Duncan Simpson: Nationalisation won't get the railways back on track

The truth is that our quasi-privatised rail system actually works rather well. Passenger satisfaction stands at 83 per cent in the latest national survey conducted. Satisfaction outweighed dissatisfaction in 35 of the 38 categories assessed (Wi-Fi on train and stations and the absence of power sockets being the exceptions).

The efficiency of train operating companies (franchises which are responsible for train services on
certain routes of the network) has also improved since they were created. In 2016, the utilisation of the UK
rail network was found to be roughly
60 per cent higher than the EU
average.

The comparison often made
with more integrated, state-heavy European systems is superficial. 
(Some) fares on (some) similar routes are indeed cheaper, but the taxpayer 
has already picked up a lot of the tab: German support for rail runs at
 roughly three times that of the UK, for instance.

But there are two points that need to be made time and again. First, the
rich use rail far more than the poorest, yet the poorest have to subsidise the travel of the richest: the top fifth of households by income travel six times further on trains than those in the bottom 20 per cent. Why should a Buckinghamshire banker’s train
fare be partially covered by those who commute to work in their cars in the North East?

Second, the idea that the
franchise operators rob taxpayers
of billions is a lie and needs to be named as such. The East Coast nationalisation between 2009 and 2015 actually generated no dividends (except in the final year), and the cost to the taxpayer (the difference between Government subsidy to the train operator and premium payments from the franchise to the Department for Transport) 
came to almost £80m over the six year period.

Looking at the larger picture, there has been a gradual decline in the total level of taxpayer support to the train operating companies. The total subsidy per passenger kilometre fell by 43 per cent between 2008 and 2017 to 4.9 pence per kilometre. In other words, those who actually use the train for their commute are paying for it, and taxpayers who rarely or never do step onto a train
are shouldering less of the burden. 
This doesn’t include taxpayer spending on Network Rail, but the trend is 
clear.

In 2015-16, the total dividends paid out by all train operating companies came to £228m. The idea that fares could be cut dramatically if only shareholders 
did not have to be looked after is a fantasy.

Things aren’t perfect from the perspective of both the commuter and the taxpayer. Network Rail still costs taxpayers billions, with a fine recently levied for repeated failure to stop 
the delays that they regularly cause. 
And their corporate governance
and debt pile is increasingly
precarious.

Commuters are also right to be
angry at some train operating companies for providing less service with 
more of their wages, though as highlighted above, the perception (and reportage) often doesn’t match the reality.

Overall, however, franchising
has been a good thing. The number of passenger journeys is up over 130 per cent since the end of British Rail 
and fare rises have kept pace 
with the increased demand for rail 
travel.

Re-nationalisation would remove
the commercial incentive to grow volumes and revenues on the railway
 and, over time, lead to less use of 
them. This would be a poor deal for taxpayers.

Duncan Simpson is a policy analyst at the TaxPayers’ Alliance and author of Nationalisation: The Real Rail Rip-Off that was published this week.