The continent’s approach to rail liberalisation holds lessons for Britain

An NTV train crosses the Tiburtina station in central Rome. Image: Getty.

As universal truths go, it’s not far off “death and taxes”: Britain’s rail network is privatised, the service is abysmal, fares are stratospheric. To restore our railway as a network we can be proud of, it must be renationalised. And we know that will work, because continental European railways are cheap, punctual, pleasurable and nationalised. Right?

Wrong. The binary debate over the future of UK rail is now so entrenched that we have increasingly ceased to question its fundamental tenets. This retreat to dogmatic positions risks doing a grave disservice to the travelling public – and we urgently need to consider both our own railway and those in Europe in a much more nuanced light.

John Band has already knocked down a few shibboleths in his 2015 article on rail fares, so I won’t cover the same ground again. Suffice to say, looking at our own railway’s structure, government control is so pervasive that it is not really credible to claim it is private at all. As in Europe, the railway’s fixed assets (track, stations, signalling etc.) are in public hands, following the reclassification in 2014 of Network Rail as a government entity.

Franchises, meanwhile, are so tightly specified by the Department for Transport (DfT) that any room for entrepreneurial activity has been all but squeezed out. Yes, DfT really does tell operators how many of their trains can have a catering trolley.

Yet arguably even more pressing for UK rail policy is the need to understand the profound changes happening to Europe’s railways as market reforms take root. It is still perfectly possible to jump on a train in Paris, Rome or Munich and find that train is run by a public sector operator, which is often part of a state holding group which also includes the infrastructure manager: train operator Trenitalia and infrastructure manager RFI in the case of Italy, for example.

However, over the past 20 years, EU policymakers have been looking for ways to make the European rail network more competitive. Policy measures have mostly focused on technical harmonisation between disparate national rail networks, but opening up of rail services to competition has also been a key strand.

This liberalisation has been resisted for years in many member states – but we are now reaching a point where the tide is turning, and the widely held perception in Britain of ‘nationalised’ continental railways is increasingly inaccurate. Perhaps most pernicious of all is the misleading suggestion that somehow Deutsche Bahn, SNCF or NS, the Dutch parent of Abellio, are sitting at home chuckling as filthy lucre from the fares of hardworking British commuters trickles into the coffers.

Far from it: most, but not all, European countries have seen some degree of liberalisation.

Take Italy, for starters. On 7 February, Global Infrastructure Partners (owner of London’s Gatwick Airport) made a successful offer of €1·9bn to acquire a company called Nuovo Trasporti Viaggiatori.

Who is that, you ask? Well, NTV runs pointy red high speed trains up, down and across the country, mostly on the dedicated high speed rail network that Italy has been building since the 1960s. Serving destinations including Turin, Venice and Naples, the company runs 50 trains per day on the key business route between Milan and Rome. Using the Italo brand, NTV competes head to head with the public sector operator Trenitalia, and between them they have gained a large majority of the rail/air market between the two hubs.

Unlike most British train companies however, NTV has no franchise or contract with government. It uses the EU’s ‘open access’ rules, paying access charges to use the national network. Its services are genuinely entrepreneurial as a result: if they are not viable, they would not survive.

NTV was established in 2011 by a consortium of high profile investors led by Luca di Montezemolo, whom Formula 1 motor racing fans will know as a former Team Principal at the Ferrari team. (The Italo trains’ scarlet livery is not a coincidence.)

For a few years, the state incumbent sought to frustrate NTV’s ambition amid a lack of strong independent regulation. But NTV has expanded from a niche operator to a significant player, at least on the core inter-city axes. As a consequence, private competition has compelled Trenitalia to up its game.

NTV’s state of the art Alstom trains were soon matched by a rival fleet procured by Trenitalia from Bombardier and Hitachi. Both have a whopping four classes of seating and, naturally, top quality espresso in the buffet car. More importantly, the number of services available between major cities has grown, but the rivalry has kept prices down.


There are lessons for here for Britain. We also have open access players in the shape of Grand Central and Hull Trains, operating out of London King’s Cross. Yet neither has the scale of NTV in Italy, and the government is lukewarm at best about operators who exist outside the contractual headlock of a franchise. For advocates of renationalisation however, there is a major quandary: Hull Trains and Grand Central regularly top passenger satisfaction tables, which suggests that more entrepreneurial zeal, not less, could lead to better services, at least in the long-distance segment.

In Italy, the inter-city network has been opened up to competition, while regional trains are, for now, still run by the state. In Germany, the opposite is true. Almost 40 per cent of German regional trains are now run by companies other than Deutsche Bahn, while DB retains a near monopoly on long-distance routes. Regional rail operating contracts are typically let by regional authorities (usually the Bundesländer), rather than by central government – but just as in Britain, the trains themselves are increasingly leased from the private sector rather than owned by the state.

Trenitalia is the second largest operator in Germany, while many of the companies holding UK franchises are also active. Indeed, British companies like National Express have made major inroads: its chief executive said last year that German contracts were now more attractive to private operators than UK franchising.

Where British and German ‘franchising’ really diverge is in costs. Typically, when DB loses a contract to a competitor, the cost of operation goes down, with a positive impact on subsidy and therefore fares. In an extreme example, Go-Ahead (yes, parent of loathed Southern Rail) has agreed to run several routes around Stuttgart for a period of 13 years from 2019. That contract is costing the regional authority in Baden-Württemberg approximately half the amount per train-kilometre it was giving to DB under the previous agreement. A raft of improvements is planned, including new trains across the network. Yet with such a dramatic reduction in the cost base, the authority also has the option to hold down fares.

Once again, the implications for British rail policy are clear. We should be asking why German rail liberalisation is driving down operating costs while quality of service is broadly improving. Instead, we get increasingly simplistic assertions about the benefits of renationalisation, which hark back to an increasingly hazy recollection of British Rail.

The opening up of Europe’s networks to competition has polarised opinion across the sector, and debate will continue for years to come as to the pros and cons. Indeed, there are areas where the British system has a clear advantage over, say, Germany – for example, a unified ticketing system which allows booking between any two stations, irrespective of operator.

But please let us not labour anymore under romanticised ideas of ‘nationalised’ European rail based on experience from the odd long weekend away. The debate over the future of Britain’s railways deserves a better level of understanding – and there is much to learn from the European experience.

Nick Kingsley is managing editor of Railway Gazette International, the business magazine for the global rail industry. He tweets as @njak_100.

 
 
 
 

So why is Peterborough growing so quickly?

Peterborough Cathedral. Image: Jules & Jenny/Flickr/creative commons.

The latest instalment of our series, in which we use the Centre for Cities’ data tools to crunch some of the numbers on Britain’s cities.  

The 2001 census put the population of Peterborough at 156,000. Some time before next spring, it’s projected to pass 200,000. That, for those keeping score, is an increase of about 28 per cent. Whether this makes it the fastest growing city in Britain or merely the second or the fourth – the vagueness of Britain’s boundaries means that different reports reach different conclusions – doesn’t really matter. This is a staggering rate of growth.

Oh, and since austerity kicked in, the city council has had its grant from central government cut by 80 percent.

Expansion on this scale and at this rate is the sort of thing that’d have a lot of councils in our NIMBY-ish political culture breaking out in hives; that seems to go double for Tory-run ones in Leave-voting areas. This lot, though, seem to be thriving on it. “I think the opportunity in Peterborough is fantastic,” says Dave Anderson, the city’s interim planning director. “We’re looking at growing to 235,000 by the mid-2030s.”

More striking still is that the Conservative council leader John Holdich agrees. “I’m a believer in ‘WIMBY’: what in my back yard?” he says. He’s responsible, he says, not just to his electorate, but “to our future kids, and grandkids” too – plus, at that rate of growth, a lot of incomers, too.

All this raises two questions. Why is Peterborough growing so quickly? And what can it do to prepare itself?

If you’re a little uncertain exactly where Peterborough is, don’t worry, you’re in good company. Until 1889, the “Soke of Peterborough” was an unlikely east-ward extrusion from Northamptonshire, far to its south west. Then it was a county in its own right; then part of the now-defunct Huntingdonshire. Today it’s in Cambridgeshire, with which it shares a metro mayor, the Conservative James Palmer. When I ask Holdich, who’s giving me a whistlestop tour of the city’s cathedral quarter, to explain all this, he just shrugs. “They keep moving us about.”

Sitting on the edge of the Fens, Peterborough is, officially, a part of the East of England region; but it’s just up the road from East Midlands cities including Leicester and Nottingham. I’d mentally pigeonholed it as a London-commuter town, albeit a far flung one; but when I actually looked it up, I was surprised to discover it was closer to Birmingham (70 miles) than London (75), and halfway up to Hull (81).


The more flattering interpretation of all this is that it’s on a bit of a crossroads: between capital and north, East Anglia and the Midlands. On the road network, that’s literally true – it’s where the A1 meets the A47, the main east-west road at this latitude – and railway lines extend in all directions, too.

All of which makes Peterborough a pretty nifty place to be if you’re, say, a large logistics firm.

This has clearly contributed to the city’s growth. “It has access to lots of land and cheaper labour than anywhere else in the Greater South East,” says Paul Swinney, director of policy at the Centre for Cities. “Those attributes appeal to land hungry, low-skilled business as opposed to higher-skilled more knowledge-based ones.”

That alone would point to a similar economy to a lot of northern cities – but there’s another thing driving Peterborough’s development. Despite being 70 miles from the capital, the East Coast Main Line means it’s well under an hour away by train.

In 1967, what’s more, the ancient cathedral city was designated a new town, to house London’s overspill population. The development corporation which owned the land and built the new town upon it, evolved into a development agency; today the same role is played by bodies like Opportunity Peterborough and the Peterborough Investment Partnership.

The city also offers relatively cheap housing: you can get a four-bed family home for not much over £200,000. That’s fuelled growth further as London-based workers scratch around for the increasingly tiny pool of places that are both commutable and affordable.

The housing affordability ratio shows average house prices as a multiple of average incomes. Peterborough is notably more affordable than Cambridge, London and the national average. Image: Centre for Cities data tool.

It’s made it attractive to service businesses, too. “London has probably played quite a big role in the city’s development,” says Swinney. “If you don’t want to move too far out, it’s probably one of the cheapest places to move to.”

The result of all this is that it has an unusually mixed economy. There’s light industry and logistics, in the office and warehouse parks that line the dual-carriageways (“parkways”) of the city. But there are also financial services and digital media companies moving in, bringing better paying jobs. In a country where most city economies are built on either high value services or land-hungry warehousing businesses, Peterborough has somehow managed to create a mixed economy.

Peterborough’s industrial profile: more services and less manufacturing, and more private and fewer public sector jobs, than the national average. Image: Centre for Cities.

At the moment, if people think of Peterborough at all, they’re likely to imagine a large town, rather than the fair-size regional city it’s on course to become. Its glorious 12th century cathedral – the hallmark of an ancient city, and at 44m still by far the highest spot on the horizon for miles around – is stunning. But it’s barely known to outsiders, and at least twice on my tour, the council’s communications officer proudly announces that the Telegraph named her patch as one of the best towns to live in within an hour of London, before adding, “even though we’re a city”. 

So part of the council’s current mission is to ensure that Peterborough has all the amenities people would expect from a settlement on this scale. “What the city needs to do is to adopt the mind-set of a slightly larger city,” says Anderson. Slightly smaller Swansea is developing a new music arena, of the sort Peterborough doesn’t have and needs. He frets, too, about retail spend “leaking” to Cambridge or Leicester. “Retail is now seen as a leisure activity: in the core of the city it’s important that offer is there.”

To that end, the early 1980s Queensgate shopping centre is being redeveloped, with John Lewis giving up a chunk of space to provide a new city centre cinema. (At present, the area only has road-side suburban multiplexes.) There’s major office, retail and housing development underway at North Westgate, as well as work to improve the walking route between the station and the commercial centre, in a similar manner to Coventry.

Fletton Quays. Image: Peterborough Investment Partnership.

Then there’s the city’s underused riverside. The council recently moved to new digs, in Fletton Quays, on the far bank of the River Nene from the centre. Across the river from the Embankment, the city centre’s largest green space, it’s a pretty lovely spot, of the sort where one might expect riverside pubs or restaurants with outdoor seating – but at the moment the space is largely empty. The Fletton Quays development will change all that, bringing more retail space and yes, new homes, too.

Jobs in Peterborough are unusually distributed around town: in many cities, most jobs are in the central business district. Image: Centre for Cities.

The big thing everyone agrees is missing, though, is a university. It already has the University Centre Peterborough, where degrees are provided by Anglia Ruskin University. The plan is for the site – a joint venture between ARU and Peterborough Regional College – to go its own way as an independent institution, the University of Peterborough, in autumn 2022. That should help provide the skills that the city needs to grow. A growing student population should also bring life and cash to the city centre. 

How big could Peterborough get? Could its enviable combination of good location and cheap housing and grand ambitions combine to make it the modern equivalent of Manchester or Liverpool – one of the great cities of the 21st century?

Well, probably not: “I think the optimum size for a city is probably about 250,000,” says Holdich. But that’s still a whole quarter bigger than now, and the council leader even discusses the possibility of refitting his dual-carriageway-based-city with some kind of light rail network to service that growing population. Peterborough’s not done growing yet.

Jonn Elledge is the editor of CityMetric. He is on Twitter as @jonnelledge and on Facebook as JonnElledgeWrites.

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