Yet the Labour Government that nationalised the railways in 1948 found seemingly intractable problems. They had little spare cash after the costs of the Second World War and were facing a railway with rising material costs, one in desperate need of investment and with a backlog of wartime maintenance and repairs and with trade unions wanting increased pay.
This passage from Cabinet minutes of March 19 1951 is typical of the period: “Some Ministers were reluctant to contemplate any increase in passenger fares, and suggested that decisions might be postponed until the Cabinet had been able to consider the report which the Minister of Transport was to make on the long-term financial prospects of the Transport Commission. On the other side, it was urged that the Transport Commission should not be required to go on accumulating, in the meantime, a deficit, on current operations and ought to be allowed to make some immediate increase in charges to compensate for increased costs, especially those arising from the recent wages award.”
At that time, there was an arm’s length body, the Transport Tribunal, which ruled on another arm’s-length body’s (the British Transport Commission) proposals for freight rate and passenger fare increases. There was tension between the commission, the tribunal and ministers and it came down to money. The commission needed higher rates to meet its costs but ministers feared the political backlash coming from higher rates and knew they would also trigger higher wage claims.
Fast forward to today and there’s an arm’s-length body called the Office of Rail and Road (created at privatisation as the Office of the Rail Regulator). It sets the charges that Network Rail can levy on operators for running trains. These are track access charges. They are calculated by taking NR’s predicted costs of operating, maintaining and renewing the railway over a five-year period and subtracting the Government’s block grant to calculate what balance must be borne by operators.
At the same time the Government controls key fares such as season tickets and decides what their annual increase should be. This was a control brought by privatisation to prevent train companies hiking the fares of their most captive audiences, such as daily commuters for whom there were no other realistic ways of getting to work. It took a few years for ministers to realise they could turn this protection on its head and use it as a way of forcing passengers to pay a higher proportion of the railway’s running costs every year.
The choices for running the railway are nationalisation, privatisation or a hybrid. Over the last half-century, Governments have tried them all and found them all failing in one way or another.
There’s no appetite for selling Network Rail. Any buyer would be taking on debts so large they’d want a government guarantee of some form. They would need hefty government payments either directly (as NR receives now) or through train operators (as Railtrack had and which prompted adverse comments about increased subsidies for private companies).
This fixed network has many challenges, not least its age. NR’s line between Montrose and Aberdeen is closed because a parapet fell from a bridge that was built in the 1840s. That was just a mile or so away from the site of last August’s fatal landslip at Carmont. And Scotland is also coping with landslips elsewhere. Largs has no trains at the moment because a landslip has shut the line. The West Coast Main Line was recently closed near Beattock because of a landslip.
Scotland is not alone. Other parts of NR have similar problems. It all costs money to repair and the bills are potentially unlimited which means that it’s simply not realistic for anyone but a government to own and fund the fixed network.
Current ministers had the opportunity to nationalise their franchised operators recently but chose not to do so. That alone rules out a fully nationalised railway even before you consider what would be done with open access operators or the freight operators (of the big four players only the smallest, DRS, is owned by the UK state).
So that leaves a hybrid model with the fixed network owned by the state and the services provided by operators in private hands with some degree of state specification and subsidy, or no specification and no subsidy, or sold entirely. The latter option is very unlikely to take root and current ministers are pursuing the franchise model with tight government control under emergency agreements.
With privatisation’s track-record of passenger figures and growth destroyed by COVID-19, there appears little likelihood in the short to medium-term, say over the next five years, that competitive franchising will return in a way that provides premium payments from franchisee to government.
If the fundamentals of who owns and operates the fixed and moving parts of the railway are to remain, what can change? Recent arguments circle around the role of the DfT with a January blog by the Rail Delivery Group typical.
It said: “It is vital that the long-awaited rail white paper is published as soon as possible. It must provide clarity about the future structure on which the industry can build a sustainable, world-class network for passengers. While investment to improve services for customers has continued as the railway waits for political decisions about its future structure, the uncertainty has undoubtedly acted as a drag on the developments customers and communities want to see. In 2021, newfound clarity must act as a catalyst for passenger-focussed change.
“Establishing a new arms-length body to act as a guiding mind for the industry will also be key. The clear direction and more coordinated decisions this body can provide will lead to a better railway. Reducing bureaucracy and a clear vision for rail over the coming years is critical in winning back and recruiting passengers onto services.”
The white paper it refers to is the result of a review conducted by Keith Williams back in 2018 - the Government promised the paper in autumn 2019. It follows a long tradition of reviews and reports on which the railway collectively hangs its future.
Sir Roy McNulty looked at costs in 2011, Richard Brown looked at franchising following the DfT’s failures when it let InterCity West Coast in 2012 (Sam Laidlaw looked at specifics of the failure). Colette Bowe examined Network Rail’s enhancement programme in 2015 from a planning perspective. Sir Peter Hendy also reviewed NR’s delivery of its enhancement programme the same year, after costs increased and timescales lengthened. Nicola Shaw looked at Network Rail’s future structure and financing in 2016. The period also saw Chris Gibb examine Southern and Sir Michael Holden look at South Western Railway
