Labour offers pragmatic rail reform with minimal expenditure

The 25th of April policy document ‘Labour’s Plan to Fix Britain’s Railways’ is really rather good, and a refreshing contrast to the years of drift under the present government. 

Most of the media comment was about bringing train service operation back into the public sector but this should not have been a surprise to anyone, as Labour have consistently promised this for a number of years.  If the operators were still allowed commercial freedom, some benefits of private sector operation would be lost but, since the pandemic, operators have been micro-managed by the Department for Transport, giving the worst of all worlds with managers frustrated and having little freedom to act and owning groups still enjoying low risk profits, albeit at a low margin. 

The proposed renationalisation process is entirely practical, with existing contracts terminating when they expire, at no cost to the taxpayer, although that didn’t stop current Ministers asking how the changes were going to be funded – politics is often an intellectually disreputable business.

The overall approach is pragmatic; Labour have kept Great British Railways (GBR) as the name for the new ‘directing mind’ and confirmed that it will be based in Derby.  But there is a welcome and refreshing sense of urgency, with promised early appointment of ‘shadow’ leadership for GBR, tasked with creating a functioning leadership team within six months and a commitment to legislation in the first session of the new parliament. 

There are no commitments to large scale expenditure, for example on a rolling programme of electrification; this was probably inevitable given the parlous state of public finances and the Shadow Chancellor’s determination to demonstrate fiscal rectitude.  The thrust of the policy is essentially to manage the industry better with the resources it already has, akin to the approach adopted by British Rail in its best days shortly before privatisation.

There are inevitably tensions, some of which are explicitly acknowledged.  For example, the devolved administrations and the Mayoral Combined Authorities are to have a statutory role in the rail network, agreeing service specifications with GBR which will have to manage regional aspirations with longer distance routes and freight.

In an encouraging demonstration of an ‘if it ain’t broke, don’t fix it’ world view, there is no plan to nationalise freight.  Historically, coal – by far the largest market – was the bedrock of rail freight and generated almost all the profit but coal has now gone and other previously major sectors such a steel and petroleum have also rapidly declined.  Despite this, privatisation of rail freight has been a success story with the entry of new, nimble operators and strong growth in intermodal markets and aggregates.  

The Labour Secretary of State is to set targets for freight growth and impose a duty on GBR to enable that growth; GBR will have to manage the tension between freight growth and regional aspirations to improve passenger services.

The rolling stock companies are also to be left untouched.  In contrast to the position with the train operating companies, nationalisation would be extraordinarily expensive.  GBR will be required to manage the fleet across the various parts of the network, which should ease some of the previous barriers to sensible fleet transfers between routes.  In the longer term Labour’s aspiration is to develop an industrial strategy for rolling stock to support British manufacturing, ending the boom and bust cycle created around ten years ago by incentives to go for new stock in franchise bidding which led to massive overcapacity and premature withdrawal of some relatively modern fleets.

There is a delicate – and not entirely honest – discussion on open access services.  So, open access “has a proven track record in driving competition and better passenger outcomes in countries whose services are run predominantly by public operators” and Hull Trains and Lumo are cited as using “spare network capacity to supplement existing contract operators”. 

It’s certainly the case that the existing open access operators have improved services to towns and cities which would otherwise be poorly served and are generally highly regarded.  Hull to London is a clear example – it would be a very brave decision to kill open access on that route, quite apart from the cost of doing so.  The problem is that, while there is spare capacity on, for example, Spain’s high speed network, capacity on the East Coast Main Line is highly constrained, hence the continued slippage of the route’s enhanced timetable. 

So GBR is to be tasked with developing timetables which maximise capacity, increase reliability and improve services for passengers, while on a number of key routes open access operators will have firm contractual rights, sitting on their access rights like cuckoos in the nest.  Perhaps not entirely convincingly, this is to be resolved by giving the Office of Rail & Road (ORR) an updated framework and guidance for its approval decisions.

Passenger representation is to be brought together in a new, stronger ‘Passenger Standards Authority’, combining Transport Focus, the Rail Ombudsman and the relevant functions of the ORR.  This looks eminently sensible.  Fares simplification remains a key aspiration with “reforms to underlying fares regulations” while making sure to avoid “unintended consequences”.  This is of course not a new challenge; the perennial problem is how to simplify the fares structure while not losing revenue and avoiding howls from passengers whose fares have increased.

There is to be a new approach to industrial relations, with “an integrated industrial relations framework”. The Trade Unions will seek to level up pay and conditions across the different operators  while GBR will seek productivity and contain costs – again, not a new challenge!

Encouragingly, there’s a recognition that “intensive micromanagement of rail delivery bodies by the Department for Transport and Treasury officials is hampering the efficient running of our railways”.  GBR is to be established as an arm’s length body, managed by rail industry professionals.  Going forward, the key issue will be GBR’s effectiveness in delegating accountability for managing costs and revenues at a regional level.  While it’s most unlikely, it would be good to reach a state when, if asked a parliamentary question about the punctuality of train services to Barrow, Ramsgate or wherever, the Secretary of State could simply respond by saying “that’s a matter for Great British Railways” – that’s what happened before privatisation.

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As a footnote, HS2 is the dog that didn’t bark in Labour’s plan. The next government will be faced with the daunting challenge of making economic and operating sense of a rump railway from Old Oak Common to Curzon Street.

chrisjstokes@btopenworld.com

Photo credit: Paul Bigland.

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