Many British voters apparently want to re-nationalise Britain’s railway system, and some of them point to the French nationalised SNCF as a model. Although still plagued by strikes, its flagship trains, the Tres Grandes Vitesse (TGV) appear impressive. The company admits to being loss making but only to the tune of about €100 million this year, considerably less than the €2 billion the UK government invests in subsidy to Railtrack and the rail operators. Can it really be that nationalisation is cheaper?

An article in this week’s Economist exposes the financial truth. By dint of writing off debt, subsidising interest payments, and pumping new equity into the track system the French taxpayer is subsidising the railways to the tune of about €3.5 billion per year. This is likely to rise to €5.4 billion over the next few years and there is no realistic prospect of it falling. We can argue as to whether the railways need subsidies, but should not delude ourselves that nationalisation provides a cheap way to administer them.