RAIL NATIONALISATION

Meeting held on Wednesday, May 30th

Speaker- Craig Dalzell, Commonwealth Head of Policy & Research

Facilitator -   Pat Smith

Railways - A Private Monopoly

●“Market Forces” don’t work for railways 

●With rare exceptions, you can’t choose one rail operator over another. 

●The only “competition” that exists is during the tendering process. 

The Franchise Model

●The Railways are fragmented and privatised between service operator, rolling stock provider and infrastructure provider  ●Tendering contracts issued every ten years.  ●No incentive for investment. In fact, weaker performance can attract subsidies.

East Coast Rail - Nationalisation 

●2009: National Express East Coast defaults on East Coast Franchise 

●2009-2015 – state-owned company takesover 

●£30m profits; net contribution to public finances 

●94% customer satisfaction – highest ever for long-distance franchises. 

●Record levels of employee engagement – sickness absence down by one-third. 

East Coast Rail - Privatisation

●Franchise privatised again in 2015  ●Taken over by Virgin East Coast – Stagecoach (90%) + Virgin (10% - until 2023  ●Collapsed in 2018 – running at a loss  ●UK Govt lets it off with £2bn in owed premium payments

A Public Scotrail

•2025 contract up – 2020 break clause  •Scotland Act 2016 gave power for a public bidder  •Public-sector bid will have to compete on tender criteria  •If bid wins – 6.5% operating profits can be re-invested – reduce ticket pr raise wages  •Bid could include worker/passenger democracy •Scottish Government indicated they are interested

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But...

•Rolling stock still privatised •infrastructure still UK controlled •£30m lost in tendering process  •limits to how big a change a public operator could make...

Integrated Transport

•Control all aspects of rail system: eliminate non-productive costs and have unified rail system and integrated transport strategy (bus, cycle, rail)  •Re-think of rail part of bigger re-think of transport: modal shift away from roads to sustainable, efficient transport  •Roads 2017-18 budget spending nearly £1bn (£200m more than railways)  •Borders Railway shows potential of rail investment: 40,000 people shift from cars to rail; 27% increase in B&B use; prevent decline in local population

Environmental Case

•Transport 27% of all emissions (up from 20% in 2003) – fallen by just 2% since 1990.  •73% of emissions from road; 1.35% from rail. •22ktCO2e reduced for every 1% of passenger kilometres currently  travelled by car switched to rail.  •Each tonne of freight transported by rail rather than road produces 76% less CO2  •Only one-quarter of rail track is electrified – CO2 of electric trains 20- 35% less.  •Major air pollution problem in cities from congestion.

Economic Case

•Expanding rail network can open up local economies, increase domestic tourism and connect people to employment opportunities  •Levenmouth example: closed in 1969 in Beeching cuts, line still owned by Network Rail, largest town in Scotland without a rail line (38,000 people), Whisky distillery keen to use line for freight cargo (currently 8 HGV’s a day).  •HGV’s create congestion and damage roads, increasing repair budget – one freight train removes 43-77 HGV’s; £2.4bn annual cost of congestion to economy.  •Reduced road repair budget can be reprioritised.

Policy changes can make rail infrastructure investment cheap: land 

Social Case

•30% of people don’t access a car – nearly half of poorest 20%, compared to 18% of richest 20%.  •Investing in motorways rather than rail benefits the better off. •Levenmouth closure example – high deprivation and unemployment since deindustrialisation.  •Rail investment in poor towns a class issue.

This was followed by discussion