Some public sectors are more equal than others

Any notion that the latest version of the EU’s Fourth Railway package might somewhat mitigate the current prohibition of UK public sector bodies from operating rail services has been firmly scotched.

A question to that effect was raised in Parliament by Nottingham South MP, Lilian Greenwood, only to be rejected out of hand by Transport Under-Secretary Robert Goodwill:  “The Fourth Railway Package has no impact on this provision of domestic primary legislation (i.e. the 1993 Railways Act), which prohibits the award of passenger rail franchises to public sector operators.”

He added that the situation would remain until the offending clause – Section 25 – was removed at some future date.

This may be the Law, but yet again it illustrates the absurd situation whereby British public sector bodies are barred from providing rail services whereas foreign state-owned ones are not.

At the moment, Deutsche Bahn (DB) controlled Arriva runs four UK franchises: Chiltern, Cross Country, Northern and Arriva Trains Wales, and has a half share with MTR in London Overground.  DB also owns DB Schenker, the UK’s largest rail freight operator, and controls open access operator Grand Central.

Netherland Railways (NS) controlled Abellio runs the Greater Anglia and ScotRail franchises, and jointly operates Merseyrail with Serco.

French Railways (SNCF) has a 70% stake in Keolis, which is the junior partner in Govia; a joint (65:35) venture between Go-Ahead and Keolis. Govia is responsible for the TSGN (Thameslink, Southern & Great Northern), Southeastern and the London Midland franchises. SNCF also holds a majority interest in Eurostar (though this is not a franchised operation).

So out of a total 18 UK passenger rail franchises, foreign-owned state undertakings run six outright, have an equal share in two and a large minority stake in another three.

It is hard to believe that this was the intention of those who privatised British Rail (BR). Nonetheless, this is what has happened.

John Major (remember him?) was very keen to force through privatisation during his time in office. He opined that BR was ‘deeply inefficient’ but produced no evidence to support this assertion. In fact when the British Railways Board and the University of London jointly conducted a comparative study of 10 European state railway systems in 1979 they found that only Sweden’s SJ did better than BR in terms of financial performance. BR also scored well in other areas.

It is therefore both strange and ironic that these ‘less efficient’ systems should be given free reign to large parts of the network whilst any would be state-run indigenous operator is still discriminated against.

It is also a very one-sided state of affairs: European state run systems fight ferocious rearguard actions to preserve their patch and only give ground to other operators grudgingly. There is no reciprocity.

For the record, the offending section (from the 1993 Act) reads:

 

“S25 Public sector operators not to be franchisees

(1) The following bodies and persons (in this Part referred to as “public sector operators”) shall not be franchisees—

(a) any Minister of the Crown, Government department or other emanation of the Crown;

(b) any local authority;

 (bb)the Greater London Authority;

 (bc )Transport for London;

(c) any metropolitan county passenger transport authority;

(d) any body corporate whose members are appointed by a Minister of the Crown, a Government department, a local authority [the Greater London Authority, Transport for London] or a metropolitan county passenger transport authority or by a body corporate whose members are so appointed;

(e) a company—

(i)a majority of whose issued shares are held by or on behalf of any of the bodies or persons falling within paragraphs (a) to (d) above;

(ii) in which the majority of the voting rights are held by or on behalf of any of those bodies or persons;

(iii) a majority of whose board of directors can be appointed or removed by any of those bodies or persons; or

(iv) in which the majority of the voting rights are controlled by any of those bodies or persons, pursuant to an agreement with other persons;

(f) a subsidiary of a company falling within paragraph (e) above.”

 

Subsection (3) of the same section, which did not prevent the BRB (British Railways Board)from being a franchisee, was repealed in 2000.

JH

Chiltern Trains is owned by the German State Railways, Deutsche Bahn
Chiltern Trains is  part of Arriva Trains UK, which is owned by the German state railway operator Deutsche Bahn (DB).

 

 

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