Published on 8 Mar 2012

Rail re-privatisation coming down the track?

It is a fact that is shocking for many reasons. It costs £3,708 for an annual season ticket to travel between London and Brighton. Nearly £4,000 for a season ticket on the 25 miles of high speed line between Ebbsfleet and St Pancras. Yet a BahnCard 100, giving unlimited travel on the ENTIRE German rail network costs less – £3,340 (€3,990).

What’s wrong with our railways? And who would pay – passengers or taxpayers?

Higher peak fares and London-style Oyster cards for all were the consumer headlines from today’s Rail Command Paper from Transport Secretary Justine Greening.

The big picture here is that she has accepted the analysis from the Labour-commissioned Roy McNulty that Britain’s rail system was very substantially more expensive than other systems. There is much fat to trim. The government, however, has chosen to channel these savings back to the exchequer by cutting subsidies, rather than limit fare rises let alone cut them.

The result is that at high peak our incredibly expensive fares will get yet higher, and worse-paid workers might have to have a conversation with employers where they are given special dispensation to get in very early or later, on account of transport costs.

The rail unions screamed “vandalism” and thousands of jobs will surely go in these efficiencies, estimated at £3.5bn per year by 2019. But I think the real radical significance of today’s number is captured in two words towards the back of the command paper: “Vertical integration”.

In plain speak, this means reuniting train and track after the flawed separation and privatisation of British Rail in the 1990s. This would only start on a regional basis. Network Rail is already running on a “shadow privatised” basis – split into ten regions with separate performance management. The plan would see, where appropriate (essentially where trains are largely run by one company), the track broken off and sold to the train company as a concession, for 25-30 years.

There are some issues with European law here, but it’s not difficult to see that this could save money in administration, and management costs. I presume selling off some “mini-network rails” might be a revenue raiser for the Exchequer too (though I can imagine some disgruntled former Railtrack shareholders). The command paper mentions Wessex and Anglian as options.

I understand that much of the impetus behind offering this came from Number 10. I imagine that in the Treasury’s efforts to open up Britain to huge Chinese and other wealth fund infrastructure investment, integrated track and train is far more attractive.

This is something of a reversal of the radical and ultimately unsuccessful model of rail privatisation of the 1990s. But it could also mark the re-privatisation of at least part of Network Rail.

Follow @faisalislam on Twitter

12 reader comments

  1. Philip Edwards says:

    Faisal,

    Oh GOOD…..even more privatisation and profiteering, even higher ticket prices, and likely even more tragic accidents and deaths.

    What a predictable horrible rip off and Tory/LibDem/New Labour scam it all is.

    And it will get worse if people continue to put up with this Gordon Gekko barrow boy muck.

  2. Philip says:

    Another opportunity lost! Instead of a German-type service which is effective in moving people around at an affordable cost, the Government chooses to make rail travel more expensive (encouraging road & air travel – so much for the “greenest government ever”!), so that it can cut taxes (eventually) for the better-off. And the LibDems apparently get bluer by the day.

  3. Saltaire Sam says:

    This government is so obsessed with privatisation – schools, NHS, now railtrack, that they overlook some of the simpler things that might work.

    They are once again talking about efficiency savings, which is fine in principle but when did a government last make meaningful efficiency savings that didn’t mean a complete upheaval costing more than the savings?

    The ticketing policy on the railways is crazy. One of my local journeys is £2 return, but £1.60 single. Do I take up less room if I come back? On other trips, it is cheaper to take two singles than to buy a return.

    It might make sense to have a two-tier system to try and persuade some not to travel at peak times, but the current mish-mash of offers that can make it cheaper to travel from Leeds to London than Leeds to Manchester is crazy.

    It might make sense for airlines to reward for booking early because they have a finite number of seats, but trains don’t work that way (Perhaps they should). Instead, if the train is fully booked, they keep selling tickets and you just have to stand.

    You quote the German example – apparently France is also cheaper. So exactly what are they doing that we are not?

  4. Christian Wolmar says:

    It’s a bit more complicated. Vertical integration is the only sensible way to run a railway – but it would work best if it was done across the system, not just one or two areas. And letting private companies run these concessions is a recipe for more bail-outs and losses to the Exchequer

  5. Marmite says:

    Vertical integration could work – but how about nationalising the whole thing? Many lies have been told about privatisation and all that seems to have happened is that things get more expensive and profit goes out of the company and is not reinvested.

  6. witteringwitney says:

    Tsk, tsk…….

    “The government, however, has chosen to channel these savings back to the exchequer by cutting subsidies, rather than limit fare rises let alone cut them.”

    You really should do your research, you know. A visit to the TEN-T website would have shown you that a directive will be produced in the not too distant future banning government subsidies and stating that all transport systems will be operated on the ‘user pays – polluter pays’ principle.

    Of course fares will rise!

    Smart ticketing is another topic on which the EU intends legislating and in fact various reports on this have been produced, latterly one in 2010 and another in 2011.

    As you should know transport (in all its forms) is a shared competence with the EU and in such cases Member States have to gain approval for any policies they wish to introduce to ensure that it meets EU policy or proposed policy.

    All Greening is doing is pre-empting that which will shortly be imposed upon us.

    If you wish to impart your opinion on the public, one can only suggest you get your facts right.

  7. Livers says:

    I wonder Christian, would we be better off today if we had kept a nationalised rail system?

  8. CRZ says:

    Cheaper rail is not free.The Germans pay for cheaper rail through their taxes. And everybody, rail users or not, end up paying…This is unfair.

  9. Skwalker says:

    One problem with the privatisation here is the very short franchise which leads to frequent changes of operating companies, re branding, repainting of trains etc. Germany has 25 year franchises which gives the operating company (usually DB anyway) time to settle down). The trains and route branding should be standardised and the operator should only be allowed to change its logo, similar to how TfL works.

  10. Andrew Dundas says:

    Big difference between German railways and ours is that they made continuous investments over many years. But the Thatcher & Major governments did not. They believed rail was a fading market. Hence the need for the UK to now pay for an investment spike to recover the lost years of under-spending.
    A lot of the costs being incurred in recent years are catch-up investments to be paid for out of current revenues.
    Moreover, the key Tory idea was to keep network separate from train operations, so that the latter could be sacked for poor performances, without losing track. Vertical integration would eliminate that incentive… Maybe Lord Snooty doesn’t know that?

  11. Caliban says:

    I have always wondered what trains are actually for.

    If I take train from Oxford to London the fare is £27.50. That is subsidised by the tax payer. To the tune of £6 billion last year (yes, six billion pounds!)

    If I make the same journey on the Oxford Tube Coach it costs me £14.00. And I make a significant contribution to the exchequer in fuel tax and road fund licence.

    So why are we spending countless billions on 18th century technology when road transport is clearly so much more efficient.

    Thank goodness big government did not exist when the canals faded away. Otherwise we would be spending billions on yet another moribund “vital transport system”.

  12. Robert Bracegirdle says:

    Yawn. British Rail was apparently more efficient. It certainly had much lower level of subsidy. I honestly believe that our politicians don’t want successful public transport anyway – sounds too much like socialism.

    Never mind, as has been said, the Chinese will be running us soon (perhaps they already are).

Comments are closed.