In its bid to cut our £155bn deficit, George Osborne's Treasury crew are polishing up the same list of asset sales that the previous lot failed to get shot of – Royal Mail, NATS, Dartford Crossing, the High Speed 1 rail line and the ever-galloping Tote. But there's one business that could fetch as much as them combined: Network Rail.
Selling the owner of Britain's tracks, signals and stations would take political balls. But this is a time for bold decisions. And the numbers are compelling. Network Rail's equity could be worth as much as £14bn, while its debts would be removed from the public books.
The trouble is, of course, that we saw what happened last time—and it was recently enough that most people remember it. Anda although the article points out that Network Rail is in a far better position than Railtrack was, there is still one crucial element missing.
You could argue that it would be better still to have a vertically integrated railway, with the same owner for both the trains and the track. That could then be carved up as, say, four big regional companies and privatised—similar to the model in Japan.
And, of course, similar to the model that our own railways had in the hey-day of British rail travel. In WWI, the railways came under direct government control, and the exigencies of war meant that the railways were increasingly difficult to run. In 1923, the government formed the companies into "The Big Four"—the Great Western Railway, the London and North Eastern Railway, the London, Midland and Scottish Railway and the Southern Railway companies. In 1947—after the government had screwed the private railway companies throughout WWII—the Labour government nationalised the struggling private companies to form British Rail.
As with every other utility the state has ever run, successive governments withheld investment, and destroyed the service. I have, for instance, written before about the utter, colossal failure that was the Beeching Axe.
But, if the government wants to privatise the railways and do it properly, then they could do worse than hire Longrider—a man who has worked at the sharp end and has a superb understanding of the problems—to lead the effort.
If Osbourne is going down the route of proper privatisation, then a vertical split is the way to go. A company that operates the signalling and track on which its trains operate has a unique incentive to make it operate properly. During the previous privatisation, relationships between signallers, traincrew and trackworkers soured overnight as they became competitors with different company loyalties rather than colleagues. It has taken a decade and a half to restore them. And, importantly, we could lose all the silly delay attribution and buying of paths necessary before a signaller can move an out of place on-track machine to its depot. And, you never know, maybe signallers can go back to regulating using common sense rather than abide by arbitrary regulation polices that are out of touch with the situation on the ground.