MP’s Notebook: Time to re-nationalise the railways

Seeing the New Year in has its own special traditions, but one that is less than popular is the annual rise in rail fares.

This year they are going up by around 3.4% – the largest increase for five years. Comparing the rise in fares on over 80 routes between when the current Government came to power and this January, the average commuter will now be paying £2,888 for their annual season ticket – that’s £694 more than in 2010. At a time when real wages for many people are stagnant, this will hit family budgets hard.

But it’s not the only thing happening on our railways that is raising hackles. Take the extraordinary announcement back in November by Chris Grayling the Transport Secretary about the future of the East Coast mainline.

Photo: Hugh Llewelyn via Creative Commons

The franchise has had a somewhat chequered history. From the mid 1990s the line was run by GNER until financial difficulties, including in its parent company, meant that it could not pay the premium it had promised to the Government. National Express then took over, only to hand back the keys two years later because of losses. It had tried to renegotiate the contract but the Transport Secretary at the time refused, saying “I’m simply not prepared to bail out companies that are unable to meet their commitments.”

Having been faced with two private franchise failures, the then Labour Government decided to take the line into public ownership and run it directly as East Coast Trains. It was a great success which paid back over £1 billion to the Government over the course of five and a half years.

Now you might have thought the incoming Tory Government would have been happy to carry on with this arrangement – not least because it was making money at a time when the public finances were under pressure – but no. Ideological purity was apparently more important than common sense, so ministers announced that the franchise would be put out to tender once again. Anyone could bid to run the service – including state-owned railway companies from the rest of Europe – with just one exception. The British state-owned company, East Coast Trains, which had actually been running the line for the past five years, was told that it could not put in a bid. Extraordinary!

And so Virgin East Coast won the right to run the service, only for it too to run into difficulties. And so in November, ministers quietly announced that Virgin East Coast will be allowed to walk away from the deal three years early. It had been due to operate the line until 2023, paying sums to the Government for the privilege, but now they will be let off and the franchise will be replaced by a public-private partnership in 2020. Chris Grayling has done what his predecessor Andrew Adonis refused to do – in effect bail out a failing private sector bid.

There’s a bigger issue here. What the history of the east coast line shows is that the private franchising model is broken. Fares are too high and complicated, and the system should be fully integrated so we don’t have to worry about using an East Coast ticket on Hull Trains.

I think it’s time that all the franchises were brought back into public ownership to join the tracks which are already in public hands. We could call it British Railways. Now where have I heard that before?


2 Replies to “MP’s Notebook: Time to re-nationalise the railways”

  1. An interesting piece.

    In respect of nationalisation, as someone who is by nature in favour of minimal state involvement across the board, I find myself in partial agreement here.

    The current franchising model is broken, and should be replaced either by full free market system – where multiple providers can compete with each other on the same networks, or they should be taken into public ownership and run that way.

    The worry of course with that is the potential for the services to fall under the spell of the unions, with Fat Len shaking his fist on the TV all the time demanding more and more money for their already excessively paid staff.

    As for the fares, an annual rise is inevitable, workers nationally are regularly threatening strike action over all kinds of things (though they’re always solved by pay) – and this cost has to be passed on, I’m afraid.

    Factor in fuel duty, VAT, employer NICs too.

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