ScotRail: Why nationalisation isn’t the solution – John McLellan

ScotRail's problems would not be solved by nationalising the railways (Picture: Ian Georgeson)
ScotRail's problems would not be solved by nationalising the railways (Picture: Ian Georgeson)
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Amid anger over ScotRail’s punctuality problems and fare increases, John McLellan says the loss-making Prestwick Airport shows why state ownership of our transport infrastructure isn’t necessarily value for money.

Nobody likes a price increase, so greeting rail commuters’ return to work this week with a 3.1 per cent fares hike was never going to go down well, pushing up an annual Edinburgh-Glasgow season ticket to £4,084 and a peak return to over £25. A 2.2 per cent rise in off-peak fares doesn’t seem too steep by comparison.

Racking up the cost on top of ScotRail’s miserable 78 per cent punctuality record this year was a gift for television news, with BBC Scotland’s coverage of the story comprising vox-pops of disgruntled travellers complaining about poor service, a half-hearted response from the operator about continued investment, and a grizzly union official demanding renationalisation.

When the ScotRail franchise was awarded to Abellio in 2015, opponents of privatised rail services were quick to point out it was a subsidiary of the publicly owned Dutch operator, Nederlandse Spoorwegen (NS), but as with ScotRail it’s not responsible for track and station infrastructure so it’s not easy to identify what a government-owned concern would achieve that the Dutch firm cannot.

It’s easier to point to what has happened to rail transport since privatisation in 1995, such as a massive increase in passenger numbers (ScotRail up to over 90 million from 69 million in 2005), investment and government support (trebled to about £5 billion a year in the UK since the 1980s) and a reliable system of performance measurement with a fines system for poor results. Imagine the Scottish Government fining itself £2.2 million as it did Abellio last year.

READ MORE: Michael Matheson: Train fares increase ‘unwelcome’

This year’s customer surveys recorded satisfaction rates of 84 per cent for both ScotRail and NS, but although a wide disparity in punctuality tells a different story Abellio/NS can hardly be accused of not knowing what to do about it. In East Anglia, where it runs the Greater Anglia franchise, Abellio has just pumped in an extra £80m, which can be argued comes from Dutch commuters. If the answer is more money, so far Abellio has only asked for an advance on the subsidy expected from the Scottish Government next year because of unexpected shortfalls caused largely by infrastructure problems which are the responsibility of the Network Rail. Nationalised Network Rail.

Were the Scottish Government to take on ScotRail as well, political pressure would be entirely on the Transport Secretary’s shoulders; at least Michael Matheson can presently pass the buck to Abellio rather than having to explain why he can’t get the trains to run on time himself. UK Transport Secretary Chris Grayling regularly gets hammered for poor rail performance partly because Network Rail’s tracks lead directly to his desk. And as he and those whose journeys were repeatedly disrupted by strike action in the past will testify, nationalisation turns industrial relations into a political weapon. Public subsidy and public ownership are not the same thing.

READ MORE: Train ‘rip-off’ as punctuality falls while fares increase

But one way or another, money has to come from somewhere and if passengers don’t pay then it has to come from general taxation. Not true, say supporters of state-ownership who argue that cheap government borrowing is a better way to fund investment. Like, say, the £40m the Scottish Government has had to pump into loss-making Prestwick Airport since buying it for £1 five years ago? More consensually, it has invested £1.2bn in Calmac ferries in the last ten years. Through borrowing or higher taxes, either way the financial pressure falls on all tax-payers rather than being shouldered primarily by those who use the service. Dutch trains might be more punctual, but the individual Dutch income tax burden is heavier; everyone pays at least nine per cent, the 41 per cent higher income tax rate kicks in at approximately £35,000 compared to Scotland’s £43,000 (40 per cent at £46,000 in England) and the top rate is 52 per cent compared to 46 here.

So here’s an idea for a TV vox-pop next time there is a rail fare increase. Go to a bus queue and ask those passengers if they’d like to pay more to improve the railways. Or if Prestwick Airport is good value for their money.

Labour in splitters spat

On the subject of testing opinions, if the Prime Minister wants any encouragement about the possible outcome of a Commons vote on a second EU referendum, she need look no further than Sean Duffy, secretary of the Scottish Labour Campaign For Socialism, and research assistant to Scottish Labour’s Brexit spokesman Neil Findlay MSP.

The People’s Vote is an “astroturf campaign designed to split Labour”, he said in a now deleted Tweet, to which Edinburgh South MP Ian Murray MP responded, “The only people who want the party to split is the hard left.” Together we stand, comrades.

Meet the real Borrowers

All enterprises borrow against future income to fund investments and predicting high passenger numbers in a densely populated area is how Edinburgh Council plans to finance the £165m it will cost to complete the tram line to Newhaven. Governments can borrow cheaply because taxation income is relatively reliable.

Similarly, former First Minister Alex Salmond’s engraved boulder at Heriot-Watt University to mark his pledge that “the rocks will melt with the sun” before tuition fees are introduced, is a good reason Heriot-Watt has doubled its borrowing to £112m to fund new facilities. As long as the Government pays Scottish students to study, income is guaranteed. Accordingly, Glasgow has doubled its arrangements to £245m and Edinburgh is on a £321m splurge on the never-never.

While the number of home-grown students can’t go on rising for as long as it takes the sun to expire without compromising standards, signs that the lucrative post-graduate market is slowing down must question the financial sustainability. Even when the UK leaves the EU and Scottish universities can start charging European students, they will still essentially be borrowing on the tax-payer.