Opinion: why we need to renationalise the railways

Fares are rising faster than wages and trains are overcrowded. It’s time we brought the railways back into public hands.

Ask any customer of the Southern rail franchise whether privatisation has been a rip-roaring success, and you’ll receive a fairly heated version of the word ‘no’.

Each cancelled service, strike and cut is proof that the current system is broken, and further bolsters growing calls for renationalisation of the railways.

And it seems you agree: a Lovemoney poll showed that 81% of readers (at the time of publishing) would like to see the rail network brought back into public hands.

Widespread issues on our railways

To be fair, Southern is an extreme example of the failures of a rail franchisee.

It has been beset by cancellations and industrial action, and in a desperate attempt to get the timetable back under control, the company has been allowed to axe 341 services.

It was ranked the worst for customer service in the UK in the most recent National Rail Passenger Survey.

But it’s not alone: a study by Which? last year found Southeastern, Thameslink and Great Northern each had an overall satisfaction score of just 46%.

The same study found that across the rail network, a third of commuters experienced delays on their most recent journey.

How to claim a refund if your train is delayed or cancelled

Lower fares

It’s hardly surprising that there is so much support for Jeremy Corbyn’s pledge to renationalise the railways. His argument for a People’s Railway hinges on a simple idea.

As he said at the party conference: “We will be running our railways in the interests of passengers and taxpayers.”

This, he explains, will mean rail fares will be around 10% cheaper.

A recent study revealed the damage that rail fare rises have done over the past six years.

In that time, regulated fares were up 25%, but wages increased just 12%, meaning each year commuters have become worse off.

Unregulated fares, meanwhile, have been allowed to increase at breakneck speed.

A study in 2014 found that one fare had risen 245% since privatisation (an anytime return between London and Bristol).

Corbyn points out that fares could be lower after renationalisation, because without private firms being involved, there would be no shareholders to pay.

Shareholders currently do very well from the system.

Figures in 2014 revealed that train operators paid more than £200 million in dividends, with Virgin Rail paying £40 million.

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More efficient

In addition, renationalisation would be able to unwind some of the mistakes made when the railways were sold off.

The network was broken into more than 100 pieces, and the train operating companies were split from the business operating the track and stations.

The idea behind it was to enable different companies to run trains on the same stretches of track and increase competition.

Unfortunately, it has meant massive inefficiencies, a duplication of jobs, and a daily nightmare trying to integrate the system.

Renationalisation would remove these at a stroke. Corbyn’s plan is to introduce regional transport bodies, working to ensure all transport networks are fully integrated, making the system far more efficient and cost-effective to run.

Critics argue that the best people to run the railways are business people, with a vested interest in efficiency.

They say that handing everything over to public ownership would mean higher costs and lower profits.

However, the experiences of the privatised system throws up some powerful arguments to the contrary.

Network Rail (which runs the track and stations) has faced financial disarray in private hands.

It was brought onto the Government books in 2014 with £34 billion of debt, after a massive over-spend on modernisation and an inability to keep rising costs under control.

It’s not the only part of the network to struggle.

The East Coast Route was brought back into public ownership in 2009 after National Express couldn’t make the finances work.

Over the next five years, the publicly-owned company was a huge financial success, returning £1 billion to the taxpayer.

Frustratingly, it has since been handed back to the private sector.

Opinion: renationalise the railways (image: Shutterstock)

Image: Shutterstock

The cost

The arguments for renationalisation are compelling, but to make it work, there would be challenges to overcome.

One of the major arguments against the move is the cost. Corbyn has pointed out that this could be kept to a minimum by simply not renewing franchises as they expired.

If it was done after 2020 (if Labour wins the General Election), by 2025 a third of the network could be in public hands.

This solves some problems, but raises others.

Gradual renationalisation runs the risk that rail companies, knowing that there is no chance of franchise renewal, will stop investing.

Corbyn has said he will introduce break clauses, so that those who let customers down will lose their franchises, but if he has to buy franchisees out, this will prove expensive.

Then there are the separate costs of rolling stock and buildings on public land belonging to the train operating companies.

These will either need to be bought, or leased – which will come at a cost.

Finally, Corbyn’s plan for a regional transport service would need to be staffed, and the new nationalised service would need to be managed and overseen.

This brings additional staffing costs to the table.

Employees themselves would also need careful treatment.

An effective, public railway would need to be able to bring in best practice from across the network in a way that would be acceptable to a highly unionised workforce, or it could run into the same difficulties Southern is experiencing after trying to change the working practices of its train guards.

How to cut the cost of rail travel

No British Rail

One of the most common arguments made against renationalisation is that British Rail was a basket case by the time it was privatised.

There’s no arguing with this. In the 1980s, there were just 600 million journeys on the railways each year – which was suffering from decades of under-investment in track and rolling stock, so was unreliable and uncomfortable.

Now, there are 1.6 billion journeys – and punctuality statistics are better than they were back then.

Supporters of the private system argue that renationalisation would mean a return to the bad old days.

But this needn’t be the case, as long as a publicly-owned railway continues to invest: and there’s no reason why it cannot.

The Green Party and The Labour Party highlight that profits would no longer need to go to shareholders – so that’s another £200 million to invest each year.

In addition, the Government can control how much subsidy it provides in order to keep fares under control and ensure suitable investment in infrastructure.

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Should taxpayers foot the bill?

Elsewhere in Europe, where the state runs the railways, we don’t see standards slipping.

Governments in countries like France and Germany are able to run cheaper and highly efficient rail services as public companies.

They can do so because they run a different balance of funding – so that the taxpayer foots more of the bill through public subsidies than they do in the UK, where subsidies make up just £4 billion of funding.

Some people argue that those who use the rail services ought to be the ones paying for it.

However, that overlooks the fact that we all benefit from having an efficient and reliable rail network, regardless of whether or not we use it.

It takes people off the roads, and gets them to work on time without costing an arm and a leg.

As anyone who travels on Southern Rail will tell you, that’s something we definitely don’t have at the moment.

What do you think? Should we renationalise the railways to improve service, or would this simply mean a return to an inefficient, costly service? Share your views in the comments section below.