It’s Time to Properly Nationalise the Rail

Coronavirus has forced the government to suspend rail franchising – now it should take the entire system back into public ownership in a way that empowers workers and improves services, argues Andy McDonald.

Last week, the government suspended rail franchise agreements to prevent the collapse of train companies due to plummeting passenger numbers caused by the coronavirus. It was announced that private train companies will no longer be responsible for revenue and cost risk, and will instead be paid a management fee for running services on a temporary basis, bringing to an end the UK’s model of rail privatisation.

The coronavirus has brought rail franchising to an abrupt end, though there has been an acknowledgment for some time that the system was not working. Polling shows public support for public ownership from across the political spectrum following years of delays, overcrowding and soaring fares. The government and the rail industry itself recognise the system is broken, even if they do not agree on what should replace it. There have been 17 reviews into the railway since privatisation. The forthcoming Williams Rail Review will fail to fundamentally reform the railway for the same reason as those before it failed: because it seeks to tinker around the edges of a broken system that ought to be replaced.

Privatisation has damaged Britain’s railway. When the Conservative government privatised British rail in 1993, it was split into bite-sized pieces for investors to buy. Competition between the different pieces was meant to drive down costs. Instead, the cost to the public purse has doubled in real terms and fragmentation has added costs from inefficiencies where all the bits of the privatised railway interact and caused a confusing mess of ticketing arrangements. Worst of all, this fragmented railway is out of control. It lacks a ‘guiding mind.’ Nobody is in a position to manage the whole railway strategically to make it all work together and plan its development to be the best possible public service.

The privatised rail system has put private profit-taking before the provision of public service. A minimum of £725 million flows out of the railway every year into the pockets of shareholders. Profit leakage occurs in many places, from train operation to Network Rail subcontractors to renting trains with exorbitant rents. Most of Britain’s train franchises are wholly or partly run by the subsidiaries of other countries’ publicly-owned rail companies that export their profits for the benefit of their own railways. Yet, absurdly, British publicly-owned bodies are banned.

Because privatisation has rendered the railway headless, the answer to the question “What is the railway for?” has been lost. Labour has sought to answer that question with our plan to put the railway back together for a vibrant economy and a thriving society while supporting climate stabilisation and a healthy local environment.

There is a need for a new model for Britain’s railway, which is why today Labour is launching its plans for the structure of a publicly-owned railway, GB Rail. With the launch of our White Paper, public ownership will no longer be a slogan but a detailed plan for how to reorganise the railway in the public interest.

Whatever its ownership structure, a railway should be run by rail professionals, not politicians. Although GB Rail will be publicly-owned, it will deliver more freedom for railway professionals to run the railway than the present privatised structure, freeing the railway from ministerial interference that leads to short-term, political decision-making.

Labour proposes a structure for Britain’s railway that achieves Britain-wide integration within a single publicly-owned railway company at the same time as giving regions far greater control over services by creating Devolved Transport Authorities (DTAs) to control both expenditure and governance within their areas.

In this proposed structure, a publicly-owned network-wide railway company runs both the rail infrastructure and train services as part of a single unified company. It would be a ‘vertically integrated’ railway within a single overarching organisation that provides a guiding mind for the whole railway and is a single employer for all railway staff.

The company is 100% publicly-owned with government holding a majority of shares and DTAs owning all the remainder. It has a two-tier board structure to enable stakeholders to input at a strategic level as members of a supervisory board, as used in companies in other European countries and UK third-sector and public organisations. A supervisory board would contain representatives of the devolved authorities, staff and passengers.

Poor industrial relations have been a persistent feature of privatised rail, and are also a problem that needs addressing. Franchise contracts encourage the private companies to force aggressive policies on staff by declaring strikes ‘force majeure’ or using indemnification clauses. This approach is against the public interest. It is short-sighted, destroying trust and management-staff working relationships, despite both parties sharing longer-term interests.

Labour’s proposal is to put in place structures and procedures that enable a forward-looking approach to industrial relations, employing staff in a single rail company and bringing the workforce into the heart of the railway, including its decision making processes.

The railway should be accountable and responsive to those who use, work on and fund it, yet the present system for passenger complaints is fragmented and confusing. Labour proposes a passenger rights body, Passenger Voice, to be more representative of and accountable to passengers, to play an entirely new role as part of democratic governance of the railway.

The fragmented nature of privatisation and the lack of a guiding mind has meant the privatised railway has been unable to roll out the type of reforms that are commonplace across Europe. Britain suffers one of the most complex and expensive fares and ticketing system in the world, while the rail timetable chaos of 2018 exposed a lack of organisation.

Putting the railway back together under public ownership would allow for wholesale reform of fares and ticketing, replacing the current system with a simple, London-style ticketing system across the nation, delivering contactless payments and creating zonal rail fares that will apply across all modes of public transport. It would also allow for timetabling to be totally overhauled so that it meshes with all other modes of local public transport, allowing improvements such as ensuring buses are coordinated with trains.

Labour believes the rail structure proposed in our document is the blueprint to deliver a railway that can go from strength to strength, and realise the vision of a railway that enables everyone to travel easily and affordably right across Britain, as part of a completely accessible sustainable transport system, fully connected with buses, trams and other public transport.