Public ownership is good policy and politics
The debate on what policies Labour must adopt to have an election-winning manifesto is truly under way. There is no doubt that Ed Miliband’s message on the ‘cost-of-living crisis’ chimes very positively with voters. Rail passengers and commuters in particular are having to deal with never-ending annual fare rises which are biting hard into family budgets. Independent research by fares expert Barry Doe has found that since rail privatisation 20 years ago a standard return fare from London to Bristol has increased by an eye-watering 245 per cent. In fact, his research shows that the top 10 regulated fare rises since the ill-fated Railtrack took over from British Rail in 1994 have been between 151 per cent and 245 per cent even though retail price index inflation was only 78 per cent over the same period. Labour needs to end this great train fares rip-off.
By next May, fares will have increased by more than 20 per cent since the coalition government took office. Passengers are getting increasingly angry. As Daily Telegraph journalist Jake Wallis Simons recently observed: ‘From the perspective of the voter, the privatised railway system remains a target of anger. Britain has the highest rail fares in Europe.’ It is clear that a pledge to tackle this rip-off will need to be part of a vote-winning Labour manifesto. However, to do so, reform of the rail industry is essential. Thankfully, the solution is already out there. The success of the publicly operated East Coast route is universally recognised. Its profits are kept by government for reinvestment. Labour needs to build on this success. We can ill-afford to revert to failed market dogmas which have allowed vested interests to accumulate huge gains at taxpayers’ and passengers’ expense. Surely what matters is what works.
The failures of rail privatisation are glaringly obvious. Since 1994 the cost to the public purse of running our railways has risen by between two and three times in real terms. A conservative estimate of the unnecessary cost to taxpayers of this abysmal failure is at least £1.2bn each and every year. The government-commissioned McNulty report found that publicly owned European railways were one-third more efficient than our fragmented privatised network. If we eliminated this terrible waste and used the entire savings to reduce fares we could afford an across-the-board cut of at least 18 per cent. Of course this reduction could be greater if we focused savings on reducing fares that are more socially useful, such us cutting the extortionate cost of season tickets, or we could invest some of it to fund wider public services. Given this, it is hardly surprising that there continues to be overwhelming support among the British electorate for public ownership of our railways.
Fortunately for Labour, Network Rail, which receives around 80 per cent of the industry’s public subsidy, becomes a public body this September. This dramatically changes the landscape of the rail industry. In addition, more than three-quarters of existing rail franchises will come to the end of their contract between 2015 and 2020. These unique circumstances present an incoming Labour government with the opportunity to allow a reformed Network Rail, or another public operator, to take over the running of train operations as franchises expire, or earlier if it is economically efficient to do so. Franchisees do not own either stations or tracks and only lease their rolling stock, so this transfer to public operators could come at no cost to taxpayers.
Such a step would mean that the next Labour government would not be saddled with an expensive, complex and failed franchising process, while minimising any structural upheaval in the rail industry. It will also allow us to deal with the unsustainable way by which rolling stock is currently procured. The substantial savings that these reforms provide could be partially invested in wider public services, while also allowing Labour to pledge to either cut or freeze fares for the duration of the next parliament. This would be a mighty relief for hard-pressed passengers and would effectively tackle an important contributor to the ‘cost-of-living crisis’. And this would be good politics too. A Labour pledge to cut or freeze fares would deliver instant electoral success and enable Miliband to win the marginal seats that would in turn deliver him the keys to No 10.
Manuel Cortes is general secretary of TSSA
Photo: Ian Britton
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