Were we lied to about Privitisation?

[4SRKT]

It doesn't matter. The point is that it is a small accounting procedure and not two large companies dealing with each other. This massively reduces complexity and the cost of the bureacracy involved. The notional 'sums' involved may be huge to represent that that would be charged to another company, but to the combined SNCF/RFF machine it is neutral. An accountant can simply allocate SNCF a bigger budget and RFF no money, and transfer the funds straight out to RFF.

TBH I don't know if this is actually how it works with SNCF or not. I'm simply using it to illustrate what could be done by any railway authority who wanted to get around this particular absurdity of EU interference in member states' business.

In the large parcel company I work for our Commercial department has to 'pay' our Linehaul department if it wants to put on an additional vehicle not part of the agreed fleet. No money leaves the business in this way and it is done simply to protect the Linehaul department's budget, as the revenue acrued by the additional work would go to Commercial and not Operations.

 

[Oswyntail]

As people always seem to. If they voted based on policy rather than just voting for "someone else", we'd probably be a million times better off.

Agreed, though, with the current system of parties in Parliament (as opposed to individual members representing constituencies), unless there is a party advocating policies one agrees with totally there will always be some policies implemented one disagrees with. Which is why I think the present coalition is a bold step in the correct direction, and deserves to succeed!

 

[Jonny]

Were we lied to about Privitisation?

Of course we were lied to - that's what politicians do. Sure there is some nominal competition between modes of transport and a few single TOC vs inter-available TOC fares but apart from that there really isn't much competition. In fact, look at the de-regulated bus industry - there is now a series of monopoly operators with some nominal competition on some of the better-frequented routes (probably done for show). The whole public transportation industry - bus and rail - is a classic example of something called market failure - where the free market simply cannot work because a few companies have oligopoly (similar to a monopoly) power over the market.

 

[Zoe]

There is competition though when the franchises are let. Different companies compete for the right to run the train services that are part of the franchise.

 

[tbtc]

There is competition though when the franchises are let. Different companies compete for the right to run the train services that are part of the franchise.

A bit like London buses. Individual companies compete when they bid to run services, but the passenger sees a unified network (rather than the confusing "mess" you get with lots of competing liveries/ conditions)

 

[4SRKT]

There is competition though when the franchises are let. Different companies compete for the right to run the train services that are part of the franchise.

This is not competition in any way from the consumers' POV. I cannot choose to travel into Leeds with First Great Western if I think they are better than Northern. Nor do I think it's any great shakes that Northern have the franchise rather than Arriva. It's a meaningless distinction and is not true private operation at all, just govt sub-contracting.

If you want to make the ultimate judgement about whether rail privatisation (a) works, or (b) provides competition, have a look at industries that have always been in the private sector, or where private involvement evolved gradually and organically. The parcels industry is a good example. Could a structure even vaguely resembling the privatised railway have evolved naturally? No, of course it couldn't, because rail privatisation was dreamt up by politicians with no experience of business for political rather than economic reasons.

 

[WatcherZero]

The private companies are competing with themslves for a contract to run a joined up and integrated railway system (from the passengers perspective). Whether there is competition or not from the passengers perspective is irrelvent as long as those competitive mechanisms exist.

London buses is a good example, Tfl specifies the services and pays operators to provide them there is no competition in the operation of the individual services themselves, outside London local councils specify minimum levels of service and operators provide this via subsidy however they are able to go further and directly compete with each other on commercial services on any route they want, heck they can even compete with the subsidised services.

In Reality the London buses system is much more efficent and better from a passenger perspective whereas what we have with rail today is like the bus system outside London. However both are examples of market competition, just the competition exists at a different level.

 

[4SRKT]

The private companies are competing with themslves for a contract to run a joined up and integrated railway system (from the passengers perspective). Whether there is competition or not from the passengers perspective is irrelvent as long as those competitive mechanisms exist.

Unless you believe that the purpose of competition (as rammed down our throats throughout the 1980s, and in some industries it turned out to be true) is to provide the consumer with a better, cheaper product. If that's not the intended purpose of competition, then could you enlighten me as to why we would need it at all?

 

[WatcherZero]

Indeed competition does provide a cheaper and better product. Just because the passenger cant see it happening doesnt mean it isnt. Competition exists through mechanisms beyond seeing two different liveries on the side of the trains.

*If a tree falls in the forest and no one is around to hear it, did it really fall at all?*

 

[yorksrob]

If indeed it does. Since NSE, Inter-City and the rest of BR ceased to exist in any meaningful form after privatisation, we don't have anything to compare the current situation with. Just a lot of free market ideology.

 

[4SRKT]

Indeed competition does provide a cheaper and better product. Just because the passenger cant see it happening doesnt mean it isnt. Competition exists through mechanisms beyond seeing two different liveries on the side of the trains.

*If a tree falls in the forest and no one is around to hear it, did it really fall at all?*

In what way does competition, in this instance, provide a cheaper and/or better product?

 

[RichW1]

Free market ideology is the best model we have for economies and people to exist in the best possible way. However, the degree to which the free market is welcome on the railways is open to question. Comparables are hard but I know one thing, the government is still shelling out billions to the railways and the amount the market has to do with improving things isn't clear. The railways are not free-market but neither are they government owned - it's some mush in-between quite unlike any other sector in an economy I can think of.

Don't get me wrong - governments can't run industries well on the whole; history has shown them to be uncompetitive and inflexible. Generally things are best left to the market, however, I'm not sure with railways as with energy and water that it's the right thing.

So far we have 5 mins built into rail timetables (or is it 10?) AND THEN.....they're allowed another 10 mins and are still called 'on-time'. Now call me old fashioned but I don't ever remember or know of any system where arriving within 15-20mins of your schedule is deemed 'on-time'. BR always had 5 mins but to triple that and say it's because of a busier railway is just crap. But then TOC's have had a part to play, but to what degree can they be blamed when new rolling stock and signalling infrastructure as well as new track is so hard to come by? It's a debatable one. We were probably were lied to about privatisation but I don't think that really matters because you're either for it or not and and lying would have been to do with how the privatisation model was to work which one can't help thinking is just a side issue. I'm genuinely still undecided but one things certain.....if you gave TOC's longer franchises, and different controls, rolling stock and infrastructure improvements would be quicker in happening.

 

[yorksrob]

It just stikes me that if you have one system, which has a limited amount of money coming in from passengers and Government, with a limited scope for cutting services - i.e it has to get permission from the minister before it actually closes a route, this will inevitably be more efficient than having large numbers of companies all charging eachother varying amounts to do the same thing with the Government trying to work out which bits will generate a profit and how much they should pay for years into the future towards the rest of the service, and which bits will need to be subsidised and by how much. It just seems to be a recipe for no one being able to keep track of whats actually going on.

 

[RichW1]

I totally agree which is why I'm not sure whether we can find a model that works yet for the railway. It does have over-inflated costs and it does seem to cost a lot for the service delivered. I think the whole industry has made huge strides but by the same token, there's a lot to improve. The service standards are nowhere near where they should be after the years of record investment. Somewhere, as with everything else in recent years, money was wasted and no-one knows where it all really went!

 

[ivanhoe]

My main issue is that from an economic point of view that Privatatisation would bring greater competition. However how can you have it on the railways? There is no real choice if you travel say Loughborough to London. It's East Midlands Trains or a diversion via Leicester and Nuneaton or Leicester to Peterborough. Clearly the last two options make it quicker to go by National Express Coach!

One could argue that costs have risen in real terms so it is not more efficient. What we have at the moment is a pigs ear of an organization so that Governments( both Labour & Conservative) can argue that we have a public railway that is Privately delivered. It's been a sham but there has been little real debate. All the current debate is about HS2 , bugger the rest . At least this privatization was not as bad as bus deregulation but that is for another thread.

 

[WatcherZero]

People who only see competition as rival operators on the same route are forgetting that the government is the main customer in the equation not the passenger, it is procuring services on their behalf, negotiating the franchises and the companies are competing against each other at the franchise level. Its not practical to have 6 different rail companies operating the exact same route and competing on price because its a limited capacity network.

Its like saying you want a certain water companies water coming out your tap or a certain companies electricity coming out your wall socket. It doesnt work like that there is a finite delivery network and the different utilities must compete generation or sales/price and then share the capacity to deliver the utility to you.

 

[tbtc]

Consider the privatisation of Directory Enquiries.

There used to be just one "choice", the BT 192. Now, any company can start a "118 XXX" number, chose it's own market niche (cheap minimum charge, cheap "per minute" rate, enhanced information provision, charity donation, wacky image...). There's few real barriers to setting a "118" number up, I could probably sit at home and Google things for 50p/minute! And me setting up a 118 number won't stop anyone else from doing theirs.

Now, consider the railways. There's limited numbers of trains (since you'd need a secure income for the next twenty years to justify building new ones, its not as simple as picking one off a shelf). There's limited paths on the tracks (with many bottle necks). There's the complication of inter-availability of tickets. There's complications in hiring staff (union requirements). There's the long term nature of the business. There's the opportunity cost of all your resources...

Competition just can't work easily on the railways, not in the way that it can in a "normal" industry. And whilst you want competition in some areas of life (who wants to eat in the same restaurant each week? who only wants one brand of trainers?), people generally want a good train service (not the complication of different ones). Choice of website to buy a CD from is great, but how can you provide competition between all train stations?

The "London bus" model is appropriate for railways, with First/ Stagecoach etc effectively acting as subcontractors to provide a level of service set by the Government (which is effectively what Serco do with Prisons etc, so suits what they do on Northern Rail).

The simple Tory idea of "competition and privatisation are good" (and the "Old" Labour equivalent of them being bad) ignores the fact that some industries suit themselves to competition better than others. The complications of running a railway can't just be left to the free market.

 

[ivanhoe]

People who only see competition as rival operators on the same route are forgetting that the government is the main customer in the equation not the passenger, it is procuring services on their behalf, negotiating the franchises and the companies are competing against each other at the franchise level. Its not practical to have 6 different rail companies operating the exact same route and competing on price because its a limited capacity network.

Its like saying you want a certain water companies water coming out your tap or a certain companies electricity coming out your wall socket. It doesnt work like that there is a finite delivery network and the different utilities must compete generation or sales/price and then share the capacity to deliver the utility to you.

you have just given the perfect reasons why it is all a sham. By the way, the Government is our representative, and thus we are still the Customer. However, nobody really asks us what we want. Nobody wanted Majors Privatisation, not even the Milk Snatcher, but we forgot to look at page 175 of the Manifesto. It's all our fault really!

 

[Zoe]

Nobody wanted Majors Privatisation, not even the Milk Snatcher, but we forgot to look at page 175 of the Manifesto. It's all our fault really!

It was very clear that the Tories were going to privatize if they won the election. The method of privatization may well have only been in the manifesto but I remember the fact that they would privatize the railways was on the news at the time. The people knew that a Tory government would result in real privatization and this is what they voted for. The people got what they wanted.

 

[Andrew Nelson]

It was very clear that the Tories were going to privatize if they won the election. The method of privatization may well have only been in the manifesto but I remember the fact that they would privatize the railways was on the news at the time. The people knew that a Tory government would result in real privatization and this is what they voted for. The people got what they wanted.

Sorry, mute point, but the Tories (Gaelic for Thief BTW) Lost the Election in '97, most of the franchises were let after that time. So the People Voted against it. Not for it.

 

[ivanhoe]

It was very clear that the Tories were going to privatize if they won the election. The method of privatization may well have only been in the manifesto but I remember the fact that they would privatize the railways was on the news at the time. The people knew that a Tory government would result in real privatization and this is what they voted for. The people got what they wanted.

Do you honestly think that rail privatization was the lead issue in 1992. If so I must have been on a different planet. The issues debated in 1992 were more about stopping Neil Kinnock being elected. Remember that ' Scum's ' headline? Please turn off the lights! The Country was still in turmoil and if you were a miner, ex steel worker or ex manufacturing worker, then I assure you that rail privatization was not high on their list of worries. Your last sentence is therefore well out of order!

 

[Zoe]

most of the franchises were let after that time. So the People Voted against it. Not for it.

Not correct, all the franchises were let before the 1997 election.
--- old post above --- --- new post below ---

The Country was still in turmoil and if you were a miner, ex steel worker or ex manufacturing worker, then I assure you that rail privatization was not high on their list of worries. Your last sentence is therefore well out of order!

I don't think any of these people would likely have been wanting to vote Tory. The people did however want a Tory government and iff you vote for a party that says they will privatize the railways though you can expect privatization to be the result.

 

[ivanhoe]

Not correct, all the franchises were let before the 1997 election.
--- old post above --- --- new post below ---

I don't think any of these people would likely have been wanting to vote Tory.

The majority of voters did not vote Tory in 1992. however the Tories won most seats. Therefore the People did not vote for privatization just like the voters did not vote for bus deregulation. They were both bit parts at best, in general elections that were more about dogma and personalities rather than transport policies.

 

[SS4]

It was very clear that the Tories were going to privatize if they won the election. The method of privatization may well have only been in the manifesto but I remember the fact that they would privatize the railways was on the news at the time. The people knew that a Tory government would result in real privatization and this is what they voted for. The people got what they wanted.

I doubt even a majority of people got what they wanted, it just so happened those who did were well spread out across the country. In addition I wonder how many of those who were in favour hated the railways and had never set foot on a train in their life but were sick of those too damn poor to drive everywhere


As for the topic on hand privatisation is better suited to goods rather than services - the limit on goods being produced is far higher than that of services. The issue is that certainly nowadays many towards the top of the public sector want to run essential services as a business. This is something the Tories have never acknowledged and I doubt ever will.

Almost everything in public hands is going to lose money and the sooner those at the top realise it the better. Private companies know this just as well and either leave the unprofitable sections to rot regardless or ask for a public sector subsidy - you only have to look at bus market to see the council subsidising, if not paying for, certain bus routes to run.

Privatisation adds cost into the system, not less as now you have another tier of staff to pay - the TOC executives and they are hardly paid minimum wage. The only difference is that private companies, being unaccountable to the electorate, simply find other ways to cut costs whether that is staff, services, stock or even safety and maintenance without too much of a fuss being made. In addition of course they can just throw in the towel and walk away if they're losing money and expect the public sector to take over

 

[Zoe]

however the Tories won most seats.

And if it hadn't been for the Sheffield Rally and a certain newspaper headline, they may not have won the majority of seats and people would not be having this conversation now although it's likely the Tories would have been back in 1997 and could have then privatized or if they hadn't then Blair could have done so if he later won the leadership of the Labour party.

 

[yorksrob]

And if it hadn't been for the Sheffield Rally and a certain newspaper headline, they may not have won the majority of seats and people would not be having this conversation now although it's likely the Tories would have been back in 1997 and could have then privatized or if they hadn't then Blair could have done so if he later won the leadership of the Labour party.

Ivanhoe raises a good point though. It's a bit tenuous to claim the majority of the people wanted railway privatisation if the party proposing it didn't even get more votes than it's rival, let alone a majority.

However, we're getting into the territory of electoral reform - which is the subject of another thread.

 

[ivanhoe]

And if it hadn't been for the Sheffield Rally and a certain newspaper headline, they may not have won the majority of seats and people would not be having this conversation now although it's likely the Tories would have been back in 1997 and could have then privatized or if they hadn't then Blair could have done so if he later won the leadership of the Labour party.

You are probably correct about 1992 but Labour could have stopped this Privatisation if they had not reneged on their promises to overturn the legislation. If they had stuck with their promises, then BR would have been here today. Blair and Brown have a lot to answer for! Anyway, we are where we are and appear to be stuck with the current system. Other than tinkering with the Franchises, I do expect this Goverment or its Successor to come out with any decent transport policies. We do not have the political will or knowledge to improve transport in Britain. Then we never have since 1945!

 

[SS4]

You are probably correct about 1992 but Labour could have stopped this Privatisation if they had not reneged on their promises to overturn the legislation. If they had stuck with their promises, then BR would have been here today. Blair and Brown have a lot to answer for! Anyway, we are where we are and appear to be stuck with the current system. Other than tinkering with the Franchises, I do expect this Goverment or its Successor to come out with any decent transport policies. We do not have the political will or knowledge to improve transport in Britain. Then we never have since 1945!

And as long as our leaders continue to travel by car and plane for a vast majority of their journeys we never will.

 

[Zoe]

How much would it have cost Labour though to terminate all 25 of the franchises that had just been let?

 

[yorksrob]

Ivanhoe raises a good point though. It's a bit tenuous to claim the majority of the people wanted railway privatisation if the party proposing it didn't even get more votes than it's rival, let alone a majority.

However, we're getting into the territory of electoral reform - which is the subject of another thread.

Self correction - The Conservatives did get the largest share of the vote of any party in 1992, but not a majority of the votes.