The Labour Party’s promise to end private ownership of rail services finds broad appeal across the U.K.
As Britain’s Labour Party closes the gap with its Conservative rivals in the June 8th general election, there’s at least one part of the party’s platform that’s widely popular: nationalizing the railways.
According to the party’s manifesto, a Labour government would end the outsourcing of passenger services to private companies, a practice that began in 1994. The idea might seem complex and expensive, but it has become a significant feature of Britain’s current election campaign—and it’s an idea that many U.K. citizens seem to like a lot: A recent survey found 52 percent of respondents favored renationalization, versus 22 percent against. That makes the idea currently more popular than the party that proposed it.
It’s just one part of a broader proposal to create national energy, mail, and utility companies if Labour is elected—and that’s no small “if.” Despite recent poll jumps suggesting a close race on the 8th, Britain’s Conservatives are still favored to win, and nationalization has no place in their agenda.
Still, Labour’s proposal is striking for its popularity. But is it feasible?
The short answer is yes, the long answer is maybe. A state takeover might be easier than it sounds, because Britain’s train companies aren’t truly private enterprises. Britain’s railways currently have a fiddly, tripartite structure that already mixes public and private ownership. In a vital difference from the United States, the tracks are still owned by the state, via a body called Network Rail. The trains are owned by private companies known as ROSCOs, or rolling stock companies. Actual passenger services, meanwhile, are run by another set of private companies, including Virgin Trains, Arriva UK Trains, and Abellio ScotRail, among others who bid to run services on five- to seven-year leases granted by the government.
This means that “renationalizing” Britain’s railways could actually be quite simple. Many current operators are on contracts that run out by 2020. The government would simply need to wait for these leases to expire before replacing their current operators with a unified state alternative. More expensive and complex would be creating a public rolling stock company, which would probably mean buying out a private operator at considerable cost.
Railroad privatization has long been a hot-button issue in U.K. politics. When Prime Minister Margaret Thatcher sold off many government-run enterprises in the 1980s, she reportedly considered private rail as a step too far. Ever since her successor John Major broke up British Rail into a constellation of private companies in 1994, the performance of Britain’s railways has been decidedly mixed. That a reversal is even being considered is a record of the failures—at least in public perception—of the whole process.
Despite the promise that competition would open up the rail market, passenger services have remained within the control of a small clique of transit companies. As Nicole Badstuber, a transit researcher at University College London notes, this has led to a situation where private companies profit without providing a truly free marketplace.
“Railways aren't a free-market good, they're a natural monopoly most people are locked into where they live and only have one train operator to get them to work,” Badstuber tells CityLab. “There's no real competition there and if prices go up, you're stuck with them. The current franchise arrangements also don’t really promote investment in the system. What they promote is extracting value and as much profit in the 5- to 7-years franchise period.”
There’s also a curious trans-European twist to Britain’s privatized rail system. Many of the passenger companies are joint ventures with, or offshoots of, European rail companies that remain in public hands. Arriva Trains, for example, is owned by Germany’s Deutsche Bahn, while Abellio Scotrail is a subsidiary of Dutch national carrier Nederlandse Spoorwegen. Both of these companies charge lower fares in their domestic market (despite Britain’s flexible pricing offering some bargains) leading to accusations that profits skimmed from privatized British rail are essentially a subsidy for more affordable public fares on the European mainland.
Meanwhile Britain’s government continues to pump subsidies of around £4 billion ($5.1 billion) annually into the system, while train companies pay out up to £200 million ($256 million) to shareholders annually. The image of the private companies has also been marred by high-profile failures, notably the poor services provided by rail services around London, damned last week as the worst since the rail watchdog was founded 14 years ago.
Whether nationalizing rail would radically change this situation is still an open question. By some metrics, Britain’s railways aren’t doing so badly at all. When it comes to punctuality, frequency, and station quality, customer satisfaction is actually fairly high in Britain compared to other European countries. Passenger numbers have also grown considerably since privatization. As Sim Harris, managing editor of transit magazine Rail News, tells CityLab, any system that’s seen so much ridership growth is likely to experience strain regardless of its ownership status.
“There are roughly twice as many passengers on the railways as there were 20 years ago, but we don't have twice as much railway, and we certainly don't have twice as many trains running,” he says. “If you take the number of trains timetabled in 1997 at an index of 100, the number of trains timetabled [today] gives you an index of 129. We've got nearly a third more trains running, but we're carrying twice the number of people. Plainly some trains, if not all, are going to be busier than they used to be.”
Creating a more joined-up, fully state-owned system where franchises didn’t break off every five to seven years could provide more consistency, while retaining profits currently skimmed off by rail operators could feasibly lower fares or improve infrastructure. But the task of managing the huge and growing volume of rail passengers in Britain cannot be solved by nationalization alone.
CORRECTION: An earlier version of this article misstated the name of the owner of Britain’s rail tracks.