An organisation called the Rail Delivery Group suggested today (according to the Today Programme ) that there has never been more rail investment – with £50billion over the next 18 months.
They have taken on four commitments:
“Strengthening rail’s contribution to the economy” (- whatever that means?)
“Improving customer satisfaction”
“Boosting local communities” (- whatever that means?)
“Creating more jobs”
So that’s two commitments really – only one of which might cost the private sector money.
So, the interview could have been shorter but still most seem to consider that this a reposte to possible Labour Party renationalisation.
Leaving aside that that this ‘privatised’ industry has way more government subsidy even allowing for inflation than it ever has had before (Rail subsidies have increased from £2.4bn in 1992-93 (the last year of British Rail) to £3.2bn in 2015-16 (all 2015/16 prices), it is to be hoped that Labour, when the franchises finally fall into their laps, opt for ‘renationalisation lite’ with perhaps workers on the board or, better still, a co-operative. This would not only be helpful because it would emphasise that we and they really are all in this together, it would also, as a side-effect, make passing on the franchises in the future a shade more complicated.
But it has also turned out that privatisation isn’t entirely bad! Simply put, it has largely reined in ‘stop go investment’. This was the notoriously difficult environment British Rail had to endure, because when the treasury decided it needed to reduce spending the railway budget was usually one of the first on the list, either for postponement or cutting altogether. If they try to do that nowadays there are financial consequences, because the franchised companies will shout foul and be demanding compensation, with the end result that there are no savings at all. When Transport Secretary Grayling recently found himself modifying the order for trains to Wales from mostly electric to more diesel electric bi-modes he could do this because not too much electrification was signed up to and the Great Western Franchise hasn’t long to run. But still the government will be picking up any (smallish) difference in cost.
Whilst not justifying privatisation this indicates what we can learn from it, and so makes it important that when renationalisation comes it is made rather more uniquely individual than it used to be, and rather more arm’s length, so as to give the treasury pause for thought before undoing its commitments. It would seem that this must mean that whilst the government might be the principal owner it must not be the only one.
Secondly – and we should be doing more of this everywhere in order to give pension funds more possibilities of secure investments – bonds should be issued for specific railway improvement purposes. This would mean that once the bonds were invested, improvements would be difficult to withdraw from (and even then not without penalty).
This has every possibility of a winning treble: it should concentrate minds both at the contracting and specifying authority, Network Rail, and put a large obstacle in the way of any rearguard treasury idea of second thoughts. This would in turn help to stabilise activity and iron out the notorious peaks and troughs in the construction and engineering industries.