Thursday, 16 October 2008

Whither the railways?

Gordon Brown's partial nationalisation of some big banks has prompted new interest in the question: what else might be about to go bust and could usefully be nationalised?

Almost every essential service, seems to be the answer. As far as transport is concerned, airlines are already going bust all over the place, but most of their services are anything but essential. Railways are a different matter, and historically it has always been the case that passenger numbers fall sharply in times of economic slowdown. If we are really going into a severe recession, several of the companies operating the existing railway franchises could easily go down the pan. When their premium/sudsidy agreements with the DfT were drawn up, steeply rising ridership into the distant future was the forecast.

I noted the other day that New Zealand, having privatised its railways, has decided that the experiment was a failure, and has re-nationalised them.

Now comes news that Germany, which has been gradually moving towards rail privatisation for some time, is abandoning the project. It will keep its major railway network, Deutsche Bahn, in public ownership after all. (Some smaller branch lines there are already operated by private companies on a franchise basis.)

True, the form that the German privatisation was going to take was not nearly as stupid as the British one. Railwaymen on the continent have for years been citing the British model as a classic lesson in how not to do it. But even their more sensible version will not now go ahead.

Meanwhile, Christian Wolmar observes that re-nationalising our railways need not in fact cost anything, contrary to what ignorant politicians like Peter Hain keep saying. CW writes:
What New Labour refuses to let on is that the railways are effectively largely publicly-owned anyway. Network Rail, which owns the infrastructure, is a company without shareholders that is dependent on government backed debt (to the tune of £20bn), for its survival. It receives billions in annual grants direct from government and is, to all intents and purposes, a state-run enterprise.
So all that needs to happen is for the operating companies to hand back their franchises either when their terms expire or when they get into difficulties.

Nobody should worry that public ownership need involve excessive interference by civil servants. On the contrary, one of the great paradoxes of the railway privatisation saga is that we have ended up with far greater micro-management by Whitehall of services, rolling stock deployment and timetables now than was ever the case under British Rail, which in fact was an arms-length operation rather like the BBC. 

The present structure is also phenomenally more expensive than the old one, both for the taxpayer in subsidies (BR in its latter days was actually rather efficient in its use of resources) and for the passenger in fares, some of which are astronomically higher than in any comparable country. Truly we now have the worst of all worlds.

Neil Clark, founder of the Campaign for Public Ownership, is naturally cock-a-hoop at recent developments

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