To build a 21st century railway system the public must take control of investment
Two stories emerged last week which ask serious long-term questions of the government’s mainstream policy of using large private contractors to deliver what are effectively public infrastructure services.
The conclusions of a 100-page joint parliamentary committee report into the Carillion debacle highlight a series of conflicts of interest — in the company, its pension funds and the audit firms it hired, making it unaccountable and leaving a web of failures unspotted until it was too late.
It has prompted some major accountancy firms to admit to a serious accounting problem at the critical interface of public and private sectors. Several have even revealed contingency plans to break themselves up to create separate, or more numerous, audit providers.
The report indicates a systemic breakdown in the relationship between government, the private firms it procures public services from, and the markets which fund them. The breakdown has come at a cost of thousands of skilled and well-paid jobs and at the cost of millions of pounds of public money.
All governments over the last thirty years have been tempted to outsource work because it moves debt off the balance sheet and keeps the public sector borrowing requirement (PSBR) low. But this largely cosmetic measure ignores the problems piling up behind it.
Add in this government’s addiction to counterproductive austerity measures and each re-franchising process quickly turns into ‘a negative auction’ in which suppliers are retained on lowest possible cost, creating huge and very expensive to manage risks over the longer term.
Which brings me to Chris Grayling’s announcement that he is bringing Britain’s East Coast rail franchise back into public ownership, for the third time in twelve years. It’s a familiar and oft repeating pattern ever since the Major government introduced private rail franchises in 1992.
As my frontbench colleague, Andy McDonnell pointed out at the dispatch box last Wednesday, the result of this 25-year experiment is “bailout after bailout, in which rail companies win and taxpayers and rail passengers lose”.
The irony of this sort of ‘pretend capitalism’ - in which government creates private monopolies that, unlike public monopolies, remain unaccountable for the way they deliver (or in the case of Southern Rail, fail to deliver) public infrastructure services - is that they are not competitive at all.
Much is made of the increase in numbers of passengers in the private franchise model. But as our road systems silt up horribly, rail passenger journeys are up across Europe’s public systems too. Network utilisation in the UK is high, partly because our system is near breaking point.
The last Labour government’s decision to return the rail network to public ownership was a positive step. It gave us the safest system in Europe. But without economies of scale or appropriate levels of investment, the UK lags far behind Italy, Poland, Spain and France in the sort electrification that would transform travel times.
In reality, business competition has never really existed between these franchise monopolies. Where rail transport really must learn to compete is in attracting passengers away from a jammed-to-bursting road system or environmentally damaging air services.
Infrastructure is crucial to the health and resilience of those who use our stations in Stroud, Stonehouse and Cam and Dursley as it is for the wealth of the nation. Such roads that aren’t potholed are full to bursting. So we really need our rail stations to do some heavy lifting.
Rail needs to become more attractive to the ordinary traveller. Endlessly changing operators’ colours and brands is an equivalent of rearranging the deck chairs on the Titanic. Rather we need to increase access and overall operational speeds by investing right across the network.
Over the next few weeks, I want to get a grip on local rail users experiences. So I'll be asking for your experiences of travelling, to help me develop a consistent picture of the challenges we must put to the various franchises that serve the constituency and beyond.
Send your stories and experiences to me at: email@example.com.