Should the rail industry be renationalised?
4 min read
19 August 2014
The TUC and Institute of Economic Affairs (IEA) are convinced they have come up with alternatives to the potential hike in rail fares.
In January 2015, rail fares could go up by an average of 3.5 per cent.
But when taking into account that particular routes have become more congested, Dr Richard Wellings, head of transport at the IEA, explains that “it is right that the heavy demand is reflected in the price.”
One is inclined to degree, however, with rail fares increasing by 24.9 per cent over the current Parliament and rising twice as fast as wages, commuters are already feeling the squeeze from high living costs.
Furthermore, a Passenger Focus survey suggests that only 45 per cent of passengers believe they are provided value for money.
The solution? “The government should adopt measures to reform the rail industry,” states Wellings. Indeed, removing “expensive bureaucracy” might reduce the financial burden that could likely be placed on Brits. “Scrapping HS2 as well as other uneconomic rail investment schemes would free up large amounts of taxpayers’ money and further reduce the cost to commuters.”
It is the TUC’s belief, however, that the UK would benefit from a publicly-owned railway. Their case in point is the East Coast Main Line, whose “successful model” over the last few years shows that there is a “better way” to run the UK railways. According to the TSSA, the line has been the cheapest franchise “to run for the past five years and has produced the greatest return to taxpayers.”
And, in a letter to the Observer, 31 MPs stated that rail fares “were contributing to a cost-of-living crisis”, and that things needed to change, despite Conservative estimates that renationalisation the railways would add “at least £10bn” to the UK deficit.
“A commitment to extend East Coast Main Line’s model to the rest of the rail network, as existing contracts come to an end, would mean that hundreds of millions currently lost in private profit would be available to fully fund a bold offer on rail fares,” the MPs wrote.
This would mean that “more money could be retained for higher investment in safety and better trains, as well as lower ticket prices,” a spokesperson told the BBC. A YouGov poll in 2013 shows that there is widespread public support of the idea, with 66 per cent wanting public ownership of the railways all across the country.
Mick Whelan, general secretary of ASLEF, the train drivers’ union, believes that “privatisation of the railways – a wheeze by John Major which even Margaret Thatcher, the arch advocate of privatisation, described as ‘a privatisation too far’ – has left us with a fragmented system which is all about making a private profit at public expense. We believe in a much better business model for a modern, 21st century railway in Britain. We believe the railway is a public service which should be publicly-owned, publicly-accountable, and publicly-run.”
However, according to Martin Griffiths, chairman of the Rail Delivery Group: “The annual increase has nothing to do with who operates services and everything to do with government policy.
“Successive governments had instructed operators to increase the average price of commuter fares in real terms every year from 2004 to last year.
“This has meant passengers, rather than taxpayers, have been paying a greater share of the cost of running the railway.”
Are you in favour of a renationalised rail industry? Let us know your thoughts!