Since the UK’s railways were privatised in 1997, Virgin Rail has been running the country’s West Coast mainline connecting London, Birmingham, Manchester and Glasgow. This week, that train line passed to a consortium of the UK’s FirstGroup and Italian state rail operator Trenitalia.
The line is the among the most lucrative and important in the country, and First-Trenitalia reportedly outbid a rival Chinese consortium with an offer to pay £1.6 billion ($1.9bn) in premiums to run the line until 2026, followed by a second phase of payments until 2034 depending on the completion of a new high-speed line, which Trenitalia has been named as operator for.
It is only the latest major UK rail line to pass to a foreign state rail operator – almost all of whom are now run by other European Countries.
German state railway Deutsche Bahn operates four British railways including the London overground and the Grand Central line to Sunderland. Seven UK railways are operated or partly-operated by Dutch state railway Nederlandse Spoorwegen (NS), including Merseyrail, Scotrail and the West Midlands Railway. Seven railways are operated fully or partly by French state railway SNCF, including Transport for Wales and the Thameslink.
Out of roughly 30 UK railways, only six are fully owned and operated by private companies or British government authorities.
As the country prepares to completely cut itself off from continental Europe on October 31 with a no-deal Brexit, that foreign ownership by EU governments of the country’s essential transport infrastructure is set to become an issue.
Lonely privatisation road
This is not the way the country’s rail privatisation was supposed to go. The break-up of state operator British Rail between 1994 and 1997 into many private operators was meant to introduce a healthy level of competition among private British companies that would lower prices and improve services for passengers.
Instead, rail ticket prices in the UK have risen significantly and are now among the most expensive in the world. The success of privatisation is a hotly debated topic. Standard single fares have increased by up to 208% since privatisation. But at the same time, the price of advance tickets has decreased in real terms and their availability has reduced the number of people travelling at peak times.
Though complaining about the UK’s rail service is something of a national obsession, defenders of privatisation point to customer satisfaction surveys that are higher than those in continental Europe. A 2013 Eurobarometer poll found satisfaction with rail services in the UK was the second highest in the EU, behind Finland. The poll found that average UK satisfaction over four different areas was 78%, ahead of France (74%), Germany (51%) and Italy (39%).
But the change in rail’s ownership structure is an undeniable consequence of privatisation. While the UK broke up its state rail giant, this was not copied in the rest of Europe. Though privatisation was meant to create local rail champions, instead the small new companies were steadily swallowed up by the entrenched state-owned giants in continental Europe.
In Brussels, UK rail privatisation is persistently used as a cautionary tale which no government is interested in emulating. Indeed, when the EU was debating new rail ownership liberalisation requirements five years ago, representatives of Deutsche Bahn and SNCF were lobbying against it by pointing to what happened in the UK.
The legislation’s proponents had to continually remind people that liberalisation isn’t the same as privatisation, and that nothing in the law required EU governments to go the same route as the UK. Instead the legislation, which did eventually pass, required rail operators to unbundle their infrastructure and operation areas. In other words, they couldn’t own both the trains and the tracks.
In the end, Europe’s state-owned rail giants used the flexibility of liberalisation to buy up the newly-privatised UK trains – even as they had to shed their infrastructure assets domestically.
The UK’s opposition Labour Party, which vehemently opposed privatisation in the 1990s, has over the years made promises to re-nationalize Britain’s railways. With the UK out of the EU, there may now be an opportunity to quickly deliver on that promise – particularly if the UK is no longer subject to the EU’s laws against rail monopolies. Whether either a Conservative or Labour government would wish to do so, with all of the potential chaos it could unleash, remains to be seen.