Rail Fare Hikes and Nationalisation, Put Simply

By Campaign Agent Nick Jones

With yet another hike in fares placing further misery on Britain’s rail commuters, who were already paying more than anyone else in Europe, the argument over nationalisation has also been ignited once again. This time around, prices went up by 3.4%, adding 3-figure sums to many season tickets, just as wages look set to stagnate for another year. 

But beyond the political rhetoric, what are the concrete arguments in favour of both nationalisation and privatisation? If nearly two-thirds of the country want the entire rail network brought under public ownership (an enormous majority by today’s standards…), then why don’t the government just do it? In this run-down, we’ve broken the debate into three main points of contention: cost (to the passenger and the state), efficiency (in terms of safety and punctuality), and public service, highlighting the main arguments made by each side.

Cost

Nationalisation: Those in favour of nationalisation say their solution would bring fares back to sensible levels. They point to countries like France and Germany, where commuters travel on state-owned trains and pay significantly less per mile than Brits. They also argue that private rail franchises waste money on shareholder dividends, which could be reinvested in the network to improve the service and cut prices. It’s also worth noting that when private operators struggle, taxpayers often end up paying anyway through expensive bail-outs, as happened recently with the East Coast franchise.

Privatisation: On the other hand, privateers assert that the money saved by passengers on trains would simply be made up anyway through taxes, meaning Brits would still cough up, just through different means. They also claim shareholder dividends are a much smaller issue than people claim, and that the costs amount to an investment by customers, since 97p from every £1 is re-spent on rail improvements. Renationalisation could cost billions in the short-term, too, and it is argued that trains are only cheaper on continental Europe due to higher taxpayer subsidies.

Efficiency

Privatisation: It’s a common argument of free-market proponents that deregulation and competition leads to a more efficient service: that’s precisely what Conservative Prime Minister John Major claimed when he privatised the network in 1993, promising a “a better, cheaper and more effective service for the commuter”. Alongside the ideological case for encouraging competition as a means to improving service, fans of privatisation point to the vast improvements in safety and punctuality since the days of Network Rail’s dominance.

Nationalisation: That’s a view contested by state-ownership supporters. They say public-run services have just one goal: providing an effective and punctual service to commuters, with profit to shareholders and companies a non-issue. They also point to the major problems on the rail network in the aftermath of privatisation, not least the Hatfield Rail Crash, which were only improved when government-run Network Rail took over the rail infrastructure in the mid-2000s. 

Trains as a public service

Nationalisation: Labour’s relationship with nationalisation is at least in some part ideological, underpinned by the belief that the state’s responsibility is to provide essential public services, like the NHS, to its citizens. The rail network, some supporters argue, is no different, and should be optimised to encourage use. Trains are also considerably better for the environment than cars, with many arguing the state should plough resources into encouraging people away from relying on cars.

Privatisation: Nationalisation’s critics, though, say it’s unreasonable to ask the general public, many of whom don’t use trains, to subsidise the fares of those who do. Notably, statistics show that those using trains tend to be affluent commuters travelling into cities - particularly London. Asking bus-using and car-driving residents throughout the rest of the country to cough up for the benefit of others is considered unreasonable and unfair.

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