Government rail review

In the face of a failing rail system Paul Salveson puts an alternative plan

Chris Grayling’s tenure as secretary of state for transport has been marked by the near-collapse of rail services in the North and parts of the South East, while he persists with the grand folly of HS2 and CrossRail 2. Yet, to be fair to the man, he has recognised that something is fundamentally wrong with how rail services are being delivered in the UK.

Whether you are an earnest advocate of nationalisation, or still cling on to the belief that privatisation was the right thing to do back in the 90s, what we have today doesn’t work. It’s expensive (compared with the overall cost of running other railways across Europe) and services are often poor and unreliable. Staff are demotivated and passengers fed up. So Mr Grayling has ordered a ‘fundamental review’ of rail policy and has appointed Keith Williams to chair it. He comes from an interesting background: former chief executive of British Airways and deputy chair of The John Lewis Partnership, the employee-owned retail chain. In addition, members of the review panel include respected railwayman Dick Fearn, former MD of Irish Rail.

The Government’s announcement of the review in September said it would “consider all parts of the rail industry, from the current franchising system and industry structures, accountability, and value for money for passengers and taxpayers”. Cynics will say that nationalisation, the holy grail of Corbynistas in a hurry, won’t be given a second thought. Maybe, maybe not. But the review does offer an opportunity to come up with some fresh ideas which could start to get us out of the current mess we’re in. I’m a member of a small group of professional railway men and women called ‘The Rail Reform Group’ which is looking at some options.

It’s important that we are clear on what we want our railways to do. Getting people and goods ‘from A to B’ as fast as possible isn’t enough and can encourage perverse outcomes. Is it right that we should be encouraging people living in, say, Doncaster or Preston to commute to London most days? Rail is good at delivering longer distance journeys, but those trips into major centres for work, education and leisure are as important as longer distance intercity journeys. And it tends to be the ‘regional’ networks that are under most stress at present, with inadequate rolling stock, lack of track capacity and poor quality stations.

Advocates of ‘nationalisation’ should also understand that much of the railway is already state-owned, or publicly-specified. Infrastructure is owned and managed by Network Rail. Trains mostly run as part of franchises that are specified and funded by Government (predominantly Department for Transport, but the devolved governments for Wales and Scotland, plus Transport for London for London Overground and Merseyside Combined Authority for Merseyrail). Yet once franchises are let, operators can cut corners to extract maximum profit from their short-term contract. Arguably, what we have now is the worst of both worlds – not fully private, but not really public either.

Our modest little ‘Rail Reform Group’ has come up with some provisional conclusions which could help improve both regional and intercity networks, as well as encourage freight. The starting point should be structural change. The current system, based on separation of infrastructure from operations (which are based on relatively short-term and highly expensive franchises) has not worked; bringing infrastructure and operations back under one co-ordinated lead is essential, but that doesn’t have to imply a nationally centralised approach. It could work at a regional level. We are suggesting, for the North, a new model – a revival of the pre-1923 ‘Lancashire and Yorkshire Railway’ brand – that would serve the major centres of the North. Basically we’re proposing regionally-based, vertically integrated operations that are socially owned. The same approach could work in other parts of the UK.

We came to the conclusion that the best business model should be a social enterprise, in which profits are recycled back into the business to fund further improvements. A railway that is tied to Treasury control, as BR was, would not have the freedom to invest and look to the long-term, which is desperately needed. Instead of short-term franchises (typically less than 10 years) there should be long-term stability with periodic reviews by an appropriate public body. In terms of ‘Lancashire and Yorkshire Railways’ this should be a strengthened ‘Transport for the North’, a body which already exists.

Within this model, there would be scope for employees and passengers to be much more fully engaged, including encouragement to invest in specific projects that could also include some private sector investment. There is a need for a UK-wide ‘guiding mind’ that can ensure co-ordination is there when it is needed. The railway does form a strong network and even in the pre-1923 days of scores of private (and vertically integrated) railway companies, there was co-ordination on ticketing, timetables and other national standards. For freight, the issue isn’t about ownership, it’s about having the right infrastructure, and fiscal regime, for freight to flourish.

These suggestions avoid the current unhelpful fixation on ‘nationalisation’ without people really understanding what that means; opting for a social enterprise – at arm’s length from the state but with clear social objectives – must be considered. The solution we’re suggesting could be as relevant to Labour’s thinking as to Mr Grayling’s.

Paul Salveson

Paul Salveson is a visiting professor in transport & logistics at the University of Huddersfield.