The Labour Party's rail plan: Nationalisation in name only
Labour will* bring the railways into public ownership
In 2016 Conservative chancellor George Osborne announced a minimum wage increase. In a savvy effort to defang the Living Wage Foundation, who campaign for employers to pay at least the minimum necessary for a worker to meet their basic needs, Osborne called his new wage rate the National Living Wage. It was no such thing, but the name stuck and now the foundation are in the unenviable position of having to constantly explain the difference between the real living wage and the Tory knock-off.
You won’t hear much about minimum wage in this election cycle because the “living wage” rebrand, coupled with inadequate but not insignificant increases, did an excellent job of knocking the wind out of the Living Wage Foundation’s sails. There’s a lesson in here for the incoming Labour government: that you can co-opt and hollow out popular policies, implementing them in name only, and you’ll get away with it at the ballot box.
It’s a lesson that Labour are already putting into practice with their “plan to fix Britain’s railways”. Rail nationalisation scores well with voters (+48 net approval) and Labour are glomming onto this enthusiasm by claiming their plan will “bring the railways into public ownership”. The disappointing reality is that there’s little difference between their plan and the bailouts that the Tories are already implementing under “operator of last resort” measures.
Our railway system, like all privatised infrastructure, is bewilderingly complicated and fragmented by design. Whether it’s Trainline charging you a quid more than anyone else for having the cheek to buy a ticket from them, or asset hoarders renting out trains they didn’t build, it’s always in the gaps between the fragments of the organisation that these middlemen extract value.
With that in mind, I apologise that it’s about to get a bit technical, but bear in mind that these people are betting on your eyes glazing over in order to rip you off, so please do stick with it.
To understand the gulf between Labour’s rhetoric and the lacklustre reality of their plan you need to understand the difference between train operating companies (TOCs) and rolling stock companies (ROSCOs). TOCs handle the customer journey that you & I see (ticketing, running stations and services) while the ROSCOs rent trains to the TOCs at exorbitant prices. ROSCOs are basically train landlords: they add no value to the end product versus direct ownership of the trains themselves, and they extract large profits from what were once government owned assets. They are by far the biggest site of profit extraction from the British railway system and, much to the delight of their owners, Labour are pledging to leave them alone:
With ten current rolling stock companies owning and leasing trains and carriages worth billions, it would not be responsible for the next Labour Government to take on the cost of renationalising rolling stock as part of our urgent programme of reform.
It would cost somewhere around £13.5bn to buyout all of the ROSCOs. This is equivalent to about ten years of the profits that ROSCOs currently hoard in the Cayman Islands and other low-tax jurisdictions. Labour’s economically illiterate position is that removing these parasites from our rail system, a move that would pay for itself in a decade or less and go on to save us tens of billions of pounds in the long run, is too expensive. It makes about as much sense as saying “houses are expensive so I’m going to rent forever”. Actually given national finances operate differently to personal ones and, unlike people, countries sadly don’t die of old age, it makes even less sense than that.
Labour’s rail plan then, is not a programme to “bring the railways into public ownership”, but an effort to rescue a collapsed privatisation strategy and to safeguard the private interests of ROSCOs. This is disastrous for anybody advocating honest to god nationalisation. The parts of the rail network that the average voter interacts with will look like the state, and there will be plenty of union jack liveries to reinforce this misconception, but behind the scenes parasites on top of parasites will continue extracting profit from our crumbling system.
The term Orwellian is overused in by Britain’s columnists, but it’s apt here. The way that Labour are abusing the term “bring the railways into public ownership” while only tinkering around the edges of the problem is textbook doublespeak. They will get away with it for a term or two, but every lie incurs a debt to the truth. Eventually the bill will come due.
Before that happens, it’s up to us on the left to articulate simple and effective solutions to the knotty problems of privatisation. We must also be very clear that what Labour are doing is not the form of nationalisation that we advocate. If we don’t, the right will invariably blame these problems on lefties, migrants and queers, and ride the coming wave of discontent straight back into 10 Downing Street.
If you’re interested in learning more about the ample flaws in Labour’s plans I recommend #Railnatter | Episode 213: Labour Will* Nationalise Rail (a Getting Britain Moving page-turn)
If you’d rather not dwell on what’s wrong and instead focus on what a coherent plan for Britain's railways would look like: #Railnatter | Episode 190: Thirty years of privatisation and what should happen next