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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Is Britain’s housing crisis a myth?

Council housing in Lambeth, south London. Image: Getty.

I’ve been banging on about the need for Britain to build more houses for so long that I can no longer remember how or when it started. But at some point over the last few years, the need to build more homes has become My Thing. People ask me to speak at housing events, or @ me into arguments they’re having on Twitter on a Sunday morning in the hope I’ll help them out. You can even buy a me-inspired “Build More Bloody Houses” t-shirt.

It’s thus with trepidation about the damage I’m about to do to my #personal #brand that I ask:

Does Britain actually have enough houses? Is it possible I’ve been wrong all this time?

This question has been niggling away at me for some time. As far back as 2015, certain right-wing economists were publishing blogs claiming that the housing crisis was actually a myth. Generally the people who wrote those have taken similarly reality-resistant positions on all sorts of other things, so I wasn’t too worried.

But then, similar arguments started to appear from more credible sources. And today, the Financial Times published an excellent essay on the subject under the headline: “Hammond’s housebuilding budget fix will not repair market”.

All these articles draw on the data to make similar arguments: that the number of new homes built has consistently been larger than the number of new households; that focusing on new home numbers alone is misleading, and we should look at net supply; and that the real villain of the piece is the financialisation of housing, in which the old and rich have poured capital into housing for investment reasons, thus bidding up prices.

In other words, the data seems to suggest we don’t need to build vast numbers of houses at all. Have I been living a lie?

Well, the people who’ve been making this argument are by and large very clever economists trawling through the data, whereas I, by contrast, am a jumped-up internet troll with a blog. And I’m not dismissing the argument that the housing crisis is not entirely about supply of homes, but also about supply of money: it feels pretty clear to me that financialisation is a big factor in getting us into this mess.

Nonetheless, for three reasons, I stand by my belief that there is housing crisis, that it is in large part one of supply, and consequently that building more houses is still a big part of the solution.

Firstly I’m not sold on some of the data – or rather, on the interpretation of it. “There is no housing crisis!” takes tend to go big on household formation figures, and the fact they’ve consistently run behind dwelling numbers. Well, they would, wouldn’t they? By definition you can’t form a household if you don’t have a house.

So “a household” is not a useful measure. It doesn’t tell you if everyone can afford their own space, or whether they are being forced to bunk up with friends or family. In the latter situation, there is still a housing crisis, whatever the household formation figures say. And there is plenty of anecdotal evidence to suggest that’s the one we’re living in.

In the same way I’m not quite convinced that average rents is a useful number. Sure, it’s reassuring – and surprising – to know they have grown slower than general prices (although not in London). But all that figure tells you is the price being paid: it doesn’t tell you what is being purchased for that payment. A world in which renters each have their own property may have higher rents than one in which everyone gets one room in an over-crowded shared flat. It’s still the latter which better fits the label “housing crisis”.

Secondly, I’m entirely prepared to believe we’ve been building enough homes in this country to meet housing demand in the aggregate: there are parts of the country where housing is still strikingly affordable.

But that’s no use, because we don’t live in an aggregate UK: we live and work in specific places. Housing demand from one city can be met by building in another, because commuting is a thing – but that’s not always great for quality of life, and more to the point there are limits on how far we can realistically take it. It’s little comfort that Barnsley is building more than enough homes, when the shortage is most acute in Oxford.

So: perhaps there is no national housing crisis. That doesn’t mean there is not a housing crisis, in the sense that large numbers of people cannot access affordable housing in a place convenient for their place of work. National targets are not always helpful.


Thirdly, at risk of going all “anecdote trumps data”, the argument that there is no housing crisis – that, even if young people are priced out of buying by low interest rates, we have enough homes, and rents are reasonable – just doesn’t seem to fit with the lived experience reported by basically every millennial I’ve ever met. Witness the gentrification of previously unfashionable areas, or the gradual takeover of council estates by private renters in their 20s. 

A growing share of the population aren’t just whining about being priced out of ownership: they actively feel that housing costs are crushing them. Perhaps that’s because rents have risen relative to wages; perhaps it’s because there’s something that the data isn’t capturing. But either way, that, to me, sounds like a housing crisis.

To come back to our original question – will building more houses make this better?

Well, it depends where. National targets met by building vast numbers of homes in cities that don’t need them probably won’t make a dent in the places where the crisis is felt. But I still struggle to see how building more homes in, say, Oxford wouldn’t improve the lot of those at the sharp end there: either bringing rents down, or meaning you get more for your money.

There is a housing crisis. It is not a myth. Building more houses may not be sufficient to solve it – but that doesn’t meant it isn’t necessary.

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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