Jeremy Corbyn has repeatedly called for the renationalisation of Britain’s railways, a policy endorsed (according to the polls) by a majority of voters. However any temptation to return the railways to public control would make little sense and must be resisted.
The first argument against renationalisation is the success of privatisation, which has seen the number of journeys undertaken rise year-on-year to 1.5 billion; under British Rail, it dropped from one billion in 1948 to 750 million. Safety has dramatically improved, customer satisfaction is up, and complaints have dropped from 127.8 to 29.1 per 100,000. Even the subsidy has fallen from 7.3 pence per passenger mile in 2012/13 to 6.8 in 2013/14 and 5.6 last year. Franchise revenue has risen every year and in the first quarter of 2015-16 was £2.3 billion, the highest ever total.
Criticisms of Britain’s privatisation are often directed at high fares, concerns which overlook how taxpayer subsidies for rail are reducing. The government aims to reduce the proportion of rail costs paid by the taxpayer to just half by 2019, much lower than in Western Europe. This is sensible; the wealthiest 20% in society make 60% of the train journeys, and train fares are a greater proportion of their spending too. Government intervention to put a downward pressure on fares is regressive and amounts to a wealth transfer to the rich. Rail subsidies also disproportionately favour London, with 2012/13 showing £216 per head invested on transport outside London, compared to £545 in the capital.
The flaw in Britain’s complex and fragmented rail system, split between Network Rail, TOCs, FOCs and RSOCs, is the lack of real, on-track competition to drive down prices and encourage innovation. Although competition exists in the negotiation of franchise contracts, the passenger rarely has choice, meaning the system often operates more like a monopoly than a free market.
The Centre for Policy Studies’ Rail’s Second Chance suggests that a more effective way to make a difference to consumers would be allowing more Open Access Operators to run competing trains on franchises’ routes. These lead to more journeys, higher revenues, higher customer satisfaction and lower fares. Real on-the-rail competition is commonplace between Freight Operating Companies and has led to cheaper services and higher productivity. OAOs also offer local benefits, like direct services not provided by large franchises, and have been praised by Chambers of Commerce in Hull, Hartlepool and Bradford for bringing investment, low prices and job opportunities. Extending OAOs would support the government’s localism agenda also.
Nationalisation would exacerbate inequalities by catering to the travel preferences of a small, wealthy group. Rather than nationalisation, more could be achieved with a true free market approach. The ORR appears hesitant to promote on-rail competition, to the detriment of consumers. Standing up to vested interests and promoting cost-effective investments beyond London are the real ways to offer a service that all of Britain can benefit from.
Alex Hardiman is a Bright Blue member and recently graduated from the University of Bristol. @AlexJHardiman