Another domino falls…
Full disclosure: this blog entry is for the really serious rail enthusiast, or perhaps for a seasoned economist, or maybe even useful as an object lesson during a business course at a university. If so, I would suggest scheduling it somewhere in freshman business 101! Add this to another text book case of running a perfectly good concern into the ground by politicizing it and putting folks in charge who haven’t got a clue what they are doing. I am of course speaking of the British rail system.
It took me a while to come up with a catchy title for this entry. “How to ruin a perfectly good rail system” was one of the first contenders. “Charging the highest ticket prices in the world and nothing to show for it” was another one. “Lying to a gullible tax paying public and the consequences” was also in the running, as was “What is the definition of idiocy?”
Eventually I did settle on “Another domino falls”! I will explain my rationale for this in a bit.
In the mid 1990’s the conservative UK government at the time decided to break up publicly owned British Rail. One could write volumes of books regarding all the nitty gritty about this decision, suffice it to say that the two major factors were the apparent belief that the private sector could run the railroads much cheaper than a state enterprise. The other factor was a behind the scenes lobbying effort by the automobile and bus industry, as well as some road building conglomerates. The UK government decided on a “franchising” model. The extant rail system was to be broken up with the physical plant (track, signaling, etc.) run by a private company. Other private companies would then bid against each other to run services in defined geographical areas, promising the government a share of the expected profits. The trains themselves would not be owned by the actual train operator, but by leasing companies. Maintenance would be contracted to the lowest bidder, for both the train equipment as well as the rail infrastructure. The UK Department for Transport (DfT) was then tasked to organize all of this and oversee this arrangement. The DfT prescribed how many trains had to be run, how many seats that train would have to have, times and ticket prices for each franchise bid, how old the trains could be, and so on. All sorts of “legalese” was built into this system, laying out who would be responsible for what, when, how and so on. The whole construct was a lot more complicated, but this was basically the gist of it.
Until then railroads were always “vertically integrated”! Even the private railroads here in the US are so organized. Amtrak and some commuter railroads being the exception. Under a vertical integration system the railroad owns the land, the track, the stations, the signals, the rolling stock. It sets its own time table, generally does its own maintenance, as well as track work, and, crucially, sets its own safety standards. Suddenly, this system was abandoned creating huge problems. On top of that you had DfT bureaucrats running the show, knowing nothing of the railroad industry.
Problems soon became apparent. Several high profile accidents have been attributed, rightfully or wrongly, to the confusion regarding competencies and responsibilities created by the franchising system.
As can be expected with all promises by politicians, the savings to the UK taxpayer by privatizing the rail system have, of course, not materialized. In 2017/2018 the net UK government direct subsidy to the private railway companies was around 6.4 billion UK pounds. (About US $8.1 billion) Just before the Railway Act 1993 privatizing the railways was passed, the yearly subsidy was around 1.7 billion UK pounds. (About US $2.1 billion) However the total spending on the entire UK railways system was a whopping 17 million pounds in 2017/2018! More about that in this blog entry.
And those shiny, new trains all this was going to bring? They may be new, but most of the new trains are awful. The new IEP Class 800 ride like they have no suspension. The diesel Voyagers are noisy and cramped.
Seats on UK trains have gone from sort of decent in the old HSTs to downright abominable. Take a look at this picture, courtesy of Modern Railways magazine:
This is in First Class no less! What idiot would think of doing this. Or this:
And now comes the latest from the recently elected conservative, “private everything is good”, government: Franchising is a failure! My dear Boris Johnson, I could have told you this quite some years ago. GNER is gone, Northern is gone, SouthWestTrains is gone and the new SouthWest Rail franchise will most likely be killed off soon. Virgin Trains has thrown in the towel and, surprise, surprise, the current train operating company running services on the East Coast Main Line between London and Edinburgh (Inverness, Aberdeen, Leeds) is, wait for it, LNER: Owned lock, stock and barrel by the UK government!
Interestingly enough CNN Travel had a nice article about the rail system in the UK in today’s edition. I have taken rides on those trains myself. They are indeed a disgrace. Article by CNN Travel:
Well, back to the future then!
As usual, I invite comments and discussion. So please feel free to leave a comment in the reply box below!