Railway privatisation in Britain isn't working for simple economic reasons – and the HS2 pay row just adds to them

The sector is in limbo. It’s ‘privatised’ so the government doesn’t have the standing to implement a badly needed overhaul. But it still relies heavily on government money, which isn’t exactly abundant

Caitlin Morrison
Wednesday 08 August 2018 18:40
It recently emerged that HS2 will cost almost double previous estimates
It recently emerged that HS2 will cost almost double previous estimates

HS2 has never been without its controversial aspects, and the revelation that almost a quarter of people working on the project are on six-figure salaries is no different.

The company explained that it requires “world class skills and expertise”, which goes some way to explaining why the amount the company spent on consultants last year doubled compared with 2017, hitting £600m.

The government is already under pressure over the high speed rail plan, after Sir John Armitt, chair of the National Infrastructure Commission, called on Westminster to stump up even more funding. The cost of the scheme is currently estimated at around £56bn, but according to a recent Cabinet Office assessment, this is highly likely to rise by at least 60 per cent, ballooning to a total spend of £80bn.

It was dressed up as being necessary to offer UK rail users “the biggest bang for our buck”, but critics said concerns about a lack of connectivity between smaller stations along the proposed line between London, the West Midlands, Manchester and Leeds still had not been addressed.

So the news that a sizeable portion of this public bill is going towards chunky paychecks was never going to go down well.

However, exasperation at this display of expensive incompetence aside, the money spent on consultants is understandable.

The government just doesn’t have the in-house expertise required. And why would it? Since the privatisation of Britain’s railways began in the mid-Nineties, Westminster hasn’t really needed to hold any great degree of knowledge or insight around the rail sector.

That job requirement has been outsourced to foreign governments.

The UK’s rail operators have been sold off gradually over the past 25 years, more often than not to foreign-owned firms, many of which are state backed.

The idea that privatisation has failed is becoming more and more popular. Earlier this year, a shambolic attempt at changing timetables across the networks run by Govia Thameslink Railway (35 per cent owned by Keolis, a French part state-backed firm) led to calls for the UK’s railways to be returned to public ownership.

It’s not just scheduling snafus that have ruffled feathers though. Money, of course, is at the root of most arguments in favour of putting the railways back into public ownership.

Network Rail is the body in charge of looking after the UK’s rail infrastructure, its remit extending across track and tunnel upkeep to timetabling and station management.

Network Rail is also mainly funded by the UK and Scottish governments in the form of direct grants. The second largest contribution comes from operators – which means a good percentage of the funding for Britain’s national railway infrastructure comes from other states.

Any profits made by Network Rail are reinvested into the group, but its performance in that regard hasn’t been inspiring lately: in the 2017-2018 financial year, the company reported profits had plunged by 90 per cent.

Clearly, the inefficiencies of the UK’s rail systems extend far beyond timetables and train maintenance.

The sector is in limbo. It’s “privatised” so the government doesn’t have the standing to implement a badly needed overhaul. But it still relies heavily on government money, which isn’t exactly abundant at the moment.

Now the biggest rail project undertaken by the government in 25 years can’t throw off the same inefficient mantle. Having to fork out £600m for consultants to help with matters that the government itself should be able to advise on is embarrassing at best, a total failure of the public at worst.

If Westminster had retained control of the rails, one would assume that it would have retained the expertise needed to oversee, maintain and update the system.

Instead, it opted for a kind of worst of both worlds, where the public purse pays for most of the railway, but ministers have little say over how they’re run and, evidently, wouldn’t even know how to advise if they got the chance.

Something needs to change to break this endless cycle of inefficiency, and fast, because with a potentially disastrous no-deal Brexit hurtling down the tracks, the government is going to have enough on its plate – and the railway problem will be left to get more complicated and costly than it already is.

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