Has the government just renationalised Britain’s railways?

A pity, it was working so well. Image: Getty.

This morning, in what can only be characterised as a whimper rather than a wail, the rail franchising system that has been in place in Britain since 1996 came to a rather unceremonious end.

With travel limited to only critical workers as a result of the rapid spread of coronavirus – EVERYONE ELSE: STAY INDOORS – there was never a chance that the over-stretched rail system would cope in its current guise, and it was likely that government would have to step in.

And step in it has. Rather than taking the franchises back in-house (as it has previously done with LNER and Northern using so-called “operators of last resort”), the government has essentially re-awarded the franchise holders with quick-and-easy “stay-put, we’ll pay you” contracts.

This isn’t full-blown nationalisation. The private companies that currently run franchised trains will keep doing so, except that rather than paying a set premium to government based on their earnings, and keeping they rest, they’ll be paid a set amount by government (2 per cent over the cost of running the service) to keep trains moving, albeit to a reduced timetable. This is the operator model already used by Merseyrail, London Overground and TfL Rail. 

However, when rolled out across the whole country, this does represent a radical shift in how our railways will be operated. And despite the stated expiry date of six months for this arrangement, it is very unlikely that we’ll see rail franchising return afterwards.

The number of companies with an interest in operating Britain’s franchised train services has diminished over the last decade, as government has cranked up its payment/risk management requirements and the overcrowded nature of the rail network has left less room for “commercial innovation”.

Given that passenger numbers have dropped by upwards of 70 per cent compared to this time last year, it was inevitable that many of the franchise holders – several of which were already on the brink of collapse thanks to over-eager bidding and delayed infrastructure delivery – would default on their payments to government.

In the background, the long-delayed report by Keith Williams as part of his review into the future of Britain’s railways had also widely been expected to end franchising. That review kicked-off back in September 2018 in the aftermath of the timetable collapse earlier that year. It is widely expected that Williams will propose bringing Britain’s railway operations closer in line with those of Japan, with joint train-infrastructure operators delivering services over larger geographical areas. At the very least, franchising, in the words of the chair himself, was “not the way forward”.

The report has been repeatedly delayed since the change in Prime Minister (Johnson or Cummings, take your pick), no doubt as a result of differences of opinion across government. But the inevitable demise of the current franchise holders has somewhat forced the issue.


What’s more, the share prices of the transport companies operating franchises have dropped to such a dramatic extent over the last month that there is only a minute chance that they would bid for franchises again even if government did decide to attempt a resurrection. For example, National Express’s share price is down at post-2008 crash levels; Go Ahead and Stagecoach are back where they were in 2003; and First Group’s share price is lower than it ever has been since trading began back in 1995.

So what will happen after the six months has elapsed? My bet is on the rail operator map being slightly re-drawn, and then new management contracts being given out, in line with the expected proposals of the Williams Review.

It’s worth noting that government hasn’t mentioned the open access operators – Eurostar, Grand Central, Heathrow Express and Hull Trains – who operate outside of the franchising system already. Will these operators be left to fend for themselves, and their inevitable collapse just be part of the COVID-19 collateral? It is certainly the case that the open access operators were a tricky match for Williams’ expected proposals. But would a Conservative government really let – arguably – the only true success stories of the privatised British rail operation fail?

For many of you sitting working from home, you’ll have little doubt that the spread of coronavirus will result in seismic changes to the wider world. For the microcosmos of Britain’s railways, that change has already happened.

RIP Britain’s rail franchising system: 1996 – 2020.

 
 
 
 

To see how a city embraces remote work, look to Helsinki

A deeply rooted culture of trust is crucial to the success of remote work. (Sean Gallup/Getty Images)

When I speak to Anssi Salminen, an account manager who lives an hour outside Helsinki, he’s working from a wooden platform on the edge of a Finnish lake. With a blanket laid out and his laptop set up, the sun low in the sky, Anssi’s remote work arrangement seems blissful. 

“I spend around half of my time working somewhere else other than the office,” he says. “I can work from home, or on the go, and I also travel to the Netherlands once a month and work from there.

“The emphasis in my work has always been that it doesn’t matter when or where I work, as long as I get things done.”

For many people around the world, the shift to remote work was sudden, sparked by the coronavirus pandemic. Finland, however, is finding the transition much less significant. Before Covid-19, the Nordic nation already displayed impressive levels of remote working, with 14.1% of its workforce reporting usually working from home. Only the Netherlands has a comparable percentage of remote workers, while the UK lagged behind at 4.7%, and the US’s remote workforce lingered at around 3.6%

Anssi works for one of many Helsinki-based companies that offers its employees flexible policies around when and where they work. That arrangement is in part due to the Finnish capital’s thriving start-up scene. In spite of being a relatively small city by global standards it is home to over 500 technology start-ups. These companies are leading the way when it comes to keeping employees connected wherever they choose to work.

“Our company has a completely location-free working policy,” says Kasper Pöyry, the CEO of Helsinki-headquartered software company Gapps. “All meetings are made available for online participants and facilitated accordingly. Some employees have worked extensively from abroad on a working holiday, whilst others prefer the comfort and social aspects of the well-stocked office. Whatever works for our employees is what works for the company.”

Like Gapps, many Helsinki-based firms are deeply preoccupied with providing the necessary technology to attract talent in a vast and sparsely populated country. Finland has only 15 inhabitants per square kilometre, and companies understand that in order to compose teams of specialised expertise, they may have to seek talent outside of the city. Local governments take a similarly proactive stance toward technological access, and Helsinki offers free, unrestricted, high-speed Wi-Fi from city-wide hotspots, while the country as a whole boasts some of the best coverage in Europe. 

But encouraging remote work isn’t just about optimising the potential of Finland’s workforce – companies in Helsinki also recognise that flexibility has clear benefits for both staff and employees. 

“The idea of a good work-life balance is ingrained in Finnish culture,” says Johannes Anttila, a consultant at organisational think tank Demos Helsinki. “It goes back to our rich history of social dialogue between labour unions and employers, but also to an interest in delineating the rules of working life and pushing towards people being able to enjoy their private life. Helsinki has been named the best city in the world for work-life balance, and I think that this underlies a lot of the mentality around remote work.” 

For Peter Seenan, the extent to which Helsinki residents value their free time and prioritise a work-life balance prompted his move to the city ten years ago. He now works for Finnair, and points to Finland’s summer cottages as an example of how important taking time to switch off is for people in the country. These rural residences, where city residents regularly uproot to enjoy the Nordic countryside, are so embedded in Finnish life that the country boasts around 1.8 million of them for its 5.5 million residents

“Flexible and remote work are very important to me because it means that I don’t feel like I’m getting stuck in a routine that I can’t control easily,” he says. “When I’m working outside of the office I’ll go down to my local sauna and go ice swimming during the working day, typically at lunchtime or mid-morning, and I’ll feel rejuvenated afterwards… In winter time especially, flexibility is important because it makes it easier to go outside during daylight hours. It’s certainly beneficial for my physical and mental health, and as a result my productivity improves.”

The relaxed attitude to working location seems to pay off – Finland is regularly named the happiest country in the world, scoring highly on measures such as how often its residents exercise and how much leisure time they enjoy. With large swathes of unspoiled countryside and a national obsession with the outdoors, sustainability is at the forefront of its inhabitants’ minds, leading to high levels of support for measures to limit commuting. In January, Finland passed a new Working Hours Act, the goal of which was to help better coordinate employee’s work and leisure time. Central to this is cementing in law that employees can independently decide how, when, and where they work.

Yet enacting the new ruling is not as simple as just sending employees home with their laptops. For Kirsimarja Blomqvist, a professor of knowledge management at LUT University, perhaps the most fundamental feature that remote work relies upon is a deeply rooted culture of trust, which Helsinki’s residents speak of with pride. The anecdotal evidence is backed up by data which suggests that Finland boasts one of the highest levels of trust and social cohesion in Europe, and equality and transparency have always been key cornerstones of political thought in the country.

“Trust is part of a national culture in Finland – it’s important and people value it highly,” she explains. “There’s good job independence, and people are valued in terms of what they do, not how many hours they work for. Organisations tend to be non-hierarchical, and there is a rich history of cooperation between trade unions, employers, and employees to set up innovative working practices and make workers feel trusted and valued. 

“It’s now important that we ensure that this trust can continue to be built over technology, when workers might have been more used to building it face-to-face.”

As companies begin to look hopefully toward a post-Covid future, the complexities of remote work are apparent. Yet amid issues of privacy, presenteeism, and social isolation, the Helsinki model demonstrates the potential benefits of a distanced working world. The adjustment to remote work, if continued after the crisis, offers a chance to improve companies’ geographical diversity and for employers to demonstrate trust in their workforce. On these issues, Blomqvist believes other cities and employers can learn a lot from Helsinki.

“People are now beginning to return to their workplaces, but even as they do they are starting to consider the crisis as a jumping point to an even more remote future,” she says. “The coronavirus pandemic has been an eye-opener, and people are now interested in learning from Finland’s good practices… We are able to see the opportunity, and the rapid transition to remote work will allow other countries to do the same.”

Katie Bishop is a freelance writer based in Oxford.