Rail re-privatisation coming down the track?

It is a fact that is shocking for many reasons. It costs £3,708 for an annual season ticket to travel between London and Brighton. Nearly £4,000 for a season ticket on the 25 miles of high speed line between Ebbsfleet and St Pancras. Yet a BahnCard 100, giving unlimited travel on the ENTIRE German rail network costs less – £3,340 (€3,990).

What’s wrong with our railways? And who would pay – passengers or taxpayers?

Higher peak fares and London-style Oyster cards for all were the consumer headlines from today’s Rail Command Paper from Transport Secretary Justine Greening.

The big picture here is that she has accepted the analysis from the Labour-commissioned Roy McNulty that Britain’s rail system was very substantially more expensive than other systems. There is much fat to trim. The government, however, has chosen to channel these savings back to the exchequer by cutting subsidies, rather than limit fare rises let alone cut them.

The result is that at high peak our incredibly expensive fares will get yet higher, and worse-paid workers might have to have a conversation with employers where they are given special dispensation to get in very early or later, on account of transport costs.

The rail unions screamed “vandalism” and thousands of jobs will surely go in these efficiencies, estimated at £3.5bn per year by 2019. But I think the real radical significance of today’s number is captured in two words towards the back of the command paper: “Vertical integration”.

In plain speak, this means reuniting train and track after the flawed separation and privatisation of British Rail in the 1990s. This would only start on a regional basis. Network Rail is already running on a “shadow privatised” basis – split into ten regions with separate performance management. The plan would see, where appropriate (essentially where trains are largely run by one company), the track broken off and sold to the train company as a concession, for 25-30 years.

There are some issues with European law here, but it’s not difficult to see that this could save money in administration, and management costs. I presume selling off some “mini-network rails” might be a revenue raiser for the Exchequer too (though I can imagine some disgruntled former Railtrack shareholders). The command paper mentions Wessex and Anglian as options.

I understand that much of the impetus behind offering this came from Number 10. I imagine that in the Treasury’s efforts to open up Britain to huge Chinese and other wealth fund infrastructure investment, integrated track and train is far more attractive.

This is something of a reversal of the radical and ultimately unsuccessful model of rail privatisation of the 1990s. But it could also mark the re-privatisation of at least part of Network Rail.

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