Re: "Tories cut Labour spending pledge"

On 2008-11-19 14:36:20 +0000, "Jerry" <INVALID@xxxxxxxxxxxxxxx> said:


"Robert" <coppercapped@xxxxxxxxxxxxxx> wrote in message
news:2008111914004050073-coppercapped@xxxxxxxxxxxxxxxx
<snip>

As the private companies before 1947 made profits, even if only
just, then a very good case could be argued that the root cause (as
one likes to call it these days) of the current situation was the
nationalisation of the railways in the first place.

That could well be the case, the mistake was to go back to a sort of
[1] pre 1923 position rather a pre 1948 position, the problem is that
the railways are now less efficient (with a few notable exceptions)
that they were in the nationalised period! Railway privatisation has
been well and truly a dogs breakfast...

[1] even worse though as the TOCs don't actually own their routes,
track and *all traffic* etc.

It was no mistake. Several studies of the privatisation process have been published, one of which I have quoted in another thread, in which the reasoning for the selected structure has been explained. One of the most important was to open up another route for investment in the railway because, as has often been explained here and in other places, the money that governments have to spend is limited[1] and a large capital inflow was required to update the system's infra-structure and rolling stock. This being the case a structure was sought to make this possible.

Returning to a 'Big Four' structure would simply have meant that BR would have been, in effect, quartered. This was the first model examined but no investors were found who were interested to buy such a railway for, essentially, two reasons:
(a) the amount of capital required to buy a quarter of the railway system would have been very large - this amount had to be calculated on the basis of the cost of replacing the infrastructure or the value of the land - if it had been a normal commercial transaction the government would have had to /paid/ the potential purchaser to take it off the government's hands as the railways were loss-making and were not a 'going concern'.
(b) if the system was to continue much as before (a political imperative) continuing government support would be necessary. Adding unknown political risk (possible near-term changes in the political complexion of the government and the consequent expected changes in the framework in which the railways operated, changes in subsidies, the expected involvement of government in the management because of the 'he who pays the piper calls the tune' principle, etc.) to uncertain commercial risks, meant that many organisations ruled themselves out.

Thus, slowly, the structure of an infra-structure company (initially to be retained by the government), an operational leasing structure for the rolling stock, separate maintenance organisations, sale of the freight businesses and 'franchised' passenger train operations was evolved. The franchises were intended to be the method by which the cost of the railway would be minimised - by competition at franchise renewal. The subsidies were intended to reduce over time. Government investment was to have been restricted to the infrastructure, so road and rail investments were to have been prioritised on the same basis by the Ministry of Transport/Treasury.

Of course it never worked out like this. The infrastructure company was sold first rather than last and a government of a different political complexion was elected. The new government had no political reason to want to show that its predecessors might have got it right and that the inherited structure may have been successful: by accident or design it relegated transport to the lower part of its list of priorities. The accidents at Southall, Ladbrooke Grove and Hatfield were grist to the mill. By withholding payments due to Railtrack after Hatfield, the Government forced the company into administration. During this period it would seem that financial control was lost. The Government did not during this time investigate alternative structures, such as geographically or line-of-route based infrastructure companies, but in effect resurrected Railtrack as Network Rail with the shares held by the Government.

Regarding 'efficiency', the financial 'efficiency' as a whole is not as good as the last days of BR for reasons I have tried to explain above, but in terms of 'operating' efficiencies' (passengers carried/year, passengers/employee, train miles/track mile, freight lifted per employee, etc.) the current set-up is well ahead of the old.

[1] This is still true, even under the current circumstances although the Goverment would like you to think that it is not.

--
Robert

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