Privatise the railways

Constantly Furious is absolutely fucking raging about the fact that many people were prevented from getting to Remembrance Services because First Capital Connect's drivers decided not to turn up for work this Sunday in "a dispute over pay".

The Unions are really starting to flex their muscles at the moment, and we are being reminded just what a bunch of cunts they are. Of course, people like myself couldn't give a shit about Royal Mail staff striking—which is why, I suspect, the CWU have come to an arrangement—and, now that I have a car, I don't take the train very often; similarly, the fact that BA staff are being balloted doesn't bother me one jot.

However, it is worth noticing that all three of the businesses cited above have something in common: they all used to be state-owned monopolies. And, actually, all but BA still are.

"What?" I hear you cry. "But the railways were privatised years ago!"

Um, no...

The railways are not run, in any meaningful sense, by private companies. Consider the evidence, m'lud:

1. The tracks are not run by private companies; they are maintained by a state monopoly called Network Rail. Yes, yes: technically it doesn't appear on the government's books, but it's £19 billion or so of debt is under-written by the state and the vast majority of its income is also derived from the state.


2. As regards the running of the train services, the government controls the franchises.
   
   • These franchises are made so short-term that—given the capital cost involved in so doing—there is little incentive for the private companies to invest.
   
   
   • A company can lose the franchise just like that if the government so wishes—and it often does, e.g. Connex South Eastern, National Express East Coast.
   
   
   • The private companies must pay a guaranteed amount of money to the government in order to run these franchises regardless of earnings, e.g. GNER (although one cannot ignore the fact that GNER negotiated spectacularly badly, such that they were about the only rail company paying a nett amount to the state. Which brings us on to...).


3. The state pays out a massive subsidy—currently sitting at about twice what it was under British Rail—to rail companies to operate these services. Of course, you might look at the whole thing a little differently if—instead of calling it "a subsidy"—you use the word "fees".


4. Of course, many of these subsidies are necessary because the state also broadly controls:
   
   • the train timetables: the companies involved cannot decide to axe or reduce the frequency of many services. (Remember that the biggest destruction of the rail services was carried out by the state.)
   
   
   • the price of tickets: the state sets maximum pricing, and many of the conditions pertaining to those prices (as the state has done almost since the railways' inception, by designating them a Common Carrier).
   
   
   • the relative priority of passenger and freight services.
   
   
   • the rental prices of the lines, through Network Rail.
   
   
   • The terms of employment (and many other conditions) by insisting that the companies that are picked for the franchises recognise unions, etc.

This is not to say that the private companies do not exploit the Simple Shopper—I am sure that they do. It is also not to say that, were the railways properly privatised that they would, in fact, be any better than they are now. (Indeed, since the railways are, like the banks, "too big to fail" they might be worse.)

All I am pointing out is that the railways, right now, are not privatised. What the Tory government did was precisely what Gordon and his merry men have done with schools, hospitals and many other public services: they have entered into a public-private partnership in order to run these services.

The idea is that the private sector puts capital into the services, and the government pays them a massive fee for running those services. The fee has to be pretty massive because private companies cannot borrow at the same favourable rates that the state can: however, the state gets to keep the capital investment off the Treasury's books since the fees count as expenditure rather than capital investment (the reasons why the state would want to do this would make up a whole other post).

And that's all I wanted to point out: that the railways are not privatised. But maybe, just maybe, we might look at whether proper privatisation could work.

But it would have to be proper privatisation—without the constant and crippling interference and condition-setting, occasional nationalisation (e.g. WWI) or commandeering (e.g. WWII) or the companies and network that the state has indulged in almost since the very inception of the rail industry.

Just a thought...