Would a ‘People’s Railway’ Reduce Inequality?

This weekend Jeremy Corbyn announced that his first official policy as the new leader of the Labour Party will be to take over rail franchises as they expire. This new “People’s Railway” is an idea that is likely to prove popular with the public, with 66% explicitly supporting Rail nationalisation and 58% supporting nationalising rail and utilities in general. But will changing rail ownership be enough to convert our public transport system from one that locks in existing inequalities to one that helps create a more equal society.

As the Equality Trust has shown in our report Taken for a Ride, government subsidies in the public transport system help entrench inequality. This is particularly the case with subsidies to rail users where households in the richest 10% get more than four times as much as people in the poorest 10%. Privatisation has done little to address this inequality, but public ownership of the railways won’t fix this problem by itself either. The largest inequalities of rail subsidy actually happened under public ownership, when in the early 1980s the richest 10% got over fourteen times as much as the poorest 10%[1].

The reason rail subsidy is so regressive is that rail users tend to have higher incomes than the rest of the population. As a result, increased subsidy going toward railways will, if not carefully directed, end up benefiting the richest more than the poorest. Of course, government ownership does not have to mean increasing subsidies to reduce the train fares of those on high incomes. The government could choose to reformulate its transport policy to better help those on low incomes. In which case, nationalisation along with smarter subsidies could provide a more progressive solution.

Rather than focusing on who owns or runs a certain type of public transport service there should be much more attention paid to people’s actual transportation needs. For some low-income households that may include trains, and for these households, specially discounted fares would be a better and more progressive use of government money than freezing the cost of season tickets for wealthy commuters in the south east.

For many others on low incomes concentrating on their needs would suggest directing public transport subsidy away from trains and towards other forms of transport. This could include increasing funding for bus services, which many low-income households currently rely on. It could also include greater investment in services such as for door-to-door transport for those with mobility problems, or investing in cycling infrastructure to connect low-income housing and nearby schools.

Jeremy Corbyn’s People’s Railway may well be a popular one. But to really serve the people, and to help tackle inequality, it must include a far fairer form of subsidies.

Tim Stacey, Senior Policy and Research Advisor


[1]According to ONS data. There are some methodological differences in how this number has been calculated over the years so the time series isn’t perfectly comparable but the ratio should still be indicative of the inequality in subsidy.