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Business & Finance Series: Announcements

Northern rail renationalisation

Media advisory from Cass PhD student Daniel Fisher

by Amy Ripley (PR and Communications Manager)

The government has announced that the troubled rail company Northern will be taken back under public ownership.  The firm’s franchise will be stripped from Arriva North from 1st March.

Daniel Fisher, a PhD student at Cass Business School, researches public-private interactions in the rail industry and made the following comments.

“The news that Northern is being temporarily renationalised is not surprising. What is surprising is that after a public enquiry, an ongoing government review, calls to nationalise the UK rail industry and deep public dissatisfaction with train services, companies have still not been able to re-establish trust and confidences with users.  Since May 2018 passengers on several franchised services have had to deal with persistent delays and cancellations which has impacted their ability to reverse the social damage caused from regularly disrupted train services. To make things worse, the privatised model has delivered £1 billion to shareholders against the claim that train companies require more infrastructure investment from government.  Still, the rail industry’s complaints about infrastructure are not necessarily unreasonable.  Some of the triggers of such delays and cancellations are related to dated infrastructure and old trains.  Regardless, train companies will continue to grapple with existential threats if they cannot re-establish trust with their users.

“An evidence paper published in April last year outlines three key perceptions that have led to public distrust.  Firstly, users believe that the rail companies cannot run a competent service.  Secondly, the rail industry is not motivated to provide a well-run service and thirdly, the rail industry does not communicate well with the public on why services are so poor.

“The report states that, ‘there is belief that the customer is not at the heart of the railway system’ and this fundamental problem will not be easy to counter after nearly two years of troubled services. We know that punctuality and reliability for the customer is the key concern among users, so it is perplexing that such a basic indicator of whether a franchise may or may not be nationalised is not given more attention by the rail companies. The reason punctuality and reliability is so important is because of the social value impact it has on users. For example, the BBC reported instances of people who couldn’t get home in time to pick up their kid from school, incurring a £20 after school care fee. There are other reported instances of sustained mental health issues due to a persistently poor service.

“When such social value costs are incurred regularly, rail companies legitimacy is at stake and nationalisation could be a possible solution. As I’ve previously written, if train companies want to succeed in the long term, they must make the basic service of travel something users can take for granted. Without such confidence, current trends of dissatisfaction and renationalisations are likely to continue.”

ENDS

All quotes can be attributed to Daniel Fisher, PhD student, Cass Business School.  For all media enquires, please contact the Cass press office.

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