In the first week of 2018, UK rail passengers were made aware of another price hike that hit both season tickets and single ticket fares. The cost rose by 3.4% on average nationally in a country where fares are already close to the worst in Europe, levels of service equally bad and bailouts of failing operators protecting train companies. This has effectively exacerbated the already low levels of confidence in the crucial public transport service causing users to speculate whether only complete nationalization and restructuring of the service might get it back in shape. Now overwhelmingly this is a common perception that spans across the political landscape with various political parties offering this as a prime policy in their manifesto. Any steps in this direction would be an enormous and probably very expensive course of action for any government to implement, but with fares approaching 14% of the average wage in some areas, some new policy clearly needs to be explored.
Despite overall being ranked as the eighth best rail service in Europe by the Rail Performance Index, which is already behind the other developed and wealthy nations of Europe, Britain’s numbers are inflated by a particularly high safety ranking. The UK scores very low indeed in quality of service terms, ranking amongst the bottom three countries in Europe for this metric. This is a perception which is common amongst consumers too as cancellations, delays, poor quality rolling stock and unsuitable stations are commonplace.
One of the primary theories observed in recent governmental economic actions throughout the world is for traditional large scale government run monopolies, to be broken up or privatized. For instance in many industries the EU actively encourages this process, setting rules on monopolies. There are a number of reasons that a government uses to justify selling off its assets in this way, these include: improving efficiency, adding a competitive element giving consumers more choice and driving down prices, rejuvenating old inefficient services and modernizing among others. However, often the primary driver is to raise money and reduce government involvement and commitment to the industry and take tax support out of the system.
The rail industry does not suit privatization for a number of different reasons. Firstly it is impractical to have different competing train companies that run the same service as the costs and wastage of running two Manchester to London trains, departing at the same time, would be staggering. This being the case, true competition is not actually possible in the rail service and so half measures have to be taken where companies compete for contracts to run a particular line. It could be argued that this does introduce some degree of competition because companies that have been ineffective on one line could lose their contract come the end of the term. This rarely happens in practice however and companies that effectively go bankrupt get bailed out and companies with very poor service histories win more contracts.
In this particular industry, because direct competition can’t be achieved, nationalization is perhaps the only real way to run the industry for the long term. Most major European train services have been able to out-compete those in the UK and they exist as majority government owned agencies, offering better pricing and service quality than their British privately owned counterparts. The evidence from other European countries shows that a national monopoly doesn’t have to be an inefficient goliath devouring resources; they can be run effectively and to such an extent that they can even expand abroad into other markets where possible, such as the French and German services have done.