We're Getting There

Sheila Gilmore writes:

Labour need not fear reversing rail privatisation. When parliament is sitting, I spend 10 hours a week travelling on the east coast mainline between Edinburgh and London.

These trains used to be run by National Express, but after that company suffered heavy losses and pulled out in 2009, the government established its own company and stepped in.

East Coast, as it's known, has proven refreshingly good at what it does. The trains are clean and punctual. There are more services to places such as Lincoln and Harrogate, and journey times have been cut.

The company now carries a million more passengers than it did three years ago. And the complimentary food and drink in first class has been well received by business travellers, attracting them away from short-haul flights.

So I was perplexed when, in March, following the fiasco over the awarding of the west coast mainline franchise, the government's new schedule of competitions for the country's 16 rail franchises had East Coast out the door first.

From my perspective, it makes no sense to rush to re-privatise a successful public sector operator when the performance of many private franchises is mediocre at best.

I've since taken up the case in parliament – tabling motions, writing to ministers, and securing a full debate on this issue in the Commons chamber today.

But looking at East Coast has made me think about the structure of the railways in general. And the more I think about it, the more I'm convinced that, if Labour wins in 2015, we could and should make changes.

Let's deal with the "should" first.

For a start I can see no evidence that the efficiency of private operators such as First or Stagecoach makes up for the leakage of profits. I don't actually think this is their fault – it's just an inevitable result of bringing the private sector into an industry that will always require some taxpayer subsidy.

Because ministers need to ensure that this money is well spent, they will always interfere with how services are run, and this means that within the narrow ambit of individual operators there is little scope for making efficiencies.

About the only thing an operator can improve is its management, and as East Coast has proven, public sector managers can achieve results as good as private managers. And because there aren't any shareholders to pay, all £640m of East Coast's profits from the last four years have been retained and reinvested.

More significantly, the structure of our railways – with private operators running trains and Network Rail managing track and stations – means overall industry costs are up to 40% higher than wholly publicly owned and integrated railways on the continent.

This "vertical separation" of train and track has pushed up both fares and taxpayer subsidy.

Now for the "could".

During its 13 years in power, Labour was wary of doing anything that looked like reversing privatisation, even when it wouldn't have attracted much public outcry.

When Railtrack collapsed after a series of fatal crashes, Labour replaced it with Network Rail, which, although entirely dependent on taxpayer subsidy, was nominally still in the private sector. Despite rising costs and fares, the structure of the industry was never fundamentally questioned.

I believe a Labour government in 2015 need not be so hesitant.

First, the public have no great affection for the private train operators (with the possible exception of Virgin, but maybe that's because the brand used to sell records).

Second, reversing privatisation need not cost any money. The track and stations are already in public hands with Network Rail. The private franchises could simply be allowed to run their course and, upon expiry, services folded in to the existing public operator, East Coast.

Third, by combining this enlarged public operator with Network Rail, significant efficiencies and savings would be realised, which could in turn be used to cut fares, increase investment, or reduce the deficit – all politically popular ends.

While this isn't Labour policy yet, I hope the leadership considers these arguments in the ongoing policy review. However, the shadow transport secretary, Maria Eagle, has made a start by backing my calls for East Coast to remain public.

Hopefully together we can persuade the current government to change course. Then ordinary passengers can continue to benefit from clean and punctual trains.