UK’s Northern Railways up for re-nationalization as a last resort

The Great British Railways which was privatized under the John Major government in 1993 with much fanfare to bring in greater expansion and more efficiency albeit at a lower taxpayer cost, is inching towards a debacle after twenty years in the making. The entire railway system was franchised, and private parties were allowed to run the system, and it was expected that this would better serve the British people. However, the experiment is now turning out to be fruitless, the latest of these franchisees to fail is the Northern Franchise of the network, which has now been engulfed in financial distress. The operator of the Franchise, Arriva, which is part of Germany’s transport major Deutsche Bahn, had over the years put in nearly £300 million pounds to improve the system but was not able to solve many of its lingering problems which has led to the current state of affairs. The transportation secretary of her Majesty's Government, Grant Shapps, stated earlier this month that the government would renationalize the Northern Railways as the operator of last resort.

The privatization of the British Railways has been a hotly debated subject ever since it took place. There is a divide among Britishers whether the promises made during privatization have actually materialized. Whereas some argue that investors have increased, so has the number of trains and also the traffic while others say that the results would have been the same or better still, had privatization not taken place. Among other things, the passenger fare system has not been updated in the past twenty-five years, and customer complaints have been at an all-time high. No major innovation has taken during the period, and assets have only changed hands. Northern railways is not the first railway network in the United Kingdom that is being nationalized. In the classic case of Eurostar running under the channel tunnel connecting London with Paris, the project was to be constructed and owned by London and Continental Railways (LCR) but midway through the project the company started running into financial difficulties, with frequent financing, planning and structural changes. This necessitated the government to start funding the project and eventually take control. However, the European passenger service, as the project later came to be known was eventually sold off. A similar fate also unfolded for the East Coast mainline in June 2018, with the government taking over the network as the operator of last resort.

On the other hand, the subsidy pay-out in rail transport continues. Privatization did not bring the necessary efficiency needed to withdraw government support. Ever since its privatization, the government has constantly tried to squeeze it subsidy support, but the disasters of Hatfield rail crash of 2000 and the potters bar rail crash of 2002 has exposed the gaps in the operational efficiencies of the companies and necessitated heightened government oversight. Privatization never brought the necessary efficiency that was anticipated, and the service quality continued to suffer. Others point out that, though investments have increased in absolute terms, they are actually far less than what they should have been, given the poor state of maintenance and the crumbling state of infrastructure. The private players only made investments keeping the current profitability of their part of operations in mind. This led to a lack of strategic planning and no long-term vision for the railways as a whole, and as a result innovation has suffered.

Her Majesty’s government had in 2019 ordered a review of the entire railway's franchise system on how it was currently performing and how to take it forward. The review committee formed, was headed by Keith Williams, the former Chief of British Airways at the behest of the transport secretary of Her Majesty’s government. The committee, whose final report is still awaited, has given some insights of its findings and has stated that given the current state of affairs, a “revolution and not an evolution” is needed at the British railways. The way the railways is being currently managed, much is left to be desired and that the current franchise based private-public business model, must make way to a more efficient business structure if any future is to be thought for the British Railways at all. Among the several points he made in his report, the one he most stressed upon was customer experience which needs to be catered to with utmost urgency and what the current franchisee system was miserably failing at. The report further stated that other than customer experience, other important factors at the centre of the proposed reforms should be reliability, punctuality, value for money, consistency and transparency driving the railways into the new age of transformation.

Arriva, the current operator of the Northern Rail franchise had been running the system since 2016 when Serco and Abellio were replaced. Arriva at that time promised to upgrade the network with a fleet of new trains upgrading it from the old-fashioned “Pacer” rolling stock. However, three years down the line and £300 million in investments, the company could not make many headwinds. The Northern Rail franchise has been for some time plagued by delays, cancellations and employee strikes. When Arriva took control of Northern Rail, 91 per cent of trains started to arrive on time. However, two years down the line, the situation has only deteriorated to only 82 per cent of the trains arriving on time. The Northern Rail network runs from Newcastle to Leeds, Liverpool, Hull, Manchester and Stoke and serves nearly 100 million passengers in a year. The government, should it actually go ahead with the nationalization, will have to infuse another £500 million into the system which would not only reopen some of the defunct lines but would also fund some repair and replacement works that are urgently needed for the network. The government is expected to announce its decision in this regard on Wednesday 29 January 2020.

It seems now that the Private-public railway franchise experiment in the United Kingdom has come a full circle. After the sell-off of the Eurostar and taking over of the East Coast mainline and the Northern Rail network by the government as the operator of last resort, Grant Shapps has indicated South Western Railway could also be nationalized in a few months because that too is in fragile financial shape. The other remaining rail operations are also in a very bad shape and are faced by dwindling passenger numbers.

This state of the Railway infrastructure is also going to have an impact on the future of the ambitious HS2 project which the country wants to implement in order to compete with the expanding high-speed rail network across Europe. The project, which at the time it was approved by the British parliament in 2017, had a price tag of around £56 billion. But two years down the line, several independent estimates now put the actual cost completion to be between £106 billion and £107 billion making it one of the most expensive transportation projects to be undertaken by the country. The transport secretary is also set to make a thorough and exhaustive review of the project before deciding on the continuation or eventual scrapping of the project.