Opinion

How Labour can make public ownership of the railways a success

Cat Hobbs

Yesterday
Left Foot Forward

The Passenger Railway Services Bill is only the first step to take back our railways

The Passenger Railway Services Bill was passed in the House of Lords on Wednesday. It’s an important moment in the history of our railways that ends 30 years of privatisation. Credit where it’s due, it’s a significant piece of legislation that sets this current Labour government apart from the Conservatives and even New Labour – at least on transport policy.

With ticket price hikes, crowded trains and increased cancellations, passengers have endured the failures of privatisation over many years. Whilst this bill will not solve the railways’ problems overnight, it does set the direction of travel towards a better deal for the public.

76% of us want the railways back in public hands, making it a hugely popular policy. Labour is going with the tide of public opinion and should feel confident pushing this agenda. We Own It, along with local and national groups, have campaigned hard for many years to reach this point, so we should allow ourselves a moment to mark this victory.

However, it is only a partial victory. If Labour is to make Great British Railways a raging success, there are three things that need to happen.
Bring the trains themselves into public ownership

Firstly, the government must tackle the issue of rolling stock. Under current plans, the trains themselves will stay privately owned in what amounts to an ongoing racket. The biggest profits on the railway go to the rolling stock companies (the ROSCOs) which lease out the trains, and the biggest three have parent companies in low tax jurisdictions.

£2.7 billion has been paid in dividends to their owners in the last decade, according to the RMT. In 2020, the taxpayer underwrote dividends of £950 million. Around 13% of government funding for these companies is extracted in profit. This is hugely wasteful.

The government should look at building rolling stock directly in a publicly owned company so it doesn’t have to rely on these costly middle men. This would chime with Labour’s bold ambition to invest to boost jobs and tackle the climate crisis.
Give passengers the power to elect their representatives

Secondly, the government must give passengers a real, democratic voice in the governance structures of Great British Railways. Louise Haigh has promised that passengers will be at the heart of the new railway, with a “powerful new passenger watchdog, the Passenger Standards Authority, to independently monitor standards and champion improvement in service performance”.

This authority should be a democratically elected body that passengers can vote for, not just another quango. Transport Focus already exists but doesn’t have much clout and dodges the issue of ownership which passengers care about.

Passengers need to feel that public ownership is a reality, not just rhetoric, that their views are taken into account. A West Yorkshire poll by Survation carried out for We Own It showed that 76% want community groups, drivers and local businesses to be represented on a transport board.

If passengers were organised into their own democratically accountable union or watchdog, they might make big demands, like asking for more funding to bring down fares or reopen lines. This is a risk the Government must take if it is serious about a railway which “relentlessly focuses on improving services for passengers”.
Invest in rail to reopen lines and bring down fares

The third issue is funding. Public ownership is a necessary but not sufficient condition for a successful railway. All excellent transport systems have a high level of government support and investment.

The government should invest to reduce fares and reopen lines. The UK has the highest fares in Europe for walk-on tickets on the day, making it hard for the railway to compete with the car. The TUC has found that rail fares have risen by 28% more than wages since 2010, and seasonal commuter tickets as a proportion of average wages are up to 7.5 times higher than in France, Germany, Belgium and Ireland.

The government must reduce fares to deliver on its modal shift targets to reduce emissions from transport.

The previous government set up a “Restoring Your Railway Fund” in 2020 to reopen lines and stations. Campaign for Better Transport called for this, to bring half a million people within walking distance of a train station, and allow an extra 20 million journeys a year. In just four years the fund has been hugely successful, reconnecting communities and enabling millions of train journeys.

The Dartmoor Line was fully restored in nine months and £10 million under budget, and now provides regular services. The restored Northumberland Line will bring passenger trains back between Ashington and Newcastle with six new railway stations from December 2024.

It’s truly shocking that the new Labour government has cancelled this fund, rowing back on the good decision by a Conservative government.

Every £1 invested in rail generates £2.50 of economic benefits, as Labour’s plan for rail itself highlights, so this is short sighted and misguided. It should be a no-brainer to reopen railways for the benefit of communities and the economy. The government cannot use rail to “deliver on the mission to drive growth” without reinstating this fund.
Public ownership is needed in other sectors too

So as the ink dries on the Passenger Railway Services Bill, we’re already turning our attention to the coming battles, on the railways and beyond.

Thames Water is on the brink of collapse. Decades of financial vandalism has left the company on its knees and a piece of our critical infrastructure in peril. Like a huge ponzi scheme, they are now robbing Peter to pay Paul – or to be more specific, hiking customer bills to service £18 billion of debt. In financial terms they are hugely ‘overlevaraged’. Do you know who else was ‘overleveraged’? American banks right before the global financial crash of 2007/8. There is no happy ending to this story unless the Government steps in and uses its special administration legal powers to bring the company back into public ownership.

This is not an abstract ideological discussion. Privatisation has failed and in some sectors we are reaching the point of total collapse. The country is full square behind a programme of public ownership that covers rail, mail, water, energy and more.

The railways bill has shown us a glimpse of the light at the end of the tunnel. Labour must keep the engine running on public ownership and push through to the end – otherwise we could all be left stranded in the dark.

Cat Hobbs is Director of We Own It

Image credit: SavageKieran – Creative Commons