Labour Market

France gives us an idea of what a fully renationalised railway sector would look like

Many of the 60% of the electorate who favour rail nationalisation may have forgotten, or never known, the depressing days of British Railways.

But that past is another country: let it go. Right now in another country across the channel we can see just what renationalisation is likely to entail. Much of the French railway system has ground to a halt as three-quarters of all staff have walked out – despite union membership being at a pitifully low level compared with the UK. This is the beginning of a planned three-month strike aimed at forcing President Macron to back down from his plans to reform the SNCF.

Macron certainly has a tough task. The cheminots have privileges which extend far beyond those of most of France’s already generally pampered workforce. Job protection exceeds the European norm, and there are automatic pay rises. Retirement on very generous pensions is available well before sixty, with drivers in particular able to leave their cabs on full pension at 52. Unsurprisingly the French railways lose billions of euros a year. They are in no shape to face competition from the private sector and other European rail systems as Open Access to tracks comes in under EU rules in 2020.

British unions would relish the chance for a national strike on Gallic terms, but at the moment employment is spread between many separate companies and disputes are confined by law to those with a particular employer. The unions have opposed virtually all productivity-enhancing improvements in recent years: the continuing hassle with Southern Rail and Merseyrail over driver-operated doors (DOD) is typical.

I commute into London with c2c which has had DOD for many years with no safety concerns and an excellent time-keeping record. Should the railways be renationalised I have no doubt that the unions would attempt to impose guard-operated doors nationally, and with the ability to call out the entire workforce under trade union law, they would probably win.

The UK’s pro-nationalisation sentiment, particularly amongst younger workers, seems to focus largely on the cost of travel and the profits which private train-operating companies (TOCs) generate under franchises which seem to unload risk on the public.

Rail travel is costly partly because large chunks of the system, under-used rural lines for instance, are over-engineered and using outdated technologies. It is also still overstaffed to a degree, while health and safety and accessibility concerns disadvantage TOCs compared with their road transport competitors.

Fundamentally, however, trains are always going to be expensive to run – and even more expensive as we update 19th-century infrastructure to 21st-century standards.

Successive recent governments have, rightly, placed the onus on passengers to pay a large part of these costs. Railways are used only by a relatively well-off minority (for instance home counties commuters) of the population and it is right that the bulk of the costs should be paid by them rather than the taxpayer. In France they do things differently, with a much larger share of the costs coming out of taxation.

The profits to train-operating companies are a red herring, accounting for a very small (3% or so) proportion of costs. A nationalised railway would probably soon eat up the ‘savings’ as newly-empowered unions choked off productivity gains.

There is much wrong with our railways, in large measure the consequence of a botched privatisation which separated infrastructure ownership from train operation. This raised costs of negotiating contracts and immensely complicates rail operation. But the idea that old-style nationalisation is the answer is simply wrong. Go over to France to check it out – when the unions let you.


Editorial and Research Fellow

Len Shackleton is an Editorial and Research Fellow at the IEA and Professor of Economics at the University of Buckingham. He was previously Dean of the Royal Docks Business School at the University of East London and prior to that was Dean of the Westminster Business School. He has also taught at Queen Mary, University of London and worked as an economist in the Civil Service. His research interests are primarily in the economics of labour markets. He has worked with many think tanks, most closely with the Institute of Economic Affairs, where he is an Economics Fellow. He edits the journal Economic Affairs, which is co-published by the IEA and the University of Buckingham.

3 thoughts on “France gives us an idea of what a fully renationalised railway sector would look like”

  1. Posted 08/04/2018 at 18:26 | Permalink

    Dear Len,

    I liked you article Re Rail nationalisation. Today’s voter need a refresher lesson on how poor British rail’s service was, expensive and absorbed huge subsidies. One point you didn’t mention is the success of the current rail system. With rail travel at record levels, is this is symptom of the efficiency of service under privatisation?
    Or maybe rail travel globally is at peak levels e.g. in France also?
    Best regards

  2. Posted 21/08/2019 at 12:24 | Permalink

    Dear Mike, the “success” as ypindesvrine it has involved continues support to private companies who failed to meet basic service needs. This leasing to franchises being removed and walked away from by those british private organisations. And now in 2019 a consortium involving the Italian STATE railway has taken over a privaten franchise alongside a number run by the Dutch STATE railway. So british trains are running well using skills from NATIONALISED rail companies. So profits from the failed tory dogma of privatisation are now going to improve the NATIONALISED networks in Holland and Italy. Daft.
    And now today the HS2 as its costs doubles has spent 7billion is to be reviewed. Meanwhile from the first TGV track in 1983 from Paris Lyon ( 50% longer than HS2 phase 1 ) , France now has 12 high speed lines, 1 in construction and 5 planned. Thatcher privatisation condemned Britain’s rail networks to disjointed planning, competitive under cutting of services and long term thinking.

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