Some problems fester for decades until a crisis makes them impossible to neglect any longer. In that respect, the pandemic may hold a silver lining for Britain’s troubled rail sector.
After years of bitter debate, it’s finally getting a major overhaul. There will be a new public organization focused on fixing the worst distortions of the past quarter-century of rail privatization while driving improvements and innovation.
UK Transport Secretary Grant Shapps — who appears before a Parliamentary committee on Wednesday — has been at pains to explain that the plan is not to nationalize rail, but to simplify it. It’s the latest example of how Prime Minister Boris Johnson’s Conservatives try to meld top-down interventionism with private-sector incentives and promises of efficiency and innovation. The question is whether a government that is not exactly known for its fine execution skills can make it work.
The sweeping rail reforms announced last week actually originated after an earlier crisis: Back in 2018, botched timetable changes hit half a million passengers with cancellations, delays and overcrowding, on top of the usual indignities of commuter travel.
Rail nationalization was part of the Labour Party’s 2017 and 2019 election manifestos under Jeremy Corbyn. (The hashtag #CorbynWasRight briefly caught on after the new plans were unveiled.) Polls back then showed some 60% of people agreed that nationalization was the way forward. In response to the 2018 debacle, the government did what it always does when it comes to the thorniest problems: It commissioned a review.
Led by former British Airways CEO Keith Williams, that long-running review is now the Williams-Shapps Plan for Rail. Although there have been many attempts to reform the rail sector over the years, this plan is different. It doesn’t hold back on the problems or seek to patch them up with half-measures. Instead, it acknowledges that the existing system — fragmented, complicated, expensive, unreliable — is largely unredeemable. More importantly, the plan is not just an academic exercise. The proposed changes will be enacted in legislation.
This government is now dispensing with the private vs. public ideology debate in favor of getting the reforms right. Margaret Thatcher, the Conservative pioneer of the ‘80s privatizations, stopped short of touching rail. But her successor rushed through an ill-thought plan: The state-owned British Rail, which operated nearly all of the UK’s railways, was divided into its main components (track, rolling stock, maintenance companies and train operators), with responsibilities distributed among various private companies, public bodies and regulators.
The fragmentation created a system that was inefficient and wasteful. It pit train operators, seeking to maximize passenger revenue, against the agency (the soon-to-be-defunct Network Rail) in charge of the infrastructure. There was a constant merry-go-round of blame for delays. In 2019 and 2020 about half of passenger trains in the north of England were late, making it as common to complain about the commute as the weather.
Privatization per se wasn’t the problem. Despite the structural flaws, the changes more than doubled passenger numbers and brought billions of pounds in private-sector investment for new stations and ticketing innovations. Safety records improved overall.
Returning the whole thing to public ownership, as some Labour politicians have advocated, would only worsen outcomes. Instead, the Williams-Shapps plan seeks to undo the original sin by creating a single public body, called Great British Railways (GBR), that will run the rail infrastructure and contract with private companies to operate trains. To be launched in 2023, GBR will specify the timetable and fares, much as Transport for London does for some of its overground services.
Unlike the existing Network Rail, which the document describes rather derisively as an “engineering-driven organization,” the new entity, its creators claim, will be supremely customer-focused. The most immediate impact on passengers should be more flexible, easier ticketing with pay-as-you-go options. The plan envisages special fares for those commuting two or three days a week, and a single website and app rather than the current jumble of offerings and price variations.
There should also be more accountability. The GBR will be a separate public body, but it’ll be ministers making the big decisions.
The Williams-Shapps plan envisages GBR will save 3.5 billion pounds ($4.9 billion) over a five-year period to 2024 from existing efficiency plans. The review also suggests a further 1.5 billion pounds a year (or 15% of fare revenue before the pandemic) could be saved under the new streamlined system. But efficiency savings are far more often promised than realized. Much depends on how the new “passenger service contracts” — the new approach that replaces franchising by rail operators — will actually work in delivering high quality, punctual services.
It’s not clear how the new body will deliver improvements in an environment of much lower passenger numbers: Rail travel in the UK is only at about 40% of pre-pandemic levels. While the Nov. 2020 spending review promised 40 billion pounds for rail capital projects to 2025, over half of that is going to the gargantuan HS2 project to build high-speed links between London, the Midlands and the north.
Creating a reliable, efficient and cost-effective rail service is essential for Johnson’s “leveling up” plan, for boosting Britain’s lagging productivity and for reducing the country’s carbon emissions. By taking charge of the rail system, the Tories have neutralized a major Labour Party critique and also bought themselves a little time to implement wide-ranging changes to the system.
It’s wise not to allow a crisis to go to waste. But there will be no excuses for failing to get it right this time around.
Bloomberg
