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City AM: Full privatisation

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HH

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Well that's just patent nonsense. Investment made by BR in the 1980s and early 1990s which delivered new trains, electrification and reopened stations and lines is not indicative of a mind-set that believed the industry was in permanent decline.

Most of the electrification took place before this period; ECML was the only major scheme during the period under discussion - which I already mentioned, and which I have also pointed out has nothing to do with TOCs.

BR did a great job with rolling stock (certainly a lot better than DfT), but the trains they brought in during the late 80s and early 90s were desperately needed - a bit like we need to replace the pacers today - and is not indicative of anything else.

--- old post above --- --- new post below ---
I'm not sure why that requires privatisation.

I didn't say it does. I said it's what happened.

--- old post above --- --- new post below ---
The key is the mindset of the government in power toward rail, there's evidence that there has been a shift in the last 10 years of some sort starting with a rail enthusiast as transport secretary and followed by Chancellor keen on capital infrastructure projects.

That doesn't explain why it's been happening since 1997...
 
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HH

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Comparing France with the UK is not comparing apples with apples I'm afraid different factors entirely at play....

You failed to say what you thought they were. French population growth has been marginally greater than UK over the period and follows a broadly similar trajectory. They too have had large influxes of immigrants. If you believe it differs in significant ways then you'd better point out exactly what they are.

Population growth has been big in both countries over the last 10 years. Growth in the UK from 1992-2002 was less than 2m; growth from 2002 to 2012 nearly 4m; there's not a huge difference between 1992-2002 and 1982-1992, so that cannot explain the growth the rail.

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GEML electrification was completed during the late 1980s.

Yes, but it had reached Chelmsford by 1956, and Colchester by 1961; even Southend was completed by 1976. That accounts for the vast majority of passenger journeys (and Norwich only just made the 80s!).
 
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Carlisle

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Yes, but it had reached Chelmsford by 1956, and Colchester by 1961; even Southend was completed by 1976. That accounts for the vast majority of passenger journeys (and Norwich only just made the 80s!).

On the Eastern the 1980s also included electrification of the Harwich, Southminster ,Emerson Park and Cambridge Lines plus the start of construction of Stanstead Branch and Fen line electrification
 
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al.currie93

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Regardless of what happens in future, privatisation unlocked rail growth in the UK. It's why Brussels models its policies on what has happened here.

I'm still waiting for any evidence to suggest that any of this growth is down to privatisation, and not simply the external factors that would have also caused growth to a nationalised industry... It seems more to me that privatisation is taking credit for growth caused by other factors like rising fuel prices and congestion etc. Look at East Coast; a nationalised company that has also experienced growth and in many ways performed better than any private TOC... this just supports my point...
 

muddythefish

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I'm still waiting for any evidence to suggest that any of this growth is down to privatisation, and not simply the external factors that would have also caused growth to a nationalised industry... It seems more to me that privatisation is taking credit for growth caused by other factors like rising fuel prices and congestion etc. Look at East Coast; a nationalised company that has also experienced growth and in many ways performed better than any private TOC... this just supports my point...

Exactly. My local station has seen 100 per cent plus passenger growth over the past 15 years but the service and stock are essentially the same. None of that growth is owing to privatisation.
 

yorksrob

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You couldn't just sell off rail to the highest bidder and leave it. I don't think anybody really thinks that, even the journo that wrote the piece.

I took this section of the column in particular:

"The long-term solution, however, lies not in state ownership, but in putting the trains, tracks and stations fully back into private hands and beyond the reach of government. This could herald the return to the subsidy-free and profitable system we had in the 1930s, but overseen by a twenty-first century regulator."

I'm not sure exactly what a twenty-first century regulator would look like but if the others are anything to go by, "light touch" is probably the best we could expect.

To be fair, I'd rather BR or the status quo than leaving things to the market.
 

Gareth Marston

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Quite so. But it's more than that too. Population is only part of the story. Despite having similar populations in total, their population densities and other demographics that affect travel are very difficult - making it difficult to compare.

At least when I mentioned SNCF and Swiss rail as comparisons, it wasn't about the extent/reach of the network, but the other dimension of...given a rail network, what is the experience of the journey like (cost, quality, frequency etc.)

I'm sure drilling down to medium super output level would be the clincher on the population front. It will also show how densely populated most of the UK is in comparison to France, the open road is more of a reality there due to space.
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Most of the electrification took place before this period; ECML was the only major scheme during the period under discussion - which I already mentioned, and which I have also pointed out has nothing to do with TOCs.

BR did a great job with rolling stock (certainly a lot better than DfT), but the trains they brought in during the late 80s and early 90s were desperately needed - a bit like we need to replace the pacers today - and is not indicative of anything else.

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


I didn't say it does. I said it's what happened.

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


That doesn't explain why it's been happening since 1997...

Growth started before 1997 as every piece of actual evidence shows let's not have this year zero nonsense please.
 

HSTEd

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Pretty sure the ECML project and its add-ons (Glasgow, Skipton and North Berwick) come to rather more route mileage than has been committed since privatisation.
Other late BR projects include Heathrow, Norwich, King's Lynn, Grinstead, Weymouth and the Cross City line. It's almost as if BR caught the SRs love for electrification in its last year's. Likely as a way to cut costs.
 

Olaf

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Full privatisation is essential for the railways to continue to grow.

It is the means by which costs are reduced in operations which would otherwise grow through internal bureaucracy and vested interests. It enables more efficient provision of services with management in the position to make the appropriate decisions, and provides a means of long-term investment through open financial markets. These all contribute to the growth in the quality of the service provided.

BR rail failed because it was in the hands of politicians and was periodically undermined by the self-interest of the unions who hand the politicians in their pockets. It was not able to commit to long-term investment because of the vested interests and could not attract private sector investment because of the those interests and miss-management of the rail assets. It was not able to make appropriate operational decisions due to the subversive activities of the unions with the result that it was not run in the public's interest.

If in doubt, look to the market economics of the soviets, the local railways in France, and the shoddy services provided by BR. Today, UK railways deliver a much better standard of service, are more punctual, and have a better public perception of the standards of service compared with most if not all of the other members of the EU. Rail services in the UK are close to profitable in the L&SE which means we are close to being able to reduce fares. The reduction in surplus labour will also contribute to achieving this, something that would not happen with the sabotage of efforts if the unions had their way.
--- old post above --- --- new post below ---
I'm still waiting for any evidence to suggest that any of this growth is down to privatisation, and not simply the external factors that would have also caused growth to a nationalised industry... It seems more to me that privatisation is taking credit for growth caused by other factors like rising fuel prices and congestion etc. Look at East Coast; a nationalised company that has also experienced growth and in many ways performed better than any private TOC... this just supports my point...

The other side of the coin is that you give evidence that it has not.
 

Railsigns

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Full privatisation is essential for the railways to continue to grow.

:lol: Pffffffffff!! :lol:

Oh, please. The railways would shrink to a fraction of their present size if fully privatised.
 

Carlisle

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Full privatisation is essential for the railways to continue to grow.

It is the means by which costs are reduced .

Has full privitisation actually happened anywhere in the world to a states railways and been a great success ?,I genuinely don't know the ansewer
 
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w0033944

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Full privatisation is essential for the railways to continue to grow.

It is the means by which costs are reduced in operations which would otherwise grow through internal bureaucracy and vested interests.

I'd be fascinated to hear how these are not mutually exclusive outcomes. I'm no businessman, but, as I understand it, achieving growth while at the same time reducing costs isn't straightforward.
 

Deerfold

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Full privatisation is essential for the railways to continue to grow.

It is the means by which costs are reduced in operations which would otherwise grow through internal bureaucracy and vested interests. It enables more efficient provision of services with management in the position to make the appropriate decisions, and provides a means of long-term investment through open financial markets. These all contribute to the growth in the quality of the service provided.

BR rail failed because it was in the hands of politicians and was periodically undermined by the self-interest of the unions who hand the politicians in their pockets. It was not able to commit to long-term investment because of the vested interests and could not attract private sector investment because of the those interests and miss-management of the rail assets. It was not able to make appropriate operational decisions due to the subversive activities of the unions with the result that it was not run in the public's interest.

If in doubt, look to the market economics of the soviets, the local railways in France, and the shoddy services provided by BR. Today, UK railways deliver a much better standard of service, are more punctual, and have a better public perception of the standards of service compared with most if not all of the other members of the EU. Rail services in the UK are close to profitable in the L&SE which means we are close to being able to reduce fares. The reduction in surplus labour will also contribute to achieving this, something that would not happen with the sabotage of efforts if the unions had their way.

Or we could look at Buses.

The market was completely deregulated in 1986 except for in London.

Over the next 25 years passenger numbers halved in metropolitan areas outside London but doubled within London.
 

Darren R

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Full privatisation is essential for the railways to continue to grow.

It is the means by which costs are reduced in operations which would otherwise grow through internal bureaucracy and vested interests. It enables more efficient provision of services with management in the position to make the appropriate decisions, and provides a means of long-term investment through open financial markets. These all contribute to the growth in the quality of the service provided.

I hate to point out the obvious, but it is privatisation which has resulted in exponential growth in internal bureaucracy in the rail industry. Compared to today, BR's management and admin were a model of slim-line efficiency. Full privatisation would only result in a reduction in that bureaucracy if the railways were re-combined into one coherent unit and then privatised - a sort of BR plc if you like. Who'd buy shares in that? As long as the fractured nature of the railways continue, so does the ever-increasing cost of the bureaucracy needed to make the whole thing work. Scrapping the franchises and selling them off permanently instead to the highest bidder would make not the slightest difference. Every minute of delay would still need an army of bureaucrats to investigate the reasons, attribute blame and apportion costs. It would still need an umbrella organisation of some sort to co-ordinate everything. It would still need a body in overall strategic control.

As to "vested interests," just what were these vested interests of which you speak that BR was so riddled with? There are more vested interests in today's privatised railways than there ever were previously. Shareholders. Franchisees that are consortia or partly owned by other companies. Franchisees that are part-owned by foreign governments. Franchisees that are part of wider transport conglomerates that also run buses, coaches and aeroplanes.

There is only one course of action that sweeps all this away in one fell swoop. And that is not privatisation - quite the reverse, in fact!
 

anme

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Exactly. My local station has seen 100 per cent plus passenger growth over the past 15 years but the service and stock are essentially the same. None of that growth is owing to privatisation.

I think this raises a fundamental question: if privatisation itself has resulted in growth, what is it that changed about railway to cause that growth? Was it better service, lower fares, nicer trains, more frequent service, etc? How much of that happened because of the involvement of private companies; because of demographic factors; because of increased government subsidy and investment? And how much happened because so many operational details are now decided in Whitehall rather than by railway company managers, whether BR or TOC?

I don't know the answer, but you could make an interesting case for much of the growth being thanks to central planning by civil servants and politicians.
 

al.currie93

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Full privatisation is essential for the railways to continue to grow.

It is the means by which costs are reduced in operations which would otherwise grow through internal bureaucracy and vested interests. It enables more efficient provision of services with management in the position to make the appropriate decisions, and provides a means of long-term investment through open financial markets. These all contribute to the growth in the quality of the service provided.

BR rail failed because it was in the hands of politicians and was periodically undermined by the self-interest of the unions who hand the politicians in their pockets. It was not able to commit to long-term investment because of the vested interests and could not attract private sector investment because of the those interests and miss-management of the rail assets. It was not able to make appropriate operational decisions due to the subversive activities of the unions with the result that it was not run in the public's interest.

If in doubt, look to the market economics of the soviets, the local railways in France, and the shoddy services provided by BR. Today, UK railways deliver a much better standard of service, are more punctual, and have a better public perception of the standards of service compared with most if not all of the other members of the EU. Rail services in the UK are close to profitable in the L&SE which means we are close to being able to reduce fares. The reduction in surplus labour will also contribute to achieving this, something that would not happen with the sabotage of efforts if the unions had their way.
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The other side of the coin is that you give evidence that it has not.

Essay time :P

I'll start with the evidence:

If you want some clear evidence that growth in the railway is down to things other than privatisation, then look at East Coast... a train operating company that has experienced a passenger growth exactly the same as any other TOC (one such source http://www.mediacentre.eastcoast.co.uk/imagelibrary/downloadmedia.ashx?MediaDetailsID=571&SizeId=-1 and an older one http://www.rail-reg.gov.uk/upload/pd...ok-2010-11.pdf) and is nationalised. If, as you are suggesting, this growth is down to privatisation, then East Coast would not have achieved this.

If you want more, let's look at the external (as in, not railway related) factors that may have also affected passenger growth. Since 1997, fuel prices have risen far more drastically than ever before (in fact, almost doubled; source http://www.petrolprices.com/the-price-of-fuel.html) and road congestion has also risen, especially around London and South East England. Many people have publicly said that, since then, they choose to use the train because of these reasons; driving is too expensive, congested or takes too long (something which was heard far less often before the turn of the millennium). In addition, and the fact that there has been a big population increase will obviously lead to more rail usage, which should be unquestionable and need no proof. This is passenger growth that is not down to privatisation, but due to rising fuel prices, congestion and population increase.

Furthermore, we have seen a change of attitude leading to more investment in the railways. This actually coincided with with the first increase in passenger numbers, suggesting that the increase in passenger numbers was the cause of this attitude change. It should be fairly obvious to see that this increased investment brought about a further increase in passenger numbers (the ORR even stated this in a report this year found at http://orr.gov.uk/__data/assets/pdf...r-rail-usage-quality-report-2013-02-20-q4.pdf at the bottom of page 5). This shows that further passenger growth is due to investment. The VAST majority of this has been carried out by Network Rail, so we can therefore conclude that a lot of the passenger growth from investment is down to this. Whatever way people look at it, they have effectively been nationalised since Railtrack went (and will be officially from Monday). Therefore the vast majority of passenger growth due to investment is not down to privatisation, but a government spending and subsidies... privatisation actually had the opposite effect on passenger growth due to investment, as Railtrack proved (shoddy maintenance leading to crashes which drove passenger away?)...

So, to sum up, why has this growth been down to things other than privatisation? Because East Coast, a nationalised company, have achieved the same growth. Because fuel prices and road congestion have risen and people have said they choose to take the train because of this, meaning more passengers. Because population has risen and this would undoubtedly mean more passengers. And because a further passenger growth has come from increased investment, mostly from a nationalised company.

This is all evidence that the growth that the railway has experienced is down to things other than privatisation, and that privatisation has simply been able to take credit from these external factors. The only evidence I have been given for privatisation being the cause of passenger numbers increasing because they have increased under privatisation and didn't under BR. Under that umbrella, I could also say that fully privatised railways would still use steam powered trains, as BR fully replaced them and the LNER, LMS, GWR and SR didn't. This claim would obviously be madness. Now I've presented my evidence, please enlighten me as to how privatisation specifically has brought about this railway growth?

Now, regarding your case about full privatisation being essential for the railways to grow:

All of your evidence for that comes from free market theory that I have heard many times before; more financially efficient and better services due to the profit incentive, lack of state intervention means they can try what they want, while competition between private companies means that they drive the prices as low as possible. It makes sense, but is however all theory.

It does not cover the fact that the railways are not profitable, and will not be while road and air transport are so available (a situation that will only change through government intervention). So there goes the profit incentive immediately, and we'll end up with a cut back in railway services until the industry became profitable. Private companies like that are also liable to being bought out by others, inevitably leading to a private monopoly. There goes the competition to drive prices down, and we'll end up with prices being as high as private company can get away with. And finally, the lack of state intervention meaning they can do what they want really isn't always beneficial... kind of worrying actually. And then it definitely doesn't solve the fact that you have an asset that is massive both physically and regarding its societal importance in private hands, under no control of the state; how is that justified?

The examples you've given to prove your case; yes, in many ways they're true. But look at Trenitalia; they have an excellent railway where you can make a two hour, 100+ mile regional journey for £6.50. Look at DB; brilliant railway system which has operations abroad adding to its coffers. And look at East Coast; experiencing growth the same as Britain's private TOCs while investing much more into the railway than any of them, having very similar stats to them (often better), pioneered wifi on trains in Britain, is the only TOC to allow you to choose your reserved seat when booking online, is the only TOC to include menus in each carriage, and the only one I've been on to offer both buffet cars and trolley service. That sounds like pretty good service to me...

BR was not perfect, but it was also around when the railway was seen in a different eye and unions were so powerful, and it also achieved so much in light of that (the HST? The replacement of steam?). A future nationalised railway would probably be different; East Coast is a bit of proof for that.
 

Gareth Marston

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Poor old Michael Roberts from RDG was trying to spin the TOCs take credit for growth line in a letter to today's Observer. Given the bulk of the growth has occurred since Whitehall took so much control over the railways after the private sector failed ie Railtrack perhaps it should be Sir Humphrey who gets credit?

Full privatisation is empty rhetoric based on pure free market theory that won't survive 5 minutes of contact with the real world. Look at some complications in other sectors take Woolworths a business that stand alone was sustainable and profitable but the parent company bought a dud distribution company and the cost of it dragged the whole lot down. Captains of private industry do not run around making perfect decisions 100% of the time far from it. Look at the pub trade, most pubs were sold off to what are known as PubCo's in the 1990's however they had no money of their own and borrowed huge sums from the city and the likes of Admiral Taverns screw their landlords to make profit to pay off the parent companies debt whereas the individual pub could have made a living for the landlord and something for the brewery that use to own them they now see landlords come and go in revolving door fashion as they PubCos demands mean they can't survive and many pubs end up closing.

We've seen similar parent company issues lead to East Coast operators throwing the towels in twice. What would happen in a fully privatised industry when one morning say South West Trains could no longer trade because of difficulties in the parent organisations finances? The beloved city would not have its workers from Surrey and Hampshire and chaos would ensue.
 

ainsworth74

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If you want some clear evidence that growth in the railway is down to things other than privatisation, then look at East Coast... a train operating company that has experienced a passenger growth exactly the same as any other TOC (one such source http://www.mediacentre.eastcoast.co.uk/imagelibrary/downloadmedia.ashx?MediaDetailsID=571&SizeId=-1 and an older one http://www.rail-reg.gov.uk/upload/pd...ok-2010-11.pdf) and is nationalised. If, as you are suggesting, this growth is down to privatisation, then East Coast would not have achieved this.

Playing devil's advocate how can you tell if this growth is down to East Coast? The line is full of private operators such as Grand Central and Hull Trains competing directly with East Coats on London services. Whilst others like Cross Country, First TransPennine Express and First Capital Connect compete on shorter flows along the line.

It seems to me that it is perfectly possible that a reasonable chunk of the growth is down to privatisation as a reasonable chunk of the services are still operated by privatised franchises!
 

anme

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Poor old Michael Roberts from RDG was trying to spin the TOCs take credit for growth line in a letter to today's Observer. Given the bulk of the growth has occurred since Whitehall took so much control over the railways after the private sector failed ie Railtrack perhaps it should be Sir Humphrey who gets credit?

I just want to repeat this point as it's similar to one I made above and I think it's worth some discussion!
 

Gareth Marston

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I just want to repeat this point as it's similar to one I made above and I think it's worth some discussion!

Well it injected stability some form of overall strategy though maybe not what people wanted, gave people confidence that something was being done to sort out the mess, took over WCRM certainly not perfect. And perhaps most importantly it shored up the finances of the TOC's so the external demand factors had something to come to.
 

Abpj17

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We've seen similar parent company issues lead to East Coast operators throwing the towels in twice. What would happen in a fully privatised industry when one morning say South West Trains could no longer trade because of difficulties in the parent organisations finances? The beloved city would not have its workers from Surrey and Hampshire and chaos would ensue.

Same as now; a bit gets nationalised. Or create some form of modified insolvency procedure as for energy companies.
 

Abpj17

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You mean like private profit public debt?

Sometimes - the banks weren't dissimilar. There might be some options to restructure the company under a modified procedure where public or private took the profit and the private (shareholders/debt holders) took the losses, while the company was able to continue operating. It depends what generated the losses and can be quite case specific.
 

al.currie93

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Playing devil's advocate how can you tell if this growth is down to East Coast? The line is full of private operators such as Grand Central and Hull Trains competing directly with East Coats on London services. Whilst others like Cross Country, First TransPennine Express and First Capital Connect compete on shorter flows along the line.

It seems to me that it is perfectly possible that a reasonable chunk of the growth is down to privatisation as a reasonable chunk of the services are still operated by privatised franchises!

I'm talking about the TOC East Coast, and not the line. The sources I gave specifically gace statistics for TOC East Coast. As this is TOC East Coast, which is nationalised, none of it is down to privatisaion. Sorry, should have made that clear.
--- old post above --- --- new post below ---
Same as now; a bit gets nationalised. Or create some form of modified insolvency procedure as for energy companies.

So why not solve the problem of this by nationalsing it permanently :P
 

yorksrob

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It seems to me that it is perfectly possible that a reasonable chunk of the growth is down to privatisation as a reasonable chunk of the services are still operated by privatised franchises!

I think it is reasonable to say that a chunk of growth will be down to tweaks and innovations brought about by private sector TOC's. I suspect, however, that a very large part of any chunk of increase down to privatisation will be down to the TOC's not being allowed to cut back on their franchise agreements in lean times. In other words, down to privatisation in a way, but more substantially down to the highly regulated way in which private franchises are specified. I strongly suspect that this would melt away if the TOC's were given more freedom to respond to economic circumstances.

New services such as the open access services on the ECML will have definately added to growth.

Similarly, I suspect that the railway is also benefiting from things such as railcards developed during the nationalised era.
 

edwin_m

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Remembering that much of the privatised railway continued to be run by BR managers, most of the more sensible service enhancements were things BR would have done if it had got its hands on the sort of money that was available to the private operators. Somewhat eclipsed by later events, but there was a graph published in the mid-90s which showed how much more money the private operators were getting than BR ever did. It was projected to fall back to around the BR figure by the early 2000s. That bit didn't happen - the incoming managers mainly from the bus industry were unpleasantly surprised to find how efficient BR had been in driving out costs, and their attempts to cut costs further usually ended up cutting something important that came back to bite them later.
 

Carlisle

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I assume your referring to things like the Drivers shortage on SWT shortly after privitisation
 

edwin_m

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I assume your referring to things like the Drivers shortage on SWT shortly after privitisation

Yes, but also the maintenance shortage on Railtrack a few years later, and the knowledge shortage that led to the crippling of the network when nobody senior in the organisation understood gauge corner cracking.
 

HH

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I'll start with the evidence:

If you want some clear evidence that growth in the railway is down to things other than privatisation, then look at East Coast... a train operating company that has experienced a passenger growth exactly the same as any other TOC
LOL. It's being run by managers who've been trained by privatised TOCs pretty much on the same lines. A few years of being run 'not for profit' doesn't tell us much.

If you want more, let's look at the external (as in, not railway related) factors that may have also affected passenger growth. Since 1997, fuel prices have risen far more drastically than ever before (in fact, almost doubled; source http://www.petrolprices.com/the-price-of-fuel.html) and road congestion has also risen, especially around London and South East England. Many people have publicly said that, since then, they choose to use the train because of these reasons; driving is too expensive, congested or takes too long (something which was heard far less often before the turn of the millennium). In addition, and the fact that there has been a big population increase will obviously lead to more rail usage, which should be unquestionable and need no proof. This is passenger growth that is not down to privatisation, but due to rising fuel prices, congestion and population increase.
Fuel prices & population growth. France has both, but yet no similar increase in rail. Explain. If congestion in the SE is a major factor, then why has rail increased not only everywhere in the UK, but not in the rest of Europe?

--- old post above --- --- new post below ---
Remembering that much of the privatised railway continued to be run by BR managers, most of the more sensible service enhancements were things BR would have done if it had got its hands on the sort of money that was available to the private operators.

The question is whether BR would have got it's hands on the money; there's no evidence to suggest that it would. The BR managers were stifled by BR; the private companies gave them more freedom to develop.

Somewhat eclipsed by later events, but there was a graph published in the mid-90s which showed how much more money the private operators were getting than BR ever did. It was projected to fall back to around the BR figure by the early 2000s. That bit didn't happen - the incoming managers mainly from the bus industry were unpleasantly surprised to find how efficient BR had been in driving out costs, and their attempts to cut costs further usually ended up cutting something important that came back to bite them later.
The latter is certainly true, which is why they had to concentrate on promoting growth. Growth generally leads to investment and it's absolutely certain that much of the investment in rail has been driven by growth.

--- old post above --- --- new post below ---
Poor old Michael Roberts from RDG was trying to spin the TOCs take credit for growth line in a letter to today's Observer. Given the bulk of the growth has occurred since Whitehall took so much control over the railways after the private sector failed ie Railtrack perhaps it should be Sir Humphrey who gets credit?

Sir Humphrey was responsible for the abortion that was Railtrack to start with.
 
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