UK Transport

As its title suggests UK Transport covers all aspects of transport in the UK. It is written from a libertarian perspective, in other words, that the less the State involves itself in the running, regulation or funding of roads, railways or anything else - the better.
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Saturday, May 11, 2002

Bullshit Alert

Train accidents do not bring out the best in either the media or the people they interview. There is, now, a grim routine to coverage of fatal rail accidents. Parts of it were on display in the immediate aftermath of the accident at Potters Bar.

There's Bob Crow, head honcho at the Rail, Maritime and Transport Workers Union telling us that the accident shows the need to bring the industry back into public ownership. (I apologise for the lack of quote marks but I didn't set the video recording and my shorthand isn't good enough)

There's Louise Christian solemnly telling us that there should be a full public enquiry. Will you be waiving your fee, Louise?

There's the representative from the train company telling us how "upset" he is. Frankly, if I was his boss I would sack him on the spot. I you can't keep yourself together when there's an accident that hasn't killed or seriously hurt someone you know, in an industry where accidents are inevitable, at a time when you have to lead your staff - then you shouldn't be in it.

Then there's the media. And its stupid questions. Questions like "Isn't this going to dent public confidence even more?" I would just love it if some rail executive turned round and said "What do you mean by public confidence?" or "What makes you think it has dented it in the past? Doesn't seem to have stopped them using the system." or "Does it matter?" But, no. Instead we get the usual hand-wringing waffle.

And then there's Stephen Byers. Now, you would have thought that right now he would be trying to keep his nose clean, steer clear of anything that could, just possibly, be misinterpreted as deception. But there he is solemnly announcing an enquiry. As I understand it enquiries into fatal rail accidents have been mandatory since 1840. But there's Byers trying to claim the credit. Draw your own conclusions.

In the News

Not surprisingly most of the news today is about the Potters Bar crash. The cause is still unclear but attention is focusing on either a points failure or something falling from the under-carriage of the train.

'Faulty track' focus of crash inquiry- looks like it's the points
Papers press Byers on train crash
Crash track had 'jolt' say travellers
Faulty points are the prime suspect
40 minutes later, a car crash - the Times takes the time to remind us that generally-speaking trains are very safe
Railtrack faces questions over maintenance - again
Investigators examine damaged set of points
Track tragedy
'Job offer' row clouds easyJet talks with Go

Friday, May 10, 2002

Three dead' in train crash. The cause appears to be a derailment which would seem to make it Railtrack's fault. Only today, in an interview in the Times, Railtrack's chief, John Armitt said “Every day waiting round the corner is something. Clearly if there was a significant accident on the railway then the knives would be out.” John, your prediction is about to be put to the test.

The crash occurred at a station (Potter's Bar) which is about the worst possible place for a crash. The worst ever train crash in Britain in peacetime also happened at a station (Harrow, 1952).

Idle speculation here, but with Railtrack now under the Government's wing I doubt if it'll get too much of the blame "all the fault of the last lot, you know." Expect focus to be directed to the state of the train (owned by WAGN) and especially its wheels. Wheel flats can have a devastating impact on the track and since the wheel/rail split there have been an awful lot of wheel flats. It has been speculated that wheel flats were a contributory cause of the Hatfield crash but the media was too focused on blaming Railtrack to look any further.

In the News

Tories demand Byers debate - the story just goes on and on
The Byers Saga - link to a graphic
Byers: the charge sheet
Byers market
Tube deal gravy train for the contractors - yes, one day after the contracts were signed the contractors admit what everyone (except Gordon) was thinking all along.
The Underground looks like becoming a tunnel of love for Amey
The Tubeway army hit pay dirt
Railtrack chief keeps to own timetable - interview with John Armitt
What the railway industry thinks
Return of the trolleybus? - no. Trolleybuses were invented to replace trams and replaced when motor buses proved themselves better in all important respects. Yes, there is something quite romantic about these environmentally-friendly vehicles but, no, they are not coming back.

Thursday, May 09, 2002

Wolmar Replies

Yesterday, I posted my e-mail to Christian Wolmar, the leading railway journalist. He was kind enough to reply. This is what he said:
Interesting letter. Given that politically, we are poles apart, there is quite a lot of common ground.

In Europe , fragmentation necessarily accompanies privatisation because of the legislation that requires separation - at least in accounting terms, but mostly taken further - of operations and instrascture.

The two fundamental errors of the British prvatisation - fragmentation and the attempt to privatise the infrastructure - have been equally damaging.

We obviously differ about the role of the state. My view is that since the railways are subsidised, then it is inevitable that there should be state involvement. Ideally, I would like to see this in a kind of 'hands off' arrangement, like Network Rail or the Dutch model. However, there must be a role for some political intevention since public money is going into the service and therefore there must be an ability to influence the way it is spent. Finding a mechanism for this, without encouraging micromanagement of the railways by ministers, is a difficult balancing act. Incidentally, one interesting remark made to me recently about Byers by a railway executive was that he did not try, unlike his predecessor, to micromanage the industry.

Your point about profit centres is intersting. If you fragment, however, that prevents the sort of integrated railway thinking that is a key part of the Dutch experience.

I am glad you don't stick up for the competition model which many of your fellow privatisation protagonists saw as the key aim of selling off the railways.

On the issue of letting the market decide, the problem with the railways is that it is how to create a structure in the railways where the market can operate effectively. So far privatisation has failed to deliver that.

In sum, I have already advocated some type of 'Big Four' arrangement for Britain's railwaysas existed between 1923-48 and not unlike the Japanese model, but there are a lot of details to sort out. In the meantime, with Network Rail and virtual boards, we are a bit nearer it, but still pretty far. away.
Hmm, I shall return to this.

High Fares are Good for you - ultimately

The news that London Mayor Ken Livingstone is all a-tizzy about having to put up tube fares brings me out in hives. Hire fares are good - ultimately. High (or higher) fares send out signals to the market. They send out the signal that here is a market that is not being catered for. They send out the signal that there are lots of people out there who would like to buy a certain service but not at the new price. In a free market this encourages new entrants to provide new services or existing suppliers to find new ways of satisfying demand. If we had a true free market for London transport, new players would come up with all sorts of new ideas. At the same time the tube lines would examine new ways of peak fare pricing, new signalling, reboring tunnels and even building entirely new tubes. But fares aren't allowed to increase and there isn't a free market - so they won't.

L'Affaire Byers

The row over Byers's management of the Transport Department goes on. For me this is something of a MEGO (my eyes glaze over) issue. It may be important, it may not; I don't know - I don't understand it. What is interesting is that the media have the knives out for Byers. Up to recently, the Labour Government has led a charmed life when it comes to media relations. But things have started to change. Journalists are beginning to realise that hospitals, schools and trains are no better than they were 5 years ago. They are beginning to realise that they have been conned - and they are angry. I suspect it will prove very difficult for the Government to garner uncritical support in the media ever again.

For what it's worth my objection to Byers is that he seems not to have any analysis of why the UK's transport infrastructure is in the mess it is. If you cannot diagnose the problem you cannot solve it.

What a Day

The newspapers today are chock a block with transport stories. Not only are there big developments in the air, on the road and down there in the tube but the Minister of Transport is facing a motion of no confidence. Your webmaster is in need of a little sympathy.

Byers 'to speak out' on spin row
Air of resignation over transport

Easyjet to swoop for BA arm in Germany
Easyjet flies close to the wind - the ink is hardly dry on Stelios's resignation as Chief Executive and EasyJet has transformed itself from corporate upstart to corporate raider

Legal challenge could delay London car toll - Flip. The legal challenge is all about the environmental effects of rat runs. For heaven's sake, if a rat run is bugging you put a toll on it.
Congestion charge review
Ken's traffic plan "will work"

Livingstone in Tube fare worry
Tube row grows as PPP contracts are signed

Airlines sell economy to the business class - what interests me is the vast difference in price between el Cheapo Economy and slightly less el Cheapo Economy with 7 extra inches. Who said size doesn't matter.
The housing shortage in the South - I link to this letter from the House Builders Federation because transport issues are inextricably linked to those of general development. By the way, most of London's transport boom took place at a time when there were no planning laws.
Rail staff vote on pay deals

Wednesday, May 08, 2002

Dutch Railways and the Nature of Private Enterprise

Christian Wolmar, whom I have mentioned before, is one of the UK's foremost railway journalists. In the most recent edition of RAIL magazine (sorry, no link) he wrote about the situation in the Netherlands. To say the least I was not best pleased at his article. So, I wrote him an e-mail:
Your article on Dutch Railways, though good in many parts, cannot be allowed to pass without comment.

You seem (and I hope I have not misinterpreted your remarks) to believe four things:
  1. That fragmentation is bad
  2. That privatisation is bad
  3. That all parts of a private business must be profit centres
  4. That privatisation means fragmentation
I will start on the final point. Privatisation most definitely does not mean fragmentation. While it is certainly true that rail and other privatisations in the UK have been accompanied by fragmentation it is by no means essential. The Japanese certainly didn't do things that way when they privatised their nationalised railway. On a related point this privatisation-pusher certainly does not believe that "choice" on the rails is the be all and end all. It is not as if there aren't plenty of alternatives. Neither am I against "central" control. It's just that I don't want the State exercising it.

On the profit centres point there are clearly all sorts of examples of bits of private enterprises that do not in and of themselves make money. R&D departments would seem to be the obvious example. For a railway operator there are all sorts of areas of the business from repainting to advertising whose contribution to the bottom line is almost impossible to quantify. But generally-speaking railways know that they need to keep their trains clean and advertise their services. Much the same logic applies to things like train taxi services.

On the privatisation point it seems pretty obvious that the private sector is perfectly capable of running railways. Not only do we have the present day example of Japan but historical examples with the Japanese private lines, the US and, of course, our own private companies pre-1922.

[Incidentally, I was glad that you discounted factors such as history and geography when making comparisons. I grow tired with the "the Japanese are different" argument.]

On the fragmentation point I tend to agree with you. Vertical fragmentation has been a disaster in the UK - just as much as it has been in Holland. If I were running a railway I would want to make damn sure that I controlled both track and train. I understand that the Central Railway are just as adamant on this point.

Horizontal fragmentation, on the other hand, is another matter. It didn't seem to do us much harm pre-1922, or indeed do much harm to the original Japanese private railways. I don't remember the new JRs complaining much about it either at the Japanese Railway Conference that took place in Cardiff in March.

That's the great advantage of allowing the market to decide. It will try things out and very quickly determine what works and what doesn't.
Mr Wolmar was kind enough to write a reply which I will post tomorrow.

In the News Today

The Byers spin saga just goes on an on:
Byers in spin chief pay-off row
Byers admits misleading MPs in Sixsmith affair
So he is a liar

Other Stories:
Queen swaps Royal Train for the Metro - HRH is only passenger on spotless and freshly refurbished train - quite right too.
Fury at Thames Valley road toll plan - not from here there isn't
Ban on use of mobiles in cars is rejected - because they can't detect it.
Smart owners not clever when it comes to speed - claptrap posing as social science
Graphic: Top ten cars flashed by a speed camera

Tuesday, May 07, 2002

Compulsory Purchase - an update

My piece on Compulsory Purchase Orders (US=Emininent Domain) seems to be causing something of a stir. Brian Micklethwait picked up on it over on Libertarian Samizdata and Natalie Solent posted it to the Libertarian Alliance Forum. And now I am beseiged with e-mails.

David Carr wrote:
"Excellent post on the building of Britain's rail and road network by dint of state power.

I must confess that I find it difficult to imagine how the networks could have been constructed without the use of Compulsory Purchase. I also believe that airlines were confronted with a similar problem because, of course, anyone who owns land also owns everything underneath it and everything above it. This meant that airlines would have to seek separate licences from every landowner in the flight path of their planes. I believe that this problem was solved by legislation granting airlines 'fly-over' rights.

Does this mean we have to stop being libertarians now? Bugger, I was just starting to get warmed up!"
Stephen Karlson who does something (presumably not janitor) at the Department of Economics, Northern Illinois University writes:
"The North American railroad with the easiest crossing of the Continental Divide is the Great Northern. As far as I know, the builder did not invoke eminent domain. He ran into a somewhat different problem: the US government objected to his building of lines through Indian reservations after making purchase contracts with the inhabitants thereon.

The building of railroads in the States involves a great deal of takings by government, but to this day you can get into a loud argument among
railway enthusiasts (whether amateur or professional) about whether the land grants offered to several railroads helped or hindered them."
And Tim Starr says:
"[The land has to be bought] only if it's already owned. In the US, much of the railways were built on land that wasn't owned before the railroads were built, or it was owned by the Federal government, and there wasn't much in the way of settlement along the routes where the tracks were laid. It occurs to me that part of the reason why it may have proven historically necessary for compulsory purchase to be used to build railroads is that the British State was under the control of the landowners, who may have enjoyed a disproportionate degree of protection of their property rights. As you say, not only did they own the land the railroads were built on, they also controlled the government that had the power of compulsory purchase at its discretion.

It occurs to me, though, that the canals that preceded the railroads in Britain were built earlier, and by Dissenters, who presumably didn't enjoy a very close relationship with the landowners in Parliament. Were the canals also built with the power of compulsory purchase?"
Oh, you lucky Americans.

The canals point is interesting. I think the Dissenter point is something of a red herring. Railwaymen like Stephenson and Brunel were just as unpalatable to the aristocracy. But the substantive point did induce me to go and do some research.

Unfortunately, it would appear that canals did indeed require an Act of Parliament. I assume that the powers acquired were those of compulsory purchase - I just can't see what else you would need from Parliament.

Incidentally, during my Google Search I did uncover this short history of the Basingstoke Canal. Well, I liked it.

Monday, May 06, 2002

Airport Landing Rights

Over on Samizdata Brian Micklethwait has very kindly linked to my article on compulsory purchase an action which has immediately led to a jump in my hit rate.

But there's a sting in the tail. Brian asks me about the market for aircraft landing rights. I may be the Libertarian Alliance's Transport Spokesman but I know precious little about the ins and outs of the airline business (trains, you see are so much more fun). Anyway, a quick Google search has brought up this couple of gems: one from BA which seems to bear out what Brian was saying about a stitch up and this one from HACAN on how an auction in landing rights might work.

The HACAN piece looks particularly interesting. HACAN is basically a NIMBY operation for people who live near Heathrow so I was sort of expecting some sort of "ban-em-all" enjoinder. But it would appear that HACAN is prepared to look at market solutions. I wonder if they would be prepared to consider a market solution to the problem of noise itself?

Sunday, May 05, 2002

Should we fear the EasyJet/Go Merger?

The news is that EasyJet, the UK budget airline owned by Greek entrepreneur-cum-showman Stelios Haji-Ioannou (don't ask me to pronounce it: everyone just calls him Stelios), is in talks to buy Go, another UK budget airline for about £400-500m.

There are all sorts of ironies here. EasyJet was the product of a combination of new opportunities: mild deregulation in the European air market, yield management technology (which allows the price to vary with time), the internet and the widespread knowledge that the old airlines were taking people for a ride (so to speak). EasyJet was like a breath of fresh air. It was cheap and cheerful and honest. No crap with people on the phone, no crap with travel agents, no crap with having to stay a Saturday night. These are the fares: take your pick. People like me loved it. Stelios was my tycoon.

Before long EasyJet was eating into BA's market. They responded by setting up Go for the deliberate purpose of putting the upstart EasyJet out of business. Then, about a year ago, in the depth of a financial crisis BA sold Go for a measly £100m. At the time the wags said that BA would have been better off hanging on to Go and selling the rest of the business! Goodness only knows what they must be thinking now. It may well turn out that Go, the BA creation designed to put EasyJet out of business will become the EasyJet subsidiary that will put BA out of business.

But that is not why I am writing. The headline on the front page of yesterday's Evening Standard was something like "Budget airline merger sparks fears of fare increases" So is it true?

I think it is. Should we do anything about it? Certainly not.

What we are seeing is a natural business process. A market is created, it is flooded with new entrants, cut-throat competition takes place and a dominant player emerges. We have all seen it in our lifetimes with the internet and personal computers. Much the same happened in the railway business 150 years ago. In the 1840s there were hundreds of independent railways, by the 1900s there were 5 big railways, 6 or so medium-sized railways and a few tens of micro-railways.

"Ah, but" I hear our opponents say "this may be a natural business process but at the end of the day you still have a monopoly and they can charge what they like. Therefore we need state regulation to protect the customer."

It rather depends on what you mean by monopoly. Sure, EasyGo may have a monopoly of budget airline travel from the UK but they will certainly not have a monopoly of airline travel; far less a monopoly on routes out of the UK. And ultimately, they are up against the greatest competition: the option not to travel at all.

EasyGo's room for manoeuvre will be limited but it will still exist and left to its own devices it will still (probably, all things being equal) put the prices up. And I still think that is a good thing? Emphatically, yes.

Out there right now is an entrepreneur with a truly great idea. The next Stelios. His dream is that he will in the end, after all the competition become the monopoly and make mega-bucks. But what if that's not true? What if, at the end of the day he will be forced into some artificial competition with some arsehole Johnny come lately. Is that going to make him more enthusiastic? Is that going to make it easier to find backers? Of course not. Monopoly regulation may bring down the fares today but it is the future that pays.

In the News Today:

Flair on the rails - short diary item on the late Peter Parker
All systems Go? - why EasyJet is buying Go
Cherie Blair runs transport seminar at No 10 - more about the constitution than transport
Byers team in £1m share deal probe - shady dealings at the Department