Renationalisation debate clouds a rail industry success story

It’s odd that nationalisation of the railways has become the totemic issue in this Labour leadership debate. Despite the swathe of privatisations that took place under Margaret Thatcher, it’s the one she never got round to – in fact, the one she positively rejected as too difficult – that Labour is obsessing about.

So what are the implications for the industry as a result of the current heated debate within the main opposition party?

Nationalisation has always been the ghost at the feast as far as the Labour Party is concerned. While Tony Blair and his front bench opposed the privatisation scheme as it was trundling through the Commons, activists and MPs were prepared (just about) to go along with the 1997 manifesto commitment, which committed a New Labour government to accepting the industry as it found it, not as it might want it to be. In other words, regulation of the privatised industry would be made to work, rather than wasting billions bringing it back into public ownership.

And then Railtrack self-combusted and Network Rail was born, triggering a pattern of public and party confusion and misunderstanding of the industry and its status.

First of all, the odd set up of Network Rail as a private company without shareholders but whose debt was guaranteed by government confused both back benchers and, in some cases, non DfT ministers (as Leader of the House, Jack Straw wrongly referred to it in 2008 as a publicly-owned company). The fact that, as of last September, NR is now officially and conclusively part of the public sector, really doesn’t improve the public’s, or activists’, understanding of the industry.

Another, more damaging, confusion arose from the provision of passenger services by East Coast Trains on behalf of the government, following the second consecutive failure to deliver by the private sector. The success of this venture not only proved that the public sector could operate lines as well as the private sector, it was claimed, but unlike the private sector (which kept all the profits to itself, apparently), East Coast trains returned its profits to the government.

The fact that the franchise bidding process includes a Dutch auction aimed at squeezing as much as possible from TOCs’ profits for the public purse was somehow lost among headlines proclaiming private failure and public success.

But the most damaging public perception of all, and the one that has led to consistent majorities of opinion poll respondents supporting renationalisation, is that our railways are a mess. Trains are invariably late, the fares are too high, the carriages are filthy and the industry’s safety record is poor. All but one of those claims is utterly false (can you guess which one is correct?) but in politics, perception is all.

So should TOCs worry about the success of the Corbyn, or even the Burnham, leadership campaigns?

Well, yes and no. With an unreconstructed Bennite apparently leading the pack, there’s no serious risk that Labour is going to be in government again in the near, or perhaps even distant, future. Andy Burnham’s sudden conversion to ownership of the means of production and exchange by the people is, on closer examination, merely a restatement of what was in the party’s 2015 general election manifesto; namely allowing the public sector to bid on franchises as they come up for renewal.

The industry itself seems relaxed about that particular innovation anyway; its main (and justified) concern is that the public sector would not have to bid on the same terms as the private sector, and would instead be favoured by a very un-level playing field.

(It’s significant that both Yvette Cooper and Liz Kendall have dismissed the issue as not being of the highest importance; if Corbyn should fall under a bus in the next few years (or is shoved under it by an unidentified Shadow Cabinet member), either of those two could yet succeed him.)

There are political dangers here for the industry and for the Labour Party. The latter risks offering a “solution” to a non-existent problem; even if they were elected and spent the necessary billions to bring the rolling stock companies and the TOCSs back into public ownership, would the resulting changes in service be impressive enough to persuade the travelling (and, crucially, the non-travelling) public it was all worth it?

And for the industry, its achievements and profits will continue to be suspect, so long as the debate continues, even in a party that is too unpopular to be in government but vocal enough to keep the issue in the headlines.

It is a great frustration that the success story of Britain’s railways in the 21st century is simply not being told; the debate in the Labour Party, and the consistent message of the polls, are just two consequence of that.


This article first appeared in issue 783 of Rail magazine and was written before the result of the Labour leadership contest was announced.

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