Labour rail strategy
Labour’s Rail Policy Adviser IAN TAYLOR details the party’s thinking behind rail renationalisation
Labour‘s Rail Policy Adviser IAN TAYLOR discusses why the party wants a fully integrated railway in public ownership.
Shortly after his election as Labour Party leader, Jeremy Corbyn summed up his party’s policy aim for the railway as “a fully integrated railway in public ownership”.
Two years on, after Election results unanticipated by the commentariat and with Labour now riding in front of the Conservatives in some polls, there is heightened interest from the rail industry and others in understanding more about Labour Party policy for the railway.
Why and how is the Labour Party developing a policy for a railway fully integrated across all of its functions throughout the whole of Britain and entirely within public ownership?
As short-hand, we will shorten this policy aim to a ‘national vertically integrated railway under public ownership’, with apologies to Britain’s component nations of England, Scotland and Wales for using the term ‘national’ to mean Britain-wide. The Northern Ireland railway is already unified under public ownership and is spatially separate, so does not need to be considered as part of this discussion.
I will concentrate on some of the key issues that Labour wants its plans for the railway to resolve, the main things it wants the railway to deliver that it presently cannot, and the principles it is applying to development of detailed proposals for the structure and operation of a publicly owned railway. In a future issue of RAIL, I will look at those proposals in more detail.
Fragmentation: politically under-appreciated
The biggest structural issue for a Labour government to address will be the
fragmentation of the railway resulting from privatisation. However, for understandable reasons, political discussion of issues arising from rail privatisation has tended to focus much more on the issue of ‘dividend leakage’ from the railway to private shareholders, with the profit levels of some of the rolling stock companies offering particularly juicy targets.
Dividend leakage is, of course, a valid concern. Indeed, I was co-author to Transport for Quality of Life’s 2012 report Rebuilding
Rail, which pointed out that some £ 0.7 billion of about £1.2bn yearly excess costs to the railway from privatisation could be attributed to dividend leakage. That report attributed about £ 0.3bn of excess costs per year to fragmentation of the railway.
At the time of that calculation, we applied fragmentation costs estimated by background research for McNulty’s Rail Value for Money
Study. That costing was almost certainly a considerable underestimate, since it applied solely to the fragmentation between the different train operating companies, and between them and Network Rail. Fragmentation costs deriving from ‘friction’ at the many interfaces created from Network Rail’s continuing high levels of outsourcing should be added in, as should the £ 60 million
Comments from staff give an impression of railway staff who care about passengers and the railway, who are frustrated that its present structure tends to undermine their professionalism, and who are doing their best to make the railway work for passengers despite its fragmented structure.
or so spent by train operators bidding for franchise competitions every year.
However, rather than the added costs of fragmentation, it is the direct frontline impacts that fragmentation has on the railway that are liable to be most damaging. These are many and varied, but have been the subject of even less political discussion. This matters, because there is a particular political challenge for Labour at this moment in railway development - Britain is moving towards a much more devolved railway.
Scotland has full devolved powers over rail franchising, and Wales will gain equivalent powers in the near future (albeit later than anticipated). London and Merseyside have full devolved powers over rail franchising, while the North of England, although presently chaffing at merely having ‘statutory influence’ over franchising, still hopes to gain full powers over franchising in future. The West Midlands aspires to follow suit and has formed a rail governance body for that purpose. Other regions of England have also expressed interest in devolution of rail franchising.
From a political perspective, this process appears to have unstoppable momentum. And from a railway perspective, it appears to be gaining a record of local improvements that adds weight to the devolution case as time goes on.
So, the context in which Labour must consider how to tackle fragmentation is: “what is the best way to achieve both the benefits of devolution and the benefits of a national vertically integrated railway under public ownership?”
For this reason, Transport for Quality of Life has undertaken research into the direct impacts of fragmentation, to inform Labour Party policy development. The data arising provides the background for discussion of how Labour should structure a publicly owned railway to function better. Most of this data is original and has not been published before.
The passenger perspective of fragmentation
More than 18,000 rail passengers throughout Britain were contacted to understand how they are affected by fragmentation in the railway system. The survey asked rail travellers to relate their experiences in their own words, with multiple-choice questions to enable easier input from those who did not wish to provide personal comments. Some 2,600 people responded, of whom 700 provided personal comments, amounting to more than 1,600 comments on the different questions.
About a third of respondents appear to experience no significant problems from fragmentation, because their rail journeys are restricted to repeated simple trips within the area of one operator that essentially operates a monopoly service, for which they are acquainted with the travel options and ticket variants.
However, a litany of problems was described by those who make journeys across boundaries between train operators, or on parts of the network where multiple train companies operate. The overall impression was of an outpouring of anguish, confusion and frustration. Comments were highly consistent and can largely be summarised by six big themes.
Myriad ticket variants, instead of ease-ofuse and simplicity.
Result: Passengers waste hours trying to work out the best ticket, feel frustrated at the end of it all, often feel they still don’t have the best ticket, resent the system making it so hard, and feel it is designed for the train companies rather than the passengers. Many give up and travel by other means.
Different rules (for example - peak/off-peak) on different parts of the railway.
Result: Passengers are often caught out and treated as criminals. Some get very anxious. Some therefore avoid making train journeys, because they fear getting it wrong or find it all too stressful.
Misinformation or lack of information, due to breaks in the system or complexity.
Result: Passengers waste time and energy trying to find information (often the information requirement itself arising from complexity of the system). They find their journey stressful as a result, and when they find information about one part of the system cannot be provided by another part, or find that information is wrong, they feel upset and aggrieved.
Result: Passengers have increased journey times - in some instances they pay more to take an alternative train company’s service for the continued trip. Some lament not travelling by car or coach.
Failure of the railway to take a responsibility for getting the passenger to their final destination.
Result: When journeys don’t go according to plan passengers feel abandoned, let-down, charged for bad service, and in some instances see that alternative capacity on the rail system is not being used to help them (or is explicitly forbidden to them). Some feel inclined (or forced) to switch to other modes of transport. Disabled passengers have a horrendous time when bits of the system supposed to assist them fail to link up.
Trains that could easily be held to connect with slightly late-running services rarely wait.
Result: Passengers have increased journey times, in some instances pay more to take an alternative train company’s service for the continued trip, and some lament not travelling by car or coach.
When passengers seek redress they fall between parts of the railway that blame one another.
Result: Insult is added to injury, with the consequence that passengers feel under-valued and exploited.
The operational staff perspective of fragmentation
Railway staff were surveyed with the assistance of the rail unions. Nearly 100 staff responded, most of whom work in ‘frontline’ operational roles.
The survey asked for examples of how the different parts of the railway fail to work together, and also asked how the different parts of the railway do successfully work together. Some answers add professional insights to the six big fragmentation issues raised in the passenger survey, as shown by the examples below.
Other staff responses raised operational and technical issues that may seriously affect the functioning of the railway, but which are only obvious to rail professionals. Professional fragmentation issues raised by staff include:
Company-specific careers mean lack of understanding between roles.
Proliferation of rolling stock types means loss of in-depth engineering know-how.
Companies operating similar rolling stock fail to share useful knowledge.
Rolling stock shortages cannot be covered by other TOCs’ rolling stock.
Disputed responsibility for station maintenance delays repairs and wastes effort.
Outsourcing functions to contractors leads to delays in repairs to facilities.
Functions are duplicated between different companies.
Some rail activities are in a constant state of flux as multiple companies change.
Stations operate to different procedures, providing inconsistent service.
NR-TOC disputes over blockades hinder timeliness of infrastructure work.
Rail infrastructure work is complicated by involvement of multiple companies.
Solo procurement by each company loses scale economies and adds waste.
Long-term thinking is destroyed by planning constrained by franchise terms.
Drivers with TOC-specific training are unable to work available diversion routes.
Trains are delayed or cancelled when drivers from other TOCs are available.
Information provision at some stations only covers the TOC that runs the station.
Few respondents were able to offer examples of different parts of the railway working together successfully, with most explicitly stating that they could think of none in response to a question seeking such examples. However, some traffic control staff noted that co-location of Network Rail and train operating company controllers had brought benefits because it “improves the flow of communications”.
Taken overall, comments from staff give an impression of railway staff who care about passengers and the railway, who are frustrated that its present structure tends to undermine their professionalism, and who
are doing their best to make the railway work for passengers despite its fragmented structure.
There were multiple replies that spoke of staff developing informal systems to try to overcome the fractures. For example: “Informally, we often ignore the fact that we are supposed to be working for competing businesses, and just do what is best for the passengers anyway. Ignoring the fact that we are supposed to be in competition makes my job [Guard] a lot easier because I am able to give passengers a much better service.”
The strategic management perspective of fragmentation
Two official reports precipitated by failures of cost control in the British railway (the McNulty and Bowe reports) compiled evidence showing how fragmentation resulting from the privatised railway structure impairs strategic management and everyday operation of the railway.
A third (the Shaw report) into the future shape and financing of Network Rail mainly focused on other matters, but did recognise that “the railway needs to function as an interoperable system” and explicitly noted that there is a need to “balance devolution with national system operation”.
The McNulty and Bowe reports describe a litany of issues arising from fragmentation. These are discussed in more detail in RailReview Q4-2017.
An integrated railway in public ownership has to do it better
It is striking that all of the official reports that identified problems and excess costs arising from fragmentation of the railway failed to recommend major reduction of fragmentation. This striking omission derives from the fact that fragmentation is a pre-requisite for privatisation, and the reports’ authors regarded privatisation as an
The railway was, at a stroke, cut into pieces to facilitate privatisation of its parts. Putting it back together again will, necessarily, be a slower process.
unchallengeably good thing.
Labour challenges the underlying misperception that the market is the best way to design a railway and can adopt the obvious solution to fragmentation - reintegration of the railway.
The perspectives of passengers, staff and managers in the previous sections reveal the challenges to be addressed. The points emerging from these perspectives can be drawn together to summarise the functional attributes that the future railway must have if a Labour Government’s reform of the railway is to be judged a success. Very few of these attributes can be achieved within the present fragmented railway structure.
The capabilities required of a reintegrated railway within public ownership include:
A railway that functions as a whole in its strategic planning for improvements - with infrastructure and train operations working as a unified whole rather than divorced from one another (so that, for example, trains no longer get ordered without certainty whether the routes they run on will be electrified or will need diesel traction).
A railway that functions as a whole in its daily operation - with infrastructure and all train operations working as an integrated whole to maximise service continuity around planned and unplanned disruption.
A railway able to take responsibility to get passengers from one end of their rail journey to the other.
A railway that is easy to use from one side of the network to the other.
A railway that is integrated with other forms of local public transport.
A railway that works together to give the densest possible network of services at regular spacings, rather than multiple operators but fewer available travel options.
A railway where ticketing is unified, simple and logical - and where it does not feel like a lottery to get reasonable price tickets.
A railway where information is reliable, timely, consistent, comprehensive and readily available.
A railway that is cost-effective in how its parts work together, without duplication and conflict between parts in its day-to-day operation or its strategic planning.
A railway that is cost-effective in procuring and managing its rolling stock and other equipment so that all parts of the railway can maximise possible economies of scale, and so that rail manufacturing is supported in Britain.
A railway that maximises opportunities to move freight by rail - where a ‘guiding mind’ controls all train operations and gives the benefits of freight on rail appropriate weight in trade-offs against passenger services (where travellers’ opinions alone would lead to suboptimal overall outcomes).
Rail devolution has the potential to make all of these issues better - or worse. The way in which Labour accommodates both national integration and devolution within its publicly owned rail structure must enable these functional outcomes.
Necessity to sharply define the new rail model
The railway was, at a stroke, cut into pieces to facilitate privatisation of its parts. Putting it back together again will, necessarily, be a slower process.
At the earliest stage, a Labour government will put in place an overarching integrated structure for the railway that will create a guiding mind and deliver strategic planning for the whole railway. Thereafter, franchises will be reclaimed from the train operating companies as they expire and become available at zero cost. It is possible that some franchisees, as in the past, will fail to meet over-optimistic franchise financial targets and so will wish to hand back those franchises before term.
Nevertheless, it is clear that there will be an unavoidable period of a ‘hybrid’ railway as the process of change proceeds. This makes it all the more important that the intended final structure for the railway is clearly defined from the outset, so that the whole railway is clear what will happen and can plan accordingly.
In a future article, I will present a possible structure for a nationally integrated railway within public ownership, and discuss its pros and cons in regard to how it accommodates rail devolution and various other requirements.
For more on Labour’s plans for rail nationalisation, including more industry comments, read RailReview Q4-2017, available from www.railreview.com.