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2 January 2018updated 21 Sep 2023 4:49pm

Something is missing from Labour’s transport policy

The party is clear on who it thinks should own railways, but less clear on what it wants to do with them. 

By Stephen Bush

Labour have two big policy stories they are pushing today: the first is that train fares are up again, this time by 3.5 per cent, which they are using to argue for their commitment to take the remainder of the rail network back into public ownership, and the second is their pledge to make hospital car parks free for patients, visitors and staff.

Over at the Guardian, Peter Walker is unconvinced by the car park proposal. I start with a strong bias towards policy choices that encourage the use of car-free travel, and there is no better example of the problem of path dependency that the number of people in the United Kingdom who are forced to own a car, despite not wanting to, nor particularly enjoying the experience. (Motorists are consistently the least satisfied of all commuters in surveys, and cars are also costly, both to their owners and to society as a whole.) So I can see where Walker is coming from, but I don’t agree: in the long-term, government policy should aim to make car usage an intermittent leisure activity, rather than an obligation, but I don’t think hospital car parks are a good or effective place to start.

However, there is a wider problem with the policy that speaks to the vacuum at the heart of Labour’s transport policy, which speaks to the party’s other story of the day: that increase in train fares.

Rail is one of the policy areas where Labour policy remains unchanged from its position under the Eds: the party will bring the rest of the rail network into public hands as franchises expire, and will cap fare freezes in line with CPI. In addition, the party will introduce free Wi-Fi across the network, maintain staffing levels, and end the expansion of driver-only train carriages.

Important to remember at this point, is that John McDonnell’s fiscal rule commits Labour to balancing the books on day-to-day spending, but allows it to borrow whatever it wants on infrastructure. The party pledged to spend £25bn extra on infrastructure spending ever year from 2017 to 2027 in its 2017 manifesto, which is around a third more what the Conservatives plan to spend over the same period.

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Labour’s transport pledges are funded from two places: the £25bn of extra infrastructure spending, which covers the free Wi-Fi, investment in new rolling stock – that’s “trains” – and so on. The remaining costs – maintaining staffing levels, and fare freezes – are paid out of reclaiming the profits of nationalisation.

It is worth noting that while the profits of nationalisation are large in terms of you or I’s budgets, they are not transformative as far as the public finances go: Stagecoach made a profit of £66m from its British rail operations in 2016-7, which is about par for the amount of profit being made in the sector. The British government subsidises rail to the tune of around £4.2bn a year which again, is not a life-changing amount of money once divided amongst the 22 private operators currently running in the United Kingdom.

There is a strong case for arguing that, morally, that these profits should be returned to the taxpayer or railway users, rather than paid out in dividends, but that doesn’t mean that the actual amounts are in themselves transformative. As my colleague Jonn Elledge notes, if you simply reinvested the profits into holding fares down, you would be able to freeze fares for a year, while you are not talking about a great deal of infrastructure spend in any case.

That’s okay, though: the policy case for bringing the rest of the network into public ownership is largely about what you can do with the railways after you bring them into public hands, rather than the cash bonanza you unlock purely by doing so. It’s not like, say, renationalising water, which the Shadow Treasury team believes with good reason may unlock higher revenues very quickly due to the way that the incredibly low rate of corporation tax that some of the water companies pay. (If you want to talk about serious money in transport spending, the actual big money is in how much the Conservatives’ prolonged freeze in fuel duty has foregone in tax revenue.)

And that’s where both Labour’s transport policy and of left-supporting think tanks is currently falling down. There’s been very little thought, either within the official confines of the opposition party or in wonk world about how a nationalised railway fits in with the wider spectrum of transport policy, the future of car ownership in Britain or regional inequalities. Because while in the short term, free car parking at hospitals is great, in the long term, most people simply shouldn’t need to take a car to hospital.

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