COMMENT: The British government knows the system is a shambles – but refuses to admit that rail privatisation has failed, John Stittle writes.
You can only pity the exasperated train commuter waiting for a Southern Railways service to arrive at Clapham Junction station. Passengers have suffered from interminable delays, last-minute cancellations and gross over-crowding of services. So horrendous is Southern’s service that it was recently voted as having the worse overall levels of passenger satisfaction in Britain.
But now Southern believes it has found an imaginative solution to manage its appalling level of passenger service (or at least, so it has convinced itself). This privatised train operator that operates services from London to Brighton, Sussex and Kent will cancel 341 daily train journeys, representing 15% of its services.
Southern states, without any hint of irony, that these cuts will provide their “passengers [with] more certainty”.
Passenger misery is compounded by Govia Thameslink Railway (GTR), the parent company of Southern trains, being engaged in a long-running dispute with the RMT union over plans to remove conductors from its trains. GTR management has blamed the cancellations on RMT’s strike action and a shortage of staff.
Woeful service
Since July 2015, when Southern was incorporated into the GTR franchise, its performance in train operations has been woeful. It has continued to breach its performance targets specified in its franchise. However, rather than insisting GTR honours its agreed targets, the Department for Transport (DfT) lowered the operator’s performance standards – and even these reduced targets continue to be missed.
Amazingly, the DfT refuses to admit that the train operator is failing. Rather than remove GTR’s franchise, the DfT have continued to prop up the franchising system in particular – and rail privatisation in general. However, the DfT has a wider political agenda with its handling of Southern’s operational problems. Indeed, in March this year, both the DfT and GTR were uncompromising in directing their anger at the rail unions.
Peter Wilkinson, the DfT franchising director, was determined to impose drastic changes on the conditions of service for Southern’s employees. Wilkinson was reported as being “furious” that ASLEF, the train drivers’ union was objecting on safety grounds to take responsibility for opening and closing train doors of Southern trains – if and when conductors are removed.
Wilkinson said: “…it has got to change – we have to break them [the unions]”. Indeed, management-staff relations worsened even further when off-duty travel concessions for employees who took part in industrial action were removed by GTR.
Rotten to the core
But in many ways the failings of Southern and the bitter dispute with the rail unions is symptomatic of a deeper structural, operational and management malaise corroding the railway industry. Two decades ago the industry was privatised and the vertically integrated and state-owned British Rail was fragmented into more than 100 separate companies, which were then sold off.
Rolling stock, infrastructure, provision of train services, freight, engineering and maintenance – everything in the industry – was sold at bargain basement prices. A myriad of complex arrangements was then created as the rail businesses contracting their services with each other soon led to industry costs soaring. John Major’s government that implemented the privatisation process believed it would lead to “better value for money” for passengers and reduce industry costs.
But there is scant evidence that these aims were achieved. Since privatisation, state subsidies have soared. In 2014-15 terms, data from the rail regulator shows that total government support to the industry soared from £2.68 billion in 1994/5 to £4.79 billion in 2014/15. Passengers are now enduring fare levels rising far faster than inflation.
Since 2004 alone, in London and the South-East, the average fares of all ticket types have increased by 15.7% in real terms; and long-distance average fares for all ticket types have increased by 21.9% in real terms. Let’s not forget that most fares on the network are not regulated either. The rail regulator admits that around 62% of passenger fare income now comes from unregulated fares that are exclusively set by what the train operators believe the market will bear.
Franchise model failing
But of more immediate concern to Southern’s passengers is the reluctance of the government to intervene and admit the franchising model is not delivering the goods – or indeed the passengers to their destination quickly and reliably. The government is concerned about the troubled franchising model but does not want to admit the private sector model is failing.
Admittedly, in 2001 and 2003, the train operator, Connex was eventually stripped of its south London franchises for poor performance. But, since Connex, successive governments have generally continued to prop-up under-performing and failing franchises. The government even offers additional financial support to some train operators whose revenue falls below forecasts and has even renegotiated terms of some franchise agreements.
The troubled East Coast franchise has seen a succession of failed franchisees on the London to Edinburgh route. Two former operators, GNER and National Express were unable to meet their franchise premium obligations after making ludicrously high bids.
In 2009, after National Express walked away from its franchise, the government as the “operator of last resort”, was forced to take over the services. Pointedly, when both Connex and the East Coast main line were temporarily operated by the state in 2003 and 2009, performance standards quickly improved.
But now that the East coast main line franchise has been awarded to Virgin Trains East Coast, there are early indications of further financial turmoil. Last week, Stagecoach, which has a 90% interest in Virgin East Coast Trains indicated that growth in passenger revenue was only 5.2% – considerably lower than necessary to successfully meet its long-term franchise obligations. But rather than scrapping the franchising model, the government has attempted to paper over the failings.
Overall, the current franchising model is confused, complex and generally not fit for purpose. Railway operations are the most operationally efficient and cost-effective when they are established as one integrated industry. All sectors of the industry, including the provision of train services, infrastructure and rolling stock, can then operate within the context of one, state-owned organisation.
But until the government recognises that rail privatisation is failing, there will be other franchised train operators that will struggle to provide a reasonable level of passenger service – little consolation for the passengers at Clapham Junction and further afield who will now be waiting for even longer for their non-existent trains.
John Stittle is Senior Lecturer in Accounting, University of Essex. This article was originally published on The Conversation. Read the original article here.