With the NHS "reforms" in full swing, the failures of rail privatisation provide important lessons. Britain has the most expensive train fares in the world. On the back of the McNulty review, the government is now set to push them even higher. How does a service intended to benefit millions find itself impoverishing them, and why is our political class determined to let it continue?

Roy McNulty's rail report was a sad spectacle, the elephant in the room so enormous it's a wonder he found space to breathe. Commissioned by Labour but published under the coalition, it found the costs of our fragmented system had created a 40% "efficiency gap" over our continental neighbours and their mostly nationalised railways. Finance isn't the only place the market failed.

It is estimated around 2,000 firms now operate Britain's trains. After a string of fatal crashes, culminating at Hatfield in 2000, the safety record of the marketised system lay in tatters. Railtrack, the commercial company setup to oversee track maintenance, was effectively renationalised, becoming Network Rail. Fragmentation and the contested liabilities it creates pose a serious barrier to safety. How long before Andrew Lansley's NHS "kitemark" has its own Hatfield moment, none can say.

In its last year before privatisation, our railways required just £431m in public subsidy. By 2006, the figure had reached over £6bn. Economists at UBS found British fares are now the most expensive in the world. In 2009, the thousand-pound fare milestone was breached for the first time – a fitting tribute to market "innovation". Even the Conservative former transport minister, Philip Hammond, has conceded the trains have become "a rich man's toy".

For so-called "choice", if you arrive at Victoria and you need a train to Brighton, there is one company and one price (£24.10). In Europe, the same fare would cost an average £11. If we paid the same fares as the French with their nationalised service, it is estimated we would save over £4bn a year. Yes, if you dig around three years in advance and have a small team of analysts at your disposal, you might just find a bargain. But woe betide the swaggering Johnny who turns up at a British station and expects to just stroll onto a train at a fair price; that braggadocio is a thing of the past.

Indeed, the fare system has become so complex that on one route, London to Manchester, 34 different fares were found. Gerry Doherty, head of the TSSA rail union, criticised the train operating companies (TOCs) for "deliberately confusing" fare structures designed to ensure "passengers end up paying for a dearer ticket at all times". If you find rail fares a confusing mess, as even rail staff do, just wait until you have to rummage through 30-page exemption documents to select your NHS top-up plan.

For comfort, Britain now has the most crowded trains in Europe. Passengers should remember that for the train operators, overcrowding is highly profitable. The more passengers you can cram into a single cart, the more revenue you raise from lower costs: profit. To understand how this dynamic might play in healthcare, look at the PFI built hospitals: cutting bed numbers was a primary source of savings.

With the P word taboo, McNulty's hands were tied in identifying the glaring problem with our rail system. Instead, he struck upon the idea of "managing peak demand" by raising prices still further. Peak users are mainly working people who do not choose their working hours; they are not crushed into the busiest trains of the day by choice. Stephen Joseph, chief executive of the Campaign for Better Transport, suggests raising fares will simply "price people on lower incomes off trains and make little difference to overcrowding". How will Lansley's market "manage demand" – again, no one knows.

Transport secretary Justine Greening is seeking to find £3.5bn yearly savings by 2019 but there seems little hint of any coherent plan behind it. The public are quite clear – they want rail renationalised. A 2009 poll showed 51% back the renationalisation of rail, including a third of Conservative voters. Just 11% back the current model. Rail privatisation has failed in the most unequivocal terms. The public can see it, the unions can see it and the taxpayers can see it. The only people who can't are the firms profiting from the mess and their supporters in parliament. Our national health service is now hurtling down the same broken track.

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