Has privatisation in general been a disaster?

[Rail_Midlands]

For railways in particular, privatisation wasn't the disaster. The fragmentation and unholy mishmash of public-private mixing resulted in a lack of joined-up thinking and management issues. The private operators running train services using trains leased from rolling stock companies and running on infrastructure owned by a state-owned enterprise and under a timetable set by public bodies. The Japanese model of privatisation where private companies own and operate everything provides a simpler system where it's clear whose responsible for what. Quality of work might not be as good as the UK but that's as more of a work culture issue. Can't speak for how it affects other industries.

Fragmentation was due to the lack of foresight during privatisation. But base infrastructure would've been under private still, if not for the Railtrack. Hence the public/private mixing. Service /quality maintenance would still be under some public watch (similar to Telecom or other utilities).

 

[eldomtom2]

The Japanese model of privatisation where private companies own and operate everything provides a simpler system where it's clear whose responsible for what.

It also relies on some companies remaining under state control indefinitely because they're impossible to make profitable.

 

[Sorcerer]

Fragmentation was due to the lack of foresight during privatisation. But base infrastructure would've been under private still, if not for the Railtrack. Hence the public/private mixing. Service /quality maintenance would still be under some public watch (similar to Telecom or other utilities).

Hmm yes, that much is true. Perhaps private/public mixing isn't the best way to describe it but I was also thinking of things such as rolling stock orders. My understanding is that the 800/801 fleet which was specified by the DfT and aren't as well received as the 745/755 fleet with Greater Anglia where the operator had more freedom to decide on their rolling stock and as such have seen the benefits of a little extra investment into their fleet (I could be wrong on that so I am open to being duly corrected).

It also relies on some companies remaining under state control indefinitely because they're impossible to make profitable.

Which by itself raises a separate debate on whether or not railways can work fully privatised or if they're always best as state-owned enterprises. But regardless I think privatisation has still been considerably better in Japan than it has in the UK, largely in part due to it's structure that mostly keeps things integrated rather than fragmented.

 

[Nicholas Lewis]

Rail privatisation wasn't a disaster but only because railway folk stood by their industry not their owners.

 

[Hadders]

I'm not convinced that a structural reorganisation of the rail industry is going to be a good thing. It'll cause years of disruption.

British Rail did some good things, often with very little resources. But my memory of it was that it had an awful reputation. My fear is that many people think nationalisation is going to solve everything but I strongly suspect the reality will be very different. Things like:

- Maintenance holidays
- Replacement trains on a 3 for 2 basis
- Service reductions on little used lines
- Fares increases to price passengers off (nationalised LNER is already doing this) - at least privitisation gave us some respite with regulated fares

These are things I fear we will hear more of.

 

[mikeg]

Privatisation of what is the question:

Airlines: Privatisation and deregulation of airlines has not been too much of a disaster, in fact is probably the greatest success story, as the majority aren't making use of network effects unless making a connecting flight and then the mishmash of alliances allows for this. The majority of journeys are time insensitive and point-to-point for which both the legacy carriers and budget airlines are in competition to a greater or lesser extent and there is marginal competition from other routes too (if you're off on your hols once or twice a year, you may consider a slightly different destination in a way that can't be applied to most rail journeys)

Railways: Not so good. The fragmentation is a problem, but this itself was brought in as a fudge to solve the problem that BR PLC would be a complacent monopolist that would milk passengers for every monopoly rent they could think of. Of course once you bin the idea of competition you can moderate this by applying utility regulation to a monopoly private BR. This has worked reasonably well for other industries. The Americans used to brag about having the 'Best Phone Service in the World' under the Bell system, which was itself broken up and fragmented with mixed results.

Water: Actually until recently, and still in the case of domestic supply, was regulated as per the above model, yet has been allowed to accumulate too much debt and under-invest. A warning of the shortcomings of the above model. Competition would likely have limited impact and be contrived at best, and arguably costs more to administer than its benefits. Arguably sewage is even more monopolistic and this was controversial even amongst those who advocated privatising water. Note, some water companies never had been nationalised.

Telecoms: Generally a success but I doubt technology would let it be too different. Hampered again by the desire for competition and fragmentation, see the Major government's decision to block BT from building a Nationwide fibre network and cable service in the early 90s(!). In general however, comparative study has shown the more liberalised markets to have cheaper service and faster speeds. However, those with some degree of public service obligation do better in serving remote and unfashionable areas. For a monopoly public v private consider Hull, once had cheaper and better telecoms than the rest of the country when it was owned by the council, is now significantly more expensive, though as I understand it unusual in being full fibre almost throughout. Therefore the public monopoly was better than the private one.

Buses: Deregulation, rather than privatisation has been the problem. Note however, that dereg replaced a poor system of regulation. No regulation can be better than bad regulation, but is not as good as good regulation.

Energy Utilities: Generally successful*, some perverse incentives caused by fragmentation vertically, but I'd struggle to see generation being a national monopoly again. However the networks themselves are essentially natural monopolies and again here the results are more mixed. There's a layer of bureaucracy required to maintain end-to-end competition (the company you pay your bills to essentially purchases electricity on your behalf from generating companies). A more efficient model may be to nationalise the DNOs and have them purchase power from a 'power pool'. This could also be done without nationalisation. It actually was to an extent in the early years,
*Complaints about high prices aside, compare them in real terms to the 80s. Not much different now and for most of the history much lower. Sorry to break it to you. But other factors may have been at work. Liberalisation has led to more volatile prices, but believe these have been lower on average.
It should be noted that electricity generation was given a good shake-up. The over-cautious Central Electricity Generating Board wanted to build lots of new coal and nuclear plants. Instead, the private companies turned to the new Combined Cycle Gas Turbine technology and saved a fortune. However building capital intensive, low return technology such as nuclear is now all but impossible without state support thanks to industry fragmentation and financial uncertainty.

Prisons: A core function of the state which really shouldn't be privatised on moral grounds imho.

Thomas Cook: Well it went bust, but would it be worth nationalising again?

 

[eldomtom2]

But regardless I think privatisation has still been considerably better in Japan than it has in the UK, largely in part due to it's structure that mostly keeps things integrated rather than fragmented.

Well, that depends on how you look at it. From the unions' perspective privatization in Japan was significantly worse.

 

[Yew]

Water: Actually until recently, and still in the case of domestic supply, was regulated as per the above model, yet has been allowed to accumulate too much debt and under-invest. A

I do sometimes wonder if a lot of our current problems are due to companies giving out unaffordable dividends, and no investing in the future of themselves.

 

[JamesT]

I do sometimes wonder if a lot of our current problems are due to companies giving out unaffordable dividends, and no investing in the future of themselves.

One thing to note with water is the level of investment doubled compared to the pre privatisation era. As with many of the nationalised industries, is government going to put the money in or would it all go to schools and hospitals?

 

[deltic]

Privatisation of what is the question:

Could add hotels, ferries, car making, road haulage, aerospace, oil exploration, horse betting, ports, coal mining, airports. Not sure there is much demand for taking many of those back into state ownership

 

[Belperpete]

My perception is that telecoms certainly improved following privatisation. The old BT was slow and monolithic. You could only purchase a limited range of approved phones. It took months to get new lines installed. Phone boxes went unrepaired for weeks. Part of this was due to institutional inertia, but in large part was because the nationalised industries were regularly starved of money.

My view is that if BR had been privatised in the same kind of way as BT, it might have been a success. As someone who worked for BR, I was initially supportive of the idea of privatisation. I could see first-hand how BR was hamstrung by political meddling, the dead hand of the DoT delaying every decision, and the investment roller coaster depending on the whims of government. However, it soon became clear that the Major government were ignoring the advice from within the industry, that they knew best.

The main aim of privatising BR was to cut the level of subsidy that the government had to cough up each year. As such, privatisation of BR has been an unmitigated disaster. Not only did subsidies rise, , due to the money-go-round effect of fragmenting the industry, but the cost of infrastructure projects went through the roof.

Railtrack in particular was an absolute disaster, with their attitude to investment and maintenance of their infrastructure, their contempt of technical expertise, and their desire for profit at the expense of all else, that not only led to some actual disasters, but with long term repercussions that are still being felt, as highly experienced staff left the industry for good.

As a previous poster notes, privatisation should be good for investment, as it should make it easier to get the money. But if you have decimated your supply industry, and massively ramped up the costs, that money isn't going to go very far, making investment far less attractive.

 

[jfollows]

Also with the deregulated world of open skies it wouldn't make sense to have a state-owned airline. Back in the early 1980s British Airways had a much larger market share and operated from almost every airport in the country. Today British Airways is largely centered on flights to and from London.

British Airways has also ditched flights to former colonies, eg Lilongwe in Malawi, which could never be profitable these days but were part of what it did in the 1980s. With a 747, albeit as an extension to a flight to Salisbury/Harare at the time. The other time I went there was with UTA, which is long gone.

 

[Nicholas Lewis]

Privatisation did generally start off delivering better outcomes for lower costs but the owners weren't prepared to take the bad times with the good and quite frankly regulation and oversight of it has been pretty poor across all industries and never held the managements feet to the fire.

 

[Tetchytyke]

One thing to note with water is the level of investment doubled compared to the pre privatisation era.

You're going to have to show your calculations on that one. The evidence is the exact opposite- that shareholder dividends (paid for by the bill payers) taken out have far exceeded the value of any investment put in.

There's very little evidence that any additional external investment came in with water privatisation. The government privatised the water companies but wrote off the debts that those water companies held- the debts written off totalled £5bn. The government gave an additional 'dowry' of £1.5bn to these companies.

The 'investment'- such as it is- has been paid for by increased bills. These companies haven't put their own money in. I know Thames Water is the poster child but Macquarie loaded the company with £7bn debt (£3bn to £10bn debt) whilst taking out dividends worth, ooh, £7bn.

In their first year of ownership the company made a profit of £200m but Macquarie took a £650m dividend. That's quite some ROCE ratio!

== Doublepost prevention - post automatically merged: 6 Dec 2024 ==

I'm not convinced that a structural reorganisation of the rail industry is going to be a good thing. It'll cause years of disruption.

British Rail did some good things, often with very little resources. But my memory of it was that it had an awful reputation. My fear is that many people think nationalisation is going to solve everything but I strongly suspect the reality will be very different.

I think it's fair to say that British Rail had been deliberately run down, particularly in the early 1980s. The government wouldn't put sufficient funding in and so British Rail was left trying to make a silk purse out of a sow's ear.

You can see that in a lot of the decisions BR made at the time, both the decisions they successfully enacted and those they didn't. Mad, now, to think that BR were seriously considering singling most of the Calder Valley line in the early 80s, so desperate were they to save money. Same with the plans for Marylebone. And the stuff they enacted, like shutting the Paisley Canal line and the Bridge of Weir line in Glasgow, very quickly turned out to be a mistake.

It's impossible, really, to play games of 'what if'. But when you look at what BR started to achieve in the late 80s with sectorisation, my opinion is very much that if BR had received the funding that the Tories made available to the privatised railway in the 90s then they'd have achieved a hell of a lot more with it. So much of the government investment in the 90s was just funnelled away into the back pockets of the shareholders, which is why Ann Gloag lives in a castle.

 

[JamesT]

You're going to have to show your calculations on that one. The evidence is the exact opposite- that shareholder dividends (paid for by the bill payers) taken out have far exceeded the value of any investment put in.

There's very little evidence that any additional external investment came in with water privatisation. The government privatised the water companies but wrote off the debts that those water companies held- the debts written off totalled £5bn. The government gave an additional 'dowry' of £1.5bn to these companies.

The 'investment'- such as it is- has been paid for by increased bills. These companies haven't put their own money in. I know Thames Water is the poster child but Macquarie loaded the company with £7bn debt (£3bn to £10bn debt) whilst taking out dividends worth, ooh, £7bn.

In their first year of ownership the company made a profit of £200m but Macquarie took a £650m dividend. That's quite some ROCE ratio!

Investment in the water industry - Ofwat

We all rely on water every day and we know how important it is for people being able to live healthy, fulfilled lives. There is more focus on the water industry than ever before, including […]

www.ofwat.gov.uk

Investment in the industry has roughly doubled since privatisation in 1989, rising drastically in the 1990s. Average totex (total expenditure) has been consistently running at around £10bn a year since 2000, and average capex (capital expenditure – money spent on assets, such as such as buildings, equipment, and technology) has been between £5bn and £6bn a year, reaching the highest point in that range (£6bn) between 2015-2020.

It may ultimately come from the billpayers, but it's still more than was being done whilst nationalised.

 

[Tetchytyke]

Privatisation did generally start off delivering better outcomes for lower costs

The simple fact is that it didn't, though.

The extract from that Excel sheet shows that total government operational funding for the railway in 1992-1993 (the last full year before privatisation) was £2.7bn. In 96-97 (so the first full year after privatisation) it was £4bn.

As for "better outcomes", I'm not sure how anyone can look at Railtrack and say that with a straight face.

It may ultimately come from the billpayers, but it's still more than was being done whilst nationalised.

You're going to have to provide a proper source for it. The article you have posted doesn't show the point that neither you nor OFWAT are attempting to claim that it shows.

While capex is the more traditional measure of investment, some modern types of investment (such as investment in sustainable and environmentally friendly solutions) may involve less capital expenditure and more operating costs (which are covered in totex figures). This is why we have moved towards a focus on that total investment, rather than a crude focus on one kind of expenditure.

What is particularly telling is that OFWAT don't reference the Return on Capital Invested (ROCE) ratio that the privatised utilities enjoy. You can't find that information anywhere on OFWAT's website. I can't possibly imagine why they would seek to disguise this information.

Of course they show that capex has remained constant at about £5bn per year, but they don't show how inflation has affected this (i.e. the value of that investment is declining rapidly year on year). They also don't mention the fact that the industry received a bung of £7.5bn upon privatisation in 1989; at today's prices that bung is worth about £25bn.

They also don't define what total expenditure is- in many cases this "expenditure" will include the cost of servicing the debts that the water companies incurred to pay dividends. Nor do they contextualise it with total income. Water bosses "invest" £10bn a year yet the revenue from customers is higher than that. Here's the thing: if your revenue exceeds your expenditure then you're not investing, your customers are.

Actual experts in the field believe that OFWAT are misrepresenting the data:

Water industry investors have withdrawn billions, claims research

A report suggests shareholders have taken billons but failed to invest as water bills look set to rise.

www.bbc.co.uk

David Hall, visiting professor at the Public Services International Research Unit at the University of Greenwich, claims that water companies have invested "less than nothing of their own money" and are “treating their customers like a cash cow”.

The University of Greenwich examined the company accounts of the top 10 water and sewage companies in England and Wales including Thames Water, United Utilities and Severn Trent.

It said that between privatisation in 1989 and 2023, money invested by shareholders in the largest firms shrunk by £5.5bn when adjusted for inflation.

Story of monopoly privatisation, that. Private shareholders take our money in exchange for diddly and then they try and gaslight us into believing they are the generous ones.

Could add hotels, ferries, car making, road haulage, aerospace, oil exploration, horse betting, ports, coal mining, airports. Not sure there is much demand for taking many of those back into state ownership

The success of any privatisation depends on whether there is a fully functioning competitive marketplace in that sector. Where there is a fully functioning competitive marketplace then privatisation has generally worked, although even then there are caveats.

You mention ferries, but even the apparent success of the privatisation of cross-Channel ferries very much depends on your viewpoint. If you're a former employee of P&O or Irish Ferries your opinion may differ to if you're a shareholder of P&O or Irish Ferries.

And, even in that marketplace, the British government has severely distorted the marketplace. The Competition and Markets Authority's shenanigans relating to SeaFrance and especially MyFerryLink were an absolute disgrace. Amazing how privatisation looks better when you force the best company (MyFerryLink), an employee co-operative, to cease trading on spurious competition grounds...

Beyond that, here the Isle of Man government bought the Steam Packet back into state-owned hands after it had bounced through several disinterested and useless owners. Before that, Macquarie (them again) had asset-stripped everything they could and loaded it up with debt; those unpaid creditors became the owner, hence their general disinterest. The Steam Packet now is far better than it ever was under Macquarie. Again, we don't have a competitive marketplace for ferries here because the market isn't big enough: competition in the 80s almost bankrupted both companies involved.

I'm not an ideologue when it comes to private enterprise versus state enterprise. Private enterprise in a competitive marketplace brings about genuine innovation. But the simple fact, proven time and time again, is that private enterprise only works when there is a fully functioning competitive marketplace. Without that competitive marketplace you end up with the government having to create a pseudo-competitive marketplace through things such as tendering or regulatory intervention.

And, at that stage, if you're having to regulate a private monopoly to the extent that the ROCE is set in law (as happens in the Isle of Man with the gas supplier), then it is likely to be cheaper and better for all concerned if the state just performs the function itself.

 

[ninja-lewis]

I think the "privatisation made phones cheap and got waiting lists down" argument is relying on the fact that BT's privatisation occured right as digital technology came on stream - with the GPO's former research project being turned into an actual product (System X) as well as BT's subsequent decision to seek a second vendor for telephone exchange equipment. There is no reason why that wouldn't all have occured had BT remained in state ownership, just as it did in other countries that never privatised.

Actually there is one big reason: Money.

BT required enormous capital investment which was counted as part of the public finances. This would not have been forthcoming at a time when the Treasury was using Royal Mail as a cash cow (by setting negative External Financing Limits).

HM Government was not a benevolent owner of nationalised industries.

 

[SteveP29]

Ok I will.
We have had Virgin Media TV & Broadband for many years. Of course I would like it to be cheaper, but I really can’t fault the service they’ve provided. If you don’t like VM then go somewhere else. I can’t understand why people complain and stay with a service provider when there’s many others available. Or are they even worse?

OK, great, but just don't have a reason to cancel your account.

From bitter experience both at home and at work with several Virgin Broadband accounts and from many friends and acquaintances, they are a nightmare to get a clean break from, either continuing to hold your credit balance and not issuing a refund until you threaten them with legal action or maintaining that you still have an active account with them, despite having provided you with your MAC code and passing that on to your new provider

 

[wilbers]

..and this is another example of why the water companies aren't trusted (noting that not all of them are like that, and some are properly managed). I don't doubt the quote from them saying its legal, but morally right that would be a no. Maybe morals and high finance don't mix well.

Major water company uses accounting trick to inflate balance sheet by £1.68bn

A substantial Severn Trent Water investment is based on IOU notes - BBC Panorama finds.

www.bbc.co.uk

One of England's top-rated water companies is using an accounting trick to artificially inflate its balance sheet by more than a billion pounds, BBC Panorama has discovered.

Severn Trent Water claims that an investment is worth £1.68bn in its accounts, when in reality it has no value to the overall business.

 

[gg1]

OK, great, but just don't have a reason to cancel your account.

From bitter experience both at home and at work with several Virgin Broadband accounts and from many friends and acquaintances, they are a nightmare to get a clean break from, either continuing to hold your credit balance and not issuing a refund until you threaten them with legal action or maintaining that you still have an active account with them, despite having provided you with your MAC code and passing that on to your new provider

A reputation built up over decades. They're one of a very short list of companies we will never use again regardless of how good a deal they're offering due to the hassle we had with them back in the 00s.

 

[Magdalia]

From bitter experience both at home and at work with several Virgin Broadband accounts and from many friends and acquaintances, they are a nightmare to get a clean break from, either continuing to hold your credit balance and not issuing a refund until you threaten them with legal action or maintaining that you still have an active account with them, despite having provided you with your MAC code and passing that on to your new provider

I escaped from Virgin Media when I moved house. I had been paying monthly bills, at a cost, but that did mean that I did not have any outstanding credit balance.

There was a hassle from changing, for me that was mostly having to change my email account.

and this is another example of why the water companies aren't trusted (noting that not all of them are like that, and some are properly managed). I don't doubt the quote from them saying its legal, but morally right that would be a no. Maybe morals and high finance don't mix well.

Did anyone notice the name of the shell company used by Severn Trent:

The complex accounting trick started in March 2017 when a shell company, with no money or assets, called Severn Trent Trimpley was set up as part of the group. Another Severn Trent company called Severn Trent Draycote - which owns the water company - agreed to buy Trimpley for £2.

Trimpley is the reservoir next to the Severn Valley Railway near the Victoria Bridge.

 

[Krokodil]

I escaped from Virgin Media when I moved house.

Sounds a big drastic

 

[Richard Scott]

In Switzerland meanwhile (generally regarded as the gold standard of public transport) there isn't much in the way of outsourcing. Some cantons have their own railways but you won't see Arriva logos on anything, the cantonal and federal governments own most of it, with a small minority of private shareholders in some cases.

Aren't there a large number of private lines in Switzerland and what about BLS and SOB, are they private or government owned? They run quite a number of services.

 

[Krokodil]

Aren't there a large number of private lines in Switzerland and what about BLS and SOB, are they private or government owned? They run quite a number of services.

BLS AG is 55.8% owned by the Cantonal government, 21.7% by the Federal government. The balance (less than a quarter) is presumably in private hands. Most of the minor railways in Switzerland have a similar ownership structure. Definitely no contracting stuff out to Arriva.

 

[Richard Scott]

BLS AG is 55.8% owned by the Cantonal government, 21.7% by the Federal government. The balance (less than a quarter) is presumably in private hands. Most of the minor railways in Switzerland have a similar ownership structure. Definitely no contracting stuff out to Arriva.

Ok, thanks, wasn't sure what the ownership was.

 

[lookapigeon]

Councils up and down the land are saying that social care is costing them an arm and a leg and unfortunately council tax payers are having to fund the costs.

A large proportion of the largest childrens' homes (no doubt prerviously owned and run by the state, as a not for profit/breakeven/lossmaking) are owned by private equity - see here - all the topcos, bidcos along with some of the more obvious LLPs. No wonder we are being bled dry via our council tax - all this we need to increase your council tax to pay for social care - owned by private equity, and no doubt ends up being in some tax haven thousands of miles away.

 

[Cloud Strife]

In general, I'd say that it's been a mixed bag. To give some examples:

Telecommunications: mostly a success, although part of that was down to governments putting huge amounts of pressure on BT after years of allowing them to abuse their position. There were some failings along the way, such as failing to build a nationwide fibre network in the mid 1990s that would have been accessible to any provider, but they've largely figured that out through Openreach. We really should have obliged BT to implement FTTH (fibre to the home) in the mid 1990s once it became clear that the internet was going to be A Thing.

Water: an absolute failure in every sense of the word and should never have been privatised. Scottish Water are a textbook blueprint on how to do it properly.

Energy: should have been partially privatised. The energy production and distribution part should have stayed in state hands (with renewables allowed to be built privately), and private energy companies could have handled the retail side of the operations. The National Energy System Operator should solve the distribution issues, but I'd argue that it has been a giant mistake to have large power plants operated privately, not least for the loss of know-how.

Rail: the mistake is and was in the method of privatisation, not privatisation itself. It would have been perfectly fine if the government retained control of the rolling stock and a model similar to the German model was adopted, where private companies would bid to run services using the rolling stock provided. The government doesn't need to run trains themselves, but the actual network could be mapped out by local, regional and central governments according to needs. You'd then have the ability to say (for instance) that LNER would run a certain network, and then the private operator could add additional services on the open access model using their own rolling stock.

Buses: long distance travel should have been liberalised, but municipal travel shouldn't. The mistake was in trying to apply the same system to two totally different methods of transport, and again, the sensible approach would have been to have private operators running franchised services in exchange for a fixed fee.

Aviation: a complete success story. We now have genuine competition between airports and airlines, airport owners are making big investments with their own money, etc.

Coal:

Obviously some industries did well to be privatised. Companies like British Aerospace, Cable & Wireless and Rolls Royce really didn't need to be owned by the public (minus the extortion that's currently happening in the Falkland Islands and St Helena), BT has turned out well in the end, and stuff like British Airways should never have remained in public hands.

But I think it's worth pointing out that the real harm of privatisation was through PFI initiatives under New Labour. Many of them have been a complete failure and only worked because they were in monopoly areas, such as in building new schools or hospitals, or even bridges (the Skye Bridge). While it took the debt off the books, the UK is now paying over 400m yearly in interest charges alone, and the PFI sector has been riddled with scams such as hideously expensive maintanence charges.

A friend is a headteacher of a PFI school that wasn't converted to an academy, and when he took over, he discovered that a lot of maintanence simply hasn't been carried out correctly. He sat down with a couple of the design/technology teachers who knew a thing or two over a couple of weekends and did a thorough audit of the school estate, and they discovered that corners have been cut almost everywhere. A lot of reported issues weren't fixed or fixed in a bodge job, making it even worse.

 

[43096]

Rail: the mistake is and was in the method of privatisation, not privatisation itself. It would have been perfectly fine if the government retained control of the rolling stock and a model similar to the German model was adopted, where private companies would bid to run services using the rolling stock provided. The government doesn't need to run trains themselves, but the actual network could be mapped out by local, regional and central governments according to needs. You'd then have the ability to say (for instance) that LNER would run a certain network, and then the private operator could add additional services on the open access model using their own rolling stock.

The state ownership of trains in Germany is a recent thing. There have been plenty of examples of new operators coming in with a distinct lack of trains to use as the incumbent has moved them elsewhere and the new trains promised by the new operator are delivered late. It has made for some rather enjoyable loco-hauled ersatzzug operations though!