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<\/a><\/p>\nTrains run on rails. And access to these rails determines what services can be offered. Back in the 19th and early 20th centuries the railways were privately owned. Most companies, however small, initially owned their own permanent way. It soon became apparent that, rather than forcing passengers on long journeys to disembark and join another company\u2019s trains, perhaps several times, there was an advantage in having trains which crossed company boundaries.<\/p>\n
As early as 1842, an integrated national network came into being, thanks to a fascinating institution, the Railway Clearing House. Modelled on the Bankers\u2019 Clearing House, the Railway Clearing House managed the sharing of revenue when passengers or goods passed through two or more companies\u2019 rails. This was, for its time, an advanced system that demonstrates the ability of the private sector to develop service integration on a voluntary basis, something often ignored by policy wonks.<\/p>\n
Many fans of rail nationalisation claim that the separation of trains and track under privatisation was the fault of those awful Tories. This is twaddle<\/p>\n
Under British Railways (BR), the entire industry essentially became a single firm. Initially, BR integrated both trains and track as the previous private companies had done. Regional divisions ran trains and maintained the tracks, although this rigid military-style structure oversaw declines in both passenger and freight, leading to precarious finances and the notorious Beeching Axe.<\/p>\n
While many fans of rail nationalisation claim that the separation of trains and track under privatisation<\/a> was all the fault of those awful Tories, this is twaddle. Vertical disintegration of the rail industry was begun by BR to improve its finances through a modernised company structure. In 1982, business sectors \u2013 InterCity, Provincial\/Regional and Railfreight for example \u2013 were introduced. This allowed managers to focus on particular business segments and begin to grow markets. The policy was successful, as it marked some recovery of both rail traffic numbers and finances. It was on the model of sectorisation that BR was privatised.<\/p>\n Separating track and train, by the way, is not something that just\u00a0happened here. The European Commission began the process with a Directive aimed at separating infrastructure management from train operations as early as 1991 \u2013 well before our railways were privatised. In mainland Europe, railway networks today look much more like the privatised British railway than the BR of old \u2013\u00a0or what is proposed under Great British Railways (GBR). If Britain were still in the European Union, the creation of GBR in its planned form might now arguably be illegal. The EU has adopted rail market liberalisation to improve outcomes for the industry and the consumer. It has led to improved service and lower fares, with national firms competing with open-access operators<\/a>, as is still the case in parts of Britain.<\/p>\n There was much wrong with the franchise system, particularly in its latter years when too-detailed specification by the Department for Transport led to fewer bidders and incentivised over-optimistic bids. Covid led to its collapse and replacement by management contracts. And Network Rail, run for many years by the government, had a poor record of delays and disruption which damaged business and the public\u2019s perception of the train operators.<\/p>\n Nevertheless, privatisation has been associated with rising passenger numbers, which more than doubled between 1994\u20135 and 2018\u20139, while freight still runs today without the operating subsidies passenger services require. Open access operators, working outside the franchising system, such as Lumo and Grand Central, saw many regional parts of Britain receive high-quality inter-city service for the first time in decades and have proved popular with the public.<\/p>\n Will rail nationalisation work?<\/p>\n Since privatisation, train pathways as well as infrastructure maintenance have been in the hands of Network Rail. These arrangements \u2013 timetable slots allowing trains to run over a particular route \u2013 have had, however, to be approved by the Office for Rail and Road (ORR) which has played an active role in ensuring fairness between operators \u2013 franchisees, open access operators, charters and freight \u2013 on congested routes.<\/p>\n The Railways Bill now going through Parliament will change this regime. GBR will now be responsible both for operating passenger trains and doing Network Rail\u2019s job of approving access to the track. The ORR will simply be an arms-length regulatory body, with a much less active approach to track allocation than it has had.<\/p>\n It\u2019s not difficult to see the flaw with this arrangement. As a train operator, GBR will have a vested interest in ensuring that its own trains have priority. It will double-down on the \u2018abstraction\u2019 argument which has been used when considering allowing open access routes. Under this system, potential open-access operators have had to demonstrate that they would grow the market, rather than simply \u2018abstract\u2019 profits from franchises.<\/p>\n Although you can see some crude logic in this situation, with franchisees having bid for, and effectively \u2018bought\u2019 a monopoly, it is nevertheless difficult to square with the ideals of competition and consumer choice. It\u2019s like Lidl having to prove that they won\u2019t abstract Tesco\u2019s profits before they are allowed to open a supermarket in the same area.<\/p>\n Stay informed with \u2028our free daily briefing.<\/p>\n Moreover, GBR will have a monopoly on infrastructure investment. Dealing with capacity constraints will require upgrades. A situation where the main operator of passenger trains is also the infrastructure manager will probably not be one where improvements that benefit freight are prioritised. Electrifying and double-tracking the branch to the Felixstowe container port would see higher speeds and greater opportunities for container trains, a growth area for rail freight. Yet, with tight funding constraints, it is hard to see GBR supporting this high impact project given it doesn\u2019t directly affect its own more publicly-visible operations.<\/p>\n The Railways Bill will probably lock in arrangements for track access for a generation. It needs safeguards to ensure that the potential of the rail industry is not stymied by embedding the worst features of a nationalised monopoly.<\/p>\n Share this article<\/p>\n