Rail privatisation hasn’t worked. It’s time to reverse it

The good old days. Image: Getty.

Just who exactly supports the UK’s privatised railway industry? It’s certainly not passengers, taxpayers, railway employees or increasingly many politicians.

The state-owned British Rail was privatised over several years starting in 1995. Prime Minister Margaret Thatcher was politically astute enough to avoid privatising this industry. But her successor, John Major, had no such doubts – he was convinced privatisation would ensure “greater responsiveness to the customer, and a higher quality of service and better value for money”.

He couldn’t have been more wrong. It’s now time to call a halt on this misconceived and misguided experiment – it just isn’t working. It’s time to renationalise the whole industry.

The benefits of privatisation forecast by politicians never materialised. Fares are now much higher, infrastructure failures and train delays increasing, the train franchising system is floundering and passenger dissatisfaction is high.

British Rail, the former nationalised industry, was a fully vertically integrated industry. This meant that BR owned and was responsible for virtually every aspect of the railway business. One researcher found it to be “perhaps the most financially successful railway in Europe”. Government subsidy was only 15 per cent of revenue in 1994, making British Rail the least subsidised railway system in Europe at the time.

Privatisation saw the industry broken up into over 100 separate companies. This fragmentation has led to a complex contractual web of operational transactions between different industry players – with a profit mark up being extracted at every stage. Renationalisating the railways would put an end to the operational and structural absurdity of the industry – and be substantially less costly.

Dysfunctional franchise model

Passenger train operating companies are awarded on a franchised basis. Normally, the operators bid to pay the highest premium to the government to win the right to operate train services on specified routes. This is based on the revenue each bidding company considers they can extract from passengers after paying their premium.

Renationalisation would lead to abolition of the costly and dysfunctional method of awarding these franchises. It would abolish the convoluted gaming by operating companies, who frequently overbid on the most optimistic assumptions in order to win a franchise.

Take the example of the failing East Coast franchise. GNER and National Express have both already walked away from their East Coast commitments and Virgin East Coast is currently renegotiating its franchise. They can do this because the penalties for failing to deliver are too low.

What’s more, the whole costly and time-consuming refranchising process is repeated every seven or eight years. Renationalisation would bring a swift halt to this disruptive and costly process – and permit better long-term planning.

Fares through the roof

Certainly, the passenger hasn’t benefited by lower fares since privatisation. Only about 36 per cent of fare revenue is regulated by the government and, even then, fare increases are related to the higher retail price index (RPI) measure of inflation (and not the lower consumer price index). For unregulated fares, the train operators have not been slow to increase fare revenue well in excess of RPI. For example, across all operators, standard class unregulated fares have increased by nearly 30 per cent in real terms since privatisation.

Whenever the train operators have the freedom to raise fares they rarely fail to increase them to whatever the market can bear. The Trades Union Congress recently highlighted that British commuters are now “spending up to five times as much of their salary on season tickets” than their continental counterparts. A commuter season ticket in the UK costing £381 a month will cost the equivalent of £66 in France or £118 in Germany.

Neglected and costly infrastructure

Another key aspect of the privatised industry is the infrastructure company that owns the railway tracks, stations and signalling. The first infrastructure company, Railtrack plc, was a publicly listed company that had a short life. Within less than five years of floatation the came the fatal Hatfield rail crash, when an express train came off the track. An inquiry found that the disaster was directly related to Railtrack’s neglect of the infrastructure.

Railtrack’s successor, Network Rail, ultimately became a public sector body of the Department for Transport. But Network Rail has been hampered by Railtrack’s former neglect of its assets and higher costs resulting from the fragmented nature of the industry. Indeed, these issues meant that the McNulty report in 2011, commissioned by the then transport secretary, found the privatised rail industry had a high cost base and the costs per passenger-km would have to be reduced by 40 per cent to match railways in France, Netherlands, Sweden and Switzerland.


Misguided support

Even the taxpayer would benefit from renationalisation. Under privatisation, state subsidies have nearly doubled in real terms. Direct government support has also previously been given to private sector train operators if their revenues fall below expectations. More recent franchisees can now receive these corporate state welfare “top-up” payments where, for example, there is fall in GDP or a slowdown in the London jobs market. Conventional private sector companies carry these business risks themselves – not so for the train companies. Renationalisation could reduce subsidies and have major financial gains for the tax payer.

Industry players frequently justify the success of privatisation by pointing to the growth in passenger traffic (passenger journeys have grown from 800m in 1996-97 to 1,729m in 2016-17). But this growth is despite privatisation; not because of it. Economic studies suggest this is down to other factors, such as employment levels, growth in GDP, property prices, leisure travel and road congestion – but not to privatisation.

The ConversationOverall, railway privatisation has failed to achieve its original objectives. Fares and state subsidies remain high, passengers are failing to obtain better value for money and industry unit costs remain stubbornly high. No other country has fully adopted the UK model of railway privatisation. And for good reason – it hasn’t worked.

John Stittle, Senior Lecturer in Accounting, University of Essex.

This article was originally published on The Conversation. Read the original article.

 
 
 
 

What’s behind the rise of the ornamental restaurant toilet?

Toilets at Sketch restaurant, London. Image: Nik Stanbridge/Flickr.

A few weeks ago, I found myself in the toilets of a zeitgeisty new Italian restaurant in east London called Gloria. As with so many contemporary restaurant toilets, those in question were an aesthetic extension of the establishment’s soul. The inventive menu was matched by two-way mirrored toilet doors.

The setup was this: cubicle occupants could see out while the unisex crowd milling around the taps could check their outfits on the exterior mirrors. All fun and games, I thought. But then I found myself mid toilet with a guy peering into my door to change his contact lens. Either he had spectacularly bad manners or he was unaware of the two-way door thing. (Let’s hope it’s the latter.)

Gloria’s toilets aren’t unique in their attempt to be distinctive. The loos at nearby Mr Fogg’s Maritime Club & Distillery are adorned with specimen boards of dead spiders. Meanwhile, Edinburgh’s The Sun Inn invites patrons to pee in buckets, and trumpets double as urinals in The Bell Inn in East Sussex. Men can wee into the vista if they’re dining in the Shard. And Sketch’s ovum shaped loos are the stuff of urban legend.

Further afield, transparent doors become frosted only after they’re locked at Brussels’ Belga Queen. In Otto’s Bierhalle in Toronto, diners can press a button to activate their own private rave. And the toilets in Robot Restaurant in Tokyo have gold-plated interiors and dancing robots.

What’s behind this trend? Are quirky toilets just a bit of fun – or an unnecessary complication to the simple act of going for a wee and checking you don’t have tomato sauce on your chin?

Yotam Ottolenghi’s London flagship restaurant Nopi crops up often in conversations about restaurant bathrooms. A hall of mirrors glitters enticingly ahead of loo-bound diners. “The bathroom needs to be the nicest part [of] the whole place because that’s where you’re on your own,” says Alex Meitlis, the designer behind the space.

But no one is truly alone in 2019. If surveys are to be believed, nearly 65 per cent of millennials take their phone to the bathroom with them. Mike Gibson, who edits the London food and drink magazine Foodism agrees that the bathroom selfie – searches for which, incidentally, yield over 1.5m results on Instagram – is part of the reason that contemporary lavatory design is so attention seeking.


“Any new venue that's opening will be super aware that there's probably not an inch of their restaurant that won't be photographed or filmed at some point”, he says. But bathrooms like Nopi’s predate this trend. Indeed, Meitlis believes he has created a haven from the smartphone obsession; Nopi’s mirrors are angled in such a way that means you have to seek out your reflection. “You can choose whether to look for yourself in the mirror or not.”

Another driving force is the increasingly competitive restaurant landscape. “It’s almost like there’s some sort of ever-escalating competition going on amongst new openings, which makes every visit a faintly terrifying experience”, says food writer and New Statesman contributor Felicity Cloake. Gibson agrees. “Restaurants want an edge wherever possible, and design definitely comes into that.”

So novelty bathrooms get you noticed, promote social media engagement and entertain diners who are momentarily without the distraction of company. (Although, it must be said, quirky bathrooms tend to make the loo trip a more sociable experience; a Gloria spokesperson described the restaurant’s toilets as somewhere you can “have a good laugh and meet people along the way.”)

Nevertheless, I’m not the only one who finds bathroom surprises disconcerting.  One TripAdvisor user thought the Belga Queen loos were “scary”. And a friend reports that her wonderment at the Nopi bathroom was laced with mirror maze induced nausea – and mild panic when she realised she didn’t know the way out. Should restaurants save the thrills for the food?

“I think it's important not to be too snarky about these things – restaurants are meant to playful,” says Gibson. Cloake agrees that novelty is fine, but adds: “my favourite are places like Zelman Meats in Soho that have somewhere in the dining room where you can easily wash your hands before sitting down and tucking in.”

So perhaps we should leave toilets unadorned and instead ramp up the ornamentation elsewhere. Until then, I’ll be erecting a makeshift curtain in all mirrored toilets I encounter in future. An extreme reaction, you might say. But, as I wish I could have told the rogue contact lens inserter, it’s not nice to pry into someone else’s business.