British Railways - Reform or Renationalise?

On Thursday 20^th June, the Centre for Policy Studies launched ‘British Railways in 2019 – Reform or Renationalise?’, authored by Conor Walsh, Researcher for the Centre for Policy Studies.

The briefing, written in anticipation of the Williams Review, which is due to be published in the autumn, evaluates the cases for renationalisation or for reform within the current framework, largely in the context of the English system.

It was launched at a panel debate featuring,The Rt Hon Sir Patrick McLoughlin MP, Former Transport Secretary; Paul Plummer, Chief Executive, Rail Delivery Group; Susan Evans, Director, Alstom; Tony Lodge, Research Fellow, Centre for Policy Studies; and chaired by Tom Clougherty, Head of Tax, Centre for Policy Studies. 

British railways have made great progress since privatisation in terms of satisfaction and efficiency, as set out by a note from the Centre for Policy Studies in December 2018:

• Rail travel has grown as a means of transportation from 4.6% in 1993 to 8.8% in 2016
• Reported satisfaction grew more in the UK than in any other European country between 1997 and 2012
• A Eurobarometer survey found us second most satisfied with our railways amongst European countries
• British railways are the second safest in Europe, marginally behind Ireland, which has a small rail network
• Last year saw the greatest amount of private investment in the railways since the records began

However, progress has stalled in recent years and satisfaction has fallen back a little due to impunctuality, overcrowding, and annual price rises in excess of consumer price inflation. Additionally, there have been some high-profile industry failures: franchises declaring bankruptcy having overbid for contracts, large-scale delays and cancellations on some networks, and of course the timetable disruption of last summer.

In an interim paper, the Williams Review panel identified the following issues:

• The rail sector often loses sight of its customers – both passengers and freight
• Over recent years it has come to lack a single strategic direction
• It has become fragmented and accountabilities are not always clear
• The sector needs to be more productive and tackle its long-term costs
• The sector is struggling to innovate and adapt

Thus, while privatisation continues to deliver a better service than in most nationalised European systems, there is still room for progress.

Renationalisation is Labour Party policy. Those in favour usually argue that cost reductions can be made by monopolising the train company and integrating train and track. This briefing argues that the history of public monopolies suggests they usually suffer from productive inefficiencies due to a lack of incentives and competition, and that these inefficiencies would outweigh those potential gains. In addition:

• A change of ownership, in and of itself, won’t do anything to improve the core product, namely delivering affordable, punctual, frequent and comfortable trains;
• Nationalisation would be a distraction from reforms more directly targeted at improving the core product;

• A nationalised industry would be even less likely to deliver innovation outside of the core product that consumers demand: it would likely have taken longer to install Wi-Fi on its trains, and would likely, for example, take longer to develop the communications technology needed to keep passengers better informed in the event of disruption;
• Altogether, as Williams has said, we need a consumer-centric railway industry, and our experience of nationalised industries in the past is that they’re seldom characterised as such.

The RDG has also – on behalf of all the producers, private and public, in the network – produced proposals concerning:

• Fare reform
• Organisational reform
• Contract reform
• Open access and competition
• Localised decision-making

Finally, this briefing outlines an open access solution originally proposed by Tony Lodge for the Centre for Policy Studies which involves different rail operators being granted access rights to run competing services on the same route.

The full briefing can be read here.

Robert Colvile, Director of the Centre for Policy Studies, said:

‘Nobody is pretending that Britain’s railways are perfect – but when you look across Europe, you realise that their performance here is a great deal better than we often realise.

‘As this pamphlet shows, the choice facing us is to focus on reforms that actually deliver a better service for consumers, or embark on a process of renationalisation that does little to actually solve the network’s problems.’

'British Railways in 2019 – Reform or Renationalise?’ was published with financial support from the Rail Delivery Group

Conor Walsh - Thursday 20th June 2019

Conor Walsh

Conor Walsh is a Researcher at the Centre for Policy Studies, having previously taught Economics at a sixth form college for four years.