The missing piece in Labour’s rail renationalisation scheme

Good morning. Labour will freeze rail fares in England, which is as good an excuse as any to talk about what it wants to do with its renationalised railway.

Network effects

Labour will freeze regulated fares in England in 2026, the first time this has happened since 1995.

This is, essentially, the case against Labour’s renationalisation of England’s railways in a nutshell: although every government since 1994, when John Major privatised the railways, has had the power to set, freeze and cut rail fares, in practice it is much easier to just blame Arriva, Virgin, Avanti, or whichever private operator is the “face” of the railway for the fare rise.

The money from the increased fares then goes on expanding capacity, building new railways and on rolling stock. Even if you reinvest every drop of profit that the privatised railways made into fare freezes, you are talking about subsidising six months of rail fares! In practice, if you are doing fare freezes, what you are doing is cutting back the amount you spend on the railways.

That’s why if you hang around long enough among railway policy types you’ll see a version of this chart:

This is a chart with a simple story: make railways compete with the elected government’s other funding priorities and the railways will pretty much always lose — even within the Department for Transport, let alone when the DfT is competing with other vote-moving spending departments such as health, education or the Department for Work and Pensions.

That is the story of Germany’s railways, and the story of British Railways until 1994, when Major’s privatisation of the railways helped unleash boom years for rail in Britain.

There’s an important “but” here, which is that this is not the story of railways in Switzerland and many other high-performing railways. If you look at a list of the UK’s best-performing railways, you get a mix of private, public and “well, it depends on what definition you use” run railways. The same is true internationally.

What really leaps out when you look at Switzerland (nationalised, mostly) and Japan (privatised) is that the ideal type of body to run your railways, whether it is state or private, is a development corporation that both runs railways and has a healthy real estate arm, with wide-ranging powers of compulsory purchase and the ability to use those things together to create jobs and boost local and national economies.

So a good reason to nationalise the railways is that at present, our railway companies aren’t set up to do this: that is, for Labour to establish proper development corporations that would then either run our railways as state bodies or be sold off to do the same in private hands.

The evidence worldwide frankly is that either of these would work well. The problem with Labour’s Great British Railways scheme is there has never been any comparable level of ambition to do something like that. Instead, plans to better integrate ticketing and fares, while welcome, are all powers that the DfT has been able to exercise if it wills it, even during the era of privatisation. It remains to be seen whether Labour’s renationalised railways can become like higher-performing peers, or if we are destined to end up like British Rail in the ’90s or indeed German rail in the present.

Now try this

The London Jazz Festival has come to an end. A short list of personal highlights:

1) My partner and I had an absolutely magical time at Tina Carr’s gig at the Puppet Theatre Barge.

It was exactly the kind of thing that is magical about a big city: an American art form, sung beautifully and brilliantly by a British singer, in a puppet theatre on a barge (who knew that London had one of those?!). They do both musical evenings and puppet shows, ranging from family favourites to avant-garde stuff for adults. You can see their forthcoming puppet shows here, and their website is here. And there’s always something particularly wonderful about a musical performance in a small venue.

2) Cosmic Fusion at Ronnie Scott’s. Absolutely great modern jazz and funk fusion, run by the marvellous drummer Jon Onabowu: you can catch them at the Late Late Show on January 23 here.

3) Emma Rawicz at QEH — obviously. Her record is here.

4) Giacomo Smith and Mozes Rosenberg at Crazy Coqs — the lovely little cabaret venue at Brasserie Zedel, and you can buy their lovely Django Reinhart-inspired record here.

5) The best free set I went to this year was by lvdf, whose great new record you can listen to here, and buy here. They were also my best new discovery of the festival.

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