As I noted in passing in yesterday’s ToryDiary, there is a slightly ersatz feel to the tone of the public discussion around Labour’s agenda. On planning, at least, both it and its critics seem to have a common interest in presenting the proposals as much more radical than in fact they are.
This extends beyond planning, and Angela Rayner’s appealing mockups of illegal housing. There’s also the so-called ‘National Wealth Fund’. It sounds like what Norway has, which is presumably the point – but Norway’s is based on oil profits, which is to say, actual wealth. Ours is a vehicle for government borrowing. So too, as far as we can tell, is GB Energy.
Which brings us to rail nationalisation. This has been talked about at points in quite breathless terms: ‘Labour to renationalise train operators with no compensation’, thundered the Daily Telegraph in January. It sounds a lot bolder than it is; the Passenger Railway Services (Public Ownership) Bill merely changes the balance of the franchising system so that a publicly-owned operator (of which there are already four in England) is the default option, rather than last resort.
Labour’s intention is simply not to re-tender contracts to private providers when they expire, so the question of compensation simply would not arise.
The mooted Railways Bill goes further, reviving the idea of Great British Railways and centred on “bringing track and train back together and planning services on a whole-system basis”. That sounds more like a return to full-fat nationalisation.
But even that is still ambiguous, not least in terms of territorial extent. What, for example, happens to Scotrail? It’s publicly owned, albeit by the Scottish Government, but isn’t listed amongst the four publicly-owned operators in the official notes on the King’s Speech. One might expect this means Labour’s plans are for England, or perhaps England and Wales – but both Bills are described as applying to Great Britain (or “GB-wide”, in the case of the Railways Bill”).
It is perhaps no less unfair to refer to this as ‘nationalisation’ than it was to refer to what the Major Government undertook as ‘privatisation’. But the truth is we never truly re-privatised our railways.
The original, privately-built Victorian railway companies were vertically-integrated: they not only operated the passenger services but also the freight, and owned not only the engines and rolling stock but also the track and stations, as well as complementary businesses such as the once-ubiquitous railway hotels.
That model had any advantages: the companies had a guaranteed long-term interest in the viability of the railway, a brand incentive to invest in grand stations and hotels, a broad asset base against which to secure financing at good rates, and the ability to cross-subsidise passenger fares with freight profits.
John Major ultimately balked at returning to anything like it. ‘Privatisation’ ended up meaning leasing companies the right to operate passenger services on a given route, and normally for only a short contract.
This does not create much incentive to invest. It’s no coincidence that the most successful franchise, Chiltern Railways, has both delivered substantial investment in improving the Chiltern Main Line and was awarded a much longer operating contract.
Which brings us to the big question for Labour: money. Whatever the flaws in the current privatisation model, it has delivered private investment. Under a completely nationalised model, all of that needs to be made up by the state, which has a very poor track record of making capital investment (see also: water) when there are competing pressures on the public purse
Rachel Reeves clearly recognises the importance of leveraging private capital in other areas – it’s the entire point of the ‘National Wealth Fund’. And at a time of increasingly stretched public budgets and ever-mounting demands on the government purse, a flexible approach to finding the cash for long-overdue capital projects is probably sensible.
So it would be deeply unfortunate if her party’s idée fixe on public ownership ended up shutting private capital out of the railway network.
Unless, of course, it simply reflects a lack of ambition for rail – the decision not to reverse Rishi Sunak’s scrapping the northern leg of HS2 is an ill-omen in that regard.