The 'N' word - Nationalise

[Zoe]

Since then every government has been forced to privatise its assets at a pace which satisfies the markets which are dominated by the US and the far east.

So what exactly would these markets have done had the governments not privatized? It was the decision of governments in 1980s to support the free market and introduce policies of privatization and liberalization. New Zealand decided to renationalized the railways in 2008 and I didn't see any markets taking action to prevent the government of New Zeland from doing this.

 

[LNW-GW Joint]

So what exactly would these markets have done had the governments not privatized? It was the decision of governments in 1980s to support the free market and introduce policies of privatization and liberalization. New Zealand decided to renationalized the railways in 2008 and I didn't see any markets taking action to prevent the government of New Zeland from doing this.

I travelled on NZ railways in Silver Fern days - great little system.
They were fully privatised in the 80s but the private owners Tranz Rail didn't invest in them so the government has taken them back (or they would have closed).
Some likes will still close as a result of the rationalisation.

They are a small outfit compared to western rail networks, with a localised PTE-type passenger element around Auckland and Wellington.
It wouldn't threaten the public purse, unlike in Britain.
New Zealand is also not in a single market like the EU and has a good trade position unlike the UK.

The main point is that we depend on the availability of private capital (either direct investment or loans to government (bonds) to fund spending, and the banks are nervous.
"Deficit reduction" is the name of the game and renationalisation is going in the wrong direction.

 

[Zoe]

The main point is that we depend on the availability of private capital (either direct investment or loans to government (bonds) to fund spending, and the banks are nervous.
"Deficit reduction" is the name of the game and renationalisation is going in the wrong direction.

That's the case now but back in the 1980s it was the decision of the government to liberalize the markets and privatize. How was this decision forced on them?

 

[WestCoast]

Even the "statist" countries like France and Germany are having to operate their transport systems at arms length as commercial concerns - or they won't get the capital they need to develop.
Germany would dearly like to privatise DB but can't find a formula which is acceptable to the laender.

The privatisation issue with DB is quite a bit more complicated than you suggest - the only firm suggestion to "privatise" DB involved the controlling stake (51%) remaining with the federal Government. There's a range of opinions as well about it, influenced by public resistance to the project, culminating in its official rejection last year (for the time being at least). The Laender play a large role in transport provision within their areas and are very influential when it comes to these matters.

In any case, there's a lot more countries in Europe than France and Germany and the likes of the BeNeLux countries, Switzerland and the Nordic countries (all pretty stable economically) apparently see the railways (and most forms of public transport) like roads, an essential means of transport to be maintained and improved by the public purse. Then again, the money is usually set aside to do this and there is little resistance to high subsidisation.

Still, I can't see renationalisation being the key to success in Britain.

 

[Clip]

So what exactly would these markets have done had the governments not privatized? It was the decision of governments in 1980s to support the free market and introduce policies of privatization and liberalization. New Zealand decided to renationalized the railways in 2008 and I didn't see any markets taking action to prevent the government of New Zeland from doing this.

Aprt from the localised railways around Wellington and Auckland NZ railways are a shadow of their former glory and really shouldnt be compared.

 

[LNW-GW Joint]

That's the case now but back in the 1980s it was the decision of the government to liberalize the markets and privatize. How was this decision forced on them?

It was a bit like Thatcherism. They called it "Rogernomics" if I remember correctly. It was a policy of less government.
They had realised that wide state ownership (even more bloated than us, in relative terms) was not viable.
In general, I think it's still their view.

 

[Zoe]

wide state ownership (even more bloated than us, in relative terms) was not viable.

This is an argument I've often seen used to defend the privatization of BR but I'm not convinced. You said earlier that privatization was forced by the markets but what exactly would have been the consequences of the government failing privatize?

 

[yorksrob]

Well, I have to say, I'm not sure I'd nationalise now. Not because I believe private ownership is automatically better than state ownership. More because I'm wary of putting the railways through another round of upheaval.

Of course, that doesn't mean to say that the original case for privatisation was anything other than politically motivated lies, or that many of the benefits quoted for privatisation aren't factually incorrect (i.e. that there have been more lines opened since privatisation - which there haven't) Or that we have newer rolling stock (which we don't).

However. We are where we are, as they say.

 

[ainsworth74]

Sorry, but have you actually read my post #44? It covers nationalisation of the whole freight transportation network, including lorries. I've reproduced it below:

The Current Situation

1. NXEC (later East Coast) to own Wakefield Westgate Station
2. First TPE to own Huddersfield Station

Well your off to a bad start as TOCs don't own stations they operate them. Network Rail own them (and operate a few of them as well).

Fundamentally, Privatised rail systems are wasteful because each company has to own and maintain separate (costly) facilities and duplicate services.

Some perhaps but there is plenty of cooperation. Neville Hill operated by EMT maintains Northern Rail, East Coast and a few XC trains. Heaton mostly works on Northern Rail but also services Grand Central and the odd East Coast train. I'm sure there is some overlap but there is plenty of cooperation at the same time.

One of the best ways to compare nationised and privatised railways is to look at a couple of rail accidents that happened.

Interesting thought but you fail to mention that right now the privatized railway is the safest that the railway has ever been and has (after an admittedly bumpy start) a record that it can be very very proud of (no passenger fatalities since 2006 touch wood).

What we should do

Sound nice but I doubt it could work in the real world if for no other reason than it would cost a lot to set up and I'm yet to be convinced it would be any more efficient or cost effective than the existing system.

 

[yorksrob]

Interesting thought but you fail to mention that right now the privatized railway is the safest that the railway has ever been and has (after an admittedly bumpy start) a record that it can be very very proud of (no passenger fatalities since 2006 touch wood).
.

Wouldn't you expect the railway to be safer than before - what with the accumulation of knowledge from the past ?

 

[jon0844]

Wouldn't you expect the railway to be safer than before - what with the accumulation of knowledge from the past ?

Quite possibly, helped by more modern rolling stock that has proved itself (from the Mk4s to the 390s) but as rail travel has increased so much, you could argue that you'd expect more accidents.

 

[D841 Roebuck]

What's all the nonsense about the cost of nationalisation?

Just compensate the current owners with a minority shareholding in the new organisation.

A pherensic attitude to the finances of all past or present MPs, senior civil servants and other public employees would not come amiss, either.

 

[Railsigns]

Wouldn't you expect the railway to be safer than before - what with the accumulation of knowledge from the past ?

Also network-wide provision of TPWS has made the railway safer, but that would have happened with or without privatisation.

 

[WCMLaddict]

On 31st of March 2013 the last reminder of old British Rail will disolve itself. The date has been set for BRB(Residuary) Ltd. They still own quite a bit of land and many bridges and tunnels from what I know. They also deal with larg amounts of claims ...

 

[Zoe]

On 31st of March 2013 the last reminder of old British Rail will disolve itself. The date has been set for BRB(Residuary) Ltd. They still own quite a bit of land and many bridges and tunnels from what I know. They also deal with larg amounts of claims ...

The BRB itself also still exists so this would need to be formally wound up.

 

[MattRobinson]

Well your off to a bad start as TOCs don't own stations they operate them. Network Rail own them (and operate a few of them as well).

My bad.

Interesting thought but you fail to mention that right now the privatized railway is the safest that the railway has ever been and has (after an admittedly bumpy start) a record that it can be very very proud of (no passenger fatalities since 2006 touch wood).

That wasn't really a point about the accidents themselves as much as a point about how quickly they were cleared up afterwards (Harrow was a much more devastating accident which was cleared up much quicker by BR)

Sound nice but I doubt it could work in the real world if for no other reason than it would cost a lot to set up and I'm yet to be convinced it would be any more efficient or cost effective than the existing system.

Maybe not, but this doesn't have to be about efficiency or cost effectiveness, but about people. A nationalised industry is, after all, run for the good of the people. Less lorries on the motorways is surely a good thing and an electrified and expanded rail network is also surely a good thing, albeit not cost effective.

 

[jon0844]

I'd love to have more lorries off the roads and onto trains - but you need to find slots for them to fit in, and it's already quite tight isn't it?

Then you need more depots to get the stuff on and off the lorries, which will have to go the 'last mile'. Or build new lines.

It has to be hard to secure funding for such new lines and depots as how many businesses can guarantee they'd need/use such extras for the time needed to pay for them?

 

[HSTEd]

As for the safety argument.....

The deployment of superior train protection systems (TPWS) can probably explain most of the safety benefits, and since BR was trying to deploy full blown ATP at the time of privatisation I don't think it can be ascribed to privatisation.

 

[ainsworth74]

That wasn't really a point about the accidents themselves as much as a point about how quickly they were cleared up afterwards (Harrow was a much more devastating accident which was cleared up much quicker by BR)

But I wonder how much that has to do with procedure rather than equipment. How extensive were the forensics that were carried out after Harrow compared to a crash such as Great Heck or Greyrigg? Do the RAIB demand more time to investigate than HMRI would have back in the 50s? Also I just don't accept that we can entirely blame the privatized railway for a lack of rail cranes firstly how many did BR have by the 1990s? Then secondly how many times over the last, say, five years would they have been needed? Most derailments these days can be dealt with using either jacks or a specialist railway vehicle (BRUFF) rather than a crane so why on earth keep them around (and people trained to use them) when you might only need them once every few years (Grayrigg will have been the last time they would have been really useful I'd bet).

Maybe not, but this doesn't have to be about efficiency or cost effectiveness, but about people. A nationalised industry is, after all, run for the good of the people. Less lorries on the motorways is surely a good thing and an electrified and expanded rail network is also surely a good thing, albeit not cost effective.

Again we live in the real world and in the real world something like this would never happen. You also have to remember that BR was never run as a public service it was always expected to come as close as possible to covering it's costs.

Certainly reducing lorries on motorways by trying to get more freight switched to rail and expanding electrification and reopening some routes is something that I won't stand opposed to but only if it makes sense and is cost effective. After all the taxpayer is at the end of the day footing the bill for all of this.

 

[emoaconr]

On 31st of March 2013 the last reminder of old British Rail will disolve itself. The date has been set for BRB(Residuary) Ltd. They still own quite a bit of land and many bridges and tunnels from what I know. They also deal with larg amounts of claims ...

I guess anything that's left will transfer to contracted organisations and the ORR. NR already do some work on behalf of BRB.

 

[WelshBluebird]

There still hasn't been an answer to why nationalisation would automatically increase our debts. Those who oppose nationalisation have said it would a few times, but they have not replied with why.

 

[tbtc]

There still hasn't been an answer to why nationalisation would automatically increase our debts. Those who oppose nationalisation have said it would a few times, but they have not replied with why.

Presumably because all of the debts of Network Rail (£25,000,000,000) would then become treated as Government debt (which may affect credit ratings etc).

Immaterial, as it won't happen, but at the moment the "arms length" treatment of Network Rail means it doesn't count as Government debt (which is why Labour set it up as they did)

 

[Skymonster]

The idea that there is competition in the rail industry is laughable - for many flows there is no choice of TOC, and even where there is the revenue is usually divided amongst TOCs by ORCATs meaning that in effect there is no competition for fare revenue but that revenue is allocated according to a cozy deal that in other industries could be regarded as uncompetitive practice or a cartel. True competition can't really exist when businesses are constrained by cap and collar limits on revenue and profit. Hiw can competiton exist if, when traffic levels are maintained (recession not withstanding) TOCs can pretty well predict what they're going to make, and they are also safe in the knowledge that if they lose much more than they expect the government will step in and if they make much more than expected some of it may well be taken off them.

But rather than nationalise, I'd rather see the idea of open access applied everywhere and all TOCs be forced to behave in that way, albeit that in this situation open access should contribute to their share of infrastructure maintenance costs.nnRail needs to create an environment in which there is easy access to competition on the part of the operators, and where there is customer choice not only as to which service they use but also as to which TOCs their revenue actually goes.

In "my" open access world:

• In order to maintain service on routes that intrinsically don't make a profit, DFT should offer a contribution in proportion to the number of passengers each TOC carried on that route and maybe even incentivise such payments based on increasing passenger numbers (so if only one TOC operates it gets 100% of the revenue support, if two operate they get support in proportion to the number of passengers they each attract). Passengers carried by competing TOCs would need to be calculated more accurately but this would be achieved by ticketing (see below) and more consistant enroute checks
• On routes where demand from TOCs to provide service exceeds the paths available, TOCS should be requied to bid for paths and the money paid for paths used to (a) fund infrastructure maintenance and (b) reduce access charges so that the overall effect on costs of having to bid and pay for paths is neutral
• On routes where there is competition, each TOC should be allowed to keep all of the revenue it generates rather than share it based on some arbitrary behind-the-scenes rules, and whilst fare caps should be maintained for consumer protection there should be no limit on how much money (profit) each TOC on a route could take or keep
• Each TOC on a route should be able to set its own fares for a flow, albeit with increases capped as per now. Journeys involving more than one TOC should usually be priced by the sum of the appropriate fares on each TOCs legs of a journey (i.e. no through fares on different TOCs, by default). However, TOCs should be allowed to offer combined fares on heir own connecting flows and should be allowed to form alliances to through-fare between themselves and other TOCs
• In order to preserve the concept of "open" tickets and interoperability where a customer is able to chose which TOC they actually travel on after buying their ticket, each ticket should always be sold for a particular TOC (or combination of TOCs appropriate to a journey, in which case the revenue would be split). If the customer then chose to travel on different TOCs, they should be excessed according to the prevalent fare of the TOC they chose to use and the fare paid should be diverted from the ticketed TOC to the travelled TOC - it would therefore been the interests of the TOC to check tickets onboard

Andy

 

[WelshBluebird]

Presumably because all of the debts of Network Rail (£25,000,000,000) would then become treated as Government debt (which may affect credit ratings etc).

Immaterial, as it won't happen, but at the moment the "arms length" treatment of Network Rail means it doesn't count as Government debt (which is why Labour set it up as they did)

When most people talk about nationalisation I would think they are talking more about the ToC's and the services that operate. Not specifically Network Rail.

And if what you say is the worry, then why not leave Network Rail as it is, but nationalise the ToC's and set a new "British Rail" up in a similar style to Network Rail (pretty much government owned and funded - but technically not).
Or even merge them both into another "arms length" set up?

 

[ainsworth74]

In "my" open access world:

• In order to maintain service on routes that intrinsically don't make a profit, DFT should offer a contribution in proportion to the number of passengers each TOC carried on that route and maybe even incentivise such payments based on increasing passenger numbers (so if only one TOC operates it gets 100% of the revenue support, if two operate they get support in proportion to the number of passengers they each attract). Passengers carried by competing TOCs would need to be calculated more accurately but this would be adds send by ticketing (see below) and more consistant enroute checks
• On routes where demand from TOCs to provide service exceeds the paths available, TOCS should be requied to bid for paths and the money paid for paths used to (a) fund infrastructure maintenance and (b) reduce access charges so that the overall effect on costs of having to bid and pay for paths is neutral
• On routes where there is competition, each TOC should be allowed to keep all of the revenue it generates rather than share it based on some arbitrary behind-the-scenes rules, and whilst fare caps should be maintained for consumer protection there should be no limit on how much money (profit) each TOC on a route could take or keep
• Each TOC on a route should be able to set its own fares for a flow, albeit with increases capped as per now. Journeys involving more than one TOC should usually be priced by the sum of the appropriate fares on each TOCs legs of a journey (i.e. no through fares on different TOCs, by default). However, TOCs should be allowed to offer combined fares on heir own connecting flows and should be allowed to form alliances to through-fare between themselves and other TOCs
• In order to preserve the concept of "open" tickets and interoperability where a customer is able to chose which TOC they actually travel on after buying their ticket, each ticket should always be sold for a particular TOC (or combination of TOCs appropriate to a journey, in which case the revenue would be split). If the customer then chose to travel on different TOCs, they should be excessed according to the prevalent fare of the TOC they chose to use and the fare paid should be diverted from the ticketed TOC to the travelled TOC - it would therefore been the interests of the TOC to check tickets onboard

Well I hope nothing like that comes to pass as it sounds like a horrific outcome for the passenger!

 

[Skymonster]

Why? It would drive TOCs to offer the best service and fares and gives greater incentives to innovate and differentiate - to the victor goes the spoils and all that - and ensure consumer choice drives behaviour whilst still providing incentive for operations on truly unprofitable services through partial subsidy, As long as passengers were given choices and told "you are buying a ticket on this TOC / these TOCs and if ou chose others you maybe subject to paying an excess" I don't see a problem.

Andy

 

[WelshBluebird]

Why? It would drive TOCs to offer the best service and fares and gives greater incentives to innovate and differentiate - to the victor goes the spoils and all that - and ensure consumer choice drives behaviour whilst still providing incentive for operations on truly unprofitable services through partial subsidy, As long as passengers were given choices and told "you are buying a ticket on this TOC / these TOCs and if ou chose others you maybe subject to paying an excess" I don't see a problem.

Andy

Right now you can buy a ticket that can be used on any ToC.
Under your suggestion, you would be forced to choose a ToC when you buy the ticket.
And you can't see why that is a bad thing for the passenger?

 

[ainsworth74]

Well for one thing I doubt that it will work the way you intend it to, another is that I think most people quite like being able to have a ticket that is valid on any TOC on a permitted route something which you're scheme will put an end to and further I'm not sure what advantages it really offers when TOCs are already welcome to introduce fares that are valid on their services only (thereby offering a saving to passengers without removing consumer choice of full inter-available tickets). I see a fair few downsides (including less consumer choice and more complication) and not many upsides.

It's a laudable aim to want to deal with the silliness that is cap and collar but punishing the passenger by hurting their existing rights is not the way to do it.

 

[Skymonster]

PS: if you think about it, the model I suggest is basically how the deregulated airline industry works and there's far less complaints about competition (or lack thereof) in air than there is in rail.

Expanding: Just think about it - RyanRail cold come in and offer "London to Bristol" but run from Ealing to Parkway rather than Paddington to Temple Meads, maybe by bidding for a path via a different and less congested route than the GWML, and then offering lower fares than the incumbent.

PPS: in theory, at present there is competition between my home station Nottingham and London - either on EMT vianthe MML direct, or EMT to Grantham and then EC via the ECML to London. Both routes can be travelled in broadly the same time. However, there is effectively no competition. Fare revenue is split via ORCATS so service differentiation offers very little incentive to differentiate. For example,EMT have no incentive to offer food with their first class fares to compete with EC, because most passengers will travel with EMT anyway even if they knew they had a choice of TOCs and routes. If EC cold freely run to Nottingham, offer a better product at a lower price and market that tomcustomers,mand if passengers were required to buy TOC specific tickets and excess if they changed their minds, things might change. At present there is meant to be competition but in effect there is little to none even where it is meant to exist. Only when the industry is freed from the straight jacket of franchises and allowed to operate where it wants and provide the service it believes passengers want (whilst unprofitable operations are protected and where appropriate subsidised) will true competition arrive in the rail industry.

Andy
--- old post above --- --- new post below ---

Right now you can buy a ticket that can be used on any ToC.
Under your suggestion, you would be forced to choose a ToC when you buy the ticket.
And you can't see why that is a bad thing for the passenger?

No... Tickets could still work on any operator - passengers would be told that if they changed their minds they MAY have to excess to that other operators fare. Or if you like (varying my original suggestion) an "any permitted" could be offered that would be the highest of competing TOCs fares, and TOCs could be awarded all of the fare rather than being subject to ORCATS split if they gripped the ticket (maybe complex now but much easier once national smart card ticketing and electronic checks on them comes in).

Andy

 

[ainsworth74]

if you think about it, the model I suggest is basically how the deregulated airline industry works and there's far less complaints about competition (or lack thereof) in air than there is in rail.

Perhaps because of one key issue, the railway isn't an airline!!

Just think about it - RyanRail cold come in and offer "London to Bristol" but run from Ealing to Parkway rather than Paddington to Temple Meads, maybe by bidding for a path via a different and less congested route than the GWML, and then offering lower fares than the incumbent.

Good luck finding: a) some paths b) paths that offer a time that people might want to do the journey in c) any fare that will attract people will almost certainly not cover the costs so you RyanRail will most likely go bust in fairly short order anyway

If EC cold freely run to Nottingham, offer a better product at a lower price and market that tomcustomers,mand if passengers were required to buy TOC specific tickets and excess if they changed their minds, things might change.

There is nothing stopping East Coast from bidding for paths to Nottingham (well other than practical operational issues such as no rolling stock) should they so wish and once they've got them there's nothing stopping them offering East Coast only walk up fares (which actually already exist in the form of a Route: Grantham ticket priced by East Coast and Route: EC & Connections tickets again priced by East Coast). Again your ideas don't seem to add much that TOCs can't already do.