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.

 
 
 
 

Self-driving cars may be safe – but they could still prevent walkable, liveable communities

A self-driving car, driving itself. Image: Grendelkhan/Flickr/creative commons.

Almost exactly a decade ago, I was cycling in a bike lane when a car hit me from behind. Luckily, I suffered only a couple bruised ribs and some road rash. But ever since, I have felt my pulse rise when I hear a car coming up behind my bike.

As self-driving cars roll out, they’re already being billed as making me – and millions of American cyclists, pedestrians and vehicle passengers – safer.

As a driver and a cyclist, I initially welcomed the idea of self-driving cars that could detect nearby people and be programmed not to hit them, making the streets safer for everyone. Autonomous vehicles also seemed to provide attractive ways to use roads more efficiently and reduce the need for parking in our communities. People are certainly talking about how self-driving cars could help build more sustainable, livable, walkable and bikable communities.

But as an urban planner and transportation scholar who, like most people in my field, has paid close attention to the discussion around driverless cars, I have come to understand that autonomous vehicles will not complement modern urban planning goals of building people-centered communities. In fact, I think they’re mutually exclusive: we can have a world of safe, efficient, driverless cars, or we can have a world where people can walk, bike and take transit in high-quality, human-scaled communities.

Changing humans’ behavior

These days, with human-driven cars all over the place, I choose my riding routes and behavior carefully: I much prefer to ride on low-speed traffic, low-traffic roads, buffered bike lanes or off-street bike paths whenever possible, even if it means going substantially out of my way. That’s because I’m scared of what a human driver – through error, ignorance, inattention or even malice – might do to me on tougher roads.

But in a hypothetical future in which all cars are autonomous, maybe I’ll make different choices? So long as I’m confident self-driving cars will at least try to avoid killing me on my bike, I’ll take the most direct route to my destination, on roads that I consider much too dangerous to ride on today. I won’t need to worry about drivers because the technology will protect me.

Driverless cars will level the playing field: I’ll finally be able to ride where I am comfortable in a lane, rather than in the gutter – and pedal at a comfortable speed for myself rather than racing to keep up with, or get out of the way of, other riders or vehicles. I can even see riding with my kids on roads, instead of driving somewhere safe to ride like a park. (Of course, this is all still assuming driverless cars will eventually figure out how to avoid killing cyclists.)

To bikers and people interested in vibrant communities, this sounds great. I’m sure I won’t be the only cyclist who makes these choices. But that actually becomes a problem.

The tragedy of the commons

In the midsize midwestern college town I call home, estimates suggest about 4,000 people commute by bike. That might not sound like many, but consider the traffic backups that would result if even just a few hundred cyclists went out at rush hour and rode at leisurely speeds on the half-dozen arterial roads in my city.

Technology optimists might suggest that driverless cars will be able to pass cyclists more safely and efficiently. They might also be directed to use other roads that are less clogged, though that carries its own risks.

But what happens if it’s a lovely spring afternoon and all those 4,000 bike commuters are riding, in addition to a few thousand kids and teenagers running, riding or skating down my local roads? Some might even try to disrupt the flow of traffic by walking back and forth in the road or even just standing and texting, confident the cars will not hit them. It’s easy to see how good driverless cars will enable people to enjoy those previously terrifying streets, but it also demonstrates that safety for people and efficiency for cars can’t happen at the same time.


People versus cars

It’s not hard to imagine a situation where driverless cars can’t get anywhere efficiently – except late at night or early in the morning. That’s the sort of problem policy scholars enjoy working on, trying to engineer ways for people and technology to get along better.


One proposed solution would put cars and bicycles on different areas of the streets, or transform certain streets into “autonomous only” thoroughfares. But I question the logic of undertaking massive road-building projects when many cities today struggle to afford basic maintenance of their existing streets.

An alternative could be to simply make new rules governing how people should behave around autonomous vehicles. Similar rules exist already: Bikes aren’t allowed on most freeways, and jaywalking is illegal across most of the U.S.

Regulating people instead of cars would be cheaper than designing and building new streets. It would also help work around some of the technical problems of teaching driverless cars to avoid every possible danger – or even just learning to recognize bicycles in the first place.

However, telling people what they can and can’t do in the streets raises a key problem. In vibrant communities, roads are public property, which everyone can use for transportation, of course – but also for commerce, civil discourse and even civil disobedience. Most of the U.S., however, appears to have implicitly decided that streets are primarily for moving cars quickly from one place to another.

There might be an argument for driverless cars in rural areas, or for intercity travel, but in cities, if driverless cars merely replace human-driven vehicles, then communities won’t change much, or they may become even more car-dependent. If people choose to prioritise road safety over all other factors, that will shift how people use roads, sidewalks and other public ways. But then autonomous vehicles will never be particularly efficient or convenient.

The Conversation

Daniel Piatkowski, Assistant Professor of Community and Regional Planning, University of Nebraska-Lincoln

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