Posted 11th July 2023 | 3 Comments

Private rail operators call for public-private partnership

Rail Partners, the lobby group representing privately-owned train operators, has called for the rail business to ‘put aside ideological battles of public versus private’ and concentrate on creating an ‘reinvigorated public-private partnership to get Britain’s railways back on the track to growth’.

Franchising ended officially in 2020, and all operators still in the private sector have limited contracts, which involve the government taking the commercial risk by collecting revenue and paying the costs, plus management fees.

Four operators in England, two in Scotland and one in Wales have been renationalised, starting with LNER in 2018, following the failure of the Virgin Trains East Coast franchise.

The most recent return to state control was that of Caledonian Sleeper, which was taken over by a Scottish Government-owned company from Serco on 25 June this year. Although some National Rail Contracts in private hands have been extended recently, others are said to be potential candidates for renationalisation.

Unions and some politicians say the transition should continue, with the aim of completely renationalising the passenger railway.

Rail Partners has published a new report prepared by Oxera, entitled ‘Track to growth: creating a dynamic railway for passengers and the economy’. Rail Partners says it ‘sets out the significant and complex challenges currently facing the railway, including the blurring of responsibilities and accountabilities between different parts of the system, prescriptive and no-longer-fit-for-purpose contracts, an out-dated fares system, changed travel patterns resulting in millions of pounds lost in revenue, and drawn-out industrial action’.

It adds that ‘public control is far greater today than under British Rail, with the government micro-managing the smallest of commercial decisions. Reform has been needed for several years and the pandemic compounded the problem and accelerated the need for drastic change.’

It also claims that privatisation from 1996 halted railway decline, and that ‘an operational deficit was closed, taxpayer subsidy reduced freeing up money for infrastructure, and ultimately, passengers returned in record numbers. Although franchising in its latter days needed reform, harnessing train companies in the delivery of passenger services was transformative for customers and the railway.’

Rail Partners’ chief executive Andy Bagnall said: ‘Today’s report is about getting back on track to growth. What matters is what works for customers and the taxpayer, so we should put aside ideological debates. The evidence shows that a reinvigorated public-private partnership is the best way to revitalise the railway.

‘Train companies, domestically in the past and across the continent right now, have shown the skills needed to grow passenger numbers and reduce costs for the taxpayer.

‘If reform continues to stall, the railway faces stunted recovery from the pandemic and worst case, a permanently smaller network. But with the right reforms, the railway can return to growth and act as a catalyst for a stronger, greener economy.

‘This is one of the most wide-ranging studies on the emerging impacts of rail liberalisation in the EU to date. We can draw on the experience of managed competition across Europe to deliver benefits here in Britain.

‘The evidence from European railways clearly shows that, if we get reform right, and train companies are harnessed in the right way, competition will deliver significant benefits for the customer, and ultimately reduces subsidy, bringing public spending down.'

The Labour Party committed itself to completing railway nationalisation in September last year. At the time, RMT general secretary Mick Lynch said: ‘We welcome the Labour Party committing itself to public ownership of the railways.

‘Tackling the greed and inefficiency of the private sector in our railways and other public services should be a key priority for the next Labour government. And the trade union movement will be on hand to make sure these Labour values are delivered for working people.’

Meanwhile, the government has insisted that it is still intent on creating the new ‘guiding mind’, Great British Railways, as recommended in the Williams-Shapps Plan for Rail in 2021. This would award new ‘concession’ operating contracts, involving minimum commercial risks for operators but also allowing them very little commercial freedom.

However, the government may not pass the necessary legislation this side of the General Election next year. Although Parliament’s agenda for the 2023-24 session has not yet been published, the government has said there may not be enough Parliamentary time to deal with an Act creating GBR.

Reader Comments:

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

  • Steve Alston, Crewe

    ‘public control is far greater today than under British Rail, with the government micro-managing the smallest of commercial decisions' - probably because it had to be after private operators were pocketing everything.

  • david C smith, Bletchley

    Yes, there are good , and not so good ,operators. Those TOCs that, are not already natural monopolies can emerge as succesful through competition between themselves and with other modes, whilst those that are will need forms of effective, more direct ,democracy to ensure their fulfilling public needs ( learning from the nationalised era's mistakes ) without spiralling costs .

    One thing we should try to avoid "this time around" is employing personnel just for the time of a project , then letting them disperse, only to have to reestablish a team for the next project ( pretty well only happens in GB, with personnel kept in long term teams in most other countries ).

  • John Porter , Leeds

    As with all industries there are good private operators and bad ones. What’s needed is a willingness to replace bad ones with public COMPARATORS and encourage good operators to grow the market.
    I’ve long advocated HS2 being charged with designing and building London to Birmingham quickly followed by a separate HS3 company being charged with designing and building Birmingham to Manchester in parallel with a separate HS4 company being charged with designing and building Birmingham to Leeds. That’s not much different from the Sectoral approach adopted by British Rail.
    It’s a pity that wasn’t adopted. The same opportunity for rail operators MUST not be lost.