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The UK should renationalise its railways

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Voting Style: Open Point System: 7 Point
Started: 5/10/2016 Category: Politics
Updated: 2 years ago Status: Post Voting Period
Viewed: 375 times Debate No: 91002
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Although some parts of the UK railway are under state control (Network Rail), the UK's railways were largely privitised in the 90's. I will argue that the railways should be renationalised, CON will argue against this.

1st round acceptence only.
Debate Round No. 1


Thank you to CON for accepting the debate.

The Economic Case

Now that it's been a couple of decades since privatisation took place, academics and experts have been able to examine how well the railways have done and compare them to how well they did under nationalisation.

What's been found is that "Generally all of the analyzed literature from UK railway sector considers (see Table 2) that railway deregulation as a major failure, and identifies that market forces are just too short-term oriented, as social implications and replacement investments are needed to be considered through longer-term perspective. Numerous different reasons are mentioned; mostly market forces are experienced to be too crude for complex and fragmented transportation system, which European railway typically represents."[1]

This is because the market is simply not suited to handle railways, for numerous reasons that match even free-market ideologies.


There is only one rail network in the UK. The cost of laying down thousands of miles of railways is so prohibitive that no-one ever has and likely no-one ever will.

f you're getting the 10:17 from Marylebone to Birmingham New Street, then there's only one possible train for you to take. The railways are therefore a monopoly situation, although as they're broken down on a regional basis with different companies responsible for different line franchises, it's more like a series of regional monopolies spread across the UK.

Now ever since the original formulations of modern Capitalism, a monopoly has been viewed as unworkable. Adam Smith railed against them[2], saying that the narrowing of competition lead businesses "to levy, for their own benefit, an absurd tax upon the rest of their fellow-citizens."

The basis of what makes Capitalism work is meant to be competition. If someone tries to sell biscuits at a ridiculous price, people will just buy their biscuits from a competitor. That doesn't work with a monopoly because there are no competitors - thus pulling away the fundamental basis of what makes Capitalism work. Indeed in these circumstances Adam Smith specifically called for state involvement.[3]

On this basis there is no reason why a market based approach should work and the railways should be renationalised.

Long-term Investment

The business of the railways is the business of large-scale infrastructure. Projects are invested in today that may take ten years to complete.

In the modern age, capital is very fluid and can be moved about and re-invested quickly and easily. Even in more normal firms, this leads to a problematic dynamic where to ensure investors continue to keep their money invested, there is a pressure on business to focus on short-term profits over long-term development. Professor of Economics at Cambridge, Ha-Joon Chang, talks about this, stating:

"The easiest way for a company to maximise profit is to reduce expenditure, as increasing revenues is more difficult - by cutting the wage bill through job cuts and reduced capital expenditure by minimising investment. Generating higher profit, however, is only the beginning of shareholder value maximisation. The maximum proportion of the profit thus generated needs to be given to the shareholders in the form of higher dividends. or the company uses part of the profits to buy back its own shares, thereby keeping the share price up and thus indirectly redistributing even more profits to the shareholders (who can realise higher capital gains should they decide to sell some of their shares). Share buybacks used to be less than 5 per cent of US corporate profits for decades until the early 1980;s, but have kept rising since then and reached an epic proportion of 90 per cent in 2007, and an absurd 280 per cent in 2008. William Lazonick, the American business economist, estimates that, had GM not spent the $20.4 billion that it did in share buybacks between 1986 and 2002 and put it in the bank (with a 2.5 per cent after tax annual return), it would have had no problem finding the $35 billion that it needed to stave of bankruptcy in 2009. And in all this binge of profits, the professional managers benefited enormously too, as they own a lot of shares themselves through stock options."

"All this damages the long-run prospects of the company. Cutting jobs may increase productivity in the short run, but may have long-term consequences. Having fewer workers means increased work intensity, which makes workers tired and more prone to mistakes, lowering product quality and thus the company's reputation/ More importantly, the heightened insecurity, coming from the constant threat of job cuts, discourages workers from investing in acquiring company-specific skills, eroding the company's productive potential [...] The impacts of reduced investment may not be felt in the short run, but in the long run make a company's technology backward and threaten its very survival."

In a business which relies on long-term investment, this dynamic is even more harmful - sometimes lethally so. The one key part of the railways that is currently nationalised, Network Rail (responsible for infrastructure but not the trains or their operations), was renationalised in the wake of the Hatfield Rail crash after the privatised Railtrack lead to an enormous disaster. This is not just economic inefficiency, but actual deaths caused by privatisation - and after the case "Because most of the engineering skill of British Rail had been sold off into the maintenance and renewal companies, Railtrack had no idea how many Hatfields were waiting to happen, nor did they have any way of assessing the consequence of the speed restrictions they were ordering - restrictions that brought the railway network to all but a standstill."[4]

This is perhaps the ultimate example of what Ha-Joon Chang talks about.

Poorer results

Because of aspects of how the capitalist system interacts with natural monopolies and infrastructure, by almost every metric the the privatised system delivers worse results than the former nationalised system.

Due to privatisation:

- "The privatised rail system requires billions more in tax payer subsidy each year" so these private businesses are relying on increasing amounts of government funding to operate. Why should that taxpayer money go to pay for investor dividends[5]?
- The "average age of rolling stock (Trains) has actually increased" as private companies under invest and trains get older and out of date[5].
- "[R]ail fares have still risen a great deal in comparison to the RPI". The RPI is the retail price index, a measure of inflation. What this means is that even accounting for inflation, you pay more for train tickets now then you would have 25 years ago when it was privatised.

In short we're paying more for a worse and inefficient service that only stopped being so amazingly awful that it's needlessly killing people because a key aspect was been renationalised. With Network Rail replacing Railtrack, and by all accounts doing a good job in the parts of the network it deals with, the overall outcome is merely poor rather than lethal, which still isn't something we should settle for when "good" is achievable through renationalising the rail network and using an economic set-up that makes sense in the circumstances.

The Democratic Case

This portion of the argument is much more simple. The UK is a democratic country and the policies enacted by government should reflect the will of the people.

When surveyed it has been found again[6]and again[7] and again[8] and again[9] that the people of the UK overwhelmingly support a renationalised railway service. The is usually by wide margins with the polls linked as sources generally tending to show 3 people preferring renationalisation for every 1 who likes privatisation.

On this basis the railways should be renationalised.



Chetork forfeited this round.
Debate Round No. 2


Overhead forfeited this round.


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Debate Round No. 3


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Chetork forfeited this round.
Debate Round No. 4
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