John Penrose: Is the traditional Tory belief in free enterprise leaving the station?

7 Jul

John Penrose is Chair of the Conservative Policy Forum, and is MP for Weston-super-Mare.

As flesh is put on the bones of the recent Plan for Rail, it will send a clear signal about whether the Conservatives are still the party of free enterprise. Rail passengers need choice and an entrepreneurial spirit, not a return to a state monopoly.

The new Plan for Rail starts really well, by invoking the buccaneering, entrepreneurial early days of Britain’s railways when the ‘iron web’, invented in this country in 1825, spread across the earth, transforming everything and everywhere it touched.

Huge amounts of private investment, ultra-fast innovation and creativity on everything from locomotive designs and signalling to passenger comfort and fares were driven mercilessly by daily competition and passenger choice.  This forced train companies to raise their game every time their rivals came up with something new. Fortunes were made and lost but, crucially, no matter which firms succeeded or fell away, passengers always won. So that starting-point matters, to show the direction and ambition of the new Plan.

And yet, and yet…… there’s devil in the detail, because the Plan is a pretty high-level document that hasn’t nailed down all that passenger-powered choice and entrepreneurial va-va-voom quite yet. There are no guarantees – and it could still come off the rails.

Why? Well, because there’s a more recent piece of railway history that’s much less impressive than the inspiring vision of those buccaneering early days. British Rail was an awful, clodhopping nationalised monopoly, with dreadful staff morale, unreliable services and unhappy passengers. It stank of failure by presiding over long-term declines in rail travel, and no-one shed many tears when it died.

Even then, after an all-too-brief period of post-privatisation creativity and growth, the entrepreneurial oxygen that had barely started to reach Britain’s railways was choked off all over again by Franchising, which swapped the awful state-run monopoly of British Rail with almost-as-awful privately-run ones that firms had bought in auctions instead.

But a monopoly is still a monopoly and, if passengers haven’t got any choice of which firms’ train to catch, everything suffers. When the timetables melted down, or trains were delayed or cancelled, we still couldn’t switch to a different firm’s service that was still running instead.

So there are plenty of bad examples in Britain’s railway history, as well as the inspiring one the new Plan is highlighting. Once the details emerge, which of them will it be?

The problem is this. At the heart of our railways is the track network and, rather obviously, train firms need it to run their services. So whoever controls the tracks controls the market; it’s a natural monopoly that, if we’re not careful, can charge rail firms and their passengers rip-off prices, or underinvest in the network so it doesn’t work particularly well or reliably, because rail firms and their passengers can’t take their business elsewhere.

So the new Plan has to inject choice and competition to stop this happening. And that means giving passengers a choice of different train companies on their local route, so if they don’t like one, a different firm’s train will be along in a few minutes instead. It puts passengers in charge, because neither the rail firms nor the track network can take them for granted when things go wrong.

Where customers already have choice, in rail freight and a few passenger services dotted around the network, the results are pretty good. The services are far less brittle, for a start, because no single entity can dictate the entire timetable. Fares tend to rise more slowly. There are fewer delays and less overcrowding. Rail firms can innovate with new routes. If one firm is crippled by strikes, you and I can still get to work on another firm’s trains.

There are examples in other types of transport too, like air travel; Heathrow or Gatwick let you fly to Paris or Rome on a choice of different airlines, not just one. Why not do the same for railways?

The Plan For Rail’s new ‘concessions’ model could push us in the right direction, or away from it. If there are only a few, big concessions while the newly-created Great British Railways controls the network, sets the times trains run, and determines the fares customers pay, then we will just be repeating the mistakes of the past by recreating the same old rail monopolies with a different label. The fat controllers in charge of the track and the rail firms will know they don’t need to worry about passengers, because we won’t have any choice.

But if there are lots of smaller concessions, and it’s easy for non-concession rail firms to try out new routes, types of service and levels of fares that compete against them without having to get permission from politicians or bureaucrats first, then passengers could be in for a bonanza.

Ultimately, we are either a political party that believes in free enterprise and which puts customers and passengers ahead of fat-cat bosses and bureaucrats, or we aren’t. The new Plan for Rail is a moment of truth; will we practice what we preach, or go for a corporatist, bureaucratic, monopolistic fudge instead? I’m hopeful, but only time will tell.

Adrian Lee: Delays, filth,Traveller’s Fare, Savile, Gary Glitter – and a failed service. Beware of Ministers re-inventing British Rail.

7 Jun

Adrian Lee is a Solicitor-Advocate in London, specialising in criminal defence, and was twice a Conservative Parliamentary Candidate.

With the recent Transport Secretary’s announcement of the creation of a state-run entity called “Great British Railways”, my mind was cast back to the time of railway privatisation. In 1993, I was one of the four National Vice-Chairmen of the Young Conservatives. One evening we met the newly-ennobled Lord Tebbit for an informal drink in a House of Lords to update him on the current health of the Young Conservatives.

Whilst he was perfectly polite, he was nonetheless pre-occupied with the detail of the Railways Bill then passing through Parliament. He was deeply concerned, believing the Bill to be so poorly drafted that it could only lead to long-term chaos, and would ultimately discredit privatisation in principle.

The legislation facilitated the break-up of British Rail into 100 companies, with contracts having to be approved by two separate quangos, the Office of Rail and Road and the Office of Passenger Rail Franchising. With the greatest reluctance, Tebbit stated that he would have to vote for this flawed Bill – because he thought that it was essential to harness private capital and management skills, and end the disaster of the nationalised British Rail.

British Rail was indeed a disaster. In its 49 year existence, all taxpayers (many of whom never used trains) were forced to pay the entire cost of the network. Because no private investment was allowed, it was continually susceptible to spending cuts. The entrepreneurial spirit associated with the pre-war privately-owned railways was replaced by disinterested state bureaucracy.

After 1948, the railways were seen as a “public service” rather than a business, and so customer service deteriorated rapidly. Railway employees had their jobs guaranteed, so they had no reason to inconvenience themselves for the mere commuter. Timetables bore little resemblance to reality, and thousands of trains were late or cancelled every year. Most of the rolling stock was ancient, Waiting Rooms on stations were filthy (frequently vandalised and stinking of urine). And the food served in Traveller’s Fare buffets, particularly the notorious British Rail sandwich, became a national joke on variety shows and sitcoms.

No wonder that British Rail never reached profitability: by 1961, it was losing £300,000 a day. A year later, British Railways recorded an annual loss of £104 million (£2.24 billion in 2019 terms). All of this occurred despite the fact that closures of railway lines started in the late 1940s, and already 3,000 miles of track had been left abandoned.

With public money metaphorically seeping through gaps between the railway sleepers, the Macmillan government had ordered a major organisational shake-up. A new structure was put in place and the first Chairman of the new British Railways Board, Richard Beeching, was appointed.

Beeching thought that he had the solution: even deeper cuts and closures. Being a nationalised industry, and so traditionally unconcerned with such commercial concerns as ticket sales and customer demand, no data existed to show which lines were profitable or essential.

A major traffic census therefore had to be undertaken, but Beeching didn’t waste time carrying it out methodically – and so the entire fate of the railway network came down to a survey that took place over the course of one week during April 1961. Stories abound of researchers turning up at empty railway stations in the mid-morning and marking them off for closure, whilst being oblivious to the fact that the same stations were heavily used in peak hours. The resulting report, The Reshaping of British Railways, was published in 1963 and recommended the closure of a third of all passenger services.

Not all of the suggested cuts were implemented – some were reprieved by dodgy political lobbying in marginal constituencies. However, conversely, many essential services bit the dust, leaving several major towns without rail transport. The whole effort was both rushed and ham-fisted. Labour, in Opposition until 1964, opposed Beeching’s Report, but implemented it in full when they returned to power. The cuts made a saving of around £30 million a year, but overall loses continued to run at over £100 million.

By the 1970s, British Rail was as much controlled by the trades unions as by the civil service. Whenever a modernisation was suggested, it had to be thrashed out first with belligerent union bosses for fear of strike action. The unions loved the nationalised system as it was so much easier holding politicians to ransom than private employers. When commuters cannot get to work for lack of trains, they usually blame the body running the railways. When the state owns the railway, the government is always to blame. Politicians hate unpopularity and, on this basis, pay rises are granted frequently. This continues to be the case for the one major British railway that was never privatised: the London Underground. Few will forget the late Bob Crow in a hurry.

In the final years leading up to privatisation, British Rail turned to public relations to paper over the cracks. First, they employed Jimmy Saville as their salesman heralding “The Age of the Train”. Then, after they dropped Saville when sexual rumours first started circulating, they turned to Gary Glitter to promote the Young Person’s Railcard. The last notable advertising slogan of British Rail was the almost desperate “We’re getting there”.

Privatisation led to the rejuvenation of Britain’s railway network. New rolling stock provided greater passenger comfort and safety, as well as faster services. There is now a better choice in food outlets in stations. Cancellations and delays have been slashed, and journey numbers have risen from 761 million in 1995 to 1.75 billion in 2019.

According to the rail regulator, 59 per cent of current service delays result from the actions of Network Rail, the section that continues to be nationalised, not the private contractors.  Lew Adams, the former General Secretary of ASLEF who went to work for Virgin Rail Group after privatisation, said in 2004: “All the time it was in the public sector, all we got was cuts, cuts, cuts. And today there are more members in the trades union, more train drivers and more trains running. The reality is that it worked, we’ve protected jobs and we got more jobs.”

So what went wrong? Under the 1993 Act, private companies lacked the competitive freedom enjoyed by businesses in other sectors. The state retained control over the tracks and stations, dictated timetables, maintained fare levels and prevented competition between different contractors on the same lines.

Unlike other countries such as Japan, British train operators were forced to operate with one arm tied behind their backs by the government. In 2009, a group called the “Campaign to Bring Back British Rail” was established, and the myth was promoted that British train fare levels were significantly higher than on the continent. The Left seized upon this – believing that the railways gave them the best opportunity to reverse a major privatisation. Sadly, very few Conservatives or right-leaning think tanks fought back against this campaign with the facts.

We have yet to hear the full details of the government’s proposals for the railways, but one thing should be clear from past experience: nationalisation does not work. For over forty years, Conservatives struggled trying to manage Labour’s statist model of operation. It was not ideology that drove the Major Government to railway privatisation, but common sense. It is imperative that we don’t stray accidentally back down the same intellectual cul-de-sac of thinking that government can run business.

Henry Hill: ‘Great British Railways’ must be far more than an English franchise reorganisation

20 May

One hallmark of the Government’s approach to the constitutional struggle to hold the United Kingdom together has been a recognition that pro-Union policy is not simply a matter for a single department: it needs to run throughout the business of the State.

This includes transport, with the first ‘Union Connectivity Review’ being published earlier this year. It highlighted different ways in which Westminster could invest in Britain’s strategic transport network to better-integrate the nation.

And it that light it is intriguing that Ministers have decided to take a step back towards a national rail network with the launch of ‘Great British Railways’ (GBR).

On the face of it, this is primarily a reorganisation of the franchise system in England – control over passenger franchises in Scotland and Wales is, alas, devolved. Most of the coverage has focused on this.

But the move still opens up some possibilities which Michael Gove and the rest of the Government’s Union strategy team should consider.

For example, GBR will apparently inherit from Network Rail the duty to “run and plan the network, as well as providing online tickets, information and compensation for passengers nationwide.” This opens up the possibility of a national ticketing app, with the Great British Railways branding.

Then there’s the question of livery. At present, train operators get to decorate their rolling stock in their own colours. But there’s no particular reason this should be. It’s not as if they need the advertising, nor do their brands carry the historic and emotional heft that the famous schemes of the genuinely private railways did. And again, there may be scope to take back control of this. The FT reports:

“The reforms will still allow private companies to run services but they will instead work under a more prescriptive management contract, similar to the system in place on the London Overground.”

The Overground operates under its own livery. Why could GBR franchises not do the same? There is surely a case at least for putting the cross-border inter-city services in national colours (perhaps an updated take on Network SouthEast), to match the saltires splashed all over Scotrail trains. And if Northern are still running trains to Glasgow, a new paint job would be a great moment for the Government to stump up for good rolling stock.

Whatever its failings – and they were multitude – branding was one thing British Rail took seriously and was remarkably good at. We need more national institutions to give a British shape to life, and GBR should be one of them.

Beattie acknowledges how Ulster’s separate unionist parties weaken the Union

Last week Doug Beattie, the newly-installed leader of the Ulster Unionist Party, hit out at Boris Johnson. He branded the Prime Minister an ‘English nationalist’, who was prepared to ignore Northern Ireland as the Conservatives have no electoral stake in the Province.

Now the charge of ‘English nationalism’ is a tedious, largely Remainer trope that I have dealt with elsewhere. Suffice to say, an actual English nationalist would not be passing controversial legislation to enable Westminster to spend even more money on Northern Ireland, as this Government is.

But Beattie’s second charge is more interesting. Here are his exact words: “He’s concerned with the English vote. There’s no vote in Northern Ireland for him or his Conservative party so he doesn’t care, he’s hands off.”

It isn’t hard to believe that there may be some truth to the suggestion that Johnson would be less cavalier in his treatment of Ulster if it returned even a handful of Government MPs. (Something that ought to give die-hard advocates of splitting off the Scottish Conservatives pause for thought.) But it invites an obvious question: what is to be done about it?

Unfortunately, there is little sign that Beattie actually intends to do anything differently, in this regard at least, to the Democratic Unionists he hopes to supplant. Standing on the sidelines of national politics and shouting is just what capital-U Unionism does now. The wholly superior vision of the Campaign for Equal Citizenship is long abandoned.

Given the furious backlash over the Protocol, as well as the ill-managed disappointment that was the two parties’ 2010 link-up (under the awful acronym ‘UCUNF’), one can understand why Northern Irish politicians shy away from the Tories. But that’s the insidious appeal of nationalism: it will always be easier, in the short term, to spurn complicating national attachments in favour of tacking to local winds and making off with as much cash as you can lay your hands on. But such an approach offers a bleak long-term outlook for the UK.

Johnson and the railways. Is he ready for pay as you go – and the end of the season ticket? And are passengers?

21 Apr

Boris Johnson loves infrastructure, and is impatient about the unconscionable delays and exorbitant costs which improvements to it generally entail.

In his speech last summer at Dudley, delivered at a lectern bearing the upward-slanting words “BUILD, BUILD, BUILD”, the Prime Minister declared that as the pandemic recedes, we must “move with levels of energy and speed that we have not needed for generations” in order to bring about an “infrastructure revolution”.

An early test of this boosterism will come on the railways. In November, ConservativeHome revealed that, as soon as the pandemic took hold, Grant Shapps set up a committee on rail reform to work out how to seize the once-in-a-lifetime opportunity presented by the emergency.

One member of that committee, Keith Williams, a former Chief Executive of British Airways, has since September 2018 chaired the Williams Rail Review, set up to make recommendations for reforming the entire structure of the industry, with the interests of passengers and taxpayers put first.

The original announcement said:

“The review’s findings and recommendations will be published in a government White Paper in autumn 2019. Reform will begin in 2020.”

Johnson, who became Prime Minister in July 2019, was that autumn contending to get Brexit done, and has for most of the last year had his attention monopolised by the pandemic.

But he is reported recently to have spent time mastering and approving the Government’s response to the Williams Review, which is likely to be published in May, after the local elections.

The whole situation has changed, and has become more favourable to sweeping reform. The pandemic hastened the end of the franchising system, under which companies bid against each other to run particular lines.

He who pays the piper calls the tune. Since March last year, as Tony Lodge reminded us on this site yesterday, the railways have only been kept running with public money.

The rail unions can no longer hope, in their defence of outmoded working practices, to divide and rule among the different rail companies.

They instead face a single opponent, the Treasury, which is not inclined to regard the preservation of inefficiencies as a justifiable use of public funds.

Before the pandemic, the unions could threaten to bring trains full of commuters to a halt, with immediate loss of revenue to the operating company.

Now that what little fare revenue there is goes to the Treasury, which in turn pays the operating companies to keep a reduced service running, the balance of advantage has changed.

To stop almost empty trains is an empty threat. The Rail, Maritime and Transport Union has this week been sabre-rattling, but the more important argument is within the Government itself.

Rishi Sunak, as Chancellor, is known to have fretted at spending billions over the last year to ship “fresh air” round the country.

The Williams Review is likely to propose the creation of an arm’s-length body to run the railways: in layman’s language, a Fat Controller.

The Treasury will require assurances that the Fat Controller, and the Fat Controller’s dependents, do not gorge themselves on endless taxpayer-funded subsidies.

The most delicate task for the Department for Transport is to keep the Treasury on side. For there can be no denying that under the new system, where the train companies are paid to provide services and the fare revenue goes to the Government, it is the latter that takes the risk.

Nobody knows how passenger numbers will recover after the pandemic. How many of us will continue to work from home, at least for part of the week?

A big determining factor will be the cost of getting to the office. The present fare structure, as anyone who uses the railway knows, is a complete mess, incorporating many ludicrous but long-standing anomalies, so that, for example, when setting out to travel from A to D, it can be cheaper to book three different tickets, from A to B, B to C, and C to D.

Will the Government seize the chance to sweep these anomalies away? A future beckons in which, when we want to go somewhere, we just swipe a card and step on the next train, in the justified belief that we have obtained the cheapest fare we could have got under any more cumbersome system.

This already happens in London. In time it will probably happen throughout the network. But the cost of introducing it will be considerable, losers from the reform will be angry they can no longer get the cheap fares currently available to passengers who book in advance on non-peak services, and from the Treasury’s point of view there will be an acute danger of missing out on the season-ticket revenue from commuters, which before the pandemic was such a significant element in the financing of the railway.

Those commuters had nowhere else to go: they simply had to get to the office, and the train was the only way. The pandemic has revealed to them and their employers that they could instead remain at home.

Yet it has recently been reported that these long-suffering commuters will soon be offered carnets of tickets, which if used will mean that to go to the office for only three days a week will end up costing them more than if they went there for five days a week with a season ticket.

That sounds like a pretty effective way to deter people from travelling by train at all if they can possibly avoid it.

The other side of the equation is costs. The pay of train drivers is very high, approaching that of airline pilots, and far above what bus or lorry drivers get.

And the training of train drivers is extraordinarily expensive. It has not been transferred to computer simulators, as much of it could be. Why should the Treasury, and indeed the taxpayer, fund these outmoded methods?

I would like, in passing, to express my admiration for the job ASLEF, the train drivers’ union, has done on  behalf of its members. But conservatism has its limits.

British Rail, which ran the system until privatisation in 1994-97, had a certain charm. It was dedicated, like the other nationalised industries, to the preservation of the past, and especially to the preservation of jobs.

As a young passenger of conservative disposition in the 1970s, I could not help hoping that BR would succeed.

But BR failed. It possessed none of the freedoms of the railway companies which had preceded it, so it could not modernise itself.

Extensive modernisation is just now required. The last thing the DftT, or the Treasury, wants to do is to reinvent BR.

The Government wants to preserve the vitality of the private sector, while also taking charge, and running the railways in the public interest.

Here, one may say, is the paradox of Johnsonism. During his short prime ministership, the railways have thanks to the pandemic been nationalised, but he aspires also to preserve for them the rude freedom of the private sector.

What an awkward circle for Williams to square.

“We need a Kate Bingham,” as one railwayperson exclaimed during the preparation of this article.

Darren Caplan: Now is the right time to speed up railway projects

16 Jul

Darren Caplan is Chief Executive of the Railway Industry Association (RIA). This is a sponsored post by the RIA.

While both Boris Johnson and Rishi Sunak have recently made speeches showing a clear appetite for Government action to spur economic recovery, many in the rail industry would like to have seen a greater mention of new rail schemes.

With the Government promoting “build, build, build” and the need for an “infrastructure revolution” to reboot the economy as we come out of Coronavirus lockdown, accelerating rail projects can go a long way to help it deliver. What’s more, many of these schemes have been budgeted for, so the ask is not necessarily for more money.

The Prime Minister highlighted in his end-of-June speech that “a prosperous and United Kingdom must be a connected Kingdom” [through]… accelerating projects from South West to the North East from Wales, to Scotland, to Northern Ireland”. Yet only one rail scheme – addressing the bottleneck at Manchester Castlefield Corridor – was mentioned, welcome though that scheme is.

With UK rail supporting some 600,000 jobs and more than £36bn GVA in the economy, this really should be a key industry for the Government to target. What is more, despite the currently reduced reduction in train ridership levels, the long-term future for rail over the next 30 years is positive. And it is a sector which contributes to the Government’s three “Gs”: growth, geography and green.

On growth, rail projects generate significant investment, with every £1 spent on the rail network, £2.20 is generated in the wider economy. On geography, rail projects support investment in all regions and nations of the UK, including areas of social deprivation where investment and regeneration is urgently needed – supporting the Government’s “levelling up” agenda. And rail investment is green, with rail travel an acknowledged low carbon form of transport.

So that is why the Railway Industry Association (RIA), the trade body for more than 300 rail suppliers, and our members, calls for the Government to be SURE (“Speed Up Rail Enhancements”). We are not seeking money; rather, we are simply urging the Government to work with the sector to fast-track schemes on its existing projects list.

This list, known as the Rail Network Enhancements Pipeline, contains 58 projects including schemes like the Transpennine Route Upgrade, East West Rail, and Western Rail Access to Heathrow. All of the projects are directly in the power of Government to accelerate. The railway industry, for our part, is ready and willing to work with the Government to deliver these projects cost-effectively and efficiently, and to speed up delivery times.

As well as supporting jobs and GVA in the economy, these schemes deliver a real boost to the UK’s connectivity, affording other sectors the ability to function – witness how the railways remained opened during the darkest days of lockdown to enable key workers to get to their workplaces.

While rail passenger numbers may have dropped over the Coronavirus outbreak, past trends following crises show that transport passenger number are likely to return to and build on pre-crisis levels in the coming years. The question now is whether or not we prepare our transport modes for that time and deliver capacity improvements, at a time when the Government is looking for job and GVA creating sectors to help reboot the economy.

From a rail perspective, we urge the Government to work with us to Speed Up Rail Enhancements, help deliver that transport infrastructure revolution, and ultimately enable the UK’s railways to play their part in delivering a green economic recovery for all of the UK.

You can find out more about the SURE campaign here.