. Why aren't we re-nationalising British railways? | Ceasefire Magazine

Why aren’t we re-nationalising British railways? Comment

This week's sharp increases in UK rail fares provide yet another reminder of the monumental failure of the privatisation project. And yet, as Musab Younis points out, the obvious solution, re-nationalisation, continues to be unmentionable.

New in Ceasefire, Politics - Posted on Wednesday, December 21, 2011 12:00 - 3 Comments


This week we heard news of another major, above-inflation price increase in rail fares. Unemployment is at a 17-year high, Kenneth Clarke is openly predicting a “long period of youth unemployment”, the public sector is being slashed, wages are plummeting, the HMRC has been exposed in letting companies off billions in tax. And to top it all, a creaking and embarrassing rail system – charging the highest fares in Europe, and some of the highest in the world  – is jacking up its prices.

According to the chief executive of the Association of Train Operating Companies (Atoc), the long-term approach will be to “cut the contribution from taxpayers and increase the share paid for by passengers.” The dichotomy is a fantasy, of course – passengers are taxpayers too – but it reflects an increasingly regressive pricing system, where (like VAT) rail fares are disconnected from the ability to pay, which of course means that the poor pay much more relative to income.

A study into ‘value for money’ in the railway system took place this year, with the publication of the McNulty Report. The study was deeply flawed – see RMT’s incisive response – but it did reveal some interesting facts. Since privatisation, British railways require three times as much public subsidy and are three times more expensive to run. They are 30 percent less efficient than other railways in Europe. They lack effective coordination. And they are, of course, drastically expensive.

It’s easy to see privatisation, once it has happened, as a tectonic evolutionary shift that can be complained about but can’t possibly be reversed. The temptation is high to dismiss the idea of re-nationalisation as impractical or (that favourite reactionary term) ‘politically impossible’. But not only is it possible – it happened: in 2008, New Zealand re-nationalised their entire railway system.

During the 1980s, New Zealand jumped merrily onto the neoliberal bandwagon (they called it ‘Rogernomics’, after Finance Minister Roger Douglas). Transport haulage, particularly within the roads network, was deregulated, leading to a crisis in the rail system. So the rail system was extensively restructured, becoming a government-owned business corporation and laying off as many people as it could (employment numbers went from 21,600 in 1982 to 8,400 in 1993.) Familiarly, this all happened under New Zealand’s Labour Party. When the right-wing National Party came to power in 1990, they privatised the whole system (New Zealand was the first country in the world to do this.) The rail network was sold to a consortium headed by US-based Wisconsin Central and a local investment bank, and renamed Tranz Rail.

A familiar litany of neglect and abuse followed. In their hapless embrace of neoliberalism, the New Zealanders forgot one thing: you’re not actually supposed to fully privatise anything, because that mythically efficient private sector is terrified of actually carrying any risk. So you part-privatise. This always works out as socialising the bits that don’t make money, are expensive, or risky, and privatising the rest. (It’s a familiar script re-enacted with devotional regularity, from the Post Office to the recent bank bail-outs.)

By 2005, a World Bank report found that ‘the initial success of privatization with increased rail traffic and increased profits has not been sustained: the government has been obliged to take back the network and to commit significant public funds to address deficiencies in the network assets.’ In July 2008, all rail and ferry services in the country finally were brought back under public ownership and renamed KiwiRail.

It was possible to re-nationalise railways in New Zealand because it was so widely recognised that privatisation had been a failure. The facts are similar in this country and it takes real effort to avoid them. But the few who benefit from the privatised system have succeeded in rigidly policing the discourse on the topic. The press is silent on the issue; none of this week’s newspaper articles on the fare increase, for example, dared to mention re-nationalisation. The Campaign for Better Transport is supposed to represent the interests of passengers (thankfully, they avoid the vulgar term “customers”) but deliberately avoids the topic.

Passenger Focus, which is supposed to be the independent watchdog for passengers set up after privatisation, is even more laughably lacking in teeth than you would expect: this week their response to the fares increase was: “It could have been a lot worse.”

To its major credit the RMT union supports and calls for re-nationalisation, but its natural allies, the passengers, have been kept completely uninformed on the topic. In New Zealand, it took a large and quite disparate alliance to condemn privatisation and create the climate where re-nationalisation became a possibility. Such an alliance doesn’t exist here, but it needs to.


To join the campaign group Bring Back British Rail, click here.


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Dec 23, 2011 10:44

Great article, was really surprised to see the data on the inefficiency of British trains laid bare. I had no idea it was that bad.

Malte Ringer
Dec 28, 2011 20:59

Great article, Musab. So much for the supposedly efficient private sector. It should be added that if the private companies were to lower fares that would likely not be a good thing: when the private sector achieves a competitive advantage over the public, that’s usually by cutting the wages of all the working-class people that work for them.

Robert Turnbull
Sep 8, 2013 9:57

Yes, time and time again we return to the subject of re-nationalization of the rail (and other necessary services), and yet we do not stand up together and have our voices heard. And, unfortunate and meek as that may be, unless we do this will continues to spiral out of control and fill the pockets of these private company owners and their investors.

The big problem, the true extent of how many people benefit from those profits, is unknown. This is the what the 1980s conservative government created. More Britons only interested in themselves and theirs. Alot of which benefitting in the form of dividends.

Would you want to lose your wholly undeserved dividends?

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