Alistair Carmichael MP attacks the mismanagement of the Conservative privatisation of the railways and says Labour hasn't done enough to correct the problems it caused.



Not even the current Tory leadership argue with the fact that their party’s privatisation of the railways left the system in a mess. In 1996 and 1997 not a single new train was introduced onto the network.

After almost a decade of Labour rule, what has changed? Very few people would suggest that we now have anything even approaching a decent rail service. Our fares remain the highest in Europe - £10 taking you 38 miles in this country but 200 miles in Italy or over 600 miles in Latvia. Since Labour came to power rail fares have increased in real terms by 5%, compared to a 9% fall in motoring costs.

Sadly increasingly expensive trains are not necessarily comfortable. Trains operated by Great Western Trains, GNER or Great Northern are on average older than those you would find in Hungary, Poland or Romania. On our overcrowded commuter lines, train operators have to resort to pricing people out of the market rather than extending capacity.

Clearly, we’re still stuck with the consequences of a lousy privatisation. An unnecessarily complicated structure of train operators, Network Rail, and Roscos, overseen by the Strategic Rail Authority, the Rail Regulator and the Railway Inspectorate. The worst example of mismanagement leading to wasted public money and an inbuilt reluctance to improve services can be seen in the way Roscos (Rail Stock Leasing Companies) operate.

For a long time now, Roscos have been the weakest link in this sorry mess. The entire British fleet of trains is owned by just three companies operated by banks. The costs of leasing the trains is sky high – most estimates suggest that Roscos see a return of over 30% on their capital each year.

There is an insufficient supply of trains for a working market structure, and there is little incentive for the Roscos to invest further in rolling stock. Furthermore there very little risk assigned to the Roscos – certainly not enough to justify such a huge return – and precious little innovation.

It’s true enough that this situation was not created by the Labour party. But I question
whether there has been enough done to rectify these inadequacies since coming to power. Successive Transport Ministers have been happy to announce the occasional “investment” without actually delivering real change. Passengers just aren’t seeing the improvements they were promised, but they are certainly paying for them.

Structural clangers like Roscos can be put right relatively easily (at least by the standards of the rail industry) by allowing train operators to own their own rolling stock – a move that would be welcomed by the operators. 

To really transform our rail services, however, we need significant capital investment. Successful rail services around the world rely on public investment.  We have to decide whether the cost of an integrated, efficient and affordable rail network is worth it. 

The outlook is not all grim – after all numbers of passengers continue to rise despite hikes in rail fares, overcrowding and problems with punctuality. Politicians of all colours continue to champion rail as a green and democratic mode of transport. Now all we need is a little common sense and some serious investment.

This article was originally published in the September edition of The House Magazine.