THE BLOG

There Is Now a Golden Opportunity For Taking the Railway Back Into Public Ownership

17/07/2014 16:55 BST | Updated 16/09/2014 10:59 BST

Almost two years ago the collapse of the tendering process for the heavily subsidised and lucrative West Coast Mainline triggered the biggest crisis in the railways for over a decade.

Miscalculations by, no doubt undersourced and overworked, senior civil servants led to the government being forced to abandon its original decision to award the franchise to First Group.

Instead the existing joint holders of the franchise, Richard Branson's Virgin and Brian Souter's Stagecoach, were asked to carry on running the franchise through a "contract extension" until a new bidding process could start. The cost to the tax payer ran to tens of millions of pounds and the government's entire rail franchise timetable was put back by years. The whole episode was rightly labelled a fiasco and led to a government initiated inquiry into the franchise system.

After the fiasco followed the fiddle. The man asked by the government to conduct the inquiry was Richard Brown, who was the CEO of Eurostar (currently bidding for the publicly owned East Coast) and is now a non-executive director at the Department for Transport, as well as being a former commercial director of National Express and chair of the Association of Train Operating Companies. With this in mind, it was hardly a surprise when it was concluded that there was nothing fundamentally wrong and that franchising should be continued.

The fiddled inquiry led to fiddled franchising. The government had to recast its franchising programme including reviewing how contracts were drawn up and limiting the number of franchises it awarded each year. This meant that nearly every single government rail franchise would be up for renewal before a new tendering process could be put in place. Rather than asking its own Directly Operated Railways subsidiary to take over the franchises, the government instead decided to "extend" the franchises or make a "direct award" to the incumbents without any competition so guaranteeing even more risk free profits for the operators - all without any public consultation or scrutiny.

Aside from being an appalling abuse of tax payers' money, the whole process has also created considerable uncertainty for the workforce and passengers, and the rail unions are to be applauded for trying to challenge all this in the courts - a task that was always going to be difficult given the reluctance of judges to overrule government policy.

It is against this background that Labour is finally shifting ground on the railways with a real debate going on in the party about public ownership. It is widely recognised that privatisation has been a colossal failure. Despite record levels of public subsidy we have the highest fares in Europe and private sector investment and innovation is non-existent. Independent reports calculate public ownership could save at least £1billion a year which could be spent on securing services, jobs and cheaper fares.

The practical and political conditions are increasingly favourable towards public ownership of the rails. In September the government will be forced to take public control of Network Rail which encompasses the entire rail infrastructure and absorbs most of government rail subsidy.

This is because Ministers have finally had to accept that a company that is completely funded by the public has to be in the public sector. At the same time new polling has shown that a policy of publically owned rail would actually make Tory, Ukip and Liberal voters switch to Labour in marginal commuter seats in such numbers as to have an impact on the General Election. There is now a golden opportunity for taking the railway back into public ownership - lets work together to make sure it happens.

Katy Clark is Labour Member of Parliament for North Ayrshire and Arran, and Executive Member of the Trade Union Group of MPs. You can follow the group on Twitter at @TradeUnionGroup and on their website - tradeuniongroup.com