Tony Lodge is a Research Fellow at the Centre for Policy Studies and author of Rail’s Second Chance – putting competition back on track published by the CPS.
Until quite recently, the post war history of Britain’s railways was peppered with stories of decline and doom. If the press was not reporting on comically poor sandwiches, consistently falling passenger numbers and rising subsidies then it was confident that another chronic safety failure was looming. The 1980s and ’90s featured repeated major accidents, with the worst being at Clapham in 1988 when three commuter trains collided leaving 35 dead and 100 injured. It is interesting that those who call for the return of British Rail (BR) rarely acknowledge its lamentable safety record; importantly, while the privatised railway has had lessons to learn, there have been no passenger or staff fatalities due to train accidents for almost ten years.
A symbolic low for the railways came in 1982 when passenger numbers slumped to just 600 million rail journeys a year; they had almost halved in 20 years. These dire numbers coincided with the first all-out national rail strike for 55 years and a Whitehall report by Sir David Serpell which proposed slashing the network and closing all but the major intercity lines leaving even these with an infrequent service. This would have left many large towns without any rail connection. Serpell’s findings and proposals were grim and significantly worse than Beeching’s 20 years before him. British Rail revenues had fallen steadily from £2,300 million in 1970 to £1,800 million in 1982, while costs had risen from £2,500 million to £2,700 million. Consequently, British Rail’s deficit had increased by a factor of 4.5.
Importantly, the report and Serpell’s proposed surgery didn’t look at the options to improve the situation, based on the view that railways were a failure and we needed less of them. This point is key to understanding part of the renaissance in rail and why Conservatives can be proud of their role in restoring a world class and safe railway to the UK – but they must now finish the job.
Margaret Thatcher didn’t implement any of Serpell’s ideas, but did accept the need to support regionalisation of the BR network and the need to get behind the hugely successful Intercity 125 programme. These were profitable trains which could genuinely claim to represent what the advertisers called ‘The Age of the Train’. If the railways were to be privatised then they would have be returned to some state of health. The results were positive, and passenger numbers picked up through the mid- and late ’80s, reaching a 20-year high in 1988.
2017 marks the 25th anniversary of the White Paper to privatise BR. The Major Government’s desire to deliver “more competition, greater efficiency and a wider choice of services more closely tailored to what customers want,” was right then and is right now. If the Government seizes the unique policy opportunities now available, then it can effectively face down the sham calls for renationalisation and finally deliver on the White Paper’s pledges with competition and passenger choice at its heart. But ministers remain resistant – why? And why is there now more micro-managing of rail by civil servants than in the BR era – especially on ticketing and service patterns?
Firstly, it is important to appreciate the renaissance on rail in the UK. Passenger journeys on the network have more than doubled since privatisation, from 735 million in 1994 to 1.65 billion in 2015 and have almost trebled since the 1982 nadir. But what of the White Paper’s key objectives a quarter of a century on?
Many passengers will roll their eyes when they read this based on their own experiences but the latest National Rail Passenger Survey shows that many of these ambitions are now being delivered – but only on one main line. At King’s Cross the main train franchise, Virgin Trains East Coast (VTEC), faces stiff competition from two non-franchised high speed ‘open access’ train operators on long distance services between London and the North East.
These trains compete on the East Coast Main Line (ECML) and record the highest passenger satisfaction ratings in the country. Hull Trains comes top with 97 per cent followed by rivals Grand Central and VTEC, each with 91 per cent. Similarly these operators also come top on value for money, reliability, punctuality, getting a seat and station facilities. The message is clear. When passengers have real choice and train companies face competition, operators raise their game; they deliver better services at competitive fares because they have to fight for passengers.
This rivalry has also delivered innovations such as free wi-fi, special flexible ticket deals and new routes as operators look to serve new towns and cities to boost their offering. The open access operators have connected towns with London which lost their direct rail services years ago as well as directly competing with the franchise at places like York, Bradford, Doncaster, Grantham, Hull and Sunderland. But why is such competition not network wide? Why aren’t ministers encouraging and delivering this model across the railways? The Competition and Markets Authority wants to see more and the Labour-chaired Commons Transport Select Committee last month called it a “success” in its long awaited report on rail franchising.
It is a very different story elsewhere. At Paddington, the Great Western franchise enjoys a complete monopoly on services across vast swathes of western England and Wales. Consequently, there is no competition on long-distance fares where only 51 per cent of passengers think tickets are value for money. Similarly, at London Liverpool Street, where Greater Anglia services enjoy a ‘railopoly’ to serve eastern England, just 42 per cent of travellers said tickets were value for money. Compare this with the average of the three competing East Coast services at 66 per cent according to the latest passenger survey.
At Britain’s busiest station, London Waterloo – used by almost 100 million passengers last year – there is just one train operator. A new application to bring intercity competition to the overcrowded Waterloo to Southampton line is before the Office for Rail and Road and will hopefully be approved.
We now have a successful and mature test case where train companies compete on the same high speed track and deliver what privatisation promised. Competition must not just be at the franchise bid stage where the winner gets the keys to a long monopoly. Similarly, proposals to further split franchises does nothing to bring real choice to passengers as it still leaves one company running the trains. All future franchise bidders should now be told to expect some level of future competition. Such a change in policy would benefit passengers, expose the flawed arguments behind calls for renationalisation and seal a railways legacy which Conservatives would so richly deserve.