I’m in an argument with a friend of mine who advocates Irish rail privatisation. I know the UK and Ireland are different but I wondered to what extent privatisation has worked in the UK and whether it’s a path other nations should follow?
Not really. It still receives government subsidy and there was a series of fatal incidents a few years back where Railtrack, the company that owned and maintained the track infrastructure, significantly failed to maintain it in safe condition (shareholder dividends were more important than spending out on repairs, essentially).
Railtrack collapsed and was replaced by Network Rail, which is a government-created company that is in some absurd technical sense only, a private entity.
No, it hasn’t.
No it hasn’t, I’d like to see anyone argue that either rail-users or the public at large have really benefited from it.
Probably one of the best examples of how you can get all the negative effects of privavitization with few of the postive effects (with no real consumer choice, basically the different companies are only competing for monopolies and the whole process needs strong regulation to keep these monopolies in line).
I can tell you that privatization of most Spanish companies has worked like shite. The resulting entities tend to combine: love of bureaucracy and vagueness, the reaction times of a particularly sluggish glacier, absurd procedurals (we need to have a “bid process” to buy pens? Really? Y, RLY!), a tendence to try and solve problems by tossing moneybags at them (I think the idea is that maybe a bag will hit the problem and stun it), and the arrogance of those who know you have no choice but to deal with them - with less controls than when they officially were government-owned.
The Spanish Lotteries are coming next. Until now, if you won a prize anywhere else, it was taxable from day one - if you won from Loterías del Estado, it wasn’t taxable as income in the first year: that’s a benefit the people playing will lose as soon as the process is done. In theory, that means a net benefit for the country, right? More taxes from the “idiot tax”, so less need for other kinds of tax, right? But, alas, think of the amounts of money and work which can be spent trying to track who won every itsy bitsy reintegro, the prizes which give you back the exact cost of a ticket. I’m not sure whether to scream or cry.
Hell no. Rail companies are a natural monopoly, really - there are alternative means of transportation, which have advantages or disadvantages due to factors which are mostly out of the control of the manufacturers, but no other trains. Natural monopolies are not natural private companies.
I think even Margaret Thatcher was not that keen on the idea of rail privatisation. It does seem like a pretty clear natural monopoly, and as Mangetout says the rail network part of the system has been effectively renationalised. Some of the privatisations of the 80s/90s made a lot of sense - British Steel, British Airways, BT - but the utilities and the rail network? Not so sure about those. I guess the argument is that some parts of those industries are amenable to competition, but all I know is that if I want to get the train from where I live, I have precisely one choice of train operator.
The food got better. So, there’s that.
How does freight rail work? Are there just monopolies on certain lines?
I’ve seen figures that point out that the amount of subsidies that the privatised railway system has recieved is actually greater than when it was in the public domain, so in that measure, its a failure.
It gets much more complex when you include passenger numbers, promptness and quality of infrastructure.
I genuinely doubt that the rollong stock or much of the station improvements would have taken place in the public sector, however the various financial and maintenance failures of major companies involved in the railways point to a differant story.
It is not easy to obtain an independant view, as privatisation is very much a political issue and almost any link will take a partisan view.The reality is that in the public sector, almost all the former state industries such as gas, coal, electricity, telecoms had been starved of investment, with profits made being purlioned into the treasury, instead of the usual practice of re-investiment in the commercial sector.
Keep this state of affairs up long enough, and obviously standards, efficienceis and quality of serve will all go down, but in a monopoly there is simply no alternative.
Once you, as a government, not only recognise the scale of the under-investment, and also appreciate the need to do something about it, then realise the costs are huge, its extremely tempting to access someone elses money to do what you should have been doing for decades.
Except that those who provide that money want a return, and want a guarunteed return, so you basically mortgage your future, you don’t pay the money up front, but you set a level of subsidy to keep the private investor interested.
Result, the subsidies down the years have cost far more than direct investment, plus the government has relinquished control of a monoploy to the private sector - now that seems like a pretty poor idea to me.
This is a story that passes through the last 4 decades, of governments of differant political shades - there is plenty of blame to go all around, including the voting public who always want something for nothing, and vote for lower taxes - thats their choice, and they have a perfect right to select, but no-one ever seems to acknowledge their own part in this.
One of the biggest problems was that while it was private, the British Railway system has not really invested in tech. As a result, while most of the other Euro countries have developped some form of high speed, or at least higher efficiency system, the British are seriously lagging behind (even though their transportation needs are the same as those of other Euro countries).
Normally, whomever builds the lines owns the right to use those lines. This can get complicated because laws sometimes require companies to make routes available to others, and many companies have joint projects for some lines, and so on. But basically, rail lines are a monopoly because he who owns the lines… owns the lines.
Of course, the golden age of rail was pretty good in private hands. Outside of a few gigantic projects, most U.S. lines were either funded privately, or with a state loan (governemnts were more involved in securing right-of-way than ponying up cash). However, modern highways are often vastly more efficient and far faster.
This puts a big squeeze on rail, which generally doesn’t like dealing with passenger traffic. People are annoying; they want room, comfort, food and restrooms, and to get where they’re going on a reasonable timeframe. Not really freight-friendly. Government, however, do want people moved by rail. Thus a conflict, which has often been resolved by the use of subsidies or semipublic rail (Amtrack, basically). In this case, the government simply owned the rail.
That kind of thing isn’t helped by having to negotiate with multiple railway companies.
The tube is still publically owned has has tons of investment into new lines and upgrades. Its problems now are really due to using Victorian tube systems (like small tunnels) which would require changes so expensive and long-term that they’re not worthwhile. I agree with the rest of your post though.
Sounds like rail privitisation has worked almost as ‘well’ in the UK as it has here in NZ.
After selling off the rolling stock (but keeping the lines) in the 1980s the NZ government ended up buying them all back (at a much greater price naturally) a couple of years ago. After two decades of being in private hands the stock had been run down, most of the passenger lines have been shut down (except for the main trunk and the trans alpine for the tourists. To add insult to injury the now state-owned Kiwirail recently opted to buy new wagons from China rather than make them locally at their own workshop. Meanwhile the government’s poured billions into roads that detoriate more quickly thanks to increased truck traffic.
Epic fail all round really
In the UK?
Actually there are now several private freight rail companies and kind of have been for a while - even during the late era British Rail - Foster Yeoman brought it’s own locomotives (Class 59s, from the US, not Britain, which initially caused a bit of a stir but actually lead to most recent UK freight locomotive to come from US designs - EMD class 66 and GE class 70) to haul it’s own quarry ‘flows’.
Originally the UK freight privitiazation was supposed to create 3 freight companies by region (the previous ‘Loadhaul’ BR sectors), but that was unlikely to work so they ended up combining all 3 franchises into 1, won by EWS (now DB Schenker). Freightliner was the main UK intermodal service provider (and had been separated from BR prior to the breakup, once being a separate BR sector).
Now, there is haulage based on “flows” (long term contracts to haul goods betwen given end-points) among the different companies like DB, Freightliner, GB Rail, I think Mendip’s still around (former Foster Yeoman equipment), and a few other companies that have came and went - the companies do compete on certain flows, and shunting contracts at large facilites. I don’t think anything is based on region anymore, simply because the regions would be too limited to make use of rail’s economy in long and medium heavy hauls (as opposed to short-haul truck/lorry flows which railroads are at a disadvantage).