RAIL NATIONALISATION

Meeting held on Wednesday, May 30th

Speaker- Craig Dalzell, Commonwealth Head of Policy & Research
Facilitator -   Pat Smith



Railways - A Private Monopoly

●“Market Forces” don’t work for railways 
●With rare exceptions, you can’t choose one rail operator over another. 
●The only “competition” that exists is during the tendering process. 
The Franchise Model 
●The Railways are fragmented and privatised between service operator, rolling stock provider and infrastructure provider 
●Tendering contracts issued every ten years. 
●No incentive for investment. In fact, weaker performance can attract subsidies. 

East Coast Rail - Nationalisation 
●2009: National Express East Coast defaults on East Coast Franchise 
●2009-2015 – state-owned company takesover 
●£30m profits; net contribution to public finances 
●94% customer satisfaction – highest ever for long-distance franchises. 
●Record levels of employee engagement – sickness absence down by one-third. 
East Coast Rail - Privatisation 
●Franchise privatised again in 2015 
●Taken over by Virgin East Coast – Stagecoach (90%) + Virgin (10% - until 2023 
●Collapsed in 2018 – running at a loss 
●UK Govt lets it off with £2bn in owed premium payments 
A Public Scotrail 
•2025 contract up – 2020 break clause 
•Scotland Act 2016 gave power for a public bidder 
•Public-sector bid will have to compete on tender criteria 
•If bid wins – 6.5% operating profits can be re-invested – reduce ticket pr raise wages 
•Bid could include worker/passenger democracy •Scottish Government indicated they are interested 
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But... 
•Rolling stock still privatised •infrastructure still UK controlled •£30m lost in tendering process 
•limits to how big a change a public operator could make... 
Integrated Transport 
•Control all aspects of rail system: eliminate non-productive costs and have unified rail system and integrated transport strategy (bus, cycle, rail) 
•Re-think of rail part of bigger re-think of transport: modal shift away from roads to sustainable, efficient transport 
•Roads 2017-18 budget spending nearly £1bn (£200m more than railways) 
•Borders Railway shows potential of rail investment: 40,000 people shift from cars to rail; 27% increase in B&B use; prevent decline in local population 
Environmental Case 
•Transport 27% of all emissions (up from 20% in 2003) – fallen by just 2% since 1990. 
•73% of emissions from road; 1.35% from rail.
•22ktCO2e reduced for every 1% of passenger kilometres currently 
travelled by car switched to rail. 
•Each tonne of freight transported by rail rather than road produces 76% less CO2 
•Only one-quarter of rail track is electrified – CO2 of electric trains 20- 35% less. 
•Major air pollution problem in cities from congestion. 
Economic Case 
•Expanding rail network can open up local economies, increase domestic tourism and connect people to employment opportunities 
•Levenmouth example: closed in 1969 in Beeching cuts, line still owned by Network Rail, largest town in Scotland without a rail line (38,000 people), Whisky distillery keen to use line for freight cargo (currently 8 HGV’s a day). 
•HGV’s create congestion and damage roads, increasing repair budget – one freight train removes 43-77 HGV’s; £2.4bn annual cost of congestion to economy. 
•Reduced road repair budget can be reprioritised. 
Policy changes can make rail infrastructure investment cheap: land 
Social Case 
•30% of people don’t access a car – nearly half of poorest 20%, compared to 18% of richest 20%. 
•Investing in motorways rather than rail benefits the better off. •Levenmouth closure example – high deprivation and unemployment since deindustrialisation. 
•Rail investment in poor towns a class issue. 

This was followed by discussion