Chairman Pip's Railway Thoughts

Panem et Circenses

Posted in America, Business, Customer service, Europe, Great Britain, Ireland, Politics by Chairman Pip on 24 October 2012

“Give us bread and circuses” is the cry, or so it seems. In last week’s Sunday Express was a poll suggesting a large majority of the public now want to see the railways re-nationalised, something that must be music to the ears of Spud and his cronies. Not only this, but it also seems that the Labour Party is considering making this official policy for the next election. So this of course should be enough to warn people off it anyway. But there are lots of things that I do think people should consider when it comes to the idea of nationalisation that it feels like aren’t out there. Like first of all the fact that there are European regulations on the liberalisation of rail transport to consider. Were the railways jusr simply nationalised, how would that impact on open access operators? But that’s by the wayside.

One of the major moans that the unions have is the fact that the franchise system in the UK allows what they describe as the “nationalised railway companies” in other European companies to procure UK franchises, while rail operations are “closed” to British operators. First of all, I’m sure Deutsche Bahn would object to being called a nationalised railway company, as it isn’t. It is an Aktiengesellschaft, which in Germany is the general equivilent of a plc, a company whose shares can be publically traded on a stock market. So even though the German government owns 100% of the shares, it can at any time sell any amount of the company’s shares. But also is the claim that operators in other countries have monopolies over their networks, when again that isn’t true. It is certainly the case in some countries that operations across all sectors are run by nationalised organs, with the one that I most often think of now being Iarnród Éireann. IÉ is a subsidiary whose shares are 100% owned by a statutory corporation, and is thus a truly nationalised operator. And those of you that are regular readers will know how I feel about the way IÉ runs its operations. Having no competition means that they are essentially free to do what they want, and if it means they have no desire to run a route any longer, they can simply reduce the service level to a point where no one wants to use the train any more, and then claim that the service is unporfitable and withdraw it. Which is what British Rail did with any number of significant routes, not least of which was the eventual closure of the line into London Broad Street (which, I’m sure you have all noticed, has now reopened).

While the big and flashy main line operations, especially the high speed networks, tend to be run by those companies that were formed out of the old nationalised railways, the local operations, the ones that we would think of as commuter, or suburban, or rural, are controlled locally, by French départements or German länder, who tender out the operation of services commercially, in much the same way as TfL and Merseytravel do. And there is the interesting thing. Because both London Overground and Merseyrail are, to all intents and purposes, nationalised rail companies, as all the important decisions in regards to management and investment are taken by the PTEs, with the actual operation of services and revenue collection contracted out to private companies. As a consequence that the PTE takes the risk, the PTE keeps the bulk of the revenue. Similar to this are virtually all of the light rail operations around the country, with only Blackpool and Tramlink owned and operated by the municipal body. This method of doing things has been adopted by some of the newer commuter rail operators in the United States – both the Coaster and Sprinter operations of the North County Transit District in San Diego are run this way, with the actual operations contracted out. So, there is the possibility, as suggested in the newspaper article that accompanied the poll, that people might be prepared to accept this type of arrangement, in ensuring that a public body retains control, but contracts out its operations. Nationalisation? No. Concession? Maybe.


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