Saturday, July 03, 2010

Selling off Network Rail

It seems that the government are considering selling off Network Rail—which would be... er... courageous.
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.



Anonymous said...

"I hate to say it, as a firm beliver in free markets, but given the total fincial disaster privatiseation has been, I'm in favour of re-nationalisetion."

The railways were never privatised in any meaningful sense; if they had been then most of the tracks would have been ripped up as the unprofitable routes were shut down. That would probably have left about a dozen railway lines in operation and the steam-heads would be bashing down the doors in Downing Street baying for blood.

What you appear to want is for the free market to take an antiquated and expensive means of transport and magically make it cheap and convenient; that's not going to happen because there's no way to do it. You might as well demand that the free market provide you with a regular horse and cart from Edinburgh to London, stopping at every village en route, with a one-hour round-trip time, for a fiver.

Britain's insane love for trains is one of the biggest reasons why its transport system is so totally fucked up. They're expensive, inconvenient and inefficient by their very nature and no-one can make them much better so the government keep trying to make every other form of transport worse instead.

Sell off the tracks and rip 'em up if they can't pay their way. You know it makes sense.

wh00ps said...

Now I'm not sure where I read this, but I'm sure I remember reading that the tracks and the trains have to be seperated under European law..?

Sandy Jamieson said...

Trouble is that the EU will not permit verical operations. In the ineterests of "competition" it strongly favours a splitting of track and operations.

Of course that just might be a way of either SNCF or DB getting control of the British railway system.

andy janes said...

How about instead of privatising as 1 company breaking up network rail into 4 groups that cover the old big 4's networks, then letting them decide when the TOC's franchise if they want to renew or if they want to re-integrate (will be interesting also to see how East coast line fares now is back in Network Rail's control)

Anonymous said...

Sandy Jamieson said...

Of course that just might be a way of either SNCF or DB getting control of the British railway system.

fine by me, the DB in my experience runs like bloody clock work, isnt expensive and they have awesome trains to boot. its all electrified though.

we're stuck in the dark ages here with a mix of electrified and non electrified lines. it would be cheaper for everyone if it was all electric as theyre seriously more efficient. (as a whole from power generation, transmission and delivery)

a big diesel is only 35-40% efficient at best...and like any machine with lots of moving parts, needs regular servicing.

in germany they have electric loco's and that leaves carraiges free to carry just passengers...they dont need an enginee shoe horned under them. that way the germans can have double decks without much hassle.

jeux société said...

when will they stop to privatise all the things?...

Roger Thornhill said...

We must not forget freight.

Road haulage is subsidised, so we need to unpick that as part of the overall plan for Rail.

Rail was, after all, a freight solution first and foremost.


I will take above anon's place. :)

I think that it could be a great idea but I can't see agreement on it from the public or within the government.

Better we sell Whitehall and Buck House .Endemol could buy both and then we'd see some reality tv. :)

neil craig said...

When BRITAIN had an empire 6% of GNP was taken by the government & it kept out of the wealth creator's way. Thats what happened. If we put a tiny portion of the money government takes into Space X-Prizes we wouldm by now, gave a larger empire than ever before & one on which truly "the sun never sets".

The total & repeated refusal of all politicians of all parties to even think about that shows why we have no such spirit.

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