Saturday, March 23, 2002
Syonara For Now
I am off to a conference on Japanese railways so for those of you who are desparately awaiting my next rant I am afraid you'll have to sit tight until Tuesday 26 March at the earliest.
British Rail Privatisation: What Went Wrong?
Would readers holding first class tickets please move right along the platform where they will find Patrick Crozier's Magnum Opus on why privatising British Rail was such a fiasco.
For those cheapskates who do not wish to pay top whack at present may we suggest the following alternative service/summary:
State control is a bad thing. In privatising BR the State achieved the dubious distinction of actually increasing its control over the railway.
Abolish the Ministry of Transport
OK, I know it's called something different now but the point stands. Before 1914 Britain had the best transport system in the world. We had the fastest trains, the most comfortable carriages, some of the cheapest fares and the fast-freight system was the envy of the world. We had the world's first deep tube network and the older (sub-surface) underground had recently been electified. On the surface a vast fleet of brand new motor buses and taxis competed for trade with the brand new electrified trams which competed with electrified trains south of the Thames.
In 1919 Eric Geddes was appointed the first ever Minister of Transport. It's been downhill ever since.
In Support of Congestion Charging
Although this article by Andrew Oswald appeared in the Times some time ago it sums up most of the arguments why congestion charging is a good idea. If I were to have one gripe about it it is the assumption that the charge in London will be set to keep the traffic moving. The more I hear about this scheme the greater my doubts that this will prove to be the reality
Just How Bad is a Monopoly?
I recently had a row with someone about fares to Brighton. His argument was that before nationalisation railway companies abused their monopoly position to charge extortionate fares. Plate 51 in Nicholas Faith's The World the Railways Made (Pimlico, London, 1990) is of a painting by Charles Rossiter from about 1870 entitled "To Brighton and Back for 3s and 6d". I presume he meant travelling from London. If one assumes a GDP deflator of about 50 over the interim that would be about £11.25. The current cheapest return fare is £15. Some extortion.
Friday, March 22, 2002
Bad News is Good News
At least it is for me. The more that statist floundering fails to deliver a worthwhile transport system the more people will turn to radical ideas like mine. At least that's the theory. Anyway, plenty more bad to neutral stories today including:
Thursday, March 21, 2002
The State Always Gets Screwed...
by the private sector. That is a general theory of mine that seems to be borne out by two stories that have appeared in the press today.
The first concerns the plans for a Public-Private Partnership on the London Underground. It seems that the returns on investment are going to be absolutely enormous.
The second concerns annual results from National Express, (you'll have to scroll down to the bottom of the page) which operates nine train operating franchises in the UK. There is a little paragraph about the renegotiation of the ScotRail and Central Trains franchises. The whole point of the original franchise agreements (negotiated in the mid-1990s) was that they were for good. If you got your sums wrong then you either bore the loss or handed in the keys and the bidding process was re-opened. What now happens is that the State says "Oh dear, what a shame, have another go" and gives you another dollop of cash to help you on your way.
Of course, it is not just private companies that are adept at fleecing the state - private individuals are just as good at it. Any UK resident over a certain age will be only too familiar with the many strikes and other forms of industrial disruption which plagued the nationalised railway up until privatisation.
There are really only two solutions to this. Either, you do as Hitler did: nationalise the people. Or you get rid of the State.
Wednesday, March 20, 2002
Book Review - Don Riley "Taken for a Ride"
Don Riley is a commercial landlord operating in London. Shortly after the Jubilee Line Extension (JLE) was completed he noticed something: property prices in his stomping ground of Southwark were going up. "Very nice" he thought - especially as he hadn't had to pay a penny for the privilege.
It is no great surprise that railways, or other pieces of transport infrastructure, increase the value of nearby property - imagine (assuming you live in London) how much your house would be worth if the local station suddenly disappeared. Private railways in Japan have for many years built shopping centres, resorts and whole towns near their lines. What Don Riley decided to do was to see if he could quantify it.
So, he set off on his bike, property newspaper in hand and reached a remarkable conclusion: the £3.5bn invested in the JLE by taxpayers had benefited well-heeled Rackmanites like himself to the tune of £13.5bn.
The consensus view is that although we might all want nice, fast, cheap rail services there is simply no way they will ever pay. London Underground will certainly never see more than a fraction of its £3.5bn. Riley's research turns that consensus on its head. Railways pay all right - just for different people.
There was one factor that Riley did not take into account - property price inflation (not insignificant in London in the late 1990s.) I have done a back of an envelope calculation on this and my conclusion was that even had inflation been as high as 100% over the period the gain would still have been about £7bn - still highly profitable.
The question is how to make this effect work for infrastructure. When offered a return of £3 for every £1 put in there can be few landlords who wouldn't respond positively But they won't respond if they know they can put in absolutely nothing and still get the £3. Such a free-rider effect encourages some to propose some sort of hypothecated infrastructure tax. Ideas like this make my heart sink. We know that the State is not very good at running things. What is less well known is that it isn't very good at procuring them.
[Actually, with the cost overruns on the West Coast Mainline, the Channel Tunnel Rail Link and the Public Private Partnership on the Tube we are rapidly getting all too familiar with this idea.]
So, is there a way of cutting both the State and the free-rider effect out of the equation? I think so. This is how I think CrossRail could be funded:
Don Riley "Taken for a Ride", Centre for Land Policy Studies, London, 2001.
Tuesday, March 19, 2002
How much Money is Railtrack Getting from the Government?
This ought to be a simple enough question but wading through Railtrack's Financial Reports I am left none the wiser? Is it £162m, or maybe £334 or perhaps even £700m? Who can say?
If you can shed some light on this I would be delighted to hear from you.
Note Initially, under privatisation/fragmentation, Railtrack did not receive a penny from the Government directly. This changed sometime in the last two years for reasons I have never entirely been able to fathom.
Ken's Cunning Car Plan
According to today's Evening Standard Ken Livingstone, Mayor of London, is working on a secret scheme to use traffic lights and other traffic management techniques to discourage drivers from entering Central London.
This all sounds very odd. Central London will be getting a congestion charging scheme in February 2003. In other words there is already an existing plan to discourage drivers. So, why do we need another one?
The only reason I can think of is that the congestion charge (£5 a day) is simply not enough and the powers that be know it. If this were a true market then the response would be to put up the prices but for some reason, either legislative or political, it is not an option open to Livingstone.
There also seem to be plans to make buses partially exempt from this scheme (by building some special bus lanes).
Up to now I have been generally supportive of Ken's plans for Congestion Charging because, while they are streets (excuse the pun) away from the free-market ideal they are the nearest thing on offer. But I am beginning to get nervous. This is how railway privatisation started. That too, was supposed to introduce some market disciplines but ended up introducing ever more state disciplines - with results we are all too familiar with. When the whole thing goes tits up it will, as usual, be the market that gets the blame.
Monday, March 18, 2002
The news today is all about the latest rail punctuality figures. On the surface they do not make good reading with an overall drop from about 80% of trains running on time to nearer 70%. A number of reasons are cited such as the administration of Railtrack, the leaf-fall season and the introduction of the Train Protection and Warning System (TPWS).
What, to my knowledge, they do not reveal is the delay attribution, in other words how much delay is due to Railtrack and how much is due to the Train Operating Companies (TOCs). I am curious to know this because I have seen reports that after Railtrack was put into administration although its delays rose they then declined to a level below that before administration. It would not entirely surprise me if we see a situation in three months' time where Railtrack delays are dramatically down, TOC delays dramatically up and excited statists jumping up and down saying "I told you so".
It gets worse. According to one insider (who I am inclined to believe) Railtrack's improved performance is all because for the first time in its history it no longer has shareholders climbing all over its back and can now concentrate on the real job of running the rail infrastructure.
So, time to abandon my libertarianism and join the Socialist Alliance? Well, no. Although it is entirely true that shareholders under the private Railtrack were indeed pulling it in the direction of cost-cutting that was because Railtrack's income was more or less fixed. So, the only way of increasing profits was to cut costs. So, why was Railtrack's income fixed? Because the State, via Track Access Charges, decreed that it be so. Cherchez l'état - it works for me.
The other side of the equation is what has been happening to the TOCs. My guess is that they are going through much the same experience as they did after Hatfield. On that occasion, when Railtrack started re-railing half the network and placing speed restrictions on the other half, the TOCs "took their eye off the ball". I can see why. Punctuality is hard work. It takes a lot of things going right all at the same time. At a time of crisis, drivers, guards and managers are working so hard just to keep the service going that they entirely forget about punctuality. And once it's gone it takes ages to regain.
Of course, such subtleties are and will be lost on politicians and the media. Shame really.
Sunday, March 17, 2002
Book Review - Christian Wolmar "Broken Rails: How Privatisation Wrecked Britain's Railways"
This is a truly brilliant book written by the second-best railway journalist in the country. It is Wolmar's account of the whole sorry saga of the privatisation/fragmentation of Britain's railway.
In it Wolmar covers the history of Britain's rail network. He describes the last days of BR. He details the manner in which the network was broken up. He chronicles the disasters at Southall, Ladbroke Grove and Hatfield. Indeed, his description of the Hatfield crash and its aftermath is the first even half way full account of what actually happened. He examines the less headline-grabbing ways in which the network has declined and writes about the Labour government's amateurish attempts to impose their latest wheezes on a flawed structure.
There is, however, one problem with this book: the subtitle. On countless occasions Wolmar illustrates how State-imposed fragmentation and regulation have injured the industry. But not once can he point to an occasion when privatisation has been exclusively to blame, if at all.
He can, perhaps, be forgiven the belief that fragmentation is an inherent part of private enterprise. But he would be wrong. Although railways were divided along regional lines prior to nationalisation there was no other fragmentation. It certainly isn't how things are done in Japan. And take the example of the Netherlands. There they fragmented but did not privatise. Chaos (or what passes for it in the Netherlands) quickly ensued.
How often can it be that a book is so badly let down by a subtitle?
Christian Wolmar, "Broken Rails: How Privatisation Wrecked Britain's Railways", Aurum Press, London, 2001.