Why calls for rail nationalisation miss the point

[teuchter]

The writer of this article was the chairman of East Coast during the period it was quasi-nationalised. The period which people who don't really understand how the railway franchising system works like to quote as an example of how publicly run franchises make lots of profit for the government, even though the government didn't particularly make any more money out of that franchise whilst it was nationalised than they do when it's in private hands.

The point is that our railways could be much more effectively improved by changes in broader transport policy, and the way the whole system is managed, than by fiddling around with who runs the franchises.

But it's easy for people to say "nationalise" so that's what ends up in the manifesto. Any kind of truly radical transport policy doesn't get a look-in.

Anyway, an interesting read perhaps.

Nationalisation: “a dead-end argument”

If you have been following my line of thought so far, you will have come to appreciate that the argument about whether our railways should be nationalised or privatised is a sterile one - they are effectively nationalised already in all but name.

However, what tends to exercise the minds of left-leaning politicians and the wider public at large is those pesky franchises. Why should private companies be brought in to operate public service contracts, and make a profit on these that is then removed from the industry and paid to shareholders?

 

[Magnus McGinty]

The point of a good railway isn't to make money. There's dozens of good reasons before you reach that point.

 

[xenon]

Privatising natural monopolies, who wins. It's also terribly efficient now isn't it. What ticket did you want to buy again, let's split the ticket, blah blah blah.

 

[Dogsauce]

There were huge price hikes when Branson took over EastCoast, mainly by reducing the amount of the cheapest advance tickets available (so they could claim they weren't putting prices up, which they did do anyway a few months later by >10%). Meant I was regularly paying £22 rather than £13 each way. That great capitalist 'magic money tree' - can you guess where the premium they pay the government comes from?

 

[maomao]

Privitisation also depresses wages and conditions for rail staff while increasing renumeration for executives. Low wages have a massive social cost. It's not just about the service and ticket prices.

 

[kabbes]

There's a real lack of accountability in the current system. Everyone wants to blame each other for the failures arising from years of systematic underinvestment. Train break-downs, signal failures, lack of staff, track problems -- the reasons for delays and cancellations are numerous but they all amount to "the system isn't good enough". Who is responsible for that system as a whole?

 

[PaoloSanchez]

The writer of this article was the chairman of East Coast during the period it was quasi-nationalised. The period which people who don't really understand how the railway franchising system works like to quote as an example of how publicly run franchises make lots of profit for the government, even though the government didn't particularly make any more money out of that franchise whilst it was nationalised than they do when it's in private hands.

The point is that our railways could be much more effectively improved by changes in broader transport policy, and the way the whole system is managed, than by fiddling around with who runs the franchises.

But it's easy for people to say "nationalise" so that's what ends up in the manifesto. Any kind of truly radical transport policy doesn't get a look-in.

Anyway, an interesting read perhaps.

Nationalisation: “a dead-end argument”

I don't pretend to fully understand the nitty gritty details of state vs private ownership wrt the running of railways. My belief is that it should be run as a public service and not for profit. Those in favour of private ownership appear to believe that the management is better in privatised companies.

I thought that one of the comments was quite interesting...

 

[alex_]

There were huge price hikes when Branson took over EastCoast, mainly by reducing the amount of the cheapest advance tickets available (so they could claim they weren't putting prices up, which they did do anyway a few months later by >10%). Meant I was regularly paying £22 rather than £13 each way. That great capitalist 'magic money tree' - can you guess where the premium they pay the government comes from?

The article mentions this as a method of increasing revenue.

 

[Bahnhof Strasse]

There's a real lack of accountability in the current system. Everyone wants to blame each other for the failures arising from years of systematic underinvestment. Train break-downs, signal failures, lack of staff, track problems -- the reasons for delays and cancellations are numerous but they all amount to "the system isn't good enough". Who is responsible for that system as a whole?

It is no coincidence that the infrastructure is in public hands, very handy whipping boy.

 

[alex_]

It is no coincidence that the infrastructure is in public hands, very handy whipping boy.

More like because Railtrack killed about 50 people.

 

[teuchter]

There were huge price hikes when Branson took over EastCoast, mainly by reducing the amount of the cheapest advance tickets available (so they could claim they weren't putting prices up, which they did do anyway a few months later by >10%). Meant I was regularly paying £22 rather than £13 each way. That great capitalist 'magic money tree' - can you guess where the premium they pay the government comes from?

Yes, it comes from revenue. When VTEC were awarded the franchise it was because the government wanted to maximise the revenue flowing from that operation. The premium that VTEC will pay per year is approximately twice what DOR (the "nationalised" operator) paid. So of course something has to give to allow that. But this is a result of central government decision. They could have specified and awarded the contract with the aim of preserving low fares instead, and franchisees would have responded accordingly. That's the whole point: the problem is with central transport policy which does not fund the railways properly. It's very handy for the government that the public ire is directed at the franchise operators, and the profit they make. The profit they make is not the main thing that drives fares up. What drives fares up is a government which wants to substantially reduce the amount of public money spent on the railways. Nationalised franchises will not change that in the slightest.

 

[kabbes]

Yes, it comes from revenue. When VTEC were awarded the franchise it was because the government wanted to maximise the revenue flowing from that operation. The premium that VTEC will pay per year is approximately twice what DOR (the "nationalised" operator) paid. So of course something has to give to allow that. But this is a result of central government decision. They could have specified and awarded the contract with the aim of preserving low fares instead, and franchisees would have responded accordingly. That's the whole point: the problem is with central transport policy which does not fund the railways properly. It's very handy for the government that the public ire is directed at the franchise operators, and the profit they make. The profit they make is not the main thing that drives fares up. What drives fares up is a government which wants to substantially reduce the amount of public money spent on the railways. Nationalised franchises will not change that in the slightest.

At the very least, it would change it by making it transparent where the decision making lies.

 

[teuchter]

I don't pretend to fully understand the nitty gritty details of state vs private ownership wrt the running of railways. My belief is that it should be run as a public service and not for profit. Those in favour of private ownership appear to believe that the management is better in privatised companies.

I thought that one of the comments was quite interesting...

View attachment 116506

I find it an ill-informed rather than interesting comment. Firstly, the railways in Germany are actually part privatised now, with quite a lot of services run by private operators. Secondly, Germany puts hugely more subsidy into its railways than we do. That's the most significant difference.

 

[teuchter]

At the very least, it would change it by making it transparent where the decision making lies.

Do you mean it would prompt people to call for more funding from government? When it was BR, people complained that BR was crap, as far as I recall, rather than voting for those who promised increased investment in rail instead of things like keeping petrol cheap.

 

[beesonthewhatnow]

The whole thing fails the moment you see moving people around as something to make money from, rather than an essential service to be provided.

 

[teuchter]

London buses are also operated under a franchise system, but are there often calls for these franchises to be nationalised? Not really, because the system works pretty well from a passenger's point of view. There's a consistent and fully regulated fare system. The different ownership between routes is basically invisible to the passenger. The difference between london buses and national rail is that the overall system is managed, regulated and funded in a different way. This is what needs to change about national rail. Fiddling with whether the franchises are public or private run is just shuffling deckchairs.

 

[teuchter]

The whole thing fails the moment you see moving people around as something to make money from, rather than an essential service to be provided.

Standard template statement for these discussions. Congratulations. But I'm trying to explain that the basic problem is with the extent to which central government sees it as an essential service.

 

[OzT]

Public transport (trains/buses/trams) and utilities should have never been privatized imho. And health care never.

They are pretty much essential services for smooth running of the community and should be a service, not for profit.

Take buses for example, when it went private a lot of country routes, with say a bus an hour for the 3 person going to town per day, were lost as was not profitable. But for those 3 people it took away their independance.

** gets off my political stool **

 

[Magnus McGinty]

London buses are also operated under a franchise system, but are there often calls for these franchises to be nationalised? Not really, because the system works pretty well from a passenger's point of view. There's a consistent and fully regulated fare system. The different ownership between routes is basically invisible to the passenger. The difference between london buses and national rail is that the overall system is managed, regulated and funded in a different way. This is what needs to change about national rail. Fiddling with whether the franchises are public or private run is just shuffling deckchairs.

It's easy to laud bus services from a London-Centric perspective. Try getting around smaller towns and rural areas where not profitable routes have been slashed or axed completely.

 

[teuchter]

It's easy to laud bus services from a London-Centric perspective. Try getting around smaller towns and rural areas where not profitable routes have been slashed or axed completely.

What's your point?
The difference between London buses and buses elsewhere is not public or private operation - it's how they are funded and regulated. That's my whole point.

 

[Magnus McGinty]

What's your point?
The difference between London buses and buses elsewhere is not public or private operation - it's how they are funded and regulated. That's my whole point.

Of course there's a difference between routes surviving if they're deemed profitable and a transport system existing as a service for communities.

 

[kabbes]

When I turn up to my local train station, the first thing I have to do is decide if I should get a ticket that only covers me for the Southern trains that go through the station or all trains that go through the station. Both Southern and SouthWestern operate services into and out of London. Buying a monthly ticket therefore means I have to take a punt on which train routes will be operating properly over the coming month.

This is just a little metaphor, really, for the whole nonsense embedded into the system. I am somebody trying to use public transport to get into and out of London. Why am I having to deal with multiple companies as part of this process? I can pick up either a Southern or SouthWestern train from Clapham, for example, to get back home -- I am one person taking one journey, occupying one space on one train either way, but I may or may not have bought the right ticket to actually do this.

I think you either see this kind of thing as an example of the way consumer society loads the burden of unnecessary decisions back onto the individual, resulting in the accumulation of general background anxiety and inefficiency in personal finances... or you see it as all brilliant "freedom of choice". This is a fundamental philosophical difference in how you think society should be built. Personally, I think it's appalling.

 

[teuchter]

When I turn up to my local train station, the first thing I have to do is decide if I should get a ticket that only covers me for the Southern trains that go through the station or all trains that go through the station. Both Southern and SouthWestern operate services into and out of London. Buying a monthly ticket therefore means I have to take a punt on which train routes will be operating properly over the coming month.

This is just a little metaphor, really, for the whole nonsense embedded into the system. I am somebody trying to use public transport to get into and out of London. Why am I having to deal with multiple companies as part of this process? I can pick up either a Southern or SouthWestern train from Clapham, for example, to get back home -- I am one person taking one journey, occupying one space on one train either way, but I may or may not have bought the right ticket to actually do this.

I think you either see this kind of thing as an example of the way consumer society loads the burden of unnecessary decisions back onto the individual, resulting in the accumulation of general background anxiety and inefficiency in personal finances... or you see it as all brilliant "freedom of choice". This is a fundamental philosophical difference in how you think society should be built. Personally, I think it's appalling.

Right, so regulate the overall system in a different way, so that different ownership of different franchises doesn't cause this kind of situation. Specify in the franchise requirements that the different operators must have inter-available tickets. This is exactly why I gave the London buses example.

 

[Gromit]

There were huge price hikes when Branson took over EastCoast, mainly by reducing the amount of the cheapest advance tickets available (so they could claim they weren't putting prices up, which they did do anyway a few months later by >10%). Meant I was regularly paying £22 rather than £13 each way. That great capitalist 'magic money tree' - can you guess where the premium they pay the government comes from?

Eastcoast was public, efficient, cheap and ran at a profit. Yet it lost its franchise to a private company that wasn't cheap and less efficient.
This raises immediate questions in my mind about the franchise model.
In no way did the franchise changing hands give best value to the public.
It only benefited the rich (Shareholders and Virgin Rail execs etc).
One also can't help but wonder how politicians also personally gained from the decision.

He argues that private companies run things better and yet they are always asking for government handouts to deal with issues any other industry would be expected to budget for. Does he factor this in?

Finally he went from public to consultancy. His own business depends on private companies paying him money. Can we really consider his views unbiased of personal self interest?

 

[teuchter]

Of course there's a difference between routes surviving if they're deemed profitable and a transport system existing as a service for communities.

London buses don't make a profit. That's not the reason we have better bus services in London. It's because there's the political will to make them work, because the majority of people rely on them. Nationalising rural bus services wouldn't magically make more money available to subsidise them.

 

[kabbes]

Right, so regulate the overall system in a different way, so that different ownership of different franchises doesn't cause this kind of situation. Specify in the franchise requirements that the different operators must have inter-available tickets. This is exactly why I gave the London buses example.

Or, rather than multiply up the rules ever further and have to keep stamping down on other types of unanticipated problems that arise due to perverse incentives and non-aligned interests, simply recognise that a natural monopoly public service belongs in public ownership, and thus solve all these kind of alignment problems in one fell swoop.

 

[teuchter]

Eastcoast was public, efficient, cheap and ran at a profit. Yet it lost its franchise to a private company that wasn't cheap and less efficient.

In what way is it less efficient?

 

[OzT]

Right, so regulate the overall system in a different way, so that different ownership of different franchises doesn't cause this kind of situation. Specify in the franchise requirements that the different operators must have inter-available tickets. This is exactly why I gave the London buses example.

But London buses are run by one authority, whereas the trains are different for profit franchises

 

[Magnus McGinty]

London buses don't make a profit. That's not the reason we have better bus services in London. It's because there's the political will to make them work, because the majority of people rely on them. Nationalising rural bus services wouldn't magically make more money available to subsidise them.

It would also mean less people using cars so less fuel tax in the treasury.

 

[OzT]

But to be fair, re the trains being re-nationized, I have heard horror stories how when it used to be nationized the service were not that good and there were often strikes, across the whole network then as it was all one. Whereas i guess now strikes just seesm to hit one network at a time.