For a people’s ScotRail

ScotRail hasn’t had a particularly good press these last few months though there is a positive story to tell. The franchise, managed by Transport Scotland (part of Scottish Government) specified a lot of positive improvements expected from the new operators, including better passenger facilities, new rolling stock, staff and wider community benefits. The successful bidders, Dutch Railways-owned, Abellio, came in with high expectations among many rail lobby groups. Over two years on, it seems to have gone sour with calls to strip Abellio of the franchise. Last autumn, in response to poor reliability, thousands signed a petition calling for that. The new managing director is a well-respected figure in the industry but has a major job on his hands in turning round ScotRail’s fortunes.

Scottish Government’s transport minister, Humza Yousaf, announced he is looking at radical alternatives when the franchise comes up for renewal. Speaking to The Sunday Herald in early July this year, he said: ‘We have narrowed down the possible vehicles that could potentially take forward a public sector bid. Transport Scotland are now working on gathering further evidence and I will narrow down the options further once that exercise is complete. The Scottish Government is committed to creating a level playing field for rail franchising in the future’.

Previous campaigns for public ownership of rail have come up against difficulties with EU legislation, which makes full public ownership of rail difficult, as well as UK law which enforces franchising of the rail network. So one option which the Scottish Government has been looking at is creating a public sector body, or using an existing one such as CalMac Ferries, to mount a bid for the franchise. This is fraught with difficulty. For one thing, the typical cost of mounting a franchise bid is around £10m, quite apart from the preparatory costs of creating or adapting a public sector body equipped to prepare a bid. A second issue would be potential legal challenges from other bidders, who would inevitably claim unfair advantage was being given to the public sector bidder.

The option of simply taking back the franchise into public ownership when the franchise expires -there is a break clause which allows for termination half way through the contract, but again it is a legal minefield – could be seen as contravening both EU and British laws. However, the Tyne and Wear Metro and the West Midlands trams (Midland Metro) were both recently taken back into public ownership, without so much of a murmur from government or EU. Transport for West Midlands (TfWM) commented: ‘the move will enable TfWM, which is the transport arm of the West Midlands Combined Authority (WMCA), to plough millions of pounds of future profits back into expanding the network’.

There are two new factors at work which may help the prospects of a publicly-owned ScotRail. One, ironically, is Brexit. If Britain leaves, clearly the directives on competitive procurement need no longer apply. There would, of course, be the not insignificant issue of British government policy. Whilst managing the ScotRail franchise has been devolved to Scotland, franchising policy hasn’t and as things stand the Scottish Government would require Westminster approval, by changes to the 1993 Railways Act, to be able to run ScotRail without having to put the contract out to tender. A few months ago that might have seemed unlikely. But now, with the distinct possibility of Labour forming the next government – with a strong commitment to rail public ownership – it starts to seem possible. Whilst the Tories will do everything possible to avoid what could well be – for them – a catastrophic election, it doesn’t need many by-election losses for them to lose their tenuous hold on power, even with DUP support. A Westminster Labour government within the next three years is far from being a pipe dream.

Labour’s stated policy has been to take franchises back into public ownership upon expiry. The responsible body could be Network Rail, which is government-owned and responsible for Britain’s railway infrastructure. If the current government was forced to call an early general election, franchises such as Great Western could be among the first to return to the public sector. Others could include CrossCountry, which operates to Edinburgh, Glasgow and Aberdeen.

If the Scottish Government was able to take up the option to end the franchise (at the half-way stage in 2020) that would allow time to prepare for the transition assuming Labour wins in the next two to three years. Even with a Tory government in Westminster, particularly with a slender majority, allowing Scotland to secede from the 1993 Railways Act could be possible, but infinitely more difficult.

If Labour is in power, committed to public ownership of rail, a lot of careful thought is going to be needed to ensure that this does not mark a retreat to the old British Rail (BR). This is particularly an issue for Scotland. It is hard to imagine the Scottish Government being happy with its existing powers over rail being handed back to what would in effect be a London-based BR. Currently, ScotRail works in alliance with Network Rail, which is still a Britain-wide organisation ultimately responsible to the London-based Department for Transport, overseen by a Tory secretary of state and subject to the whims of HM Treasury.

It’s easy for the left to see ‘public ownership’ as self-evidently a good thing, though some might argue that a tightly-specified franchise (such as the current ScotRail) delivers much of what you’d want to see. The reality is that a publicly-owned railway, if done properly, could re-invest any surplus into the railway and develop a much stronger ethos of social and economic responsibility. Potentially, it could empower both workers and users of ScotRail, offering real control instead of mere ‘consultative’ power.

A starting point for a ‘People’s ScotRail’ should be full devolution of both ScotRail – the train operator – and Network Rail, as infrastructure operator – to the Scottish Government. That, in effect, means one organisation responsible for both train operations and infrastructure, taking the current ‘alliance’ – in which there is one managing director for both ScotRail and Network Rail – much further. Again, under current EU law this is difficult to achieve in full. But potentially, post-Brexit and with Corbyn in No10, it could become a distinct possibility.

Going beyond the traditional approach of state ownership will be a challenge facing a People’s ScotRail. Integrating existing train operations with Network Rail will be challenging but not impossible. Retaining good relationships with Network Rail south of the border will be important, with access to some of Network Rail’s expertise and resources when needed.

But what sort of public enterprise will the new ScotRail be? Scotland has a tradition of public ownership in the transport sector. Lothian Buses is owned by four local authorities with Edinburgh having a 91% share. It runs a fleet of 650 buses and employs over 2000 staff. Last year, it made a profit before tax of nearly £12m, £6.6m of which went to its owning local authorities. Not a penny went to individual shareholders. Its vision is ‘to be an integral part of the future success of Edinburgh and the Lothians by providing world-class, environmentally-friendly and socially-inclusive transport’. Strathclyde Passenger Transport owns the Glasgow Subway, a unique example of a non-franchised vertically-integrated and publicly-owned railway. CalMac ferries operate 29 vessels providing essential services to the Highland and Island communities and is owned by the Scottish Government. It returns an annual sum back to its owners. So the idea of public ownership of transport services is ingrained in Scotland’s politics. Buses, ferries and the subway – as well as water – are all examples of successful, socially-responsible businesses providing essential services and contributing to the wider good.

A People’s ScotRail would have the opportunity to create a new kind of railway which is part of the fabric of Scotland’s economy, culture and communities. It could build on the positive work already being done with communities, supported by both ScotRail and Transport Scotland. Adapting, Lothian Buses’ ‘vision statement’ it could be the pioneer for a ‘world-class, environmentally-friendly and socially-inclusive railway’ which is fully integrated with buses and ferry operations. But it needs to go beyond nice words and become something which both workers and passengers can feel proud of, something that they are part of.

Structure and governance will be crucial. There are models worth looking at within Britain such as Glas Cymru, the publicly-owned water company for Wales. Within Scotland, Lothian Buses has many useful lessons to offer. But finding a model which incorporates both worker and user involvement within a framework set by the Scottish Government is a big but exciting challenge. There are a number of options.

One approach is for ScotRail to become an arms-length company owned by the Scottish Government, enjoying a close and positive relationship with Transport Scotland, which would set its overall objectives. However, it must have commercial and operational freedom within an agreed framework. Railways can sometimes suffer from being too narrowly-focused, stressing operational over wider social and economic outcomes. ScotRail could have a strategic board, accountable to the Scottish transport minister, with a carefully selected (by open recruitment) board which reflects the nation’s diversity and brings high-level skills and expertise to ScotRail. Not only should these include transport, engineering, financial and commercial skills but also backgrounds in sustainability, community development, strategic planning and culture. Above all, both users and workers should have representation. Employee representatives could be elected by their colleagues. The Scotrail managing director should be a member of the strategic board and carry out its’ instructions.

Below that, an executive board comprising executive directors should be responsible for the general management, implementing government and strategic board objectives. Key roles should include Operations, Infrastructure, Customer, Commercial, Sustainability, and Safety. A strong national focus will be essential, with close relationships with other train operators that also serve Scotland as well as Network Rail and Department for Transport south of the border, a strong focus within Scotland is equally important. There are specific needs within the central belt, the Highlands and other parts of Scotland which require a regionalised management supported by stakeholder boards which include both staff and community representation as well as local authorities and business interests.

There is a more radical model which could embed real worker and user participation in ScotRail through a co-operative approach. This could be seen as a more risky strategy for the Scottish Government as it involves ceding day-to-day responsibility to an outside body. However, a co-operative ScotRail operating within a broad framework laid down by Government and reviewed on a regular basis, could provide the right balance between public accountability and an entrepreneurial approach in which workers and users are the owners. This would be a challenge for the unions who would have to change their own adversarial culture and sit down as, effectively, part owners of the business. Employees could automatically have shares in the co-operative while users – anyone who lives or works in Scotland – could again buy shares in the business. But, being a co-op, you still only get one vote no matter how many shares you own. Both workers and employees would have a very direct stake in the success of ScotRail.

A People’s ScotRail is within our grasp. By bringing the railways of Scotland back together again with clear management focus, there is potential for cost savings and avoidance of duplication. Social ownership will ensure that any profits are kept within Scotland and used to re-invest in creating a modern, accessible railway that meets the nation’s needs. By developing new forms of democratic social ownership, rail will not be for the few, but the many. The trick will be finding the right way forward to achieve what could be a new form of public enterprise.

Stuart Macleod is a pseudonym of an experienced writer, researcher and commentator on the railway industry in Britain.