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11 May 2017updated 04 Aug 2021 6:33pm

Passengers not profit: the case for public ownership

A reliable and affordable rail service is essential for growth, writes Andy McDonald, Shadow Secretary of State for Transport.

By Andy McDonald

For Britain’s railways, June 8th’s general election presents an opportunity not only to reverse seven years of decline, but to put an end to the 23-year-old privatisation experiment. When one looks at the recent performance of our railways, it isn’t difficult to understand the popularity of Labour’s pledge to bring the railways back into public ownership, a policy that receives support from voters of all parties across the entire political spectrum.

Fares have risen by a whopping 27 per cent over the past seven years – three times faster than wages – and the cost of some season tickets will have risen by over 40 per cent. Commuters were told that higher fares would fund investment, but vital projects such as the electrification of the Midland Mainline and Great Western railway have been delayed for years. Worse still, recently published figures demonstrate that punctuality on our railways is at the lowest point in a decade. With passengers paying ever more to travel on increasingly overcrowded and unreliable trains, it’s little wonder that passenger satisfaction is in decline.

If you made one of the 1.7 billion passenger journeys on Britain’s railways last year, the need for a re-think will be clear. As shadow transport secretary, I have spent this past year working with colleagues to develop an approach to rail and transport as a whole. My starting point for deciding how to arrange our nation’s vital transport systems was a simple question, but one that isn’t asked often enough: what are our railways for? For Labour, the answer is simple. Rail is about the safe and efficient transport of people and goods. This question and its answer may seem so obvious that they appear trite, but it is the case that public transport has increasingly become detached from the concept of public service. Too often it is seen as a series of opportunities to profit from an essential service that no government can let fail.

If one wanted an example of the failures of rail privatisation, there could be no better case study than the ongoing debacle of Southern Rail.  Southern, the country’s worst rail service, is an economic artery for London and the South East, yet the disgraceful service provided by the company has left both passengers and workers suffering at the hands of a management that has veered somewhere between incompetence and callousness in its treatment of both.

Southern has exceeded any existing conception of what constitutes a poor rail service. The company’s performance is rock bottom amongst train operating companies, but no league table or statistics can convey the costs to passengers and staff of how GTR, Southern’s parent company, has managed the service. Delays and overcrowding are so severe that passengers faint on trains so overcrowded that they remain standing even while unconscious, parents have become accustomed to saying goodnight to their children over the phone, people have lost jobs because they cannot reliably travel to work, the rights of disabled passengers have been wound back by years through dangerous staffing cuts and, as reported this month, homeowners in areas served by the service have seen the value of their properties fall.

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Yet it isn’t even the poor service that makes Southern an example of why privatised rail doesn’t work; it’s the lack of government intervention, leaving passengers to suffer the vagaries of the market, which gets to the heart of why our railways are so dysfunctional. The success of East Coast Mainline demonstrates a clear alternative to the model of privatisation. East Coast Mainline, placed in state ownership after private operator National Express walked away from the contract, delivered over £1bn to the Treasury, kept fares down, had record passenger satisfaction and engaged the workforce with unparalleled success before the line was re-privatised in May 2015. The example of East Coast, as with the ongoing Southern Rail debacle, shows a government clinging to a failed model for purely ideological reasons – and it is commuters who are being made to pay the price.

The network of companies who operate passenger services on Britain’s railways – 75 per cent of which are foreign companies or foreign-owned state companies that extract profits from British taxpayers and commuters in order to reduce fares back home – come together in a jumbled network that drives up the cost of improvement works, complicates ticketing structures, slows ticketing reform and extracts eye-watering profits that could instead go on improvements or keeping fares down from the system. The hit to the pockets of commuters stands in stark contrast to the hundreds of millions of pounds in dividends paid to shareholders of private train companies each year.

The case for nationalisation is good economics, too. Last year, TUC research showed that the costs saved from bringing franchises which expire from 2016 to 2020 back in house could save up to £604 million a year by 2020, enough to lower regulated fares by up to 10 per cent.

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We know reliable, affordable transport is essential to delivering productivity growth. Trimming the fat of privatisation can unlock funds to deliver cheaper fares for passengers – and backed up with Labour’s commitment to invest in transport infrastructure such as a Crossrail for the North. A coast-to-coast, east-west rail line in northern England, connecting Liverpool, Manchester, Leeds, Sheffield and Hull – and High Speed 2 – will leave us with an integrated railway network fit for the 21st century.

The Labour Party has been clear that we will put an end to Britain’s rip-off railways, bringing rail back to public ownership, with routes returning to public ownership as private contracts expire, meaning profits can be re-invested to improve services and hold fares down. Ultimately, passengers, not profit, should be at the heart of Britain’s railways.