It is bizarre that the Labour Party, or at least Ed Balls, is now tying himself up in such contortions to avoid renationalisation of the railways at any cost when the polls constantly show 70-80% of the electorate, which must include a very large number of Tories, is demanding just that. Is the Labour Party, or at least Ed Balls, ashamed of public ownership when a great majority of the voters want it and when all the facts on the ground make clear it’s the right and sensible objective? To suggest that when a rail franchise falls vacant, it should be re-auctioned in a competition between the State and the private sector is frankly barmy: why require the State to bid for a section of the railway which at that stage it already owns? Quite apart from the fact that it’s unnecessary, costly and bureaucratic, it still leaves the UK rail system hopelessly fragmented, which as the McNulty Report recognised is its main problem.
It’s not as though rail privatisation has been a roaring success. Since 1997 the taxpayer subsidy to cover all rail running costs has quintupled to £5.2bn a year. Network which owns the track gets a subsidy of £4bn a year, yet its debts have exploded and are set to reach £50bn. McNulty noted that UK fares were 30% higher than in France, Netherlands, Sweden and Switzerland, and UK operating costs were 40% higher because of the fatal flaw of fragmentation – a route down which no other country in Europe has gone. The Boston Consulting Group found that the annual public subsidy per passenger is £9 in Spain, £49 in Italy, £67 in France, £101 in Germany, but £136 in the UK. Yet despite these enormous taxpayer subsidies, the train companies have still managed to siphon off £6.2bn in profit and dividend payouts.
It’s being suggested that Labour support for public ownership of rail is somehow ‘ideological’. The reverse is the truth. The Tories rammed through the botched privatisation for purely ideological reasons, and to cling to that now is simply to embrace Tory ideology. The real Labour Party, like UK voters generally and like every other country in Europe, supports the public ownership of rail for the pragmatic reasons that it’s more efficient, less costly, and keeps fares down. Not that there’s anything undesirable about public ownership provided it is soundly based and directed at the right targets which include energy, housing, pensions, banks, welfare, to name but some, all of which have dramatically failed in the last decade within the private market.