renationalizing Britain's railways

[miyakoji]

Interesting article on the feasibility of renationalizing Britain's railways.  Apparently, this sort of happened with National Express, which collapsed, as the article says, in 2009.  Services were then run by Directly Operated Railways, which was state-owned.  This reverted to private ownership again last November.  Just wondering what our British forum members and other informed parties think :).

 

http://www.bbc.co.uk/news/magazine-31621300

[Davo Dentetsu]

Won't be much chance.  Governments prefer to offload the tricky and troublesome sectors that can sort of make money but require a large expense to keep running.

[bikkuri bahn]

How are rolling stock purchases financed in this nominally privitised system? I ask because some British enthusiasts like to complain about the cost on the IEP programme, implying their taxes are Involved.

[kvp]

Imho they should either go fully private, get rid of the franchises and privatize the rail lines too in regional deals (like in Japan) and stop all public funding. Or they should get everything back under state control and try to run it as a company. (Although the EU won't really want to allow that.) The first version would lead back to the days before the nationalisation and the second would mean the same as in the BR days. Both are viable, but i think using public funds and subsidies is only fair in the 2nd, state owned case. Or they could make a law that if accepting public funding, then the companies have to be run as nonprofit organisations and all of their subcontrators have to do the same. Or the franchise owners could hand back the franchises if they can't run them without public money. This would clear up the mess pretty quickly and allow fully private ownership and operations on profitable lines and the state could close non profitable routes or allow anyone (lige local councils) to buy them.

Edited March 2, 2015 by kvp

[Mudkip Orange]

The problem with full privatization (a la the "big four") is that within 20 years they'd all be owned by the Germans.

 

Now, I'm a huge fan of Kings Biergarten, and my woman is of predominantly German-Texan ancestry, but as a policy matter I think they own quite enough of Europe already.

 

On the other hand, if there ever was a UK exit from the Eurozone (the Nigel Farage-as-PM scenario), then a return to the Big Four ought to work splendidly.

[Densha]

In the Netherlands the main network is still 'state-owned' (officially not, but in practice they are). Most regional lines nowadays are run by a franchise system.

 

I'm not exactly sure how the British system works, but the Dutch system works like this: a local governmental body (province or region or so) says they want more say in the railway line running through their area that is operated by the Dutch Railways. The national government then usually approves of that (because that means less costs for the national government). Then the local government writes out a franchise which all railway companies can bid for by writing a business plan. The local government subsequently chooses a winner (the company who has the best offer and asks the lowest compensation for that). Some franchises have new rolling stock as a mandatory factor, but other franchises can re-use existing stock. Franchises in the Netherlands usually require very modern rolling stock which most of the times leads to new rolling stock. This is why there are dozens of barely 20 years old rolling stock sitting around on sidings doing nothing, just like the hundreds of buses in the Netherlands that were fine but needed mandatory replacement by the franchising regulations.

 

Although the Dutch privatized public transport started with dozens of companies, after many acquisitions there are nowadays practically only three left: NS (and their subsidiary Abellio), DB (under the name Arriva) and Veolia-Transdev (with many subsidiaries). Keolis has one franchise with their subsidiary Syntus.

In other words: in my opinion the privatizing failed in the Netherlands because everything (and not only public transport, also many other utility companies) ended up with a few 'big boys' in the end.

 

@Mudkip Orange

Germans indeed seem to own everything nowadays. About a quarter of the public transport in the Netherlands is already operated by Arriva (=DB), the British freight company EWS is now DB, etc. etc.

Edited March 2, 2015 by Densha

[kvp]

 

nowadays practically only three left: NS (and their subsidiary Abellio), DB (under the name Arriva) and Veolia-Transdev (with many subsidiaries).

NS: Dutch government, DB: German government, Veolia: French government. They are not true private companies. Also imho if someone manages the trains, then they should manage the tracks. The same is true for buses, if they run the bus network, they should repair the roads and do this without government money.

 

 

On the other hand, if there ever was a UK exit from the Eurozone (the Nigel Farage-as-PM scenario), then a return to the Big Four ought to work splendidly.

It would work, but it's not dependent on the EU. If the UK would leave the EU (they are not part of the euro zone), then according to free market laws, foreign companies could still keep their properties and money, so there is nothing stopping them buying up anything that is on sale, including the whole electric grid, public transport or anything else. (except the french government already got these two)

 

The Dutch franchising regulations are good for eastern europe, since most of those buses and other equipment ended up here for almost free.

[Densha]

Yep that's something important I forgot to write about. NS, DB and Veolia-Transdev are all very large government-owned companies. It's often not viable for small companies to run a franchise and if it is they are bought out by the larger companies because they want to enhance their market share. All small public transport companies before they were bought by the larger companies were usually municipality-owned though, which is also governmental of course.

 

The biggest problem I have with the 'privatization' of Dutch public transport is that everything is run by state-owned companies which is indeed absolutely no privatization. The officials of the ministry of transport keep calling it privatization even though it is nonsense. Now the Dutch government basically pays money (subsidy) to state-owned companies of other countries to let them run the Dutch trains and buses, even though the profit made by these companies goes to the public treasury of that other country. The NS will actually be running all trains in the British ScotRail franchise from April this year, but then it's the Scottish paying the Dutch government, in other words: the same story but backwards.

[Claude_Dreyfus]

The biggest issue with the set up in the UK it is neither one thing or the other. The infrastructure is effectively a government company, whilst the trains are owned by leasing companies (passenger at least), and run by the operating companies. The problem is the government (the Department for Transport - DfT (known generally as DafT on account of some of their decision-making) won't leave it alone. You either have a truly private system, or a nationalised industry - we have nether.

 

There have been a lot of rumblings lately about the quality of the railways in the UK - and sometimes (tonight for example) they are awful - with various threats to renationalise; but BR were certainly not perfect. It has been 20-odd years since full-privatisation...there have been huge improvements in terms of the average age and quality of the stock (although some of the seating layouts are pretty dreadful). Will renationalisation happen? In my view, no. Parts of BR were handed over to private operators many years ago; this year marks the 30th birthday of the class 59 (the first 'private' locomotive to be purchased to run on BR tracks). Other areas, such as catering and road transport were also sold to the private sector many years ago.

[Mudkip Orange]

according to free market laws, foreign companies could still keep their properties and money, so there is nothing stopping them buying up anything that is on sale

 

Euro exit would free the UK to pass tariffs, ownership restrictions, and the like which presently contravene EU law. There was a row in the US about 10 years ago where Dubai Ports World wanted to acquire the stevedoring operations at about two dozen US ports. There was a huge uproar, legislation was introduced, and they ultimately gave up and devolved the operations to AIG.

 

Of course, Germany would be free to retaliate as well. Most of Europe forbids the importation of American-raised poultry, and as a result the US forbids the importation of European light trucks. (Manufacturers get around this by installing seats in cargo vans, making them legally passenger vehicles. Upon receipt in the US, the seats are shredded.)

[miyakoji]

Thanks everyone for your posts, this has generated a lot more conversation than I had expected

[Sacto1985]

Interestingly, I wonder why when JNR split into the various JR companies, why didn't they separate out the Shinkansen operations into its own separate company? Was it because the company that became JR Central wanted to keep operational control of the Tokaido Shinkansen, given that was the most busy of the Shinkansen lines?

[miyakoji]

How it was going to be divvied up was decided before any corporate division was established, iirc.  I think it was decided by a group that was made up of Ministry of Transport and JNR people. Check used booksellers for Yoshiyuki Kasai's book Japanese National Railways: Its Break-up and Privatization. It details how it was divided geographically, and why track, operations, etc were kept together under each regional company.