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Wednesday, 6 June, 2001, 09:02 GMT 10:02 UK
Off the rails: is it time to re-nationalise?
As Railtrack shares go into free fall, the company is likely to be ejected from the FTSE 100 stock market index because it is not worth enough.
The share slump has led to renewed calls for re-nationalising the country's troubled rail network - broken up by the Conservatives into Railtrack - the only privatised track authority in the world - and 24 separate train operating companies.
Despite the continuing problems, Tony Blair has ruled out taking Railtrack back into state hands, saying it would cost too much and take too long. But the bank ABN AMRO has advised shareholders to sell their Railtrack stock, saying only a large transfer of taxpayers' money can save the company.
Why hasn't the state of the railways received more attention during the election? What should the government that is returned on Thursday do to improve the railways? Is it time to take the railways back into state ownership?
This debate is now closed. Read a selection of your comments below.
In the dotcom world, companies wait until their target company goes bust, then buy it cheap. The same should happen with the railways. If the privatised companies make such a mess of things that they can't afford to run the service any longer, then they should offer it back to the government in a cut-price deal. Maybe then we can start getting freight back onto the rails and off the roads, and give passengers a halfway decent chance of a reasonable service.
Why are we as a country (ie the media, government, city investors, etc) so anti-rail? I find it one of the better and safer ways to get around the country.
We have made a fuss out of all proportion over a single accident which tragically killed four people last year. What we have completely missed is the multiple tragedies on the roads that occur every day without any media/public concern whatever.
It is time we as a country got real and stopped the unnecessary and unwarranted anti-rail slagging. If we don't, then we deserve the clogged up motorways and town centres that we endure daily, and the continuing long-term decline of Britain as a result.
What's this talk about re-nationalisation? The railways have never been privatised properly in the first place. Every time there is trouble, taxpayers' money gets thrown into the abyss, while any profits go to the shareholders. And to top it off, ticket prices go up. Sounds like a risk-free money-making machine to me. However, it's not risk-free for passengers.
Carl Meyer, Manchester, UK
In the dark years of Thatcher, a myth arose that private enterprise was automatically less efficient than public enterprise. The privatisation of the railways is beginning to stand this view on its head. In addition to the costs of running a railway must be added big juicy dividends to shareholders and inflated bonuses to fat cat directors (even when they fail disastrously).
Private companies are good at making profits, not making goods or providing services (as Lord Stokes once said, "I am not in business to make cars, I am in business to make money".) We all know the quality of goods his company (British Leyland) created and we all know that he and his fellow directors walked off with wheelbarrows full of cash. By the same token, Railtrack and operators' directors are getting well rewarded for running a rubbish service.
While public enterprise is sometimes not as well-run as we would like, at least it's accountable and doesn't have to bear the added costs of un-productive snouts in the trough.
Perhaps a solution would be to wait for Railtrack to declare bankruptcy. When the company files for bankruptcy, whatever government agency is involved then "buys" the company in the "fire-sale" that would ensue. Of course this would involve assuming responsibility for all the debts as well, but I am fairly sure that the Treasury could evolve a strategy to work around such problems. The company structure could be changed to one that might be described as a "not-for-profit" company. With this set-up it might be easier for the government to justify the payment of subsidy to the new company.
Where genuine competition can be established, then leave privatisation in place - eg, telecoms. Where it cannot, ie Railtrack, then re-nationalisation is the only logical answer - but with the ability to raise funds for new projects like a TGV link to Edinburgh from the end of the channel tunnel.
Many commentators knock Railtrack, but Railtrack will come out of the present mess with flying colours. Companies need good management and good returns to shareholders to attract inward investment and good political direction. A lot of the current problems relate to mistakes like the branding term "Intercity" being ditched and replaced by individual train operating companies branding. National products like Rover tickets are being sidelined while greedy companies like Virgin increase walk-on fares and place more and more restrictions on the use of walk-on tickets. People should be kicking-up a fuss with the Strategic Rail Authority, the Rail Regulator and greedy train operators to improve services and reduce fares. Railtrack does not deserve the criticism it is receiving.
Aleksander Mazalon, London UK
Despite rising fuel costs and increased congestion on the roads, it is often quicker and certainly cheaper to drive than use the railway. How long can this be allowed to continue? Surely it is a matter of taking the practical steps necessary to get a properly functioning transport system, not ideological debate? What's the big problem anyway? Both France and Germany manage to get a train from A to B on time, why not the UK?
Japanese railways move 20 million passengers a day and have an enviable safety record. Despite earthquakes and typhoons, punctuality is of a very high standard. A train is officially recorded as "late" if it does not arrive at the specified time. The average "lateness" per train on the Tokaido Shinkansen in 1999 was 24 seconds.
The Japanese railway system was also once nationalised. Because of huge accumulated deficits and labour problems, it was privatised and divided up in 1987. This led to the current success of Japanese railways.
Former BR chairman Sir Richard Marsh claimed a major cause for the company's poor performance was delays caused by having to go to the government for project funding, which meant lengthy scrutiny of plans.
Most projects were subject to political interference and re-assessment. What is it politicians feel that they have, that none of the business experts have?
There is no need to renationalise the railways. All the companies are privately owned and they should accept the risks along with the rewards. What we should be doing is giving the companies stricter targets rather than bailing them out with taxpayers' money.
Paul R, UK
Unfortunately Paul, I disagree. We need only look to the conditions of rail networks in other nations to observe what kind of rail system we could have. The loss of efficiency from having a state-owned rail system would be offset by the positive economic spillovers that a reliable and fast rail network would allow us. And rescuing the rail network from its current laughable plight would be a start in switching to more environmentally favourable methods of travel.
Let's at least be honest and admit that the railways in this country have been terrible for as long as I can remember.
Unfortunately we have under-invested in the railways for the last 40 years, under both private and public ownership.
Nationalising the railways would do no good unless the government is really prepared to invest more money. This seems unlikely given what has been allowed to happen to the underground.
The railway companies receive public subsidies and yet they still pay dividends to their shareholders. Many companies would actually have made a loss had it not been for the subsidy - in effect, public money into private bank accounts. I'm surprised this is even legal. If we want a fully integrated system, then it has to be a single system. If the government were to take responsibility for the railways and nationalise them, we might get some way towards that single entity. We might then avoid some of absurdities of taxis being used to convey passengers home when one company's train has not waited when another company's train which is late. I feel that the government prefers the status quo, so that it can say "private industry, nothing to do with us". Until that attitude changes, I fear we shall be going nowhere fast.
Nigel Tregoning, Falmouth, Cornwall, UK.
The alleged cost of re-nationalisation is a complete red herring. In the aftermath of the Second World War (when the UK was flat broke!) one-third of the British economy was brought into public ownership. This was done by compulsorily swapping the shares for government bonds. It didn't cost the tax payer a bean. There is nothing stopping the government doing this other than the fact that Blair/Brown have hitched their wagon to the "Free Market".
The railways are a disaster these days. Railtrack is not a public company so I don't see why it should have public handouts just to keep it running. Let it go bust and then buy it back.
I've travelled on trains around the world, Germany, Taiwan, France, etc. All are better than here.
I have travelled quite extensively on the rail systems of other European countries, and ours is the worst by far. The first time I travelled on Dutch and German trains was a revelation - beyond the punctuality, the cleanliness, and the standard of stations, what really stood out was the quality of ride; no clanking, no juddering, no grinding of wheels and lurching over points. You really can feel the decrepit state of the British network in your spine every time you travel. The question of nationalisation is merely a consequence of the true issue here - money. We now look at rail as an industry rather than a service. We don't expect our schools, hospitals or even roads to make a profit, yet railways are expected to. We need to shift our mind-set to see that you put money in, and you get trains out, not the other way round.
David Topham, MK,UK
I don't believe that a full nationalisation of the railways would bring any benefits to commuters in the long term. However, Railtrack should be in full government control as a Railways agency, in much the same way as the Highways agency. The national network of railways should not be financially driven by profit and loss to the benefit of shareholders. The public should be regarded as the shareholders, with the return from investment being safer and more efficient services.
If a budget was produced for how much it would cost to renationalise the railways and how many tax increases would be needed to attempt such a foolish venture, I wonder whether all these people moaning for renationalization would be singing the same tune they are singing today.
Re-nationalising won't achieve anything. Instead there will be zero motivation because everyone will know that there is no business accountability. You only have to look at the Underground to see that. I want to be treated as a customer, not a passenger.
The privatisation of BR has obviously been a disaster, but the current state of the Railways is not all the fault of Railtrack. The Tories spent £2 billion on the privatisation and stopped virtually all investment while this was going on. They almost destroyed our railway industry in the process and handed over the system in a very poor state.
Matthew Baines, London, UK
I visited a number of eastern European countries just after the Cold War ended and found the national rail networks to be cheap and efficient. In the winter the trains kept going despite deep snow and blizzards. The same applied to the bus services. If a Warsaw timetable said 4:47, the bus would appear at 4:47. I last saw such a thing in the UK sometime around 1969! Now the governments of these countries are introducing privatisation: prices are rising and standards falling.
Billions were spent on privatisation, which has been a disaster. And now Railtrack is demanding billions of public money because it is incompetent. In the meantime, millions of us have had to suffer, losing the economy billions of pounds in lost time because of delays and stress. Instead of seeing the light and re-nationalising the railways, Blair and his cronies think it's too expensive. Politicians don't care because they don't use the trains. If they did, they would renationalise them straight away.
Some of the railways' problems are problems of success. Passenger figures are up 50% since privatisation, which is causing overcrowding problems, and it doesn't help that many of the new trains keep breaking down. Yes privatisation was right but the way it was done was wrong.
Andrew, Bolton, England
Regaining control of the railways would be very simple. Each time Railtrack begs for more public cash, insist that it must issue shares to the government to match the value of the extra funds. The state would have a controlling interest in no time.
When privatised industries such as the railways encounter serious difficulty, they immediately ask for government help. Surely the whole point of having private concerns of any sort in the first place is that they should sink or swim. The idea of a government safety net paid by the taxpayer undermines the very idea of private business. If something is not under government control, why should the taxpayer foot the bill for that industry's misfortunes?
Railtrack has received over 2 billion of taxpayers money in the last 18 months and now wants another £2.5 billion. Rather than give Railtrack more money for paying dividends to it's shareholders, the money spent/pledged could have been used to renationalise it with some spare change left over. The French railway operator, SNCF, has built the world's best train system and yet it's total debt for that investment stands at 1.5 billion pounds - Railtrack burns through this much money every 6 months with nothing to show for it but an ever worsening network. This is the one sure-fire case where renationalisation actually will be cost-effective.
Tiresias Kostas, London, UK
I have been a rail fan for many years and was very angry at the Conservatives' sale of British Rail. But, I believe you cannot re-nationalise the railways as it would be at a large cost to the tax-payer. Maybe every time the government has to bail out rail-track they should - they should exchange the money for shares, instead of just giving it to Railtrack. Or maybe the government should buy 49% of Railtrack?
Renationalising alone won't achieve anything - a "publicly owned, publicly-accountable" railway is like world peace - desirable, yes but achievable - no. In my opinion it would be throwing a lot of money at achieving nothing - and as for those that say BR Mk. 2 doesn't need to make a profit - it was precisely because it wasn't making a profit that the dead hand of the Treasury came in and starved BR Mk. 1 of investment. Railways contribute to the wealth of the nation in more ways than just profits on a balance sheet, as, given the current situation, we are belatedly beginning to realise.
The United Kingdom is going down the same bad road as the United States. When the airlines were deregulated the service got worse . I rode the trains of England extensively in the 70's . It was one of the best systems in Europe. With the self-regulating of trains , it is now the worse system in Europe. The government should not have tried to fix what was not broken when they deregulated.
Bill S, USA
There is no problem with nationalised industry as long as short-term government policy objectives do not interfere. The temptation is always there for a government to squeeze nationalised industry in order to cut taxes or spend the money elsewhere. The lesson should be learnt that a nationalised company is still a company. However, the lesson that should be learnt from the 1980s and 1990s is that often privatisation is much worse. The answer is for the state to own strategic interests but leave them to run themselves where ever possible.
Transport, as with health and education, is a matter too important to permit of privatisation. The rail network must be brought back into public ownership, and it would not dent Labour's election, or re-election in 2005 if the Government were committed to it.
I wish someone could explain satisfactorily what is supposed to be so marvellous about public ownership. The problem with our railways lies with former British Rail employees who still largely form the staff of Railtrack and most train operators; BR were insulated from the financial consequences of their incompetent actions and it will take years for the culture to change. Something major needs to be done - but certainly not renationalisation!
Why not just get the French take it over and while they are at it, they can take control of the NHS as they have the best health system in the world as well!
The old railway companies were nationalised for their own good before many of them went bust - problems on British Railways began long before 1947. If the French can do it, then we should be able to do it as well - and we should be embarrassed that we persist in the low-cost, low-quality solutions that are all to prevalent in all aspects of British life. Nationalise - but do it properly.
People may want the trains in the UK to be of the standard they are in France, but I bet they'll complain bitterly when they are asked to pay the taxes needed to fund it.
The idea that the railways were safer and more reliable under British Rail is the stuff of pure fantasy. Mistakes have been made in the implementation of privatisation. Its a mess that needs to be sorted out and of course the government has a role in this. But bringing the railways back into state ownership is not the answer.
It is disgraceful that we pay so much for such a bad service. I believe the blame lies with the Conservative government which privatised the railways - for not putting in place enough measures to make sure Railtrack provided a good service.
Placing a cap on ticket prices as an incentive to increase passenger numbers might help, but passengers will be unwilling to use the trains if the current problems of scheduling and accidents continue.
It ill becomes the Tories to complain about Britain's trains - their lack of investment and dogmatic privatisation have produced the current situation. Four years of a Labour Government cannot turn around 19 years of neglect. Furthermore we should look to both France and Switzerland for expertise in running an efficient rail system
Barry, Bristol, UK
The railways were sold off by the Tories and they were in a terrible condition even before they were sold! As Tony Blair stated, they would cost too much money to re-purchase. Then we would still have to find the cash to improve it!. I don't use the railways, if I did I would pay the fare as a matter of fact, but why should I pay more tax for the middle class & top rate high earners to gain even more? I say tax the users not the non-users!
All the railway system should be brought back into state control, the money that is now subsidising Railtrack should be used for the purchase of new share capital in the companies thus avoiding the need to pay compensation to existing shareholders who could keep their shares as mementos of greed & folly.
Whatever the management faults of BR, effective remedies were always in government hands; i.e. replace the bosses and provide adequate funding at the same percentage of GDP as, say, France, Switzerland or Germany.
What to do now?
Full renationalisation is not necessary. A crafty enabling act to give HMG effective control of Railtrack would be a good start.
I am a long suffering central trains user. I think Blair is right that renationalisation will just stall the repair of the rail network. The point that is being missed is that a lot of the problems are caused by bad management in the industry. The government should step in and stop rail companies treating customers with such contempt.
Neil, Wrexham, Wales
Privatisation is not the problem; therefore renationalisation is not the answer. The decline of the railways is the result of over 50 years of under-investment by governments of both colours. Perhaps after the election he will grow up and realise there is a problem to be addressed, which in my opinion can only be resolved by restructuring Railtrack such that it sells rail space to the train operators at a price which enables it to raise the required investment.
I think the problems with the railways started when they were nationalised in the first place by the Labour party. I don't think that repeating the same mistake again is going to make things any better.
Paul Evans is absolutely correct. The reason the railways are in such a mess is due to 50 years of under investment when in public ownership. Neither Labour nor Conservative spent enough on it so by the time it was privatised it was on the verge of falling apart anyway. Renationalising is not the answer, because by the time they have actually bought it back history shows they will not invest enough in it.
Nothing in the UK has ever worked under nationalisation. It has been proven to breed incompetence, self interest and waste, and attracts only those managers who can't hack it in the real world. So, let's drop this naive concept once and for all, and get on with fixing the problem. Give Railtrack the grant they need to get the system sorted out, but with extremely strict and harsh penalties if they fail.
Julian Berks, Leeds, UK
The government should renationalise the railway infrastructure and then charge train operating companies to use it.
This would fund improvements in the railway lines and would allow the government a lot of control over the service provided by the private companies, thus ensuring the people are served properly.
I believe that all public transport should be run as a service, not for profit. It is the only way that I can see to get an integrated transport system that is cheap enough for people to use. At the moment the train timetables don't link with each other, or with buses. Public transport doesn't run early or late enough, and is often overcrowded and dirty. It is often cheaper and less hassle to drive. Only when it is cheaper, faster and more reliable than driving will public transport become an option for most people. At the moment it scores 0 out of 3!
The British rail service is the most expensive to use in Europe, and probably has one of the poorest services. Railtrack and the private companies who own the services seem to have put little investment in. The months of fiasco that followed the Hatfield rail crash were disgraceful. Something as important as our transport infrastructure should not be in private, profit-obsessed hands. The rail system should be a public service focused on service, not draining out as much profit as possible whilst putting in the least possible investment.
It would be an expense to renationalise, but only in the short-term. In the long-term it will work out more cost-effective.
If Tony Blair were to announce that they're going to renationalise Railtrack next year, and shareholders would get £1 a share, that in itself would sort out the problem of cost. With respect to the train operating companies, all you need to do is award all the franchises to 'British Rail' when they're up for renewal, and Bob's your uncle!
I don't think we should renationalise the railways, but if we are giving Railtrack so many billions, the government should get a significant stake in the company - say a third of the shares - in exchange.
It's amazing how short a memory people have. It wasn't too long ago that everyone slated the nationally owned railways. Re-nationalisation is not the answer - but stricter control of the railways is required. The Japanese seem to have got their privatised railways right.
Paul Smith, Daventry, UK
Renationalise the lot. The point about a national asset is that you keep it that way because the cost of not having it is even worse. It is primarily there for transport not profit. The state of the road system since Beeching, and the state of the rail system since privatisation both prove my point.
The main problem is the under-investment the railways have suffered for decades. Privatisation has simply exacerbated and highlighted the problems by sacrificing safety in the pursuit of profit. The railway system needs a much more integrated approach and a very large investment, which it is obvious the private sector cannot provide. Some form of renationalisation is the only realistic way forward, as privatisation is plainly not working, and is not going to improve in the foreseeable future.
It was 17 years of Tory neglect which contributed most to the mess the railways are in now. Surely if Labour tried wholesale renationalisation now, then there would be howls of derision about how much money it will cost the tax payer. T
Labour need to take an even firmer hand and take some perhaps unpopular decisions to sort out the mess.
The nationalised railways with all their faults brought us electrification of the major mainlines and the Intercity 125 and 225 trains. Privatisation has brought us a few new licks of paint, some unsuitable trains and chaos. Renationalise now and give the control of railways to experienced railwaymen and engineers, invest in French technology and kick all these boardroom executives and shareholders out!
Privatisation was intended to improve service through competition: operators don't perform, another company comes in. Railtrack, however, is a monopoly. Conceptually you could choose which train operator you go with but with a private monopoly such as Railtrack, there is no choice. Renationalise Railtrack now, but keep train operators private.
Chris Douce, UK
Trains should be used only for the transportation of freight and large amounts of people between heavily populated areas. The other (smaller) lines should be shut down and proper bus routes set up to take their place. Stop hankering back to some supposed golden age and be realistic. Local lines cannot ever be economical to run.
The last massive state bail-out of Railtrack was worth over 50% of their shares at the time. Why wasn't this mentioned? Why can't we issue compulsory purchase orders to the greedy shareholders who are still taking dividend payments, despite the huge losses their company has made?
Any leverage which the state may have is dissipated by measures taken to reassure shareholders that the state will not interfere with their commercial interests. This definition of interference does not seem to extend to bailing them out.
It is always argued that there is stiff competition between bidders in the private sector. Why then do we announce preferred bidders before we have even negotiated contracts? By 'competition', they do not mean consumer power. If I am sick of the poor service of Connex South-East, should I walk 30 miles and take someone else's service?
I would truly love to see the railway network renationalised, it's too important to the country to be prey to the selfish interests of business. However, I do have to ask whether it would be run any better in government hands? Previous experience suggests it would not. Any organisation that has no competition has no incentive to maintain efficiency, nor would the lower rates of pay attract the best people. I'd want to see some very firm quality control proposals before I, as a taxpayer, would be happy to see the rail network jump from the private frying pan into the public fire.
Renationalising Railtrack would mean years of yet more upheaval and would be costly.
I think it would be better if the government gave Railtrack the extra £2.6bn (almost half the company value) they've recently asked for in return for an equity stake of at least 40%.
Unless something is done soon there is a danger of losing the investment momentum.
Tony Blair said last night it would take two years to effect full renationalisation, but Railtrack claim it will take them five to sort out their own mess. The government will shell out twice as much public money to shore up Railtrack, as it would cost to bring the industry back into public ownership. Mr Blair should realise that on this issue the Daily Mail readers that he usually runs scared of may actually back him. It could be - in the long run - one of the government's most popular moves. Renationalise now!
Paul Gorman, Peterborough UK
Blair has already priced many innocent motorists off the roads, now he's content to see many dependant commuters priced off the railways. There is an ocean of evidence that the railways should come back under public ownership. Privatisation was a tragic failure and the biggest losers were the passengers. Does it make sense to handover £1bn of public money to rescue a private industry? The government's rescue package will not be entirely spent on improving the service. A lot of it will be used to boost profits for Railtrack, and a lot more will just be wasted.
The last few years have proved that the railway network cannot be entirely self-funding. Government subsidy of some kind is quite possibly an answer to keeping standards up and prices affordable. Perhaps some kind of rationalisation of the railway companies is needed? There are far too many train operators, competing with each other, rather than with the alternative forms of transport like bus and plane companies.
Matt, York, UK
Of course railways should be nationalised again. The Tory party that privatised it had more in common with Stalin than they would like to admit, in their single-minded and callous approach to public services. While the latter believed in communalisation at any cost, the Tories believed in privatisation at any cost.
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