Benefits of nationalisation

[Hellfire]

Quite often members on these forums touch on re-nationalisation of the UK railway system. This has set me thinking of what would be the benefits, and obviously the downsides if this were to happen.

I'm not interested in discussion over political dogma about state run or privatised companies. I'm thinking from the point of view of railway staff and passengers and whether we'd get a better system under public ownership or not.

Bob Crow is very keen on public ownership but I suspect many passengers think that's because it will make it easier for Him to shut the whole network in one go.

Given that in the 200 years or so since Richard Trevithick operated the first passenger carrying railway ( he's the chap on the left by the way) the railways, which were mainly built by private capital, have only been in public hands for less than 50 years.

Or maybe the answer is a mixture of the two. Is that what we have now?

 

[TrainBoy98]

For a start they could have an inhouse engineering team, and could build their own trains instead of importing them

 

[Zoe]

Quite often members on these forums touch on re-nationalisation of the UK railway system.

One part (NI Railways) is still nationalized.

 

[starrymarkb]

For a start they could have an inhouse engineering team, and could build their own trains instead of importing them

Do any European networks still build in house? I know OBB built their Tauri under licence from Siemens but can't think of any other....

Plus competition drives improvements. BR would source from various manufactures (EE, MetCam etc) as well as their in house engineers to keep everyone on their toes.

 

[Gwenllian2001]

Quite often members on these forums touch on re-nationalisation of the UK railway system. This has set me thinking of what would be the benefits, and obviously the downsides if this were to happen.

I'm not interested in discussion over political dogma about state run or privatised companies. I'm thinking from the point of view of railway staff and passengers and whether we'd get a better system under public ownership or not.

Bob Crow is very keen on public ownership but I suspect many passengers think that's because it will make it easier for Him to shut the whole network in one go.

Given that in the 200 years or so since Richard Trevithick operated the first passenger carrying railway ( he's the chap on the left by the way) the railways, which were mainly built by private capital, have only been in public hands for less than 50 years.

Or maybe the answer is a mixture of the two. Is that what we have now?

Well, if you're not interested in 'dogma' perhaps it would be better to leave Bob Crow out of it.

You forget that the railways were effectively under state control in both World Wars. Even as private companies the railways were always subject to political interference in that they were hamstrung by being designated as 'Common Carriers', a little detail that gave the road concerns leave to do pretty much as they liked.

What we now have is neither fish nor fowl with far more public money going on the railways than before 'privatisation'. The countries of mainland Europe were much quicker to see the benefits of state ownership of such valuable assets and were much more progressive with things like electrification.

BR wasn't perfect but that's hardly surprising since it was treated as a political football between Labour and Conservative politicians.

I think that a return should be made to something like BR after sectorisation, publicly owned and financed and left to get on with it, without being subject to the whim of whatever party happens to be in power.

By the way, the first passenger carrying railway was the Swansea and Mumbles; nothing to do with Trevithick, great man though he was.

 

[David Barrett]

Why should Bob Crow be singled out anyway, prior to Him the Media's pet hate was Jimmy Knapp and during the 1970s Ray Buckton? True it is an issue but no more so than any other aspect of our governance from Banker's Bonus Payments to Water Supply problems. I have seen Sectorisation mentioned already but that, along with various forms of railway organisation put fault lines into the system as we have experienced all along from the boundaries between Franchises that we see to-day to the Regional Boundaries part way along a number of routes under B.R. What I am trying to say, I suppose, is that our traditional parochialism might well be a bigger boundary than any line drawn on a map by the Planners.

 

[corfield]

I like the localism aspect of lines being run seperately. Afterall, BR had its divisions and subsdivisions anyway so it hardly multiplies management - less perhaps as they arent all tied in togeather with a large core. Somewhere you have to draw borders in any complex system.

Plus why should say the Tilbury and Southend railway be part of the same organisation doing similar local/commuter routes in the North West ?

The Public ownership dogma is a greed based obsession about owning things that do exist, rather than focussing on why they exist and what can be done with them.

As it is, the state sold the assets but still controls everything, very similar to my previous large industrial employer and its relationship with its land and equipment (all leased and rented).

I think the franchise model is ok, it will always need tweaking to suit changes in travel patterns, opportunites/constraints from infrastructure and rolling stock management efficiencies but generally it seems to deliver a more responsive railway, and one much better to use. Plus it seems to have given the confidence to invest large public and private sums. Something no purely state organisation has acheived.
Longer franchises seem to work best, reducing the overhead of the bidding process (for govt and companies) and incentivising the private side to seriously invest.

A specialist agency to oversee it all at arms length from Ministers amd the central civil service would possibly be a better solution from the Govt side as DfT seems unfit to do the job from the centre. You could call it the British Rail Agency and paint everything green/blue in the office

Network Rail now seem to be on top of the infrastructure side, and their partnerships ala SWT seem to be a way ahead. Formal seperation of the two aspects, but working cooperation now seems to be working?

I dont see a monolithic state organisation as remotely desireable, all my experience of them is that they orientate around the workers, are slow to react to change and are impossible to monitor and control/improve financially. Smaller organisations are leaner, more transparent and I think are more focused at doing what they exist to do.

And please rememeber the unions only exist to benefit their members - not for any general moral or public good. Clearly they will favour outcomes that give them the most leverage to get as much as they can for themselves. Just as the CBI prefers solutions that favour the interests of directors. The answer lies somewhere in between, and I hope politicians are strong enough to resist both sides. We are a long way from a capitalistic free for all, and it doesnt seem many companies make much from the railways so I think the balance is probably ok - both sides complain to the same level of whingeing anyway !

I do like the idea of pension funds investing, massive financial firepower, legal requirements to closely monitor risk and a long term view.

Either way, giving it another decade to settle should give us a better position from which to draw judgement. Constant (every decade or less) major interventions cost a fortune in change management, never settle or stabilise and result in a huge mish mash of results which due to lead times and system lag are impossible to attribute and so work out what actually does and doesnt work - as we see in health and education for instance...

 

[cuccir]

Where do you start? There's whole areas of academic literature, political, professional and philosophical lives that are spent covering this debate. I doubt we'll get it sorted on here!

For any public service, there are five choices:

1. State Monopoly
Pros - Minimum service level guaranteed. Centralized, controlled system, with associated efficiencies. Social well-being placed ahead of profit extraction
Cons - Open to political game-playing. Danger of over-bureaucratization. Lack of competition can lead to other inefficiencies and little innovation

2. State v Private Competition
Pros - Minimum service level guaranteed. The state can provide the services that the private sector wouldn't, while the private sector can offer innovations and new services for those who can afford it
Cons - State can be left to pick-up the dregs, leading to a 'two-tier' service (eg as in NHS, Schools). Public sector involvement may lead to inability for private sector to properly innovate and compete

3. State-Subsidized Private Service And/Or PFI
Pros - Minimum service level guaranteed. Full competition, but with the state guaranteeing that certain socially-useful services are maintained, and that the long-term infrastructure is maintained
Cons - The state can be left with all the risk, while private interests cream off the profits. Can be very bureaucratic

4. Regulated Private
Pros - More competition, with associated innovation and investments. Reduced state interference allows private companies to run customer-centered services, resulting in efficiency. Regulation ensures that long term interests of maintaining services/infrastructure are retained, and that collusion does not take place
Cons - Regulation still prevents 'proper' competition and/or state is too weak to regulate effectively. Socially-useful services are dropped, in favour of services which generate profit

5. Full Private sector
Pros - Full competition, with associated innovation and investments. If services are needed, they'll generate a profit, and therefore be run. Companies need to provide a good service for people to use the,
Cons - The long-term interests of society are not served. Socially-useful services are not run if they do not generate profit. Profit extracted from system into private hands

I've probably missed a few things out. I think at the moment we're somewhere between scenarios 3 and 4. I'd prefer something more like scenario 1, though with private companies able to run services if they want. But what you chose depends on what you think is most valuable in and important in running any public service!

 

[Hellfire]

By the way, the first passenger carrying railway was the Swansea and Mumbles; nothing to do with Trevithick, great man though he was.

You are of course right. Trevithick's first effort in 1804 only hauled coal

 

[NSEFAN]

Politics will always be interfering with the railway, as the railway will always need public subsidy to keep the lossy services running. Obviously there are wider economic benefits to running loss-making trains, but either way the money to run them has to come from somewhere. Wider social benefits aren't normally of interest to a private company if there is no profit to be had.

For any public service, there are five choices:

1. State Monopoly
Pros - Minimum service level guaranteed. Centralized, controlled system, with associated efficiencies. Social well-being placed ahead of profit extraction
Cons - Open to political game-playing. Danger of over-bureaucratization. Lack of competition can lead to other inefficiencies and little innovation

2. State v Private Competition
Pros - Minimum service level guaranteed. The state can provide the services that the private sector wouldn't, while the private sector can offer innovations and new services for those who can afford it
Cons - State can be left to pick-up the dregs, leading to a 'two-tier' service (eg as in NHS, Schools). Public sector involvement may lead to inability for private sector to properly innovate and compete

3. State-Subsidized Private Service And/Or PFI
Pros - Minimum service level guaranteed. Full competition, but with the state guaranteeing that certain socially-useful services are maintained, and that the long-term infrastructure is maintained
Cons - The state can be left with all the risk, while private interests cream off the profits. Can be very bureaucratic

4. Regulated Private
Pros - More competition, with associated innovation and investments. Reduced state interference allows private companies to run customer-centered services, resulting in efficiency. Regulation ensures that long term interests of maintaining services/infrastructure are retained, and that collusion does not take place
Cons - Regulation still prevents 'proper' competition and/or state is too weak to regulate effectively. Socially-useful services are dropped, in favour of services which generate profit

5. Full Private sector
Pros - Full competition, with associated innovation and investments. If services are needed, they'll generate a profit, and therefore be run. Companies need to provide a good service for people to use the,
Cons - The long-term interests of society are not served. Socially-useful services are not run if they do not generate profit. Profit extracted from system into private hands

I've probably missed a few things out. I think at the moment we're somewhere between scenarios 3 and 4. I'd prefer something more like scenario 1, though with private companies able to run services if they want. But what you chose depends on what you think is most valuable in and important in running any public service!

That's a useful scale you've posted here, Cuccir! I would add though another point to the 3rd option, that the government can also use the "private" nature of the railway to distance itself from problems when it suits.

In my eyes, passenger traffic has more social value than freight. Passenger services should be run for the benefit of passengers and towns connected by rail links, and in an operationally sensible manner, e.g. clockface timetables where possible and none of these silly parliamentary trains. Note that this could be done either directly by the state or by private companies paid by the state; provided the setup is a manageable system that gets the job done, it doesn't really matter who runs it. Freight on the other hand can stick to the open access system which seems to work quite well at the moment. That's just my idea of how things should be!

 

[LE Greys]

Not forgetting the business of vertical integration.

1. Railway Companies. They own track, trains, stations, signalling, works, hotels, ferries, whatever they can lay their hands on. They are free to do pretty much what they like on their own land, provided they can commit company funds to do so, but bear the full risk if it does not pay off. Basically, how the railways were run before 1914, and in some ways how they are still run in the USA, excluding Amtrak. Under this scenario, things can happen a lot faster, but you have an extensive risk of your private companies going bust or closing things without too much warning.
   
2. Railway Companies with State intervention. Similar to the above, but the Treasury makes loans and awards grants. They also indulge in more reguation. Essentially, the 1918-1939 way we did things, and my preferred option. However, the State bears a lot of the risk, but it allows the companies to provide a stable service and underwrites some loss-making routes. If a company goes bust, the State ends up saddled with its assets.
   
3. Permanent TOCs who own their rolling stock running services over a private or public railway without refranchising, they own the rights. Essentially, what happens with airlines. No franchises or anything. It's a way round the EU rule, but runs the risk that one TOC might pull out of a route and take its stock away. However, it does promote stability and continued investment, since they will never have to go through the refranchising roundabout.
   
4. Franchised TOCs who own their rolling stock over a public or private railway. This gives us the stop-start investment we see with refranchising. TOCs are tenants rather than owner-occupiers. Therefore, it's feasible that one might decide to remove all trains from a route when it leaves. This makes it highly unlikely.
   
5. Either of the above with some rule meaning that you can't just take away all the toys when you leave. For obvious reasons, but then its no different from below.
   
6. The current system with TOCs, ROSCOs and either private or public rail ownership. As seen since 1997 here, and increasingly in Europe. In many cases, a recipie for stagnation or stop-start investment.

In general, the fewer the number of partners, the quicker things happen. For example, I reckon that a new LNER could have had Class 93 electrics rolling out of Doncaster in less than a year if they wanted, so a much shorter design process than IEP. However, building such a small batch would probably be more expensive for each loco built, and buying them in from a private contractor would be a possible alternative. They might be able to offset that by selling their 91s to someone else, though. Equally, the LNER could have decided to upgrade the ECML to 140 without any input from the DfT or anyone else, but would that have been a good idea? If you give people permission to make a decision, the risk you have to take is that they might make one you do not like. The government has sometimes taken that risk since 1997, but generally has not.

 

[Dave1987]

I would say that people call for renationalisation because they believe TOC are making massive profits for their share holders, which even though people refuse to believe it, they make 3% per ticket. The rest goes on running and maintaining the railway. Let me put it this way. Does all your Road fund license actually get spent on repairing the roads?? The grass is always greener on the other side!!

 

[Clip]

I would say that people call for renationalisation because they believe TOC are making massive profits for their share holders, which even though people refuse to believe it, they make 3% per ticket. The rest goes on running and maintaining the railway. Let me put it this way. Does all your Road fund license actually get spent on repairing the roads?? The grass is always greener on the other side!!

There's no such thing as road fund license

 

[Hellfire]

There's no such thing as road fund license

Technically correct, it is now VED but colloquially referred to as Road Fund Licence (with a c not an s) and in very common usage so we all know what it means.

 

[Greenback]

I would say that people call for renationalisation because they believe TOC are making massive profits for their share holders, which even though people refuse to believe it, they make 3% per ticket. The rest goes on running and maintaining the railway. Let me put it this way. Does all your Road fund license actually get spent on repairing the roads?? The grass is always greener on the other side!!

No, people call for renationalisation for several reasons. They may see that more public money is going into the system than ever before and believe that this shows public ownership is more efficient.

They may believe in public ownership for ideological reasons.

They may even call for it as a way of ensuring greater consistency of services and ticketing.

Of course, some may well believe that the profits made by the private companies are too high regardless of the actual percentage figure on turnover. It is all money that could be better spent on the network itself.

 

[rebmcr]

Technically correct, it is now VED but colloquially referred to as Road Fund Licence (with a c not an s) and in very common usage so we all know what it means.

Excellent counterpedantry. What's a Lisence though?

 

[Clip]

Technically correct, it is now VED but colloquially referred to as Road Fund Licence (with a c not an s) and in very common usage so we all know what it means.

I think you'll find most people would say 'road tax'.

Yeah, my spelling can be poor at times,bite me

 

[Hellfire]

I think you'll find most people would say 'road tax'.

Yeah, my spelling can be poor at times,bite me

My spelling is OK. Diplomacy a bit iffy though

 

[LE Greys]

No, people call for renationalisation for several reasons. They may see that more public money is going into the system than ever before and believe that this shows public ownership is more efficient.

They may believe in public ownership for ideological reasons.

They may even call for it as a way of ensuring greater consistency of services and ticketing.

Of course, some may well believe that the profits made by the private companies are too high regardless of the actual percentage figure on turnover. It is all money that could be better spent on the network itself.

If they scratched the surface, they would see that there is a blatant cross-subsidy going on where some lines, mostly inter-city routes, are funding others. I'm sure that happened under BR as well, but not so blatantly, and certainly not to the extent that it brought down a TOC, as happened with GNER (hence the chip on my shoulder about the ECML funding the WCML upgrade).

 

[Morgsie]

To those advocating this policy nationalisation, you do realise loads of debt will be transferred to the Government's books and it will give Bob Crow power and he will use it to grind the system to a halt

 

[ChiefPlanner]

One thing BR had by the 1980's was good cost control and good systems for managing the little investment it could beg from the Govt. Don't forget the "localisation" of NSE routes for example like the branding and local control under generally responsive managers who looked after an improving quality of product and could change things fairly quickly (especially if costs were reduced and money could be made legally) - maybe the grass roots culture did not always respond , but the unions were usually quite supportive after the flexible rostering malarky etc. It was big enough to cross subsidise within sectors and there were no nonsenses of artifical constrants like track access and depot access rights. If you failed to agree on something , deals could be done - as getting things up to Chairman level could be career threatening.

 

[Railsigns]

To those advocating this policy nationalisation, you do realise loads of debt will be transferred to the Government's books and it will give Bob Crow power and he will use it to grind the system to a halt[?]

Do you think that the extra billions of pounds of taxpayers' money needed to support the privatised rail industry every year is money well spent, as long as it keeps Bob Crow in his place?

Remember, the politicians that privatised the railways repeatedly claimed that the industry would become more efficient and cost taxpayers less as a result but the exact opposite has happened.

 

[ChiefPlanner]

[
Remember, the politicians that privatised the railways repeatedly claimed that the industry would become more efficient and cost taxpayers less as a result but the exact opposite has happened.[/QUOTE]

Because BR was basically well run on a cost basis , and several early privatised operators found there was little fat left to cut. Early Railtrack divested itself of "old school" engineers and handed almost everything over to contractors and myriads of subbies. Losing quality and costs in the process. Well documented in many books and articles.

 

[Bevan Price]

The nationalised BR was very imperfect, but in my opinion what we have now is much worse.

A fragmented system, where vast sums of money are squandered on things like franchise contract preparations & negotiations (probably a lot of money going to well-paid lawyers, accountants, etc.)

A non-network, where trains often fail to connect because they are operated by different tOCs.

Hiring trains rather than buying your own. One of the first things I learned when I had to manage my own finances was that it is a lot cheaper to buy equipment than to rent it or use hire purchase. OK - most times you cannot do this for houses, but for other items, sometimes you may have to wait a bit longer before getting something new, but in the long term, you are the winner, not some finance company.

Silly separation of infrastructure & train operators leads to engineering works timing regardless of inconvenience to passengers or freight operators.

Personally I would prefer a return to a nationalised rail network - but with some kind of independent** audit panel to review the efficiency and effectiveness of rail management & spending. (** - definitely no involvement of DfT, or its purse-master, the treasury).

To curb greed, and the activities of the minority of TU trouble makers within the industry, I would also hope for a law requiring industrial action to be approved by (say) 60% of ALL members, rather than a simple majority of those who bother to vote.

(As a former member of a TU, I would suggest that some people need to consider - which is best - a zero (or low) pay rise but keep all the jobs, or seek a greedy pay rise that leads to job losses ? Remember what happened to the mining industry.....)

 

[Bald Rick]

There is a distinction between nationalisation, which in theory could be done now under the current structure, and integration (vertical and horizontal) which needs primary legislation.

Nevertheless, a fair proportion of our industry is nationalised, just not necessarily by our nation. But I do raise a wry smile when the likes of DB and NS are effectively funding parts of our railway as (some of) their UK rail subsidiaries lose pots of money.

 

[D365]

There is a distinction between nationalisation, which in theory could be done now under the current structure, and integration (vertical and horizontal) which needs primary legislation.

Nevertheless, a fair proportion of our industry is nationalised, just not necessarily by our nation. But I do raise a wry smile when the likes of DB and NS are effectively funding parts of our railway as (some of) their UK rail subsidiaries lose pots of money.

Haha, all the more ironic when people are complaining 'profits' go into overseas railways :P

 

[jon0844]

Remember, the politicians that privatised the railways repeatedly claimed that the industry would become more efficient and cost taxpayers less as a result but the exact opposite has happened.

I agree that the costs of doing many things has gone up, but a lot of that is down to new rules, including health & safety issues and so on - not just blatant profiteering. A nationalised railway would likely incur these higher costs too. Put simply, things are done differently these days, right or wrong.

Also, post privatisation, railway usage has soared. This must have increased overall spending too, even if the money raised in fares will have gone up. For one, a lot of money has been spent on making up for the lack of spending in the years before.

What I fear is that if the Government took over, we'd see a service run that would potentially be the bare minimum with little incentive to invest in new things.

Staff might benefit more, possibly, but the 'job for life' concept is long gone and in fact you might find that there's more chance of a pay freeze (certainly staff couldn't just move from one TOC to another, or threaten to, in order to keep pay up) and job cuts. And that might well lead to industrial action and a downward spiral as many rail users go back to their cars, or just travel less.

 

[W230]

Many interesting points here. While I remember the BR days, I was in my early teens when privatisation took over so can't comment on a nationalised service much.

However, I do remember the regular complaints about the BR services being tired, dirty, late, old etc and do think many people seem to look back on BR with rose tinted specs - though maybe these complaints back then are only the same as people venting their anger at their particular local TOC now. There did seem to be a chronic under investment in the railways in the 80's, though it was never seen as a growth industry at this time.

The railways are a growth industry now but we no longer have this nationalised system so we will never know how BR would have turned out if they were still in control. I think it's fair to say that BR had to work with a bit of a 'make do and mend' policy prior to privatisation. I'm sure things would have turned round and continued to grow had they remained nationalised - would they have been better though? I'm not convinced.

Personally, I was fairly in favour of the long term franchising setup we have started to see more recently. Well, that was until I realised how much more the system now costs to run than it really should. As a result I read these posts with no further idea as to what the actual answer really is!

 

[jon0844]

The BR I remember as a child, even with the fancy NSE branding, was mostly that of an old and dirty network of stations and trains. Old slam door trains, a distinct lack of information to passengers with most stations having no screens, or if they did they were broken, and a look and feel of a public service that was only used by people who couldn't afford a car. I don't remember trains being massively delayed or cancelled, but when things did go wrong there certainly wasn't the same level of information (but, to be fair, there wasn't email, SMS, Twitter or people carrying devices to check on things while travelling).

That was the impression I got a lot of the time, although when we got 'new' 317s and flipdot screens and automated announcements at platforms on our line, I must admit that it was when I suddenly thought of train travel as quite exciting.

I think BR to many would be how a lot of people see rural buses now. The things that you'd not use if you could afford not to.

Take Virgin as an example of how people get quite attached to a train service, which is something that BR would never have been able to achieve - not even with Jimmy Savile!!

 

[DarloRich]

I would say that people call for renationalisation because they believe TOC are making massive profits for their share holders, which even though people refuse to believe it, they make 3% per ticket

The TOCS are making good profits. It is simply hidden in financial planning within the group companies.