Despite four years work on the Williams-Shapps Plan, the government has failed to come up with any credible answers for the complete market failure of the railway.
Its promise that Great British Railways (GBR) will be an integrated guiding mind “maximising social and economic value in the public interest” is fundamentally unachievable while privatisation remains in place.
Grant Shapps knows this. That’s why he’s deciding the future of essential passenger services such as fares, ticketing, staffing and station management in backroom talks with private train companies; exempting these areas from consultation. Meanwhile, the Williams-Shapps Plan offers a set of incoherent legislative proposals, which fail to clarify which essential services will be run by GBR; and which will remain in the hands of train companies.
The Williams-Shapps Plan for Rail consultation is clear about just one thing – the reasons for market failure. In the government’s own terms, this has been caused by: 1. Moral Hazard – where profit motivations conflict with the public interest, also known as “perverse incentives”; and 2. Information Failure – where inferior decisions are made due to fragmentation and lack of accountability.
However, both of these problems are certain to remain. Here’s why the Williams-Shapps Plan will fail to deliver:
1. Competition law prevents integration
While rail privatisation remains, the restrictions of competition law will permanently prevent the integration of cross-industry functions such as timetabling, ticketing and passenger data. Competition law also requires a ‘level playing field’, meaning that decisions must not cause an adverse financial impact to private train companies.
The Williams-Shapps plan has failed to find a solution for ‘track access’, the process by which train companies negotiate their use of the timetable. The government has suggested a slightly heavier weighting on public interest factors when timetabling, but this suggestion is likely to be impossible under competition law. Integration will be impossible, with timetabling dominated by private interests, thus minimising the influence of devolved and regional governments.
As the ORR has emphasised in its new consultation response, the government’s proposals actually unleash even more competition concerns, likely to conflict with multiple existing regulations. It even suggests that GBR might have to be split into two distinct parts – to avoid the possibility of breaching competition law by collaborating across retail and operations within itself.
2. Incoherent legislation will prevent reform
Given the undisputable fact that privatisation leads to market failure, the government wants to amend the Railways Act 1993 to make it easier for ‘direct awards’ to publicly-owned operators when private companies fail. However, it wants publicly-owned operators to remain banned from actually competing for contracts because the better value they provide is seen as an ‘unfair advantage’ over private train companies.
The government also wants to retain EU Regulation 1370/2007; making it easier to navigate issues around state aid. These changes are welcome and could greatly increase the ability of local and national governments to directly award contracts to publicly owned companies. However, this approach is logically in conflict with the Bus Services Act 2017, which bans municipal ownership and severely limits the powers of local authorities to regulate their buses. Unless these changes are taken together holistically, it will be impossible to achieve integrated, multi-modal travel across bus and rail.
Finally, the government wants to sign up to the Luxembourg Rail Protocol; a way of liberalising and globalising the Rolling Stock Companies (ROSCOs), making it easier for the big banks to get involved. However, the leasing of trains under the ROSCO system is already one of the most dysfunctional areas of the railway; as well as the biggest site of profit leakage.
3. Accessibility proposals will fail to deliver
According to the submission made by the Disabled Persons Transport Advisory Committee (DPTAC), the government’s proposals will be “insufficient to achieve real cultural change.” The government had previously ignored DPTAC’s recommendation for a £6 billion investment for full station accessibility by 2060, offering just a ‘nationwide station audit’ instead.
Last week, we published a confidential DPTAC report that suggests investment in station accessibility is being jeopardised by the “perverse incentives” of train operators. It is important to note that publicly-owned operators such as LNER are directly subject to the public sector equality duty, whereas private operators are not.
One positive suggestion in the Williams-Shapps plan is to expand the role of DPTAC, which has proved itself to be a competent and independent advisor to the government; never failing to oppose “toxic” and “illegal” policies of railway destaffing. However, there is now an urgent need to ensure DPTAC is sufficiently resourced to guarantee its independence, and has clear guidelines around its publishing and transparency policies. This is the only way to avoid the potential for political interference – especially in relation to the controversy around railway destaffing.
4. Passenger representation – a new role for Transport Focus
The Williams-Shapps Plan suggests that all passenger representation should be conducted by Transport Focus, part of a planned expansion of the organisation. Though it is an excellent research organisation, Transport Focus does not have the independence or credibility required to perform the function of a “passenger champion”; especially as relates to its new role representing disabled passengers. The inflation of Transport Focus to perform all of these vital roles appears to be a quick and cheap way to tick the ‘passenger rights’ boxes without any real consideration of what it would take to gain passengers’ trust and actual representation within the railway.
We Own It and Bring Back British Rail have published an excellent guide to the consultation, which calls for a ‘passenger board’ including representatives from every region of the country, as well as rail workers. Such a model is common in Europe and would greatly increase passenger involvement and trust.
How to respond to the consultation
The Williams-Shapps Plan for Rail consultation closes at midnight tonight, and we urgently need your help. The online response form is complicated, but the information in this blog, plus this excellent guide from We Own It, should help you to demand public ownership with just 15 minutes of your time.
Despite four years work on ‘reinventing the wheel’ of railway privatisation, the government has: 1. Failed to consider public ownership and 2. Failed to provide any proper economic analysis or predictions in support of its plans.
It’s vital to demand that legislative changes work holistically, creating the conditions necessary to “maximise social and economic value” – only possible under public ownership. However, legislative changes alone will not be enough. We’re also demanding a new ‘public sector value test’ to enshrine the benefits of: economic and social value, levelling-up, equality, decarbonisation and modal shift as determining factors in all government contracting decisions. These aims should never be compromised by competition law, especially the duty to avoid ‘financial impact’ on operators.
Any private train companies continuing to operate on the British railway must at minimum be treated as public sector bodies, and made subject to the Freedom of Information Act and the public sector equality duty – as the publicly-owned operators are already.
For more information: email@example.com