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.

 
 
 
 

Green roofs improve cities – so why don’t all buildings have them?

The green roof at the Kennedy Centre, Washington DC. Image: Getty.

Rooftops covered with grass, vegetable gardens and lush foliage are now a common sight in many cities around the world. More and more private companies and city authorities are investing in green roofs, drawn to their wide-ranging benefits which include savings on energy costs, mitigating the risk from floods, creating habitats for urban wildlife, tackling air pollution and urban heat and even producing food.

A recent report in the UK suggested that the green roof market there is expanding at a rate of 17 per cent each year. The world’s largest rooftop farm will open in Paris in 2020, superseding similar schemes in New York City and Chicago. Stuttgart, in Germany, is thought of as “the green roof capital of Europe”, while Singapore is even installing green roofs on buses.

These increasingly radical urban designs can help cities adapt to the monumental challenges they face, such as access to resources and a lack of green space due to development. But buy-in from city authorities, businesses and other institutions is crucial to ensuring their success – as is research investigating different options to suit the variety of rooftop spaces found in cities.

A growing trend

The UK is relatively new to developing green roofs, and governments and institutions are playing a major role in spreading the practice. London is home to much of the UK’s green roof market, mainly due to forward-thinking policies such as the 2008 London Plan, which paved the way to more than double the area of green roofs in the capital.

Although London has led the way, there are now “living labs” at the Universities of Sheffield and Salford which are helping to establish the precedent elsewhere. The IGNITION project – led by the Greater Manchester Combined Authority – involves the development of a living lab at the University of Salford, with the aim of uncovering ways to convince developers and investors to adopt green roofs.

Ongoing research is showcasing how green roofs can integrate with living walls and sustainable drainage systems on the ground, such as street trees, to better manage water and make the built environment more sustainable.

Research is also demonstrating the social value of green roofs. Doctors are increasingly prescribing time spent gardening outdoors for patients dealiong with anxiety and depression. And research has found that access to even the most basic green spaces can provide a better quality of life for dementia sufferers and help prevent obesity.

An edible roof at Fenway Park, stadium of the Boston Red Sox. Image: Michael Hardman/author provided.

In North America, green roofs have become mainstream, with a wide array of expansive, accessible and food-producing roofs installed in buildings. Again, city leaders and authorities have helped push the movement forward – only recently, San Francisco created a policy requiring new buildings to have green roofs. Toronto has policies dating from the 1990s, encouraging the development of urban farms on rooftops.

These countries also benefit from having newer buildings, which make it easier to install green roofs. Being able to store and distribute water right across the rooftop is crucial to maintaining the plants on any green roof – especially on “edible roofs” which farm fruit and vegetables. And it’s much easier to create this capacity in newer buildings, which can typically hold greater weight, than retro-fit old ones. Having a stronger roof also makes it easier to grow a greater variety of plants, since the soil can be deeper.


The new normal?

For green roofs to become the norm for new developments, there needs to be buy-in from public authorities and private actors. Those responsible for maintaining buildings may have to acquire new skills, such as landscaping, and in some cases volunteers may be needed to help out. Other considerations include installing drainage paths, meeting health and safety requirements and perhaps allowing access for the public, as well as planning restrictions and disruption from regular ativities in and around the buildings during installation.

To convince investors and developers that installing green roofs is worthwhile, economic arguments are still the most important. The term “natural capital” has been developed to explain the economic value of nature; for example, measuring the money saved by installing natural solutions to protect against flood damage, adapt to climate change or help people lead healthier and happier lives.

As the expertise about green roofs grows, official standards have been developed to ensure that they are designed, built and maintained properly, and function well. Improvements in the science and technology underpinning green roof development have also led to new variations on the concept.

For example, “blue roofs” increase the capacity of buildings to hold water over longer periods of time, rather than drain away quickly – crucial in times of heavier rainfall. There are also combinations of green roofs with solar panels, and “brown roofs” which are wilder in nature and maximise biodiversity.

If the trend continues, it could create new jobs and a more vibrant and sustainable local food economy – alongside many other benefits. There are still barriers to overcome, but the evidence so far indicates that green roofs have the potential to transform cities and help them function sustainably long into the future. The success stories need to be studied and replicated elsewhere, to make green, blue, brown and food-producing roofs the norm in cities around the world.

Michael Hardman, Senior Lecturer in Urban Geography, University of Salford and Nick Davies, Research Fellow, University of Salford.

This article is republished from The Conversation under a Creative Commons license. Read the original article.