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Privatisation - is the tide turning?

1 May 2012

Paul Salveson looks at the hopeful signs emerging from Labour’s policy review

McNulty bin

For many years, the unions have been ploughing a lonely furrow in their opposition to privatisation. The Blair era was all about ‘markets’ – public ownership was a phrase not to be uttered in polite company. Despite now having the most right-wing government for decades we’re actually beginning to see some fresh thinking in the Labour movement which could reverse the last two decades’ unspoken – but very real – commitment to privatised rail and bus services.

I think there are a number of reasons for this. The notorious McNulty Report – initiated, for the best of reasons, by Lord Adonis when he was Transport Secretary in the last year of the Labour Government – has let quite a few cats out of the bag. He identified how expensive the railway is to run compared with similar operations abroad, even if his prescriptions would only add to the fragmentation of the UK network. A second factor is simply the passage of time and the experience that comes with it. We’ve had rail privatisation for nearly twenty years and bus de-regulation and privatisation for longer. Have things improved? On the buses, outside non- deregulated London, bus use continues its steady decline. On the railways, passenger numbers have grown dramatically, but few would attribute this to private entrepreneurial zeal. If anything, the railways are more state-controlled than they have ever been, but delivered by the private sector, which increasingly means foreign state-owned railways. The railways of the Netherlands and Germany are doing very nicely, partly thanks to the profits that their UK subsidiaries are making.

European state railways

A sign of the changing times was the recent conference at the University of Huddersfield on Reforming the Railways. It was unusual for at least two reasons. Firstly, a leading trade unionist – our own Manuel – was amongst the speakers. Secondly, a senior Labour politician – Lilian Greenwood – was able to stand up and say the unsayable: that privatisation has failed and we should be looking at alternative models which should include forms of social ownership. On one hand this was not new and Shadow Transport Secretary Maria Eagle said much the same at last year’s Labour Party conference.

Since then, Labour’s thinking has developed and Lilian – Maria’s Shadow Rail Minister, was able to spell out some of the detail.

Her judgement on rail privatisation was pretty damning – ‘It’s clear that rail privatisation has not delivered,’ she said. ‘Yes, we have had enormous passenger growth and investment in infrastructure in recent years – but there is no evidence this has come from privatisation. In fact the years after privatisation saw little in the way of major investment, with the huge leap forward only beginning under the last Labour government. And that investment was funded by the tax-payer along with on-going subsidy of services, despite operators walking away with large profits in some cases’.

Lilian Greenwood

A strong thrust in Lilian’s speech was that Labour would support the devolution of local and regional services to strong regional bodies. We’ve already seen the metropolitan transport authorities make huge advances in rail, with electrification, new stations, re-openings and new rolling stock. Labour is suggesting a much more extensive devolution, with the powers and resources to go with it, to create the sort of high quality regional networks we see in Germany, combining rail, bus and tram in a single seamless network which is fully accountable to elected regional authorities.

Services would not necessarily be delivered by the private sector. She commented that ‘we would support alternatives to the existing model of franchising, including not for profit and mutual options’.

All of which is welcome, and very much endorsed by Manuel in his contribution where he argued for a new approach to a socialised railway, rather than a ‘BR Mk 2’. Devolving rail to the regions will allow accountable public bodies to determine how local and regional services are delivered. But what about the national network which isn’t suitable for handing over to regional bodies but needs a strong strategic direction?

‘For those services that are clearly national,’ said Lilian, ‘for example the East and West Coast main lines and the new high speed lines – we have to find a better way of addressing the costly fragmentation that is the legacy of privatisation: a model where the needs of passengers and the British economy come before private profit’.

So without being too prescriptive, Labour is opening the door to a unified, publicly-owned InterCity network. It’s not really all that revolutionary. Germany has a publicly-owned inter-city network, so has France, Sweden and Italy. Each has thriving regional networks which are separately managed but dovetail with the national high-speed networks. Yet in a British context, it’s radical stuff. The options include a state-owned company, or other models which could include co- operative structures with a mix of employee, passenger and government ownership. Ironically, this was precisely the vision of our forebears in the Railway Clerks Association, a hundred years ago!

Maria Eagle and Lilian Greenwood are inviting transport experts – and that would include every single member of TSSA – to get involved in a debate on how we should build a modern, enterprising railway which is publicly accountable. There’s going to be plenty of voices with a vested interest raised against them and they will need strong support from their allies in the unions. But it’s looking very much like Labour will fight the next general election with a commitment to rolling back rail privatisation with something infinitely better for the passenger, the transport worker, industry, and the economy as a whole. But don’t expect it to be an easy ride.

The sort of attacks they may find themselves facing have been demonstrated recently in the North-East where Nexus – the Labour-controlled transport authority – has been trying to get bus operators to agree to a relatively modest ‘quality contract’ to bring some degree of stability to the local bus network. This would see the authority setting times and fares for the network as a whole. A report in the local press revealed that Nexus staff were told by Stagecoach that the plan was ‘blackmail’ and ‘theft to keep local authorities officers in jobs and to steal operators’ businesses’. The irate Stagecoach spokesman accused Nexus of ‘operating in the same camp as Marx, Lenin and Trotsky’.

All of which is entertaining stuff, but there’s a nasty sting in the tail. He added that ‘If the transport authority were successful in the European Court, they would need to be prepared to take over bus services straight away as Stagecoach would immediately cease operations. Stagecoach would not hand over any of its depots to Nexus; the company would move its buses elsewhere and make all staff redundant’.

Which is about as near to a declaration of class war as you’ll get. The private bus groups have done well out of deregulation and privatisation, despite falling passenger numbers, over-inflation fare rises and the sort of arrogance towards elected bodies exemplified in the Stagecoach manager’s statement. I’m told that Stagecoach makes a 23 per cent profit margin from its North-East operation. It’s enough to make anyone a Tirotskyist!


Paul Salveson is a member of TSSA’s Yorkshire Ridings Branch and a visiting professor in Transport and Logistics at the University of Huddersfield. www.paulsalveson.org.uk

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