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19 August

Why rail nationalisation could stop us being the laughing stock of Europe

UK privatisation has primarily made money for foreign governments – and their citizens.

By Andrew Fisher

Tens of thousands of rail workers are on strike this week, refusing to take a real-terms pay cut and have their jobs threatened with redundancy.

And yet rail companies made £500m in profits during the Covid lockdown – that’s enough to give every single one of the National Union of Rail, Maritime and Transport Workers (RMT)’s 40,000 rail workers going on strike this week £12,500 each – a pay rise of more than 30 per cent. I’m quite sure the leaders of the rail unions would settle for considerably less than that, but it illustrates the fact that the money is there. The issue, as ever, is who is getting it.

Britain’s railways are a mess – and were made so by the John Major government’s bungled privatisation of the national rail network in 1993. The then-Labour leader John Smith said at the time, “there is barely a single person in this country outside Downing Street who thinks it is a good idea to privatise British Rail.”

Smith has certainly been proved right that being inside Downing Street seems to determine supporting rail privatisation. Neither Tony Blair nor Gordon Brown ended this failed experiment. But Smith’s contention that the public is against it has endured: recent polling shows 63 per cent of Conservative voters want the railways in public ownership (it rises to 78 per cent among Labour voters). 

Privatisation has fragmented the railway system, leading to what Labour’s 1945 manifesto described as “competitive waste”. The 2011 McNulty report into Britain’s railways found there were over 600 workers employed on “delay attribution” – which essentially means arguing over which company is responsible for compensating passengers for delays.

Although the Railways Act 1993 barred the UK state from running the railways, many foreign state-owned enterprises were interested – well aware that profits would be made from the franchise model. Indeed, state enterprises of the Netherlands, Germany, France, Italy and Hong Kong now all run rail franchises in the UK. A video made by the Transport Salaried Staffs’ Association (TSSA) in 2019 showing how grateful those countries’ citizens are to us Brits for subsidising their cheaper and more efficient railways has recently gone viral again on social media.

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It’s quite astonishing, and more than a little ironic, that nationalised state operators from all over the world can run our railways, but not the British one. It also shows how fake the rail market is: you cannot have competing companies on the same track – so these companies run monopoly fiefdoms, and many (such as the Dutch company Abellio) run the country’s bus companies too.

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We pay some of the highest rail fares in Europe since operators have been allowed to charge above-inflation increases year on year. In 1989 research by the British Railways Board found Britain’s railways to be 40 per cent more efficient than comparable European railways. Twenty years later, the McNulty report quoted an Office of Rail and Road survey that found Britain’s railways to be between 34 per cent and 40 per cent less efficient than the top-performing European ones.

Public ownership is more efficient – and we don’t need historical evidence for that assertion. In 2009 the East Coast Main Line franchise, then run by National Express, failed. The government could not shrug its shoulders and say “well, that’s the market” – it’s a vital bit of transport infrastructure. So the line was taken under UK public ownership: punctuality and reliability improved, and the public operator returned over £1bn in premiums to the government. (Nonetheless, the Conservative government privatised it again in 2015 before it failed yet again three years later.) This one rail line illustrates the benefit that would come from running the whole network in the public sector – the UK public sector.

It’s time to run the British railways in public ownership for the good of its workers and passengers.

[See also: Why the housing market is about to crash]

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