Liberalization of the railways has been a key tenet of European transport policy since the early 2000s, with proponents claiming that competition results in improved service quality and increased ridership. This is an instantly disprovable statement given that ridership was already on the rise across Europe prior to, rather than after, liberalization efforts, suggesting other effects are at play.
Gareth Dennis is an award-winning railway engineer and writer. He is the author of the internationally bestselling book How The Railways Will Fix the Future and co-founder of the Campaign for Level Boarding.
On the other hand, the case against fragmented and privatized operations focuses on three key arguments. The first is that railways are complex systems where commercial boundaries at engineering interfaces are a threat to safety and efficiency. The second is that railway operations are geographic monopolies where market conditions are — at best — contrived. The third is that railways are a public service that cannot fail — hence, introducing private interests into the railways is merely a way to sequester income into private hands while the state shoulders the financial risk. In other words, private interests’ role is simply to extract profit that could otherwise be reinvested into the system.
The United Kingdom was one of first countries in Europe to liberalize a significant portion of its railways (Northern Ireland’s railways remained publicly owned and operated). As such, the aftermath of privatization is instructive in tracing liberalization’s final destination. In short: it isn’t pretty.
Selling the Family Silver
The UK’s contiguous network in Wales, Scotland, and England was privatized in stages between 1988 and 1997, starting with its domestic train manufacturing industry. This took place following a massive self-off of public assets in the aftermath of the broader financialization of the British economy. For example, the water industry in England and Wales was wholly divested through the 1980s — something no other country has ever done. Thanks to archived papers from then Prime Minister Margaret Thatcher, we can understand precisely what the political drivers for mass privatization were.
First, as a large employer of over 50,000 staff, divesting the water industry would greatly contribute to “the privatisation programme”. Second, it would take necessary investment in an ageing asset off the public books. Finally, it would increase shareholding in the public, mitigate state interference, and create financial assets for trade. It is worth noting that none of these justifications took the quality or expansion of services into account.
And so, we turn back to railways. In 1990, things had been looking up for British Rail. Ridership had been climbing solidly since the mid-1980s. The average subsidy was as low as 20 percent of running costs, making the British system one of the most efficient in Europe. Urban, regional, and high-speed rail projects were being delivered or, in the latter case, were in serious development.
Three rolling stock operating companies bought — at rock-bottom prices — an enormous range of hugely valuable trains for which British Rail had scrimped and saved over the preceding decades.
Then the early-1990s recession hit. More than a decade of constrained public spending and service sell-offs meant there was an immediate impact on passenger numbers, sending the government into a panic. Suddenly, the Thatcherite doctrine of “sell everything but the railways” was thrown out the window, and plans for privatization were put in motion.
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