Posted 28th September 2011 | 14 Comments

Railway renationalisation 'would save £1 billion a year'

British Rail was privatised between 1994 and 1997

British Rail was privatised between 1994 and 1997

A NEW union-sponsored report prepared by a transport pressure group has concluded that renationalising the railways would save at least £1 billion a year -- about the level of savings set out in the McNulty/DfT 'value for money' study published in May.

The findings have been revealed by the Transport for Quality of Life think tank, founded ten years ago.

2,000 people were surveyed as part of the TQL study, which was commissioned by the four main rail unions – ASLEF, RMT, TSSA and UNITE.

Of those surveyed, 71 per cent believed that franchised train operators were more concerned with making profits than providing the best possible service, with 'affordable' fares, while only 19 per cent believed that railway operators should stay in the private sector.

One consistent opponent of rail privatisation, RMT general secretary Bob Crow, has welcomed the report's findings.

They contradict the conclusions of Sir Roy McNulty in his research for the Department for Transport, in which he had concluded that renationalisation was 'unlikely to lead to a reduction in costs', and went on to blame the government 'to some extent' for the failure to achieve economies following rail privatisation.

In the wake of the new report from TQL, Mr Crow countered: "This research nails the lie of the McNulty review that the answer to the inefficiencies and over-charging on Britain's railways is more cuts, more rip-off opportunities for big business and higher fares.

"The solution is simple – stop the greed, fragmentation and profiteering of privatisation, and we can save more than a billion pounds that could be invested back into the system. If Labour fail to grasp the popularity and economic common sense of renationalising the railways, they will be throwing away the political opportunity of a lifetime."

The other unions have also backed the conclusions of the new study.

ASLEF general secretary Keith Norman said: "Last week, transport secretary Philip Hammond warned that the railways were becoming a rich man's toy. To prevent that disaster he needs to control the industry, and that can only be done by ending the anarchic free-for-all that's emerged from the discredited private franchise system."

Railway privatisation was a policy of the John Major government of the early 1990s. Control of the infrastructure was transferred from the British Railways Board to Railtrack on 1 April 1994, and the progressive transfer of the passenger businesses to private sector franchised operators followed in 1996 and 1997.

Other BRB businesses, including freight and the railway workshops, were sold outright.

Reader Comments:

Views expressed in submitted comments are that of the author, and not necessarily shared by Railnews.

  • Philip Russell, Carlisle, United Kingdom

    I say bring back British Rail or something similar maybe a coperative ,it was far from perfect but when you considerTranspennine Express themselves claim the cost of living since 2004 has risen 19.8% while their staff wages have gone up by 36%-43% , its just another example pretty much all of the private operators total inablity to control wages or (apart from C2C maybe) make efficiencies during their franchises ,we must now have one of the worlds most expensive passanger railways where B.R. was among the most efficient of its time.

  • Anoop, London

    Nationalisation severely damaged the railway. But in the decades after nationalisation, British Rail became very efficient. Privatisation dealt a worse blow, and the railway has not recovered because the current structure is too fragmented. For example, private companies waste millions of pounds on repeatedly bidding for franchises.

    Railways need integration of track and train within geographical areas, and a steady programme of long-term investment taking care to retain experienced railway engineers. Railway companies should be reasonably sized (maybe 5 or 6 for the whole country) and should be around for the long term. Whether they are operated as public, private or co-operative companies is less important than the requirement for vertical integration.

  • Rob Lewis, Bath, UK

    British Rail was far more efficient than the current ludicrous organisation, and required about a fifth of the subsidy. We have gone from having one of the most efficient railways in Europe to one of the least efficient. Recreating British Rail could eventually save much more than £1 billion per year, but it would take a generation to recreate the expertise that has been lost.

    BR had a rolling programme (if you’ll pardon the pun) of stock replacement, which ground to a halt during privatisation. 3 years without orders crippled our train manufacturing industry, and when some jobsworth suddenly decided that all the slam door stock needed to be replaced on ‘safety’ grounds (but curiously not the ‘Pacers’) there wasn’t the capacity. Couple that with the fact that the people specifying the new trains didn’t know what they were doing, and the result was a mish mash of overweight, inefficient, non compatible stock, which in many cases turned out to be less comfortable than the old BR stock.

  • Timothy Rowley, Stoke-on-Trent, Staffordshire

    I have always found the railways to be too fragmented and a big 5 as suggested earlier would be the sensible way to go while leaving the freight companies as private companies.
    The whole purchasing of rolling stock needs to be addressed not just so it favours UK companies but so there can be savings made from place much larger combined orders for more than one operator a bit like LM and TP are doing with their order for Deserios I am sure they would have got an even better deal if the order had been placed as part of the Thameslink order.
    Another big area savings could be made is in staff wages drivers, signalmen etc are paid far to much considering the education level required for the jobs, I understand they work unsociable hours but the pay levels offered by the railway companies is far too high. Consider this, I am a Senior Scientist with a degree and nearly 15 years post degree work experience and I still don't earn the entry level of pay for a driver.

  • Chris Reynell, Longstock, Hampshire.

    Having the big four or five companies makes sense. These companies could have employee shareholdings maybe to the same level as Burdens Ltd or the John Lewis Partnership. This reduces strikes etc and gives the workforce pride in their company.

    As mentioned earlier, cross country passenger and freight and new high speed lines could be joint ventures etc

    To date, whether it's British Rail or private companies, the staff are superb are long may that continue.

  • Lutz, London

    French private rail companies complain that rail charges in France are more than double the European average due to the virtual/effective monopoly of SNCF and its close relations with the Government, and thus with the rail unions.

  • Joel Kosminsky, London, Britain

    If railway staff are so strong why are wages so low in the clerical 'CO' and operating 'RO' grades?

    This financial year so far, half a billion railway pounds have been taken as disproportionate profit for almost nil business risk; that money could have deferred or reduced the excessive 2012 fares rise, and/or paid for some operating improvements.

  • Craig Ward, Blackburn, UK

    Nationalisation need not be the same as in the 1940's. Mutualisation is a better option with the employees being responsible for running the network as a non-profit making business but with incentives to meet certain targets such as increasing passenger numbers and reducing costs. The John Lewis Partnership could be the model. i am sure it would be a better option than the current set up.

  • John Harper, Edinburgh, UK

    One of the biggest beneficiaries of the current system are railway employees as the threat of strike action and turnover / profit loss leads franchises to cave in too wage demands.

    We do need a simpler railway and John Major's vision of the old big four looks attractive albeit that it would need to be big 5 to accomodate Scotland. We also need to free the railway from Civil Service interferance . Long term state support needs to be clearly agreed upon the basis of growing the railway in terms of passenger usage, freight hauled, capacity and reducing the gap between earned income and costs. Perhaps this is where Network Rail could come in acting in the same way Transport Scotland does regarding strategy, providing consultancy support to investment in infrastructure, and sorting out conflicts between demand for capacity for freight or passengers.

    Mind you if we had a big 5 who gets HSR2 or would it be a joint line ?

  • Geraint Griffiths, chester, England

    The railways were destroyed by nationalisation. If you read the history books everything went downhill from nationalisation in 1948, and since privatisation the railways have seen a staggering revival. I know some people will disagree with this, but the fact of the matter is that a government run, not-for-profit organisation will be driven by costs, not by standards.

  • Lee, Manchester, England

    Is it coincidence that the reported savings (in the union backed study) to be potentially gained through renationalisation are equal to those to be gained through the (government backed) McNulty reports findings? I would back the conclusion that private industry is focussed on profitability rather than level of service though. Maybe the real answer to improving rail efficiancy and achieving savings is a combination of both studies? Remove the profit obsessed private sector and achieve greater operating efficiency through removal of inefficient operating practices and people.

  • Tony Pearce, Reading, UK

    The railways have been able to re-new most of its rolling stock because it didn't need Government direct funding. If it were a Nationalised organisation then the Government would have had to borrow the money.

    So what do you think the Government spends it borrowed money on, health services, defence or new railway carriages ?

    I have just come back from traveeling around France by SNCF. Rail Freight carryings are dropping like a stone because it is not privatised.

  • Watcherzero, Wigan

    Im guessing they did a calculation where they calculate all profit and the Governments higher credit rating and list it as a savings figure. Problem is that would mean the Government would have to borrow billions more and the removal of profit motive reduces the impetus to achieve savings and improve efficency.

  • Lutz, London

    Considerable operational savings could be made by removing NR's profit-margin markup on projects that arise from its setup as a for profits company. It could be moved to a non-profit organization, but that would then make it more difficult to raise debt, and to fund the existing debt.

    The basic problem with the above report is that it looks at less than half the problem, and does not identify how existing the system would be funded under nationalization. The reality is that nationaisation destroyed the rail industry in the UK, in the same way it recked other commercial businesses.

    Of course, the RMT does not mention that there would significant cost savings if the rail companies imposed proper wage constraint and cut the excessive claims in overtime payments.