call to "Complete privatisation" by adding more competition

[whole diary]

[grahame]

from Centre for Policy Studies originally published in The Telegraph Online

For the first time in a generation the Conservatives are at real risk of losing the great railway debate. A toxic mix of not delivering on privatisation pledges, Whitehall micromanagement and failing to address the Southern franchise failure have combined to convince Jeremy Corbyn that he commands huge public support for rail re-nationalisation. Then there’s outrage at poor value for money, compounded by fare rises which consistently outstrip wages – like those announced yesterday. The Tories need to take the lead again and fast.

This summer marks the 25th anniversary of the policy which led to privatisation and did so much to reverse the railway’s decline and secure long overdue investment in new trains and a safer network. The result has been a rail revolution in the way we travel – passenger journeys on the network have more than doubled since privatisation, from 735 million in 1994 to 1.7 billion in 2016, almost trebling since the 1982 post-war slump.

But while a growing railway is good, there is still so much more to do to improve the passenger experience, get fares down and regain the initiative on the nationalisation debate. John Major’s original privatisation plan pledged to deliver “more competition, greater efficiency and a wider choice of services more closely tailored to what customers want”.

It was right then and is right now. Unfortunately, however, his plan has not been fully implemented. Instead, policymakers have so far delivered only an unsatisfactory halfway house where most passengers don’t enjoy any choice or competition. Fixing that – and transforming the lives of rail users – offers huge political rewards.

Ministers should look at last month’s rail passenger satisfaction survey. All passengers have their own horror stories, and some will no doubt roll their eyes when they read this, but July’s National Rail Passenger Survey shows that many of John Major’s original ambitions are now being delivered – but only on one main line. At London King’s Cross the main train franchise, Virgin Trains East Coast (VTEC), faces stiff competition from two high speed “open access” train operators on intercity services between London, Yorkshire and the North East.

These trains all compete on the East Coast Main Line (ECML^▸ (East Coast Main Line)) and record the highest passenger satisfaction ratings anywhere in the country. Hull Trains comes top with 97 per cent, followed by rival Grand Central on 94 per cent and VTEC with 91 per cent. Grand Central and Hull Trains also came top on value for money, reliability, punctuality and getting a seat. The message is clear: when passengers have real choice and train companies face rivals on the same track, they raise their game. Evidence also shows that competition limits fare increases, so putting an end to the regular bad news on ticket prices that passengers have to endure.

Why are Ministers afraid of encouraging and expanding this proven model across the railways? This is a huge opportunity for Conservatives to deliver for passengers and regions across Britain.

The price of not doing this is very clear elsewhere, where the ECML model is not in operation. At London Paddington, for example, the Great Western franchise enjoys a complete monopoly on services across vast swathes of western England and Wales and suffers one of the lowest satisfaction scores. There is no competition on long distance fares, and only 48 per cent of passengers think tickets are value for money.

[snip]

The success of the ECML means we now have a mature test case where train companies compete on the same track to deliver the choice and growth which privatisation promised. It shows that competition must not just be at the franchise bid stage, because that way the eventual winner gets the keys to a long monopoly. Part of the prolonged southern rail problem is that this now huge franchise was allowed to absorb two other train firms against which it used to compete. Passengers now have no alternative service when the unions strike.

A new rail policy which delivers real choice for passengers would expose Corbyn’s flawed calls for renationalisation and finally deliver on the Conservatives’ rail pledges made a generation ago. It’s still not too late.

[JayMac]

Can the Centre for Policy Studies tell us how they'll introduce competition on the Severn Beach Line, The Looe Branch, Island Line, and various other such lines across the country?

[grahame]

Can the Centre for Policy Studies tell us how they'll introduce competition on the Severn Beach Line, The Looe Branch, Island Line, and various other such lines across the country?

Not answering for them, but I supposed one way would be to let different operators compete to run trains for a period of, say, 7 to 10 years rather compete on a per passenger basis. Have the competition judged by an impartial government body, taking into account the price that was offered along with other promises, with the winner committing to provide at least a certain level of train services.

[stuving]

Can the Centre for Policy Studies tell us how they'll introduce competition on the Severn Beach Line, The Looe Branch, Island Line, and various other such lines across the country?

Well, I note that he studiously avoided saying how much of the network this ought to be applied to. But it is surely true that if you have a market of any kind, it's competition that keeps it honest and serving the customers' interests. That would have to involve management knowing they risk of losing customers, then money, followed by their job.

I mean, if you could say to a GWR^▸ (Great Western Railway) suit "screw up like that again and I'll take my custom elsewhere", and then you (and thousands of others who never got to talk to their management) could do it, would that concentrate their minds, do you think?

But getting the mix of real competition, synthetic markets, beauty contests, and regulation isn't easy. After all the private railways when we had them were largely monopolies, and needed regulating even then. And when you hit a serious capacity limit - one that would need big bucks to shift it - it gets even harder.

[johnneyw]

True completion on the railways will always be difficult insofar as you can't have 2 competing services on the same line/route at the same time. This is especially relevant at periods such a rush hours for commuters when a competing service may be a rather 2nd best option.

[Trowres]

Given the background of the Centre for Policy Studies it is unsurprising that this report appears to have a biased view of rail privatisation. At least it hasn't tried to cloak its partisan nature in some veil of academic neutrality.

Living in an area where the vast majority of trains are still of BR^▸ (British Rail(ways))-era construction, and improvements to services have been largely built upon changes initiated by BR in the 1970s and 1980s, I'm rather sceptical about the links between passenger number growth and privatisation. Was the upsurge in traffic coincidence more than causality at work?

[didcotdean]

Such a surge in growth hasn't been seen in general in other countries. However, there were a number of modernisation projects that happened in the latter days of BR^▸ (British Rail(ways)) that only paid off in passenger terms from the mid 90s onwards after the recession.

I have some sympathy with the view that relatively little of the railway has been truly privatised and if anything the drift has been steady in the opposite direction, ending up with the DfT^» (Department for Transport - about) directly meddling with stock procurement. The public-facing companies with short-term franchises have increasingly become little more than the contracted-out management agent for the DfT, which is far from the intention of the original legislators. If they have any more room for manoeuvre long-term it is well hidden.  They might as well paint everything in 'DfT Grey', but the coats of many colours serve as a false flag.

Whether a really free-market privatised railway could ever work, where there might be say 5 companies awarded separate tenders over the same route (bidding separate amounts to operate trains at specific times) is a different matter. Hard to see how inter-operable tickets could work in such a scheme for one thing.

[Bmblbzzz]

Well it's clearly true in "ideological" terms that there isn't competition on railways from the passenger's point of view. But I'm not sure that introducing full competition, where the passenger has a choice of several operators on each route, would necessarily lead to greater efficiency or to a greater choice of services in terms of times and speeds.

I'd also say that there isn't real competition on buses in most parts of the UK^▸ (United Kingdom). The only area of public transport where the traveller has a choice of multiple operators seems to be flying, and some ferry services.

However, from the small town in Poland where I lived a while back to the nearest city, there was a choice of operators – and we always avoided the yellow buses, because although they were quicker, they were crowded and tended to be badly driven. And slightly more expensive. Easier to get multiple services on one road than one track, of course. And they all still required a subsidy. (And, later, there was a disagreement over which operators were allowed to use which stops; imagine if, say, only GWR^▸ (Great Western Railway)  could use Temple Meads – because it was theirs – and competing operators had to build a new station!)

Can the Centre for Policy Studies tell us how they'll introduce competition on the Severn Beach Line, The Looe Branch, Island Line, and various other such lines across the country?

Not answering for them, but I supposed one way would be to let different operators compete to run trains for a period of, say, 7 to 10 years rather compete on a per passenger basis. Have the competition judged by an impartial government body, taking into account the price that was offered along with other promises, with the winner committing to provide at least a certain level of train services.

This would not actually increase choice or competition from a passenger PoV though.

But it could be the true competition in transport is not so much between operators as between modes.

[trainer]

I'm not sure that introducing full competition, where the passenger has a choice of several operators on each route, would necessarily lead to greater efficiency or to a greater choice of services in terms of times and speeds...

...imagine if, say, only GWR^▸ (Great Western Railway)  could use Temple Meads – because it was theirs – and competing operators had to build a new station!

There was a time when we had unfettered 'free market' competition on the railways.  Competing companies built their own lines and stations so you had choice of whose train you would use as long as you lived in a town with more than one station, but that was fixed to a longer or shorter route depending on choice.  The flaws in the system included many companies going bankrupt, some even before they built their lines. It also meant a rush to the cheapest and most dangerous infrastructure the unregulated companies could get away with and eventually, after government 'interference', led to four big private enterprise conglomerates running the whole lot.

There is a mood amongst some that there was a glorious past of private enterprise delivering a wonderful railway where workers were treated like royalty and the friction of competition cascaded sparks of bounty on all who used the trains.

Go to the wonderful Steam museum to see through to something nearer the truth (although even that representation can be rose-tinted).

I am not an advocate of nationalisation as we had after the WW2 (necessary in its historical context no doubt) but without clear political direction of private enterprise running a public asset we can have only something like the USA experience in many of their cities with commuter trains in peak hours in the direction of peak flow only.  Franchising is a failed model, but both the extremes of full nationalisation and free(er) enterprise will equally fail to meet the social and economic potential of the rail network.

My main issue is with politicians who have limited imagination within a narrow five year period (election looms then) and seem to share with some entrepreneurs the view that nothing is valuable except in financial terms.

[IndustryInsider]

I'm rather sceptical about the links between passenger number growth and privatisation. Was the upsurge in traffic coincidence more than causality at work?

Looking at the all time graph courtesy of the British Railways wiki page https://en.wikipedia.org/wiki/British_Rail#/media/File:GBR_rail_passengers_by_year_1830-2015.png it is staggering what growth has occurred since the mid 90s which was of course when privatisation started.  What part coincidence plays in that is a difficult and complex question to answer, linked to many different factors.

Also interesting that the industry has now been privatised for almost as long as the 'Big Four' era lasted!

[Electric train]

I always find it amusing that persons in grey suits in an aircon building on lavish expense accounts who probably have a top of the range beamer as a company and never use the trains can come up with this theoretical tosh.

There is a good reason why we have ended up with the half way house ............... it works better than the planned free for all in the 1990's The competition for maintenance of the infrastructure resulted in deaths and there is no hunger for companies to run trains as there is no much in the way of profit without tax payer subsidy