Matthew Lesh claims the late 90s privatisation of BR did not go far enough

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lordbusiness

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Interesting article in the Telegraph today. A bit lightweight but basically saying it should go the other way.

Basically, trains, stations, track, signalling, the whole shebang in the hands of a private entity!

https://www.telegraph.co.uk/news/2021/05/23/truth-british-railways-werent-privatised-enough/
...Private train operators lacked the freedom or competitive pressures afforded to other private sector businesses. The government neither gave companies full control over tracks, trains and stations — as historically was the case and works well in Japan – nor did they allow competition between operators on the same lines. Nor could they dictate fares, open new routes or tinker with the timetable to match supply to demand. These were all set in advance in contracts.

Even with their hands tied behind their back, private operators expanded the railway system and innovated well a truly privatised, commercialised and innovative railway system could have produced...
 
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Bletchleyite

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Interesting article in the Telegraph today behind the paywall unfortunately. A bit lightweight but basically saying it should go the other way.Basically, trains, stations, track, signalling, the whole shebang in the hands of a private entity!

That's the Torygraph for you! That said I do think BR plc might have worked better than what we had.
 

Annetts key

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As always, an article from the telegraph is amusing as well as being misleading.
Leaving aside the history of the railways before they were nationalised, at least part of the reason for more ‘rail journeys’ is a combination of a (positive) change in the economic situation in the country and more people moving further from their normal place of work (more commuters). Plus I suspect far more people buying multiple tickets for one journey rather than a single ticket for the whole journey. The private railway companies may well have helped to increase leisure travel though. There is however no doubt that before the pandemic more people were using the railways.

But could BR have managed a similar increase? Well, passengers numbers in some areas IIRC were rising before privatisation... (I don’t know about the across the country though).

The other factor that is often not talked about, is car ownership and road congestion. How much affect do these have on rail journeys? If you put to one side the difference costs, in terms of time and hassle, if you live near a station, often it’s quicker and easier to commute by train. But not if you don’t live near a station.

Trains would have been modernised anyway. Before privatisation BR was buying new trains...

WiFi is all well and good, but a lot of people have smartphones that use 3G, 4G etc mobile networks, so that makes the restricted WiFi a poor comparison. At the same time some routes have lost the buffet carriages. And the trolley service has far less range and is a pain when the carriages are full and they want to try to squeeze through.

I don’t know if we pay more for train travel in this country, but respectable organisations have investigated this and it looks like compared to similar European railways, passengers do pay more for tickets overall.

One thing is however certain, the pandemic would have bankrupted the mainland U.K. railways regardless if they were part private (as two years ago), as set up after privatisation, or if fully private. And as the franchising system was broken (regardless of why), something did have to be done.

Network Rail does have it’s faults, but keep in mind that Network Rail bought Railtrack plc lot stock and barrel. Initially Network Rail was a new board on top, with 99% of the Railtrack plc organisation now forming the rest. And Railtrack plc was an engineering failure. Network Rail had to try to find a way out of the mess it was given. That was always going to take a lot of money.

Network Rail is a inefficient bureaucracy compared to BR because of privatisation. It has tried to reduce bureaucracy (although I personally think it could go a lot further). I’m not sure how Network Rail can be “responsible for much of the system’s fragmentation” after the slicing and dicing of privatisation.

In what way is Network Rail worse for infrastructure delays compared to Railtrack? The ratio of delays between the infrastructure and the train operators basically comes down to which is having a bad day.
If a train breaks down on a main line, this can be just as bad as a point failure.

“And it’s dominated by unions”. The unions wish it was. The unions have a very respectable membership in both Network Rail and in all the TOCs.

The way that Network Rail is financed and the way that the railways were controlled by the department for transport results in the lack of incentive to innovate or improve services.

“Railways will also have to compete with other public services for investment”. Yes, just like now.
 

LAX54

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There are still ‘fights’ (okay, disagreements and discussions) within Network Rail about which function/department should be responsible for the delay...
In my old area, it was nearer 90% of delays to the TOC were/are 'disputed' :)
 

Watershed

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I don't suppose it's any surprise that the article is so wildly inaccurate and dogmatic when it's written by Matthew Lesh, the Head of Research at the Adam Smith Institute!

Many are claiming this vindicates criticisms of privatisation, but privately owned railways have consistently outperformed nationalised services in Britain. Private companies built Britain’s railways in the 19th century, while nationalisation in the mid-20th century was an unmitigated disaster.
I wonder why the railways were much more successful in the 19th century. It couldn't possibly be anything to do with them having an effective monopoly on transport across the country? Oh, and let's overlook some of the barmy lines that never even paid off the cost of construction, let alone operation.

Nationalisation in the mid-20th century was an unmitigated disaster: there was a dive in passenger numbers, a lack of investment and the Beeching cuts which diminished the network.
There was a dive in passenger numbers because cars became affordable for most people. There was a lack of investment because the government decided to invest much more into roads than rail. The Beeching cuts were quite likely lighter than what would have happened under the same circumstances on a fully private railway. But still - private good, public bad!

Privatisation led to a renaissance. In 1995, there were 761 million rail journeys. This more than doubled to 1.75 billion by 2019.
The age-old issue of correlation vs causation rears its head... The demographic changes that led to this increase - primarily an increase in commuting in the SE, due to higher housing prices - are an inconvenient truth to be overlooked, as far as Mr Lesh is concerned. Who is to say the same increase wouldn't have happened under BR?

There are new and faster services, improved safety and billions invested. Trains have been modernised with improved bistros and features like Wi-Fi.
There are a handful of open access services. But the vast majority of improved services are just TOCs fulfilling franchise obligations that the government gave them. Safety is notably better, but we might well have a widespread ATP system if BR hadn't been privatised right as it was being trialled. Far more trains had bistros under BR, and WiFi was only invented after all the franchises were let.

Despite the myth, Brits do not pay more than continental Europeans for similar journeys.
What a load of nonsense. The vast majority of the fares that people actually pay are more expensive than their European counterparts. You only have to look at the average revenue per passenger-km to know that. It's true that there are a handful of cases where bargain basement Advances are available but this is very much the exception, and in no way makes up for how expensive fares are here vs abroad.

The system was not perfect. The Government had already taken over operation of the East Coast and Northern franchises after financial collapse. The final straw was a pandemic-induced reduction in passengers, which crashed revenues. Brits also came to expect much more after privatisation, which has at times led to disappointment, with overcrowding and delays.
"Let's just skip over the massive problems with privatisation" :lol:

But there is little reason to think that a largely state-run system, with more central direction, will do much to alleviate these issues.
Can it be much worse? So long as there is greater day-to-day independence, that has to be an improvement over the DfT's current micromanagement.

Network Rail is a deeply inefficient state bureaucracy totally lacking in entrepreneurial spirit
Yes, it's quite inefficient in areas. But do we want a return to the dark days of Railtrack, where "entrepreneurial spirit" resulted in subcontractors subcontracting everything down 10 levels, to the point that no-one knew who was responsible for anything?

and responsible for much of the system’s fragmentation
The 1992 Major government is responsible for the system's fragmentation!

and delays (59% according to the rail regulator)
I would be alarmed if the infrastructure wasn't responsible for the majority of delays on any given railway!

and it’s dominated by unions
Less so than most other parts of the railway!

There will be little incentive to innovate or improve services.
Roughly 95% of the railway network is unprofitable. What incentive would "BR plc" have to improve hopelessly unprofitable parts? It ultimately always comes down to government investment.

Railways will also have to compete with other public services for investment.
Just as they do now!

Private train operators lacked the freedom or competitive pressures afforded to other private sector businesses. The government neither gave companies full control over tracks, trains and stations — as historically was the case and works well in Japan – nor did they allow competition between operators on the same lines. Nor could they dictate fares, open new routes or tinker with the timetable to match supply to demand. These were all set in advance in contracts.
The DfT has micromanaged franchises far too much, yes. But at the same time, is there really much alternative in a system split up into so many parts? How else would you stop train companies from whacking up fares by 50% overnight, or cutting the service in half to save a bit of money? The system needs to be joined up in order to function properly. That is the root cause of the issue, not whether it's privatised or state run.

Even with their hands tied behind their back, private operators expanded the railway system and innovated well. Imagine what a truly privatised, commercialised and innovative railway system could have produced. Sadly that day is still yet to come.
Imagine what BR would have managed with the levels of subsidy and investment the railways have enjoyed over the last 25 years...

Mr Lesh is so blinded by his free market ideology that he refuses to admit the plainly obvious - namely that that privatisation (at least in the way that Major forced it through) was an abject failure which has cost passengers and taxpayers dearly.
 

XAM2175

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I don't suppose it's any surprise that the article is so wildly inaccurate and dogmatic when it's written by Matthew Lesh, the Head of Research at the Adam Smith Institute!
I had to do a bit of a double-take at that name because I'd not seen it in years, and this isn't a place I'd expected to see it again. I knew him as a student in Melbourne - so two more pinches of salt should be that he was only an infant at the time BR was privatised, and that he lived in Australia full-time until 2010 at the earliest
 

Grumpy Git

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Don't forget that the drawn-out process of rail privatisation in Britain also finished-off most of the rolling-stock manufacturers. We've now become a country of flat-pack vehicle assemblers (MFI Rail anyone)?
 

Dr Hoo

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Don't forget that the drawn-out process of rail privatisation in Britain also finished-off most of the rolling-stock manufacturers. We've now become a country of flat-pack vehicle assemblers (MFI Rail anyone)?
Don't forget that the fits and starts of the original nationalisation in 1948, the 'Standard' steam locomotive designs, the 1955 Modernisation Plan and the plethora of diesel and electric designs that followed, the later Sprinter programme, etc. didn't actually do a great deal to help either 'private' rolling stock manufacturers or most of the numerous 'Railway Works' that BR inherited.

What's the difference?
 

WesternLancer

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I had to do a bit of a double-take at that name because I'd not seen it in years, and this isn't a place I'd expected to see it again. I knew him as a student in Melbourne - so two more pinches of salt should be that he was only an infant at the time BR was privatised, and that he lived in Australia full-time until 2010 at the earliest
Hmm - probably tells us all we need to know really. A most helpful post!

So not even old enough to have been a member of the Railway Conversion League <D;)...
 
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Irascible

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Don't forget that the fits and starts of the original nationalisation in 1948, the 'Standard' steam locomotive designs, the 1955 Modernisation Plan and the plethora of diesel and electric designs that followed, the later Sprinter programme, etc. didn't actually do a great deal to help either 'private' rolling stock manufacturers or most of the numerous 'Railway Works' that BR inherited.

What's the difference?
Even if it was unrealistically well planned & a smooth transition would we not still have lost many of them anyway? simply because you just don't need so many diesels vs steam. Thats a rather different situation. How was our export market in the 90s? and compared to the 50s?
 

muddythefish

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Moderator note: Split from https://www.railforums.co.uk/thread...-changes-updates-only-non-speculative.217595/

Interesting article in the Telegraph today. A bit lightweight but basically saying it should go the other way.

Basically, trains, stations, track, signalling, the whole shebang in the hands of a private entity!

https://www.telegraph.co.uk/news/2021/05/23/truth-british-railways-werent-privatised-enough/

Although I would have preferred BR to have stayed nationalised, albeit funded properly and seen as a vital national asset rather than a drain on the nation's resources, the author does have a point: the railway would have been far better served privatised in the 1990s as a single entity, in other words, a BR Plc, instead of split into myriad different parts that has caused such complexity and huge cost over the past 25 years.
 
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Although I would have preferred BR to have stayed nationalised, albeit funded properly and seen as a vital national asset rather than a drain on the nation's resources, the author does have a point: the railway would have been far better served privatised in the 1990s as a single entity, in other words, a BR Plc, instead of split into myriad different parts that has caused such complexity and huge cost over the past 25 years.
Yes, I agree with him on that. At the time, I was opposed to privatisation more because B.R. was not being sold as one going-concern than for reasons of political dogma. It was obvious to many people interested in railways that fragmentation would cause problems.
 

yorksrob

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It's always an interesting position to ponder (Not withstanding the fact that the author is such a whippersnapper to have barely experienced the nationalised railway he's denouncing). But the fundamental fact is that allowing a railway company full freedom to operate as a private sector business, would lead to cherry-picking routes and services, abandonment of quieter trains and services and a general decline in the utility of the passenger network as a whole.

That's not the sort of railway that the public would want.
 

Colin1501

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I don't suppose it's any surprise that the article is so wildly inaccurate and dogmatic when it's written by Matthew Lesh, the Head of Research at the Adam Smith Institute!


I wonder why the railways were much more successful in the 19th century. It couldn't possibly be anything to do with them having an effective monopoly on transport across the country? Oh, and let's overlook some of the barmy lines that never even paid off the cost of construction, let alone operation.


There was a dive in passenger numbers because cars became affordable for most people. There was a lack of investment because the government decided to invest much more into roads than rail. The Beeching cuts were quite likely lighter than what would have happened under the same circumstances on a fully private railway. But still - private good, public bad!


The age-old issue of correlation vs causation rears its head... The demographic changes that led to this increase - primarily an increase in commuting in the SE, due to higher housing prices - are an inconvenient truth to be overlooked, as far as Mr Lesh is concerned. Who is to say the same increase wouldn't have happened under BR?


There are a handful of open access services. But the vast majority of improved services are just TOCs fulfilling franchise obligations that the government gave them. Safety is notably better, but we might well have a widespread ATP system if BR hadn't been privatised right as it was being trialled. Far more trains had bistros under BR, and WiFi was only invented after all the franchises were let.


What a load of nonsense. The vast majority of the fares that people actually pay are more expensive than their European counterparts. You only have to look at the average revenue per passenger-km to know that. It's true that there are a handful of cases where bargain basement Advances are available but this is very much the exception, and in no way makes up for how expensive fares are here vs abroad.


"Let's just skip over the massive problems with privatisation" :lol:


Can it be much worse? So long as there is greater day-to-day independence, that has to be an improvement over the DfT's current micromanagement.


Yes, it's quite inefficient in areas. But do we want a return to the dark days of Railtrack, where "entrepreneurial spirit" resulted in subcontractors subcontracting everything down 10 levels, to the point that no-one knew who was responsible for anything?


The 1992 Major government is responsible for the system's fragmentation!


I would be alarmed if the infrastructure wasn't responsible for the majority of delays on any given railway!


Less so than most other parts of the railway!


Roughly 95% of the railway network is unprofitable. What incentive would "BR plc" have to improve hopelessly unprofitable parts? It ultimately always comes down to government investment.


Just as they do now!


The DfT has micromanaged franchises far too much, yes. But at the same time, is there really much alternative in a system split up into so many parts? How else would you stop train companies from whacking up fares by 50% overnight, or cutting the service in half to save a bit of money? The system needs to be joined up in order to function properly. That is the root cause of the issue, not whether it's privatised or state run.


Imagine what BR would have managed with the levels of subsidy and investment the railways have enjoyed over the last 25 years...

Mr Lesh is so blinded by his free market ideology that he refuses to admit the plainly obvious - namely that that privatisation (at least in the way that Major forced it through) was an abject failure which has cost passengers and taxpayers dearly.
I agree with everything you say. A superb deconstruction of the perennial 'private good, public bad' rewriting of history. On a personal level (and unlike Mr Lesh), I am old enough to have commuted regularly under both BR in the 1970s and 80s, and under the franchise system until very recently. As a passenger, my overall view is that one was neither significantly better nor significantly worse than the other. So I conclude that privatisation has not really given us anything that we would not have had if BR had continued, given the same economic and social conditions.
 

WesternLancer

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It's always an interesting position to ponder (Not withstanding the fact that the author is such a whippersnapper to have barely experienced the nationalised railway he's denouncing). But the fundamental fact is that allowing a railway company full freedom to operate as a private sector business, would lead to cherry-picking routes and services, abandonment of quieter trains and services and a general decline in the utility of the passenger network as a whole.

That's not the sort of railway that the public would want.
I agree with you on that. That's the sort of thing the Adam Smith institute would advocate of course (I suspect they are also probably keen on a true market system for roads as well, eg full cost tolling etc, tho I have not checked).
To address the issue you rightly point out you would require (and IIRC the 1st franchises had this, recent ones maybe still do) - requirements on minimum levels of service frequency, times of 1st and last trains etc etc on a route by route basis - which would all be things the Adam Smith Institute would see as inappropriate interventions int he market.
 

Irascible

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To address the issue you rightly point out you would require (and IIRC the 1st franchises had this, recent ones maybe still do) - requirements on minimum levels of service frequency, times of 1st and last trains etc etc on a route by route basis - which would all be things the Adam Smith Institute would see as inappropriate interventions int he market.

Because the benefit ( and profit ) arises from providing a utility & looking at the overall profit for the area/country, with the understanding that cross-subsidising underperforming parts of the country is a benefit to the better performing parts. That's a bit too socialist for that institute, though. I suspect his main problem was that BR wasn't really privatised in the first place.
 

35B

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It's always an interesting position to ponder (Not withstanding the fact that the author is such a whippersnapper to have barely experienced the nationalised railway he's denouncing). But the fundamental fact is that allowing a railway company full freedom to operate as a private sector business, would lead to cherry-picking routes and services, abandonment of quieter trains and services and a general decline in the utility of the passenger network as a whole.

That's not the sort of railway that the public would want.
It isn't. But, whatever the weaknesses of that article, franchising gave us a halfway house between public and private, with most of the decisions most hated about the railway driven by government, not the operators.

Regulation - which admittedly wouldn't be on the Adam Smith Institute's agenda, despite being entirely consistent with their namesake's views - provides means to ensure the features you suggest rather than just cherry picking.

The railways weren't privatised in the 1990s, and pieces like those are an important reminder of the other options that exist.
 

tbtc

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Network Rail is a inefficient bureaucracy compared to BR because of privatisation. It has tried to reduce bureaucracy (although I personally think it could go a lot further). I’m not sure how Network Rail can be “responsible for much of the system’s fragmentation” after the slicing and dicing of privatisation

Network Rail celebrates its twenty year anniversary next year - twenty years of public sector infrastructure - it's had a long time to deal with all the "slicing and dicing" of the 1990s - how much longer until we take responsibility for things?

Don't forget that the drawn-out process of rail privatisation in Britain also finished-off most of the rolling-stock manufacturers. We've now become a country of flat-pack vehicle assemblers (MFI Rail anyone)?

That's how things are made these days.

Look at the car industry, where factories in Swindon/ Washington etc don't "make" cars, they assemble Spanish windscreen wipers, Dutch indicators, Czech exhausts etc (other countries are available!)

The idea that a twenty first century BR would be hand crafting trains (rather than using efficient assembly lines) seems a bit... optimistic

It's always an interesting position to ponder (Not withstanding the fact that the author is such a whippersnapper to have barely experienced the nationalised railway he's denouncing). But the fundamental fact is that allowing a railway company full freedom to operate as a private sector business, would lead to cherry-picking routes and services, abandonment of quieter trains and services and a general decline in the utility of the passenger network as a whole.

That's not the sort of railway that the public would want.

I'm sure it wouldn't be the sort of railway that the public would say that they wanted, but you still don't like private companies even when the minimum service levels/ fare rises etc are all controlled by the Government

Privatisation may be bad, but I don't know because we haven't had actual privatisation

whatever the weaknesses of that article, franchising gave us a halfway house between public and private, with most of the decisions most hated about the railway driven by government, not the operators

Agreed.

A significant number of the things that people complain about were Government decisions

  • Governments decided how generous to subsidise franchises ("no growth" etc)
  • Governments decided what minimum service levels to specify
  • Governments decided who to offer franchises to (even if they get things wrong, like the 2012 WCML franchise fiasco)
  • Governments decided what stations/lines to close/open/re-open
  • Governments decided what to electrify
  • Governments decided what the level of annual fare increases should be
  • Governments were responsible for the IET contract
  • Governments came up with HS2 (and Crossrail and other big schemes)
  • Governments funded the publicly owned Network Rail
  • Governments decided what paths to give TOCs to ensure a reliable timetable, Governments
Enthusiasts: "Private companies are to blame - we should have full state ownership!"
 
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