits (which, for UK train franchises, tend to be about 3 per cent of total revenue).

The RMT, famous for being the least sensible or survival-oriented union in the UK since the National Union of Mineworkers, has taken exception to a Hong Kong company being involved in the railways, since in their Brexity, curly sandwich-eating eyes, only decent honest British Rail has ever delivered good railways anywhere in the world.

“A foreign state operator, in this case the Chinese state, is set to make a killing at the British taxpayers’ expense,” the RMT’s General Secretary Mick Cash said in a press release.

This is not true. Partly that's because a 30 per cent share of those 3 per cent profits is less than 1 per cent of total revenues, so hardly making a killing. Mostly, though, it’s because it’s misleading to call MTR “state-owned”. While it’s majority owned by the Hong Kong government (not the same body as the central Chinese state), it’s also partly listed on the Hong Kong Stock Exchange. More to the point, this a really odd way of describing a transport authority controlled by a devolved body. I wouldn’t call the Glasgow subway “UK-state owned” either.

So this fuss is intensely, ridiculously stupid.

There’s an argument – it’s a bad argument, but it exists – that the entire UK rail system should be properly privatised without government subsidy.

There’s an argument – it’s a slightly less stupid argument, but it exists – that the entire UK rail system should be returned to the public sector so we can enjoy the glory days of British Rail again.

The glory days of British Rail, illustrated in passenger numbers. Image: AbsolutelyPureMilk/Wikipedia.

But to claim that the problem is neither of these things, but rather that the companies who are operating trains on the publicly run network are partially foreign owned, makes you sound like a blithering xenophobe.

In fact, if you think it’s reasonable for a Scottish company to run trains but not for a Hong Kong company to run them, then that's me being pretty bloody polite all things considered.

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