Does the public sector really have the answer?

  • Chris Cheek

Does the public sector really have the answer?

Passengers and commentators alike think the answer to current difficulties on the rail network is to take the whole industry back into public ownership, Chris Cheek wonders why

A couple of months ago, I wrote in this column that the problems that Network Rail had been having in delivering upgrade projects meant that the new timetable was ‘a public relations disaster worthy of British Rail at its most incompetent’. The same article continued that ‘this further undermines the already low public confidence in a system which is in any case not trusted and is widely misunderstood’.

Well, that’s one forecast that certainly proved to be correct – though I don’t think even I had understood just how badly things were going wrong, especially in view of the delays to route learning and other driver training that had occurred because of the infrastructure delays

So, inevitably, the usual political and trade union abuse has been heaped on the private sector train operating companies, and we’ve endured the now familiar ritual of members of the public, opposition politicians and RMT General Secretary Mick Cash calling for renationalisation of the whole network.

Meanwhile, in the midst of all this, the Secretary of State for Transport and his officials completed the eviction of Stagecoach and Virgin from the InterCity East Coast franchise – amongst another flurry of accusations of over-bidding and people ‘having got their sums wrong’. By the time that this article is published, a new state-owned operator will be running the route – called the London and North Eastern Railway. This represents another attempt at trading on railway nostalgia, and the ‘great heritage of the line’.

In view of the losses sustained by GNER, National Express and now Stagecoach in running the franchise, it is interesting to reflect that the original company may have built some very nice steam engines, but also had a great heritage of betraying its shareholders – the LNER did not pay a single penny in dividends between its formation in 1921 and the day the state took over on January 1 1948.

Presumably we can expect the new Hitachi trains to be decked out in an apple green livery – or perhaps the coaches will be painted with teak-effect paint. Expect extensive use of the Gill Sans font, and frequent appearances of Flying Scotsman, Mallard and the other surviving A4 Pacifics. Who knows, we might even get a few brown and cream Pullman trains.

Looking forward

There is a much more serious question behind all this, of course, which does concern the future ownership and management of the railway industry. One thing is clear – we cannot say that railway privatisation has failed, because we haven’t tried it yet.

The Government still owns the infrastructure, and it is moderately clear that the company appointed by the Department for Transport (DfT) to manage, maintain and improve that infrastructure, is too big and too unwieldy. In fact, after its recent performance, there must be some doubt that Network Rail could manage its way out of a paper bag.

The Government also sets the timetables, most of the fares and determines how much rolling stock of what type will be run on the routes. Don’t like the new Thameslink rolling stock? Blame DfT – their officials specified the trains and chose the manufacturer.

Disappointed by the new InterCity Express trains? Another fine Government project – years late, over specified, much too expensive, poor value for money (according to the National Audit Office and the Commons Public Accounts Committee). And where have we heard that before? In the NHS, building nuclear submarines, aeroplanes, new computer systems – the list is endless.

So, the question remains: what point would be served by putting the whole industry back into public hands? Oh, it would be simpler, people say, but the fact is that even Network Rail is unmanageable – can you imagine how much more difficult it would be to run the whole industry again as one company?

It is important to remember why John Major’s Government took the very brave step of embarking on privatisation at all 25 years ago. The need for more investment which the Treasury could not or would not afford; failings in safety management revealed after the Clapham Junction rail crash; the need to curb the power of the trades unions; and the need to improve services. The Government believed that its reforms could and would deliver improvements in all these areas – and to a large extent they have (with the possible exception of reigning in the unions).

It is important to remember too the degree of political interference and tinkering that Government control always brings – over such things as wage levels, safety management, and crucially investment in rolling stock, infrastructure and stations. In such circumstances, it is worth reminding ourselves that the interests of Government and consumers do not always coincide (in fact almost never). Giving politicians control means that it will be the political imperative of the moment that drives decision-making, not the interests of the customers.

Governments inevitably have a difficult time these days. There are huge demands on the public purse – and politicians have to make some very tough choices – about absolute levels of spending and taxation, about which spending areas get priority and how and when to prioritise.

With the best will in the world, public transport in general and the railways in particular are never going to rank highly against the priorities of the NHS and social care in an ageing population; against the need to provide for children and young adults left out of the system; or against the imperatives of a chronic housing shortage.

The reality is that if we want a world class railway system in this country, then we are going to have to be prepared to pay for one. We need a system which taps into the private sector for the resources we need to invest; we need a system which allows investment and management decisions to be made on a rational, business case basis, not on the macro-economic imperatives of the Treasury.

Above all, perhaps, at the moment, we need a system which cares about and looks after it customers as an absolute priority.

Try as I might, I simply cannot envisage a system in which a nationalised railway company could have a snowball’s chance in hell of delivering all (or indeed any) of that.

2018-06-26T14:31:28+00:00June 26th, 2018|July 2018, Magazine|