2 July 2021

Is the traditional Tory belief in free enterprise leaving the station?

By John Penrose MP

The new Plan for Rail starts really well, by invoking the buccaneering, entrepreneurial early days of Britain’s railways when the ‘iron web’, invented in this country in 1825, spread across the earth, transforming everything and everywhere it touched. Huge amounts of private investment, ultra-fast innovation and creativity on everything from locomotive designs and signalling to passenger comfort and fares, were driven mercilessly by daily competition and passenger choice that forced train companies to raise their game every time their rivals came up with something new. Fortunes were made and lost but, crucially, no matter which firms succeeded or fell away, passengers always won. So that starting point matters, to show the direction and ambition of the new Plan. 

And yet, and yet…there’s devil in the detail, because the Plan is a pretty high-level document that hasn’t nailed down all that passenger-powered choice and entrepreneurial va-va-voom quite yet. There are no guarantees and it could still come off the rails.

Why? Well, because there’s a more recent piece of railway history that’s much less impressive than the inspiring vision of those buccaneering early days. British Rail was an awful, clodhopping nationalised monopoly, with dreadful staff morale, unreliable services and unhappy passengers. It stank of failure by presiding over long-term declines in rail travel, and no one shed many tears when it died. 

Even then, after an all-too-brief period of post-privatisation creativity and growth, the entrepreneurial oxygen that had barely started to reach Britain’s railways was choked off all over again by franchising, which swapped the awful state-run monopoly of British Rail with almost-as-awful privately-run ones that firms had bought in auctions instead. But a monopoly is still a monopoly and, if passengers haven’t got any choice of which firms’ train to catch, everything suffers. When the timetables melted down, or trains were delayed or cancelled, we still couldn’t switch to a different firm’s service that was still running instead.

So there are plenty of bad examples in Britain’s railway history, as well as the inspiring one the new Plan is highlighting. Once the details emerge, which of them will it be? 

The problem is this. At the heart of our railways is the track network and, rather obviously, train firms need it to run their services. So whoever controls the tracks controls the market; it’s a natural monopoly that, if we’re not careful, can charge rail firms and their passengers rip-off prices, or underinvest in the network so it doesn’t work particularly well or reliably, because rail firms and their passengers can’t take their business elsewhere. 

So the new Plan has to inject choice and competition to stop this happening. And that means giving passengers a choice of different train companies on their local route, so if they don’t like one, a different firm’s train will be along in a few minutes instead. It puts passengers in charge, because neither the rail firms nor the track network can take them for granted when things go wrong. Where customers already have choice, in rail freight and a few passenger services dotted around the network, the results are pretty good. The services are far less brittle, for a start, because no single entity can dictate the entire timetable. Fares tend to rise more slowly. There are fewer delays and less overcrowding. Rail firms can innovate with new routes. If one firm is crippled by strikes, you and I can still get to work on another firm’s trains. There are examples in other types of transport too, like air travel; Heathrow or Gatwick let you fly to Paris or Rome on a choice of different airlines, not just one. Why not do the same for railways? 

The Plan For Rail’s new ‘concessions’ model could push us in the right direction, or away from it. If there are only a few, big concessions while the newly-created Great British Railways controls the network, sets the times trains run, and determines the fares customers pay, then we will just be repeating the mistakes of the past by recreating the same old rail monopolies with a different label. The fat controllers in charge of the track and the rail firms will know they don’t need to worry about passengers, because we won’t have any choice.   

But if there are lots of smaller concessions, and it’s easy for non-concession rail firms to try out new routes, types of service and levels of fares that compete against them without having to get permission from politicians or bureaucrats first, then passengers could be in for a bonanza. 

Ultimately, we are either a political party that believes in free enterprise and which puts customers and passengers ahead of fat-cat bosses and bureaucrats, or we aren’t. The new Plan for Rail is a moment of truth; will we practice what we preach, or go for a corporatist, bureaucratic, monopolistic fudge instead? I’m hopeful, but only time will tell. 

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John Penrose is the Conservative MP for Weston-super-Mare.

Columns are the author's own opinion and do not necessarily reflect the views of CapX.