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A new report has put the case for bringing the national rail network back under public ownership, claiming it could save taxpayers around £1bn a year. B&E takes a look.

The UK’s privatised railway is failing society, the economy and the environment, with taxpayers’ money flowing into the pockets of private shareholders while commuters contend with a fragmented, expensive and dysfunctional system.

So says a new report calling for the network to be taken back into public ownership.

The union-funded study, by thinktank Transport for Quality of Life, claims the UK’s rail system is in such a state that other countries view it with “disbelief”. Furthermore, the use of franchises to operate services means that subsidiaries of German, French and Dutch state railways are making profits here that are used to keep fares down back home.

At the same time, the UK’s rail manufacturing sector has been decimated since privatisation because investment and procurement is patchy due to the lack of a “guiding mind” that plans for the whole system.

Meanwhile, British commuters face the highest day return and season ticket prices in Europe, even though the amount of public money pumped into the railways every year has surged from £2.4bn before privatisation (1990-91 to 1994-95) to around £5.4bn between 2005-06 and 2009-10.

The report says the main drivers of these increased costs include: higher interest payments in order to keep Network Rail’s debts off the Government balance sheet; debt write-offs; costs arising from the fragmentation of the system into many private organisations; profits for complicated tiers of contractors and sub-contractors; and dividends for private investors.

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Taken together, these have cost the taxpayer around £11bn since privatisation – or £1.2bn a year – although the thinktank claims this is a “minimum figure” as it only covers the costs that can be readily quantified.

The report argues that the problems affecting the UK’s rail system are now recognised on all sides.

“There is a widespread concern – shared across the political spectrum – that we are not getting good value from the substantial sums of public money that are invested in the railways every year,” it says.

So what is the answer?

Transport for Quality of Life believes common sense and railway expertise have been sacrificed for a “misguided” ethos of private-must-be-best.

Under its plan, regional and local authorities would join passengers and the wider workforce in running the services in their areas.

“Involvement of local and regional bodies in provision of rail services is the norm elsewhere in Europe,” the report says.

“Although there is a wide range of models for interactions between unified national passenger train operators and municipal or regionalauthorities, every other European country appears to have more devolution of control for local services than the UK.”

However, the thinktank noted that across much of England the highest level of authority on transport issues is county or unitary councils, which are too small to specify local train services.

“One solution to this problem might be to establish regional transport executives, answerable to groups of local authorities,” it suggests.

“A regional transport executive might cover an area such as the north of England (including the ITAs responsible for Liverpool, Manchester, Leeds, Sheffield and Tyne and Wear, and also local authorities including Cumbria and Lancashire), or southwest England, or the Midlands.”

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But the study emphasises that the reform of the railways should not become “mired in the broader politically fraught debate about regional devolution”.

The report concludes that if all the “unnecessary costs” stemming from privatisation were eliminated and the resultant savings were channelled into reducing fares, passengers could expect ticket prices to tumble by 18 per cent across the board.

This may be music to the ears of long-suffering commuters – but will the report gain political support?

Well, the Government’s own McNulty Review, which was published last year, contained similar calls for devolution of power over train services to passenger transport executives and local authorities.

Nevertheless, most observers would concede that the chances of the Conservativeled Coalition adopting the radical renationalisation plan put forward in the union-funded report is slight at best.

Still, the report has received a warm welcome from the opposition, with Labour’s shadow transport spokeswoman Maria Eagle calling it a “coherent case for reform”. The party could adopt the proposals as part of its policy review, keen to win over frustrated commuters up and down the land.

Of course, the question of whether the network should be renationalised is very different from whether town halls actually have the capacity to run local services.

The report itself acknowledges that county councils are too small to effectively oversee the system and that adequate regional bodies do not exist across much of England.

And with local authorities facing more job losses and years of budget cuts, the practicalities of adopting the report’s recommendations mean that in the current climate the proposals could struggle to gain traction.

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