Support for the full renationalisation of Britain’s railways is consistently popular amongst the public. A recent poll showed that almost 70 per cent of the British public support train operating companies being brought back into public ownership.[1] Labour has also supported this proposal, recently pledging to renationalise most passenger rail services within five years.[2]
The arguments for Labour’s decision are those commonly made by those in support of rail nationalisation which are that franchised train operators pay their shareholders dividends while increasing fares for passengers, and that nationalisation would improve the efficiency and level of service for commuters.
This note demonstrates that these arguments are erroneous and that many of the current problems on the railways are occurring where effective nationalisation has been deployed.
READ THE BRIEFING NOTE
Key findings
- Almost 60 per cent of delays are caused by Network Rail,[3] which is already nationalised.
- Up to the coronavirus pandemic, the number of passenger journeys had consistently increased since privatisation with the number of journeys increasing by over 119 per cent between 1996-97 to 2018-19.
- Passenger satisfaction is already high and stands at 82 per cent in the latest National Rail Passenger Survey.[4]
- Most franchised train operators did not pay any dividends to shareholders in 2022-23 while total dividends paid in 2022-23 by these operators was 43 per cent lower than the amount paid in 2021-22 and 75 per cent lower than the pre-pandemic £300 million dividends paid in 2019-20.
- Franchised train operators had income of £9.03 billion and expenditure of £13.23 billion in 2022-23. Including the franchise subsidy, franchised train operators had a surplus of £159 million in 2022-23. With this subsidy these operators had a margin of 1.2 per cent.
- Dividend payments by franchised train operators in 2022-23 were equal to 0.9 per cent of fare income.
- Three of the four largest subsidies given to franchises in 2022-23 were given to renationalised railway services with £697 million, £602 million and £402 million given to ScotRail, Northern and South Eastern respectively.
- Those in the top 20 per cent of households by income travelled almost three times as far by rail as those households in the bottom 20 per cent in 2022.[5]
READ THE BRIEFING NOTE
[1] YouGov, Should train operating companies be brought back into public ownership?, 1 April 2024, yougov.co.uk/topics/politics/trackers/should-train-operating-companise-be-brought-back-into-public-ownership, (accessed 29 April 2024).
[2] Austin, K. & Whannel, K., Labour pledges to renationalise most rail services within five years, BBC, 24 April 2024, www.bbc.co.uk/news/uk-politics-68889345, (accessed 29 April 2024).
[3] Network Rail, Public performance measure and delay responsibility, www.networkrail.co.uk/who-we-are/how-we-work/performance/railway-performance/public-performance-measure-and-delay-responsibility/, (accessed 29 April 2024).
[4] Transport Focus, National Rail Passenger Survey, Spring 2020, p.5.
[5] Department for Trasnport, Mode of travel: Average number of trips and miles by household income quintile and mode: England, 2002 onwards, Gov.uk, assets.publishing.service.gov.uk/media/64e8b06c691aa3000da56e16/nts0705.ods, (accessed 29 April 2024).