A green signal for transport co-operatives?

The time is right for co-operation on the railways, according to Prof Paul Salveson. He considers the opportunities and the obstacles.

Britain gave the world its railways. They have gone through private ownership, nationalisation and then back to the private sector – both forms of ownership have brought their advantages and disadvantages, but the one approach that has yet to be tried is the mutual model.

With the exception of some heritage railways and the proposed ‘open access’ operator Go-op, our rail network has not yet felt the benefits of an approach that could combine commercial flair with real involvement of passengers and employees.

The Co-operative Party, with partners Aslef, last year commissioned me to write two reports on how a co-operative approach could work for railways in Wales and Scotland. It need not involve a massive re-organisation.

As franchises come up for renewal, an employee and passenger-owned mutual could take over the running of the business; instead of profits going to private shareholders, or foreign state-owned railways, the surplus would go back into the railway.

A rail franchise does not require enormous amounts of capital; train operators own very little. Network Rail has stewardship of the infrastructure while the trains are leased from rolling stock companies, owned by the big banks.

The main obstacles are artificial barriers to entry in the form of bonds (of up to £20m) which have to be paid to the government if the franchise runs into difficulty, and the sheer cost of putting a winning bid together – typically around £10m.

If government was serious about encouraging social enterprise on the railways, it could work with partners in the co-operative sector to encourage a new approach which would offer value for money with excellent service quality and employment conditions.

A good place to start would be the Northern franchise, which comes up for renewal in 2016. It is heavily dependent on subsidy and if current arrangements continue, the franchise will be awarded to a private company which will siphon off annual profits of around £40m, while enjoying a comfortable subsidised existence.

Northern local authorities have the time to develop a mutual bid with partners in the trades unions and co-operative sector that could compete with private bidders. But it would need government encouragement for it to work.

While most rail franchises are very large businesses, there is scope for some small-scale co-operatives to develop organically within the railway industry, even under private franchising. A good place to start could be stations themselves, many of which are unstaffed.

In a few cases, local social enterprises have taken over the running of previously unstaffed stations and developed successful businesses. Gobowen in Shropshire is a great example, run by not-for-dividend Severn-Dee Travel.

In many other cases, currently-unstaffed stations could be run by local co-operatives selling not just rail tickets, but offering other goods and services which meet local needs. Why not develop small stations as local community hubs?

It needs encouragement, not obstruction, from both parent train operator Network Rail and the government, but the approach could transform many small unloved stations and offer better services to local people. Already, hundreds of stations are ‘adopted’ by local community groups; some would be up for going to the next stage and actually running their station.

In many parts of rural Britain, bus services are under threat as local government is forced to cut back support, while train services are infrequent and don’t link with buses. We should look at bus and rail services in rural areas being managed by a single body, structured as a co-operative, which could also develop commercial tourist services and become a rural enterprise agency focused along the rail corridor.

Co-operation has much to offer our railways. Let’s seize the opportunities.

Paul Salveson is visiting professor of transport and logistics at the University of Huddersfield and a board member of Passenger Focus. He is author of A People’s Railway for Wales, A People’s Scotrail and Railpolitik: bringing railways back to communities.