Five signs that public ownership of the railways can no longer be swept under the carpet

This blog by our director Cat Hobbs was first published in Rail Professional.

All of us want to see the railways working well, but what is the scope of the debate on how to achieve this? What can be discussed and what is a no-go area? About six years ago, I was at a rail industry conference with questions in my mind about the idea of public ownership, but a very strong sense that asking those questions was outside the realm of acceptable debate. This was the time of Lord Adonis, High Speed Two just on the table, when Labour was defending its record on franchising, and before the East Coast takeover by Directly Operated Railways. Everyone, then as now, wanted to see services improved for passengers, but the structure of the rail network was not up for discussion.

I believe that has changed and is changing as new developments transform the landscape. Here are five signs that the debate is shifting.

1. Passengers are calling for public ownership

66% of the public want to see our railways in public hands. That's not new, but 2015 began with passengers protesting at railway stations around the country about high fares and calling for public ownership. Whereas in the past the emphasis was more about government policy on fares regulation, the calls for public ownership are growing stronger, and the list of organisations involved in the protests is growing longer. We now know that the main reason why people want public ownership is a belief that railways should be accountable to taxpayers rather than to shareholders. The second main reason is that people want lower fares. As those fares just keep on rising, passengers are getting angrier and learning more about the alternatives to privatisation.

2. New research shows the 'cost of privatised living'

Since privatisation, the average price of a train journey has increased by 22% in real terms. We've known for a while that public ownership of rail would save money - £1.2 billion according to the 'Rebuilding Rail' report, which mainly looked at the costs of fragmentation. This equates to a fare cut of 18% across the board. Our own recent research with Corporate Watch looked at the cost of energy and water bills along with rail fares, and found that households would save around £250 a year if energy, water and rail were in public ownership. (This research didn't consider the issue of fragmentation but just looked at the savings that could be made by taking out shareholder profits and allowing for a lower cost of borrowing for government.) At £13 a year, rail is by far the smallest part of this sum (everyone uses energy and water, not everyone takes the train). But for those people who do commute or take the train regularly, their savings on train tickets would be much higher than this average. The political context of 'austerity' and the fact that people are feeling the squeeze in their households makes that additional 'cost of privatised living' look like an unnecessary extra burden.

3. East Coast and foreign taxpayer-owned companies are success stories

It is becoming impossible to pretend that public ownership doesn't work. The East Coast line has shown that our railways can be run successfully and profitably in public ownership, with profits - £1 billion in this case since 2009 – being returned to the Treasury. It was recently revealed that foreign taxpayer-owned companies received £102 million in dividends from UK train fares in the past two years. Instead of using rail profits to improve services and reduce fares, we are choosing, in effect, to subsidise passengers in other countries, because of an ideological commitment to franchising. Right now the government is not questioning this approach: East Coast is being reprivatised; the state-owned Abellio has been given the ScotRail franchise and will use profits to improve services for Dutch passengers. But this situation gives the lie to the idea that only private companies can run a railway. Privatisation is still winning the battles but is it starting to lose the war?

4. Network Rail's debt is on the government's balance sheet

In September of last year, the Office for National Statistics reclassified Network Rail as a central government body. As CRESC (University of Manchester) outlines in its report 'The Conceit of Enterprise', Network Rail operates as a kind of 'philanthropic landlord' to the industry. Train companies benefit from the indirect subsidies provided through low track access charges and high government investment. Despite this, we know that the average age of trains is higher than it was in 1996 and there has only been a 3% increase in new carriages since 1994/5. Now that Network Rail's debt is officially on the government's balance sheet, we might be able to expect more debate about how we should manage our railway network and investment.

5. Party policies are shifting

Perhaps prompted by some of these developments, Labour's policy on rail is to legislate to allow in-house bids from the public sector for rail franchises as they come up for renewal. The Liberal Democrats also commit to this, and the SNP want to see public sector bids alongside not-for-profit models. Plaid Cymru and the Greens, meanwhile, are committed to public ownership of the railways. Our scorecard which compares party policies with public opinion on this and other indicators shows that many politicians believe there is a problem with the way our railways are run, and are questioning things in a way that hasn't been seen before. Public ownership isn't being swept under the carpet anymore. It looks like we're starting to have a real discussion about the best way to run a railway.