Month: January 2016

Railway ticket prices in the UK have risen by 25% in the last 5 years. This yearly rise in prices, and continued complaints over punctuality, has led to the usual yearly rise in news stories about the UK’s railways.

There were 1.6 billion passenger rail journeys in the last 3 months. In addition to passenger journeys railways also transport the food we eat, the material that is used to build our houses and our post and parcels around the country. More than 190,000 people work on the railways to deliver these services.

In 2014 60% of the public were in favour of railway nationalisation believing that it would lead to greater accountability, cheaper prices and better services.

Nationalisation will take at least a decade. Technology driven change in transportation is moving faster than this. The UK needs to look for a different path.

The UK debate over public or private ownership of railways

Railways are a highly efficient and environmentally friendly form of long distance mass transit. The UK led the way in innovating and building railways during the industrial revolution.

In recent years, with the exception of Northern Ireland (*), the UK’s long distance railway network has operated with a model of publicly owned tracks used by privately owned train franchises that lease trains from other companies. This model is not generating the right results. The incentives are flawed. The parts do not work together for the common good. The whole is less than the sum of the complex parts.

In 2015 we also had a mid-year rise in news stories about railways. Following his recent victory in the Labour Party’s leadership election Jeremy Corbyn confirmed Labour would renationalise the railways if it won a general election victory in 2020 by building railways that are cooperatively run by government, workers and passengers. Labour has stated that nationalisation will lead to cheaper and better services.

Many other countries successfully run their railways under full or partial public sector ownership. The East Coast mainline was run very well by the public sector until recently. The previous owner of the franchise, National Express, walked away as they were not making sufficient profit. The public sector took over, successfully ran the franchise and made a net contribution back to the Treasury. Contributions from publicly owned transport can be reinvested in building better infrastructure.

The digital age will beat a steam age policy

Unfortunately beneath the headlines I expect that Labour’s plan will fail to deliver what people want: greater accountability with cheaper and better services.

The policy will not have any effect unless Labour win a general election in 2020 and it will then require contracts for existing railway franchises to expire before the new government would bring the franchise back into public ownership.

Nine railway franchises are due to be awarded before 2020 and the likely 10-year terms of the contracts will run beyond a 2020–2025 parliament. Nationalisation by this approach will take decades.

It will run at the speed of the steam age rather than the digital age.

Long-distance transport in the digital age

Passengers are unlikely to wait. The move to build cheaper and better services will be faster.

The existing train services rely on passengers purchasing and showing a paper ticket at a time when a growing number of passengers have a smartphone or contactless bank card in their purse/wallet. The franchise operators have failed to invest in modernisation and building a better user experience. There is good evidence that that UK public sector knows how to use technology to transform mass transit services but, unlike the rail franchise operators, some private sector companies also know how to do this.

The technology companies that have been reinventing transportation in our cities will soon start to focus their efforts on long distance travel whether it be through personal services such as ride sharing and automated cars or new forms of mass transit.

If those services are cheaper and better than railways then people will choose them. People are currently complaining that the UK’s railways are run from France and Germany, soon they will find themselves complaining that their transport is run by technology giants in the US or China.

Some passengers will get the benefits of modernised services that are cheaper and better but we risk losing the environmental benefits of mass transit, the accountability that people say they want and benefits for all. You cannot use Uber unless you are online and many UK adults are not.

The UK Government currently has a permissive approach to regulating these services so unless the technologies companies choose to open up, be more inclusive and become more accountable to governments, passengers and workers then we need to consider a different path.

Taking the cooperative path and using the market

The franchising system allows people to organise and use the market to take power.

A cooperative could be formed that includes local government, devolved governments in Wales and Scotland, workers, freight companies and passengers. This cooperative could work together to bid for franchises as they are put out to tender. The cooperative model brings the accountability that we risk missing out on if we wait a decade for nationalisation. It can still provide money back into the public sector that can be reinvested in building better infrastructure.

Bidding for a franchise is not cheap. Experts in railways, technology and running cooperatives will need to be employed to pull a bid together. It is reported that Virgin spent £14m on their failed bid during the disastrous West Coast mainline franchising process in 2012. There were 1.6 billion passenger rail journeys in the last 3 months. Modern digital approaches can be used to crowdsource money and build scale fast. If people can crowdsource $100m for a computer game then people should not be frightened of raising money to bid for a railway franchise.

New cooperative railways could build on the expertise gained through the extremely effective running of the East Coast mainline; connect with the new Transport for North initiative; and work with city-regions to support their need to integrate national transport infrastructure with local transport options such as cars, buses and trams.

Even without the involvement of national government a cooperatively run railway that bought in expertise from the public and private sector could deliver on the promise of greater accountability coupled with cheaper and better services.

That is what people want and need. The new franchises can be open, inclusive, innovative and modern at a time when the UK’s privately run railways are not.

There remains the chance that government will put new requirements into the next round of franchises; that the existing rail franchise operators will modernise and become more accountable; or that the new technology companies will choose to open up.

If they don’t a people’s railway will continue to be demanded but it will need to start soon if it is to have a chance of success.

(*) curiously most UK debate over railways does not seem to recognise that in Northern Ireland the railway is publicly owned.

[Update 5 Jan 2017 as various news stories emerge about the usual annual increase in rail fares here is the latest rail franchise schedule from the Department for Transport. Three new invitations to tender are expected this year. I wonder if any mutual organisations will bid.]