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Post-privatisation: a new railway model for Wales?

4 January 2013

Paul Salveson describes his proposals for a new structure for Welsh railways when the current franchise expires, as featured in a new publication by The Co-operative Party.

Castle

The turmoil in the rail industry following the suspension of the West Coast and other franchising competitions has caused many railway professionals to question the assumptions that have underpinned privatisation, and in particular the model that has been imposed on Britain’s railways. Neither short franchises, nor longer contracts, provide a sensible way to develop the UK rail network; both have inherent contradictions that have been exposed over the last couple of years, on both East and West Coast franchises. The big problem for opponents of privatisation has been the question ‘well what would you do instead?’ The simple answer, to bring back ‘old BR’, has its problems. The centralised structure created in 1948 had some merits but reflected a post-war United Kingdom that has disappeared. Devolution of significant powers to Scotland, Wales and Northern Ireland mean there is no going back to London control, whether for railways or many other areas of policy. In terms of rail, even the current government is seriously contemplating devolving rail powers to the English regions.

This presents some exciting opportunities for trades unionists if we are willing to think beyond the old mind- set of central state control and ownership. My report ‘Rail Cymru – a people’s railway for Wales’ was commissioned by the Co- operative Party and explores ways in which a not-for-profit ‘mutually-owned’ railway could work, offering up a number of ideas for further debate. I hope TSSA members will respond to that challenge and play a leading part in the discussion. Some of the proposals in the report owe much to the early ideas of railway trades unionists at the beginning of the twentieth century, including those of the Railway Clerks’ Association, the forerunner of today’s TSSA.

What is the report saying? Firstly, that franchising is not an appropriate way to run a railway and the end of the current ‘Wales and Borders’ franchise in 2018 offers the right sort of timescale for the Labour-run Welsh Government to prepare for something much more suited to the needs of the people of Wales and neighbouring parts of England. Ironically, the current franchise is run by a state- owned operator – German-owned Arriva Trains Wales. In many ways its performance compares well with other ‘regional’ operators, but the reality is that the main objective is to make money for its parent company whilst keeping performance within the standards laid down by the franchise agreement – currently let by the Department for Transport in London.

Arriva Trains Wales

If devolution is to mean anything, full responsibility for domestic rail services (i.e. other than InterCity) should lie with the Welsh Government. The model for ‘Rail Cymru’ owes much to the approach adopted by the devolved Basque Government in Spain which owns and operates its own regional rail network called ‘Euskotren’ (ET). The company also runs an integrated network of feeder bus services. The company operates on an arms-length basis from the government, with day to day responsibilities lying with the company itself. The Basque Government has funded a number of major improvement projects including track doubling, new rolling stock (built locally!) and improved station facilities. In addition, the ET network is vertically integrated, with infrastructure as well as operations coming under the same overall control, but with separate accounting units for infrastructure, to keep within EU law.

In Wales, a not-for-profit train company could be established by the Welsh Government, ensuring public accountability but also allowing scope for employee and passenger involvement. Some of the remaining municipally- owned bus companies in the UK offer examples of how public accountability can be delivered in ways that are both legal and deliver high quality services.

A key issue is to create a company that combines accountability, inclusiveness and commercialism – a word which trades unionists should not be afraid of, if the result is improved services. Creating the right governance will be critical in ensuring Rail Cymru has the leadership needed to create an outstanding service for Wales and the English borders.

The proposal in the report is for a three-tier structure that ensures balanced representation across Wales and the Borders and delivers a tight management structure at the top. This would involve the Rail Cymru Board itself, supervised by a National Stakeholder Forum with five ‘area stakeholder boards’ (ASBs). The latter would involve employees, local managers, local authorities, passenger groups, community rail partnerships, Network Rail and other relevant rail industry bodies.
The ASBs would have considerable influencing power. Each would have a strong say in service delivery in its area but also look at opportunities for widening Rail Cymru’s profile in the local community. It would ensure that Rail Cymru delivers on its obligations and also help ensure that as much procurement of goods and services is as local as possible.

The ‘national’ stakeholder forum would cover the entire Wales and Borders network and include representation for employees. There might also be representation from the Welsh Government itself as main paymaster, Network Rail, local authorities (including neighbouring English shires), passengers (via Passenger Focus), community rail partnerships, the business community and individual experts nominated by the Welsh Government.

The national stakeholder forum would be empowered to discuss issues of strategic importance to the company and from its number it would appoint members (‘non-executive directors’) to the Rail Cymru board. This would have day-to-day responsibility for the running of the business and be chaired by the managing director. Its members would include executive directors and non- executive directors nominated by the national stakeholder board.

Trades unionists should have strong input as representatives of employees on the national and area boards, together with other stakeholder groups representing passenger and local government interests. This has some similarity to the proposals put forward by Emil Davies in The Case for Railway Nationalisation, published in 1912 and supported by many RCA activists. Davies called for a publicly-owned railway with a range of stakeholders represented on a ‘railway council’, including trades unionists, local authorities and the business community.

This structure would seem to offer the best balance between the interests of the Welsh Government which would be the primary funder, and ultimate licensor, of the train company, the interests of employees and those of passengers and the wider community. It would not be a full co-operative but enshrine many if not all of the ethical values which distinguish co-operatives from most ‘for profit’ companies owned by shareholders.

The proposals for what is essentially a ‘social enterprise’ train company in which any surplus (profits) are re-invested into the railway are not very difficult to implement. It requires political will, which is there on the part of the Labour- controlled National Assembly for Wales. However, it also requires a sympathetic response from the Government at Westminster, on a number of levels. Firstly, to give the National Assembly of Wales the same control over the Wales and Borders franchise as those currently exercised by the Scottish Government over ScotRail. In addition however, it should allow the Welsh Government to decide not to go through a franchising process to set up ‘Rail Cymru’ as the operator of passenger services in Wales and the Borders. This cuts across the Tories’ 1993 Railways Act and may require either derogation or amendment to the Act. It most certainly needs a sympathetic approach by the UK Secretary of State for Transport and that is only likely to happen if we have a Labour Government in power at Westminster as well as in Cardiff Bay.

Getting the structure right is crucial, but the success of a ‘mutual’ Rail Cymru will be judged on how it delivers. The report suggests that Rail Cymru should aim to expand its services, improve quality and ensure much better integration with bus services across Wales – including operating its own feeder services to towns which lost their rail services in the 1960s. It should also have a high profile in the community and reflect a strong national identity – a train company that the people of Wales can feel truly proud of.

If Wales can be the first to break loose from the shackles of privatisation and the shot-termism of franchising, other parts of the UK could well follow suit, including Scotland and the North of England. What marks Wales off as being the strongest contender to move beyond the privatised shambles is having a Labour administration willing to try alternative approaches combined with a suitable length of time to prepare the ground before the current franchise runs out. There is everything to play for in achieving what our RCA forebears aspired to.

 

wales reportProfessor Paul Salveson MBE is a member of TSSA’s Yorkshire Ridings Branch. The Co-operative Party’s report Rail Cymru – a people’s railway for Wales is downloadable on the Co-operative Party website http://tinyurl.com/welshrail

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