Re-nationalizing The British Railways
The British Railways has a long history dating back to the 1800s, when the first steam trains began operation. Although the railway system and network was largely a private sector development, the governments hand in the development and sanitization of the system did more to bring the railways to its current state (Prosser 215). The privatization of the British Rail began in the 1990s. The process was a complex affair that met resistance from different divides including unions, opposition parties in parliament and the general public (Leyland 435). The period of privatization of British rail was disastrous, bringing with it accidents, losses and poor service standards, all of which have instigated debate on the wisdom of privatization of the railway system, especially with the current fragmentation of the system (Leyland 435). The result of this has been calls for the renationalization of the railway system, giving control back to the public and ending the current fragmentation and franchised system that is the British Rail. Both the public and the government have much to gain, making the renationalization of the British Rail system not only a pragmatic, but also a utilitarian policy.
Britain’s acquisition of the railway system was largely an effort of the private sector through private companies and investors, who built about 6,000 miles of the approximately 11,000 miles of the railway network (Leyland 435; Prosser 215). Privatization of the railway system became complete in 1997 following the privatization of Rail track through a public floatation (Prosser 216). Before this, however, the rail system had been forced into an amalgamation of the “Big Four.” The process of privatization was systematic, and involved the fragmentation of the system. The fragmentation gave freight and parcels to the private sector, while passenger services were franchised to a number of private operators (Prosser 216). The infrastructure on the other hand (inclusive of tracks and signaling), went under Rail track, a new authority formed for the sole purpose of maintaining the infrastructure. However, as aforementioned, the authority was also privatized in 1997, completing the rail privatization process.
The complexity of the privatization process is one of the main reasons that there should be rethinking of the renationalizing the railway system. A few years after the privatization of the system, there were two major collisions blamed on faulty signals, where a total of 38 people perished (Martin 8). Shortly after the two collisions, there was a third crash, where four people died, a crash caused by a broken rail. This crash (in 2000) brought the entire railway system to a halt (Martin 8). The result of the crash was the imposition of speed restrictions on train operators, a fact pointing to lack of confidence by Rail track on the state of the infrastructure (Martin 8).
Apart from the lack of confidence in the infrastructure, the accidents point to the failure of the privatization process, which were complex and created many redundancies in the system. The privatization process had broken an integrated system into more than 100 different business entities only held together by contracts (Martin 8). The disintegration included Railtrack, more than 20 train operating companies, track renewal companies, track maintenance companies, rolling stock leasing companies, among others, which have increased the complexity of the railway system.
Part of the purpose for privatization was to increase profitability of the system. To encourage the privatization, the government agreed on subsidizing the companies in the management of the system, with the hope that the subsidies would help the companies break even, and sweeten the privatization deal. However, the subsidies have been on the increase, much more than the government anticipated, in part due to failure of the system, and has been increasing over the period that the system has been under private operation (Martin 8). Thus, although privatization has brought some improvements including the gradual replacement of the old rolling stock by new passenger trains, the process of replacement was already underway before privatization. This was happening even as the rail system received much lesser subsidies from the government in comparison with the amounts received by the privatized entities (Martin 9).
Despite the subsidies to the privatized Rail system, it is sad that passenger pay much more in comparison with other countries. Thus, the government in their operations does not only subsidize the private companies, they make profits, which they do not pass down to the consumers (Northern Echo n.p.). The policy on renationalization of the system is therefore pragmatic in as much as the welfare of the passengers is concerned. While privatization had promised efficiency and cost-friendliness of the railway system, since the process began in 1993, the cost of railway has been on the increase for passengers. According to BBC, there has been a 33 percent increase in the cost of train services; despite the heavy subsidies provide by the government to cushion the private companies against losses and operational costs.
Perhaps the more reason for renationalization of the system is the success of a publicly owned company, Directly Operated Railways, which operates in the East Coast mainline. Having picked up after the privatization spree, the company has managed to be successful in its operations despite getting fewer subsidies than its privately owned rail franchise operators (BBC n.p.). The ability to bid for a franchise by public companies from other countries, while British public companies are forbidden from the bidding process more than ever rationalizes the pragmatism of nationalization of the railway system. Royal Train, run by Germany’s Deutsche Bahn, is an example of a foreign public company operating in Britain. It is sensible, therefore, to renationalize the British railway system, if only to be fair to the taxpayers and ensure the efficiency and profitability of the system.
Opponents of renationalization have pointed out that the failure of the system after the nationalization of the railway system and the establishment of the Big Four was a result of political meddling. The argument here is that nationalization of the system will only make things worse from political bickering and meddling. Such meddling will be a sure cause of failure of the system, as it was before privatization (BBC n.p.).
Opponents of nationalization additionally point out that since privatization; there has been an increase in passenger kilometers. These opponents have argued that in the era of privatization in the 1870s to the start of the First World War, the number of journeys rose to 1.5 billion (BBC n.p.). With the nationalization of the rail system under the management of the Big Four, the journeys fell to 1.2 billion between 1923 and 1947. Under British Rail, a public owned company, the journeys fell further to 1 billion in 1948 and 750 million by 1995 (BBC n.p.). Since privatization in 1995, however, the journeys have spiked to 1.5 billion, a number not seen in a century. The argument here is that indeed, privatization has improved service delivery, leading to the increase in the number of journeys.
Further, privatization proponents see the operation of different franchising entities as a good thing for consumers as it increases competition under the open market system. The proponents additionally argue that claims of wastages in operations are unwarranted and inaccurate since the figure includes money paid to rolling stock companies, a feature present even during the era of British Rail, the public owned entity. Moreover, these proponents argue that interference between franchisees is good as it encourages improvement in performance of Network Rail and train operators.
Renationalization of the railway system presents an opportunity to bring sanity, efficiency and safety to the railway system. Although the private sector has done much in the laying and construction of the railway network in Britain, the problems it has so far created including accidents, inefficiencies and rising costs to the taxpayers in subsidies and rail service fairs are too much a risk for the continued privatization. Moreover, it is only sensible to renationalize the system given the successful operation of a publicly owned company, Directly Operated Railways, with fewer subsidies. It is impossible to rationalize more subsidies with more accidents, inefficacies, less profits and revenue to the government, as well as higher taxes and railway costs to the taxpayer. Renationalization has the potential to reduce these costs, increase efficiency and bring sanity to the rail system, in addition to leveling the playing field for both domestic publicly owned and foreign companies.
“‘Rail Reform Not Ruled Out’.” Northern Echo: 9. May 05 2014. ProQuest. Web. 7 May 2016
BBC. “Why not…nationalize the railways?” BBC, 2013. Web. 7 May 2016
Leyland, Peter. “Back to Government? Reregulating British Railways.” Indiana Journal of Global Legal Studies 12.2 (2005): 435-70. ProQuest. Web. 7 May 2016
Martin, Brendan. “Derailed: The UK’s Disastrous Experience with Railway Privatization.” Multinational Monitor 23.1 (2002): 8-12+. ProQuest. Web. 7 May 2016