Is there any substance to the UK's railway reform?
ADVERTISEMENTThe UK has announced its struggling railway network would be brought back under government control, albeit with significant involvement of the private sector.
The reform will create a new public body, Great British Railways, that will set train timetables and ticket prices as well as managing railway infrastructure. Private companies will continue to operate trains under contracts with the state.
Prime Minister Boris Johnson’s government claims the overhaul will improve life for the country’s long-suffering train passengers, in what has been described as the biggest shake-up in Britain since the privatisation of the network in the 1990s.
“I am a great believer in rail, but for too long passengers have not had the level of service they deserve,” Johnson said in a statement.
As the country debated Brexit, many, especially on the political left, said the European Union's restrictions on state aid limited the government’s ability to renationalise its railways.
So has the reforms announced in the UK been made possible by Brexit? And how does railway ownership work in countries still in the bloc?
Euronews spoke to experts and lawmakers to inform this politically fraught debate.
What does EU law say about nationalising railways?
While EU law generally prohibits state subsidies to avoid distorting competition between member countries, there are many exceptions.
One of them is listed in Article 93 of the EU's treaty, specifically exempting the transport sector from state aid rules.
"Aids shall be compatible with the Treaties if they meet the needs of coordination of transport or if they represent reimbursement for the discharge of certain obligations," it reads.
Most EU countries have made extensive use of this exemption, with Luxembourg going as far as making public transport completely free since last year.
"So we know EU rules do not prevent state spending or ownership. But there are competition laws that allow states to own rail infrastructure but require service contracts to be put out to tender. Both public and private companies can bid for the tender. The idea behind this is that passengers will get the best service," Green MEP Ciarán Cuffe told Euronews in a written statement.
Yet new EU legislation -- known as "the Fourth Railway Package" -- that will fully come into effect in 2023, marks a shift towards more liberalisation.
"Not least as a result of UK influence, the EU is moving from December 2023 to a more liberalised model of operating rail passenger services with an obligation to open up to competition many rail routes," said Totis Kotsonis, a state aid expert and partner at Pinsent Masons law firm in the UK.
"That does not mean that state-owned rail companies will disappear but it does mean greater competition for the provision of rail passenger services."
"So, the model of UK, reverting back to full nationalisation where both rail infrastructure and operations were state-owned with no private sector involvement in the operation of the railways, would not have been possible from December 2023," the legal expert told Euronews,
"But to be fair, that model was not one which many in the UK deemed appropriate and indeed, the white paper makes clear why such model had significant shortcomings and was not favoured," he added.
"Even whilst a member of the EU the UK was 'best in class', significantly ahead of other member states in terms of restructuring and liberalising its railways.
ADVERTISEMENT"The UK was in fact greatly influential in promoting further EU rail liberalisation and in the setting of European rail standards," Kotsonis told Euronews.
Would the UK reform have been possible before Brexit?
All the experts and lawmakers contacted by Euronews said the reform unveiled last week would have been possible before Brexit.
"Yes, reform of the UK rail system was possible before Brexit. That it was not carried out is ultimately a political decision down to the UK government," Cuffe told Euronews.
"As I understand it, UK rail will now have a public sector body to oversee the rail network in England with private contracts to carry out the service still put out to tender. This is not far off what many other European countries do," added the Green lawmaker, who is a member of the European Parliament's Transport Committee.
"Although it is true that EU rail regulatory framework imposes certain requirements as regards, for example, the length of contracts awarded for the provision of rail passenger services, or as regards the separation in governance terms of rail infrastructure from rail operation, there are no obvious indications that the substance of what the white paper on UK rail reform proposes would not have been deliverable under EU law," Kotsonis told Euronews.
ADVERTISEMENT"So, could the UK government have done this before Brexit? They may have had to oversee the separation of train and track management under EU rules, but the British government has been quite explicit: the UK rail reforms are not a move toward public ownership and renationalisation," Cuffe said.
"Brexit is a gamechanger in many ways but is a diversion in this regard," said François Davenne, Director General of the International Union of Railways.
As an example, he noted that "EU regulation did not stop France from restructuring its railway system," bringing RFF which owned the national rail network under the umbrella of the public SNCF group.
"No regulatory framework should prevent sensible business restructuring to ensure efficiency and sustainability," he added.
So why is the UK reform coming now?
"I do think that politically, rather than legally, these changes can be placed in the context of a post-Brexit government," said Jonathan Hart, an infrastructure expert and partner at Pinsent Masons law firm.
ADVERTISEMENTThe UK white paper "expressly associates these suggested changes to the re-opening of closed railway lines which are identified with the 'levelling up agenda," the expert noted.
"Levelling up" is part of the ruling Conservative party's manifesto and is about bridging regional disparities in the country.
"COVID can be seen to have had a major influence on the timing and content of the latest announcements," Hart also told Euronews, even if the rail review that led to it was launched long before the pandemic in 2018.
"The rail review led by Keith Williams, a former CEO of British Airways, was launched in September 2018 effectively in recognition that the franchising model for the operation of rail passenger services had failed to deliver, with the Government having to intervene increasingly to rescue failing (private sector) training operating companies," said Kotsonis.
But the new form of contracts envisioned by the reform to replace the franchise agreement is "likely to be an extension of the emergency measures put in place as a consequence of COVID," Hart told Euronews.
ADVERTISEMENT"As passenger levels and ridership decreased, the Department for Transport effectively scrapped the existing franchise arrangements (by which the train operator took on-demand risk) and introduced management contracts for the running of train services," he explained.
Where do EU countries stand with public ownership of railways?
"In fact, several EU member states have state-owned railways -- France, Germany, Portugal, Italy and Poland to name a few," Cuffe noted.
"Luxembourg even has free public transport funded by the state," he added.
But while historical state operators dominate the market in most EU countries, several nations have liberalised passenger rail transport in recent years, notably Germany, Italy and Austria.
In Italy for instance, state-owned Trenitalia has been facing competition from a private group, Italo, since 2012.
ADVERTISEMENTIn Germany, FlixTrain has established itself as a competitor to the country's state-owned company, Deutsche Bahn.
But public funding remains key to safety, quality of service and intensity of use, according to the 2017 European Railway Performance Index published by the Boston Consulting Group.
"A railway system’s overall performance typically correlates with the level of public cost, which we define as the sum of public subsidies and investments in the system," the publication said.
In the 2017 Index, top performers in Europe were Switzerland, Denmark, Finland, Germany, Austria, Sweden, and France.
In tier two were Great Britain, the Netherlands, Luxembourg, Spain, the Czech Republic, Norway, Belgium, and Italy.
ADVERTISEMENTLithuania, Slovenia, Ireland, Hungary, Latvia, Slovakia, Poland, Portugal, Romania, and Bulgaria featured in the third tier with a lower overall performance.
Will the reform solve the UK's rail problems?
For many years, the UK's rail system has been marred by high prices, inefficiency, delays and overcrowding.
The introduction of new timetables in 2018 left passengers stranded and frustrated by a shortage of trains.
"Our railways were born and built to serve this country, to forge stronger connections between our communities and provide people with an affordable, reliable and rapid service. Years of fragmentation, confusion and over-complication have seen that vision fade and passengers failed, " said Transport Secretary Grant Shapps.
"That complicated and broken system ends today," he added.
ADVERTISEMENTBut according to We Own It, a campaign group against privatisation, the reform has fallen short of putting passengers first.
"'Great British Railways' sounds like a shiny new way of running the railway, but it’s really the same old privatisation, tweaked and rebranded," said We Own It founder Cat Hobbs in an op-ed.
"In the new model, rail franchises are being replaced with 'Passenger Service Contracts'. Franchises are simply a type of contract, so this is not a big change," she noted. "In other words, yet again the private sector has guaranteed profits while the public sector takes the risk and bears the responsibility if things go wrong. A familiar story."
According to Cuffe, "the British government has been quite explicit - the UK rail reforms are not a move toward public ownership and renationalisation. So, if it's not renationalisation, we are back to the lack of reform being down to a political decision."
Other rail experts contacted by Euronews were more positive about the benefits of the reform.
ADVERTISEMENT"This reform is a logical next step in ensuring that railways, as the transport backbone of a sustainable economy, are providing the end-user with the best, most cost-effective, safe and efficient suite of service options as possible," Davenne told Euronews.
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