Why it’s time to re-think privatisation of our bus and rail services


10:16 am - September 17th 2011

by Éoin Clarke    


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The basic argument for privatisation is that it opens up competition and drives down prices whilst all the while improving service delivery. Forget for a moment the merits of that argument – my point is that railway competition does not really exist.

If I am to travel from Nottingham to Skegness then I must take a train provided by East Midlands Trains. There exists no choice or competition nor is there any incentive for companies to improve their rolling stock or fares.

Franchises mean that different parts of the rail network are carved up and that there is insufficient price competition.

These companies pass on above inflationary price rises on an annual basis with impunity and indeed their profits are great.

It is not just our railways. John Ruddy has shown how a handful of bus companies are making profits of half a billion a year. And is it any wonder with rising passenger figures (see below).

The Department of Transport’s figures show that bus passengers exceed 5 billion a year in 2010 and this is a sharp and steady increase from 2001.

More people depend on our bus networks at any time in the last decade and yet they are burdened with above inflationary fare increases while companies reap growing profits.

So too the graph above (Dept of Transport) shows a steady increase in the numbers per year using light rail and tram. In 2009-2010 the figure was 200 million. In addition, ONS figures show that 2.7million passengers daily use the national rail network.

But the lack of choice and competition in the rail network means that the customers are subjected to rail fare increases almost at the rail companies will. This forthcoming year will see an 8% increase in fares for example.

An average house spends £3,000 a year on transport. For poor families it is more than 20% of their household income.

The time has come to reexamine whether or not the state should create a national transport company to re-enter the transport market and win back key franchises for the tax payer.

A state run transport company could protect low paid workers from the regular above inflationary pay hikes that currently inflict economic misery on struggling households.

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About the author
Eoin is an occasional contributor. He is a founder of the Labour-Left think-tank and writes regularly at the Green Benches blog.
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Reader comments


I am very glad that I am not the only person to have noticed the inherent flaw in expecting meaningful competition from the railways. I am a great believer in the power of competition but think that advocates if it are often a bit uncritical and don’t stop to think about whether competition even applies or is meaningful under every circumstance.

This said, while I think that competition on the railways cannot exist due to limitations of the market, you compete on destination of the train and time – neither of which are practical, I see no reasons why privitised bus travel can’t work. Just that it currently doesn’t.

The only problem is, your central premise is wrong. The competition element in rail privatisation is absolutely not about train companies competing against each other for passenger custom on the same route – that would be insane.

It’s about train companies competing against each other *when bidding for franchises*. The company which can offer the taxpayer the best deal gets the right to operate the franchise. Obviously, part of “offering the taxpayer the best deal” involves ensuring that the far-wealthier-than-average people who use rail transport chip in their fair share of the costs.

The above inflation fare increases aren’t related to the government policy of reducing the proportion of costs funded by tax subsidy, perchance?

Without means-testing entitlement to cheap fares, it would be difficult to avoid having state funded railways being anything other than a subsidy for the well-off, unless usage patterns change dramatically.

That £3000 doesn’t go away just because it’s being funded by taxation you know. Does anybody know of any research that compares the total cost of running railways, private versus state run? Hard to get a like for like, I expect.

Oh and no, it’s not much of a wonder that higher usage leads to higher profits.

There is already an element of means testing entitling you to lower fares – the young, the old, the disabled and jobseekers are all allowed to get railcards giving them a third off the ticket price.

The above inflation fare increases aren’t related to the government policy of reducing the proportion of costs funded by tax subsidy, perchance?

Luis, as usual, is correct.

Where I live, the fares keep going up at the same time as the buses get more crowded. I appreciate that if you put more passengers on a bus, it uses more diesel, but the extra cost of that isn’t as much as the extra fares paid by the extra passengers as the cost of diesel per passenger is only a small part of the fare they pay, so the bus company is having it all ways – more passengers per bus = more profit and higher fares = more profit.

Meanwhile, they have the gall to paint things like “every five minutes” on the side of buses that can be anything up to twenty minutes apart at peak shopping times.

That’s all sensible and indeed public transport in this country is utterly atrocious. However, there are other reasons to support nationalisation as well.

For a start, increasing public ownership is a form of democratisation. Unaccountable private power becomes accountable public power. It’s not necessarily appropriate for all parts of the economy, but for something so crucial, that affects the economy and people’s lives to such a degree, it’s a step forward.

Secondly, public ownership of key services like this can help to cement a sense of common cause in society. There needs to be a balance between collectivism and individualism and lately the balance has shifted too far towards the latter.

That said, we need to consider seriously how best to implement nationalisation. Services need to be responsive and accountable and the Morrisonian model may not necessarily be the best way.

Rising bus journeys is a consequence of higher oil prices. We want people to leave their cars at home or at park and ride and use public transport, right. Therefore, higher profits for bus companies as more people use their service is a pretty unremarkable outcome.

Why on earth should transport companies price rises correspond to the retail or consumer price indexes ? The price indexes are weighted for all goods and services. The operating input costs of a bus company will be dominated by fuel. Therefore, the bus company will have a personal inflation dominated by fuel costs. If their fares rise it is because fuel has risen. However, we already knew that because we can deduce that from your first chart showing the rise in bus journeys. Why then will their profits rise with rising fuel prices? Because many of the previous bus journeys would have been with half empty buses. Adding new passengers does not significantly increase their costs. What it does is make unprofitable and marginal routes profitable, and profitable routes even more profitable. That is good, right. Less chance then of a company withdrawing a route that does not even cover its cost.

What we want is for people to be paying for the transport service that they use. Considering that someone has to pay, we do not want to subsidise all transport as that would mean modest income taxpayers in Cornwall and elsewhere subsidising the commute to the City of suburban bankers. Let them pay the full cost of their own journey is the equitable solution.

Of course, we already have a state transport network, it is called the roads. A pretty sorry state that they are in too. Any idea why they are so congested?

10. DisgustedOfTunbridgeWells

Any idea why they are so congested?

Negative externalities arising from market failure.

@2

“the far-wealthier-than-average people”

*headdesk*

If rail prices were reduced more people on lower incomes (like, er, me) could afford tp use them. Also it’s not just about rail it’s about buses which are disproportionately used by those on lower/no incomes and fares are rising all the time. Where I live it costs £3.80 for a 6 mile bus ride for god’s sake – not much to someone earning a bit but when you’re on the dole or NMW or whatever it’s a hefty bit of the wage packet to fork that out everyday.

12. So Much For Subtlety

The Department of Transport’s figures show that bus passengers exceed 5 billion a year in 2010 and this is a sharp and steady increase from 2001.

More people depend on our bus networks at any time in the last decade and yet they are burdened with above inflationary fare increases while companies reap growing profits.

Where is the evidence that bus travellers are being hit with above-inflation price increases? The website you liked to point out that the top three bus companies made a profit of £350 million. For over 5 billion bus passengers, that does not seem excessive to me.

All the time while it being possible to show the massive savings that the bus companies have given us – especially on long distance bus travel. You can go the length of the UK now for £24. Which was utterly unheard of when I were a lad and 24 quid was real money.

13. So Much For Subtlety

The Department of Transport’s figures show that bus passengers exceed 5 billion a year in 2010 and this is a sharp and steady increase from 2001.

Which, by the way, proves that prices are not too high. If demand is still rising, then tickets are too cheap.

@13

What is “too cheap”? Are you arguing that poor people should be priced off the buses ? If so you’re in luck, it’s getting that way.

Could our railways not be nationalised by the French, German or Japanese state…rather than our own?

“Which, by the way, proves that prices are not too high. If demand is still rising, then tickets are too cheap.”

No…that’s not true, especially not where you have high fixed costs as both rail and bus services do. The buses and trains run even when empty so any increase in usage is beneficial because the increased cost of carrying an extra person is negligible.

17. So Much For Subtlety

8. Chris

That’s all sensible and indeed public transport in this country is utterly atrocious. However, there are other reasons to support nationalisation as well.

As well? Other reasons? The more state involvement in public transport, the worse it is as a general rule.

For a start, increasing public ownership is a form of democratisation. Unaccountable private power becomes accountable public power. It’s not necessarily appropriate for all parts of the economy, but for something so crucial, that affects the economy and people’s lives to such a degree, it’s a step forward.

I am sorry but no one in their right mind believes this teenage Trot nonsense. Denying people choice means denying accountability. Vesting power in a far off indifferent bureaucracy is not democratic. The market gives direct accountability to the people who use the service. This is why, apparently to your surprise, the Soviet Union did not work.

Secondly, public ownership of key services like this can help to cement a sense of common cause in society.

In the sense that everyone bitching about poor service creates a Blitz-type spirit.

There needs to be a balance between collectivism and individualism and lately the balance has shifted too far towards the latter.

Yeah, yeah, yeah. Slavery is freedom. We know.

18. So Much For Subtlety

11. Mr S. Pill

If rail prices were reduced more people on lower incomes (like, er, me) could afford tp use them.

And alternatively, if you introduced very complex ticket pricing schemes, you would be able to sort out some of the very poor from some of the rich or at least the people who need to plan and search for the best deal from those who don’t.

Where I live it costs £3.80 for a 6 mile bus ride for god’s sake – not much to someone earning a bit but when you’re on the dole or NMW or whatever it’s a hefty bit of the wage packet to fork that out everyday.

First of all, people on the dole don’t have a wage packet. They have part of someone else’s pay packet. But perhaps this is the government’s “Nudge” strategy? The poor and especially unemployed have terrible health outcomes. Partly because they don’t exercise. Perhaps the government wants them to walk or ride their bike those six miles.

14. Mr S. Pill

What is “too cheap”? Are you arguing that poor people should be priced off the buses ? If so you’re in luck, it’s getting that way.

No. I am arguing they are not being priced off. The fares go up, but they keep paying. Passenger numbers keep rising. The good news is that whatever bus tickets cost, the value to customers is higher still. Because they still pay.

15. Left Outside

Could our railways not be nationalised by the French, German or Japanese state…rather than our own?

What did Sir Humphrey say about the people who read the Guardian and want our country to be run by another country?

16. Left Outside

No…that’s not true, especially not where you have high fixed costs as both rail and bus services do. The buses and trains run even when empty so any increase in usage is beneficial because the increased cost of carrying an extra person is negligible.

Ummm … yes it is true. Because you have to look at the value to the customer, not to the bus company alone. It may be that they would get more passengers if fares were lower, but as we all know, trains and buses are crowded. They are not at risk of running empty trains. The point remains – no matter what it costs, the value to the paying punter is higher still because they pay the fares.

19. Charles Wheeler

It is interesting though, how the neoliberal vision of the market can withstand almost any clash with reality. We sit amid the ruins of one of the greatest market failures in history and people still keep banging on about how markets should work in theory.

Rail privatisation has been a disaster, creating heavily subsidised but largely unaccountable monopolies with a staggering array of pricing mechanisms which change from hour to hour, if not minute to minute. The system is sitting on a crumbling infrastructure which exemplifies the inherent problems facing private operators in heavily capitalised industries outlined in Perelman’s ‘Railroading Economics’.

Meanwhile, bus routes are being wiped out across the country because the only possible objective of providing transport must be to make a profit and cross-subsidisation or the recognition of externalities is anathema.

Historically, publicly funded transport has been a major contributor to the expansion of economies around the world, benefiting the private sector beyond the subsidy it has provided.

A good rule of thumb is to look at countries (or states) with well-funded public transport and compare them to those with a more market fundamentalist approach (you have to discount for the fact that many areas that are following a neoliberal approach still rely on the remnants of a heavily public-funded infrastructure which has been sold off cheaply into the private sector).

If it doesn’t matter that the poor or elderly can’t travel, or that high-cost transport in one area pushes problems into other areas, or that the fragmented service isn’t co-ordinated, or that it costs more in the long run as failing providers are bailed out to maintain an essential service, then privatisation is the way to go.

Ditto social care, healthcare, education, pensions.

If rail prices were reduced more people on lower incomes (like, er, me) could afford tp use them.

Which would be rubbish, cos they’re already full.

Also it’s not just about rail it’s about buses which are disproportionately used by those on lower/no incomes and fares are rising all the time. Where I live it costs £3.80 for a 6 mile bus ride for god’s sake – not much to someone earning a bit but when you’re on the dole or NMW or whatever it’s a hefty bit of the wage packet to fork that out everyday.

This I agree with. All buses should be run on a London model, with a regional authority specifying service levels and putting the service out to tender, and with fares set low enough that they are viable for low-wage earners as in London.

As well? Other reasons? The more state involvement in public transport, the worse it is as a general rule.

That’s a rule hewn from Obvious And Total Bullshit. The very worst public transport in the UK is provided by the wholly private-sector, unregulated bus companies outside London. The best public transport is provided by the public-specced, privately-operated TfL concessionaires – including London Overground, the bus companies and the DLR.

21. the a&e charge nurse

[19] strongly agree – healthcare will be next, with an array of complex and inter-dependent services being given over to “any willing provider”.

Still, the idea that competition drives up standards is written in stone for the marketeers irrespective of the actual evidence (as you have already said).

“Rail privatisation has been a disaster”

Railtrack privatisation was a disaster.

“creating heavily subsidised but largely unaccountable monopolies”

Bullshit. For one, most TOCs pay money to the government; for two, all TOCs operate under a direct contract to the government, to specifications laid down by the government, with regular review by the government to ensure these are met.

“with a staggering array of pricing mechanisms which change from hour to hour, if not minute to minute.”

No they don’t (well, unless you count demand management on advance fares as “changing minute to minute” whenever cheap tickets sell out).

“The system is sitting on a crumbling infrastructure which exemplifies the inherent problems facing private operators in heavily capitalised industries outlined in Perelman’s ‘Railroading Economics'”

The infrastructure isn’t crumbling at all, either on the (public sector) tracks side, or the (private sector) trains side. BR’s infrastructure was crumbling at privatisation; Railtrack failed for the reasons Perelman cites; but the current incentives are the opposite. That’s why Network Rail has spent billions since its formation on maintaining and upgrading the tracks to counter 50 years of neglect (of which, to be fair, the five years in Railtrack’s hands were the worst). Meanwhile, we have one of the newest and most reliable overall rail fleets in Europe.

“the far-wealthier-than-average people who use rail transport”

Huh? Is this right? I’d expect use of rail transport to be skewed towards people who can’t afford to own/insure/fuel/maintain/park a car. I can see how rail users in the commuter belt around London might be generally wealthier than average, but surely the same doesn’t apply everywhere? (I’m pretty confident that in my area, West Yorkshire, rail is simply the cheapest way to get around.)

24. former railway employee

I was made redundant when the railways were given away. In the begining before Thatcher and her ilk wanted to pay off her ‘friends’ the banksters the various parts of the nationalised industries did actually contribute to the health wealth and wellbeing of this country. Money granted from taxation to these bodies was supposed to be for investment in that tax year. This meant little or no time for future planning which could take three or more years to plan and execute. At the end of the year the unspent portion was reclaimed or hastily spent on short term things. The media was only too delighted to point to ‘nationalised’ waste but did not explain that this was due to government incompetance and deliberate under funding on behalf of one government after another.
Check out the facts for yourself. There are some very informative books on this subject out there probably no longer in print.
The abuse of nationisation by successive brands of government was a disgrace and continues to be so.

“Huh? Is this right?”

Yes, vastly. Rail is used primarily by people who commute to inner cities; people who have the kind of jobs where they commute to inner cities tend to get paid much more than people who have other kinds of jobs. While it’s true that Great Aunt Edith on her widow’s pension gets super-cheap train fares to visit the town at lunchtime, she isn’t representative of the vast majority of rail traffic.

(1.3 billion journeys a year are made on the entire national rail network, including commuter services; 1.1 billion journeys a year are made on London Underground alone…)

@3 Luis enrique

That £3000 doesn’t go away just because it’s being funded by taxation you know. Does anybody know of any research that compares the total cost of running railways, private versus state run? Hard to get a like for like, I expect.

Well we can certainly compare our railways when they were state run to how they have been since privatisation. And the comparison is less than flattering to say the least.

Before privatisation, British Rail was one of the most cost efficient rail operators in Europe, requiring one of the lowest levels of public subsidy per head. Ironically BR was forced to become very efficient because of Margaret Thatcher’s funding squeeze.

http://turniprail.blogspot.com/2011/03/no-steven-norris-in-1990s-british-rail.html

After privatisation, however, the cost of running the railways has spiralled out of control, and they now cost four to five times more to run than they did under BR.

http://www.christianwolmar.co.uk/2010/11/rail-657-an-open-letter-to-sir-roy-mcnulty/

This is partly to do with the insane structure (used in no other country) where the infrastructure is split from the train operators, meaning effective management is impossible. And partly because of the private companies taking a cut of profit out of public subsidies and fares.

@18

You’re misremembering the Yes, Prime Minister quote. Here it is:

Hacker: Don’t tell me about the press. I know exactly who reads the papers:

* The Daily Mirror is read by people who think they run the country;
* The Guardian is read by people who think they ought to run the country;
* The Times is read by the people who actually do run the country;
* The Daily Mail is read by the wives of the people who run the country;
* The Financial Times is read by people who own the country;
* The Morning Star is read by people who think the country ought to be run by another country;
* And The Daily Telegraph is read by people who think it is.

Sir Humphrey: Prime Minister, what about the people who read The Sun?

Bernard: Sun readers don’t care who runs the country, as long as she’s got big tits.

And, incidentaly, I’m very interested in hearing why you think public transport in London is worse than public transport in the rest of the country.

28. Leon Wolfson

How good the local buses are varies wildly by area.

In, for example, Southend, the prices have remained static for two decades, many routes have two operators and tickets are fully compatible between operators. The major routes run to 10pm, and even minor routes often have several late buses. The only fly is that single tickets are uneconomical compared to returns.

In, for example, Coventry, ticket prices rose by 50% in the last five years, there is only one operator on most routes, they have no-change tickets and you can’t buy returns, most services and most services end at 6pm and even major routes only have a few late buses, and even then to 8-9pm….

It’s all down the the terms granted, and there needs to be competition and price controls, as well as funding for late and marginal routes. Perhaps a state-owned operator could add to the competition, but it’s entry would have to be considered on a regional level, and often adjusting the bus company’s terms would be more effective.

Trains, trains now…that’s a different situation. The companies have drastically higher costs and prices than the nationalised network, wildly inconsistent in how they work and provide far poorer services than the old nationalised railways. The government should take them back when the operating contracts expire, the market’s failed.

Also, there DOES need to be more competition in the long-haul bus network, with prices up lately, and some major towns are not well-served with long-haul buses. Southend has none, for example. (Because the very expensive c2c rail services are ALSO owned by National Express, and they want people to travel on THAT…). So, again, selective routes from a public operator would be a good thing.

29. Leon Wolfson

@18 – “The good news is that whatever bus tickets cost, the value to customers is higher still.”

No, they can be extremely POOR value, and people are forced to pay them as the only viable means to travel.

@20 – London model huh? Above-inflation prices rises every year with no positive change to the services provided? A single bus rise in London in 2008 cost 90p. From next year, that will be £1.40. There’s your London model *right there*.

30. DisgustedOfTunbridgeWells

@17

The more state involvement in public transport, the worse it is as a general rule.

What general rule? There must be a name for such an established concept, presumably named after the economist(s) who came up with it.

Ever been on the Moscow metro out of interest? Stations literally like palaces, a train every 90 seconds, fantastic.

@19

The system is sitting on a crumbling infrastructure which exemplifies the inherent problems facing private operators in heavily capitalised industries outlined in Perelman’s ‘Railroading Economics’.

I’ve read that, if memory serves he quotes Charles Adams a lot, there’s no comparison to be had here, the US at that time had a genuine market system which drove prices down and ultimately a lot of companies into bankruptcy, it was basically an argument for a price floor.

We’ve got, well, what would you even call it, a massively subsidised (the last subsidy was twice what it cost to run BR in it’s final year) regional monopoly system in which fares don’t seem to fall (I think we’ve got the most expensive fares in Europe?) but instead consistently rise due to a lack of competition, or greed, depending on your pov.

I do, do, so love this argument of Eoin’s. It is the sort of thing I would expect from a PhD in Irish feminist history when facing economics.

Essentially, his argument is that privatisation has meant that many more people are using buses therefore we must nationalise the buses.

Umm, yes Eoin. D’ye think you could return to that vital paper of yours discussing the impact of the tampon on feminist street demonstrations? You know, something where you can actually add value?

31. Tim WorstallI

do, do, so love this argument of Eoin’s. It is the sort of thing I would expect from a PhD in Irish feminist history when facing economics.

I think you’ll find, that since the mid-1980s when the buses were privatised. Bus patronage has fallen dramatically outside of London. Whereas within Greater London (which accounts for about half of UK bus usage) bus patronage has continued to grow. So those figures are misleading. All of the growth which has occured has been within London.

http://www.pteg.net/NR/rdonlyres/1EA9FE83-F53D-4455-80AA-580499E3563D/0/BusPolicyBriefingMarch09.pdf

The difference being, that within London, the buses were never deregulated, whereas outside of London they were. In London, Transport for London controls the fares and timetables, and the buses are run under contract by private companies.

Outside of London there is a chaotic free-for-all where local authorities only have powers to subsidise certain bus routes but not much else. The privatised bus companies can essentially do whatever they please.

At the begining, there was competition on bus routes. However, the larger companies used their size to lower fares and drive the competition out of business, with the result that in most of the country, one company has a monopoly in their area and can run as crappy and expensive a service as they like. And since local authorities outside London have been stripped of their powers over public transport, no-one can do anything about it.

http://www.bussoff.org/index.php?option=com_content&view=article&id=9:martin-mayer-public-transport-the-real-cost-of-privatisation&catid=1:privatisation-&Itemid=7

33. So Much For Subtlety

19. Charles Wheeler

It is interesting though, how the neoliberal vision of the market can withstand almost any clash with reality. We sit amid the ruins of one of the greatest market failures in history and people still keep banging on about how markets should work in theory.

Markets do work. In practice and in theory. We are doing no such thing.

Meanwhile, bus routes are being wiped out across the country because the only possible objective of providing transport must be to make a profit and cross-subsidisation or the recognition of externalities is anathema.

Why should unprofitable bus lines be maintained? Or more accurately, why should I pay for it? If only Upper Sheepshagger benefits from a bus line, why shouldn’t they pay for it? Explain to me what possible principle we could have for organising transportation except demand – that is, we provide services for those that want them, we don’t for those that don’t?

Historically, publicly funded transport has been a major contributor to the expansion of economies around the world, benefiting the private sector beyond the subsidy it has provided.

This is an interesting use of the word “historically”. France’s rails have been a massive drag on the state ever since they were taken over. Even now, although their accounts are not exactly transparent, it is clear they are sitting on billions of euros in debt. Russia’s never helped the economy much. The best railway system in the world has been America’s, which got subsidies, but was left in private hands until the disaster of Amtrack.

If it doesn’t matter that the poor or elderly can’t travel, or that high-cost transport in one area pushes problems into other areas, or that the fragmented service isn’t co-ordinated, or that it costs more in the long run as failing providers are bailed out to maintain an essential service, then privatisation is the way to go.

Or as I would put it, if you are tired of fighting reality, then reality is the only option. If we want the poor and elderly to travel on public transport then the sensible thing is to leave the transport to the market and provide the elderly with cheap tickets. The solution to fragmentation is consolidation into larger business units.

Ditto social care, healthcare, education, pensions.

We can but hope. The only education that works in this country is private education. The rest of the population is parasitic on them. Public pensions are a disaster of Greek proportions.

21. the a&e charge nurse

[19] strongly agree – healthcare will be next, with an array of complex and inter-dependent services being given over to “any willing provider”.

Like France you mean?

Still, the idea that competition drives up standards is written in stone for the marketeers irrespective of the actual evidence (as you have already said).

No matter how you slice it, no matter what metric you take, those health care systems with an array of providers is better than the British system. America leads the world in developing new treatments and drugs, providing a responsive system unequaled anywhere in the world. France is widely agreed to have the best system in the world. Singapore provides world class health care at less than half the cost of the NHS. Why shouldn’t we copy the French?

@33

Ah good anonther post from SMFS wildly divorced from both facts and reality. On yet another subject they know nothing about.

Why it’s time to re-think privatisation of our bus and rail services

I thought that our rail services had been renationalised. I keep seeing government ministers telling me what they have decided will be done with the railways.

john b: “It’s about train companies competing against each other *when bidding for franchises*.”

Which is totally meaningless. It’s very difficult and expensive for the government to pick a fight with these companies. Like most companies bidding for government contracts of any sort, they can promise the moon with near-total impunity in their contract bid. The idea that the railways are a functioning competitive market (especially the bizarre ROSCOs, who appear to have no useful function other than to enrich their directors and shareholders) is absurd.

so much for subtlety: “The market gives direct accountability to the people who use the service”

Newsflash: there is ONE bus operator in nearly all local markets. There is a very good reason for this, and it’s not because their service is uniquely loved by passengers, or because evil big government gave them a monopoly.

On the face of it, it ought to be quite possible for someone to undercut Stagecoach in my home town. Fares on the buses are so high that if there’s more than two of you it’s cheaper to get a taxi. Logically, it ought to be more efficient than a taxi, especially given we’ve got 10,000 people on that route with no other public transport links.

But no-one could actually ever provide such a service, even if it were viable in theory, because Stagecoach would use 0.001% of their vast reserves of capital (or some similar percentage) to crush them utterly by running buses one minute beforehand with fares of 50p. Once the upstart had been bankrupted, fares would rapidly return to normal, and we’d again be back in the taxis with buses running around containing only pensioners and schoolkids (whose fares are of course paid by the government, wasting vast sums of taxpayer money).

However, everyone knows this, which is why no-one would ever even try to challenge Stagecoach. Meanwhile in libertarian world (or perhaps Stagecoach shareholder world) the bus market is competitive, open and responsive to passenger requirements.

@36. jungle

Unfortunately, true believers don’t let little things like facts trouble them!

38. So Much For Subtlety

33. Graham

@33

Funny, it is 32 by my count.

Ah good anonther post from SMFS wildly divorced from both facts and reality. On yet another subject they know nothing about.

And yet another utter failure to even attempt to refute a thing I said by Graham.

35. jungle

Newsflash: there is ONE bus operator in nearly all local markets. There is a very good reason for this, and it’s not because their service is uniquely loved by passengers, or because evil big government gave them a monopoly.

Actually it is directly down to the fact that the government has given them a quasi-monopoly.

On the face of it, it ought to be quite possible for someone to undercut Stagecoach in my home town. Fares on the buses are so high that if there’s more than two of you it’s cheaper to get a taxi.

And notice precisely what they have done – the customers have the ability to enforce an upper limit on prices. Because if it was any higher they would take a taxi. Notice that the government continues to restrict taxi numbers and outright ban some things like mini-vans taking small numbers of people where they actually want to go. The solution here is less regulation.

But no-one could actually ever provide such a service, even if it were viable in theory, because Stagecoach would use 0.001% of their vast reserves of capital (or some similar percentage) to crush them utterly by running buses one minute beforehand with fares of 50p. Once the upstart had been bankrupted, fares would rapidly return to normal, and we’d again be back in the taxis with buses running around containing only pensioners and schoolkids (whose fares are of course paid by the government, wasting vast sums of taxpayer money).

And yet this is not the way such things usually work. Everyone has tried this when they have come close to a monopoly. Standard Oil for instance. They have all failed without government backing.

39. Leon Wolfson

@31 – Ah, you’ve been dropping something good (or you’re an idiot). I see.

No, can’t be anything to do with pricing the poor off transport and their jobs, and cutting into their ability to pay for food and utilities well before that. Which I’m sure you’re just fine with.

@35 – I see, it’s a waste to provide transport kids and older people. They can just stay at home, right.

@37 – No, stopping the regulation of Taxi’s is a terrible idea, it’s a good example of a profession where stringent safety licensing is entirely appropriate.

40. the a&e charge nurse

[33] “Like France you mean” – no, more like managed care in the USA – do try and keep up.

Oh, by the way – let’s not forget the NHS is still a powerhouse despite decades of under investment – look at this.
http://www.kff.org/insurance/snapshot/OECD042111.cfm

I’m sure there a moral there somewhere for the market zealots?

“I’m sure there a moral there somewhere for the market zealots?”

Oh, absolutely there is.

When we talk about the NHS lefties tell us how lovely and cheap it is, we don’t have to spend much money on it. Then when anyone says, well, let’s spend a little less money on this or that we’re shouted at as “cutters”, instead of being applauded for trying to make other things lovely and cheap which we don’t have to spend too much money on.

Come on, it’s one of the other: either the NHS is to be applauded for not costing too much money in which case we should be trying to do the same with all public services, or we should be measuring how lovely things are by how much we spend on them in which case the NHS is just terrible, isn’t it?

42. So Much For Subtlety

40. the a&e charge nurse

no, more like managed care in the USA – do try and keep up.

We have that in the sense of one big massive HBO. But of course no one is even hinting at moving to the American model. Nor did you describe the American model. You described the French model. Would you have a problem with copying the French system?

43. the a&e charge nurse

[42] “Would you have a problem with copying the French system” – I wouldn’t phrase it that way – whether we are talking about transport, or the NHS I would be more interested in the evidence that changes, especially wholesale structural changes will deliver better results than what is being replaced.

To my mind most restructuring is driven by ideology rather than a critical examination of what the evidence actually tells us.

Couple of thoughts:

1. It’s only in the South East that the majority of journeys by rail are made
by rich commuters. Outside of there, I haven’t seen any advice that most journeys are made by long distance commuters.

2. It’s interesting that people saying that rail passengers should have higher fares as many of them are rich are the same people who say that high earners shouldn’t be taxed too much or they’ll leave the UK. What happens if a bunch of high earners decided they’d rather work in a country where the commute was cheaper?

Leon Wolfson: “I see, it’s a waste to provide transport kids and older people. They can just stay at home, right.”

That’s not what I meant. It’s obviously very important to transport schoolchildren and pensioners. My point is that it’s a vast waste of taxpayers money for the government to pay the Stagecoach monopoly to do that task, using buses almost completely empty of other customers due to the absurdly high fares.

So Much For Subtlety: “Actually it is directly down to the fact that the government has given them a quasi-monopoly.”

Has it? How? I see no laws or regulations mandating local monopolies in bus services, at least outside London… these local monopolies have been created by the market. They are privately enforced, by the ability of the incumbent to crush anyone (so long as they’re not backed with a multinational scale warchest of capital) with temporary below cost pricing.

SMFS “And notice precisely what they have done – the customers have the ability to enforce an upper limit on prices. ”

Ermmm… but by that logic if the bus somehow had an absolute monopoly over all motorised transport, fares were £100 each way, then customers would be “enforcing an upper limit on prices” by “choosing” to walk the eight miles to Tesco. The “ability to enforce an upper limit” becomes meaningless in practical terms in that situation.

Oh yes, and if someone started running cut-price minivans with no seatbelts between my hometown and Leamington, paying immigrant drivers £1/hr, unless they had a vast warchest of capital, Stagecoach would crush them just the same. After doing so, they would start running minivans themselves, paying immigrant drivers £1/hr – but still charging the same monopoly level fares as they did before with the buses. The fares are totally disconnected from the cost of running the service. Slashing the cost of running the service by making it less safe and paying drivers sub-minimum wage would have no impact whatsoever.

SMFS: “And yet this is not the way such things usually work. ”

It’s exactly how such things usually work. In market after market, the trend is toward monopolies; the only reason we have a significant number of supermarket operators in the UK, for instance, is because of government intervention to prevent takeovers. If you ignore the wider consequences for other sectors of the economy, a monopoly is better for shareholders than a competitive market.

It’s interesting that people saying that rail passengers should have higher fares as many of them are rich are the same people who say that high earners shouldn’t be taxed too much or they’ll leave the UK. What happens if a bunch of high earners decided they’d rather work in a country where the commute was cheaper?

It’s interesting that [many of the same] people saying you should do as you should be done by are people who believe that the Son of God was born of a virgin. Or, that’s a fatuous argument.

I believe that rail passengers (or, more specifically, the peak-time inner-city commuters who account for the vast majority of rail traffic) – while having new infrastructure projects subsidised because they allow major cities to function – should pay a fair chunk of the costs of providing transport to make their job/work situation viable.

I also believe that the 50% tax rate will have sod-all impact on anything, because not many people will think “hmm, I’ll only get 40 quid an hour on the money I earn above GBP150k, so I’m going to go and live in the Caymans”. My take appears, judging by the latest net migration figures, to have been accurate.

Also, Jungle is correct on buses outside London. In Manchester and Newcastle, after new operators tried undercutting Stagecoach on its former-council-now-private-monopoly routes (by running clapped out bangers driven by people paid minimum wage who couldn’t really drive), it brought in Magic Bus, which ran decent buses driven by Stagecoach drivers at the same fares as the new rivals to drive its rivals out of business.

Anyone who defends the way Mrs T sold the buses outside London, or the way in which that system works, is deluded. Anyone who thinks that the purpose of the rail system is to allow people to commute from $niceplace to $centralplace for a tenner a week is, also, deluded.

In practice, government-specced private delivery works, with subsidies to keep local communities afloat and for new infrastructure projects, and with low off-peak fares to reflect the fact that once you’ve got a railway, it’s cheap to run it in the off-peak.

@45. jungle

In my experience there is little point trying to argue with SMFS because they are impervious to any evidence which contradict their wordview.

@46. john b

believe that rail passengers (or, more specifically, the peak-time inner-city commuters who account for the vast majority of rail traffic) – while having new infrastructure projects subsidised because they allow major cities to function – should pay a fair chunk of the costs of providing transport to make their job/work situation viable.

What about the people who benefit indirectly from new transport infrastructure projects. Like the people who’s house prices rise because they are near a new station. Or the businesses who benefit from better punctuallity of their workforce. I’ve heard some economists argue that there should be a local tax surcharge to help pay for infrastructure projects, from those who benefit. Or for that matter everyone should contribute, because they benefit from the increased economic activity and thus tax revenue that ensues.

@42

But of course no one is even hinting at moving to the American model.

Au contraire, mon ami. Daniel Hannan MEP, darling of the Tory Right, went to the US and gave fulsome praise to the system in the US, implicitly stating that those of his ilk would like to see the UK follow suit.

50. Leon Wolfson

@41 – And you launch yet another attack on the NHS, in the middle of a transport thread. One-track mind, as usual.

Efficiency is nice, but you use it to fund additional services. And the priority was, rightly, increasing funding to reasonable levels from the Tory very low ones, to enable a proper range of services to be offered. This is never as efficient as a long-running service.

Of course, you’ve thrown all the efficiencies away with new layers of bureaucracy and another massive, top-down reorganisation. And much of the NHS as it stands will be closing down, including most hospitals anyway, so…

@22
“most TOCs pay money to the government”

Care to name which TOCs are a net contributor to the government after taking into account subsidies to network rail covering track access charges?

Every franchise makes money – for its owners – while most receive subsidy from the Government in one form or another. If takings fall, or costs rise and the franchisee decides to throw in the towel, they can – for them its a win-win scenario. First Great western has just said that they wont be taking up an option to extend its franchise – the 3 years when it was supposed to be making repayments to the Government, and the basis for it winning the franchise back in 2006.

52. DisgustedOfTunbridgeWells

When we talk about the NHS lefties tell us how lovely and cheap it is, we don’t have to spend much money on it. Then when anyone says, well, let’s spend a little less money on this or that we’re shouted at as “cutters”, instead of being applauded for trying to make other things lovely and cheap which we don’t have to spend too much money on.

This post was brought to you by the ASI school of self awareness.

@50 ‘. And much of the NHS as it stands will be closing down, including most hospitals anyway, so…’

Perhaps you’d provide us with one of those peer reviewed papers you’re so keen on to support this claim?

54. Leon Wolfson

@53 – Most hospitals are marginally viable as it is. Take away some of the better-paying services for the private sector, and…whoops!

The NHS might remain “free at the point of contact”, but that point can be a few hundred miles away, and that statement still remain technically true.

This isn’t a *scientific* claim, for which I would indeed provide a link.

@54

Right – so you made it up then?

Let’s try ‘most hospitals are marginally viable’ got any evidence, peer reviewed papers etc? And – how does viability work under the NHS?

56. Leon Wolfson

@55 – Thank you for demonstrating that logic is beyond you, and you’re simply crusading against the NHS. No more need be said.

57. So Much For Subtlety

43. the a&e charge nurse

I wouldn’t phrase it that way

But you did phrase it that way. Precisely that way. You said you objected to a move towards a mix of providers. The French model.

whether we are talking about transport, or the NHS I would be more interested in the evidence that changes, especially wholesale structural changes will deliver better results than what is being replaced.

There is no one who doubts the French have a better health system. Two minutes googling will produce more reports from your side of the political fence than you could read in an afternoon. You could even go there.

To my mind most restructuring is driven by ideology rather than a critical examination of what the evidence actually tells us.

And the evidence tells us that if we ignore political measures and just focus on health outcomes, pretty much everyone does better than us. Especially those with a mixed range of service providers. Hell, even if we include most political measures, the French do better than us.

So what is wrong with that model?

58. So Much For Subtlety

45. jungle

Has it? How? I see no laws or regulations mandating local monopolies in bus services, at least outside London… these local monopolies have been created by the market. They are privately enforced, by the ability of the incumbent to crush anyone (so long as they’re not backed with a multinational scale warchest of capital) with temporary below cost pricing.

Because governments prohibit most forms of competition. Suppose I had a mini-van and I wanted to take eight people from my local Post Office into town. The government prohibits me from doing so. Incumbents cannot crush anyone in the long run. Even Standard Oil tried this and failed. They can only be enforced with government co-operation.

Ermmm… but by that logic if the bus somehow had an absolute monopoly over all motorised transport, fares were £100 each way, then customers would be “enforcing an upper limit on prices” by “choosing” to walk the eight miles to Tesco. The “ability to enforce an upper limit” becomes meaningless in practical terms in that situation.

Well yes, that is what that means. And it is not meaningless as the bus company would have no passengers at £100 and would go bust. It is a simple example of how passengers do actually have a direct ability to enforce some accountability on transport companies.

Oh yes, and if someone started running cut-price minivans with no seatbelts between my hometown and Leamington, paying immigrant drivers £1/hr, unless they had a vast warchest of capital, Stagecoach would crush them just the same.

It is illegal to not provide seat belts. Stagecoach could try. But it could not crush every budding entrepreneur who wanted to start such a service. They may be able to do it to one person in one place, but they cannot do it everywhere.

After doing so, they would start running minivans themselves, paying immigrant drivers £1/hr – but still charging the same monopoly level fares as they did before with the buses.

The costs of entry into such a market is so low, how long do you think they could stop other immigrants – who are willing to work much harder and provide a much better service when working for themselves or their uncle – doing it too?

The fares are totally disconnected from the cost of running the service. Slashing the cost of running the service by making it less safe and paying drivers sub-minimum wage would have no impact whatsoever.

Fares are not totally disconnected from the costs of running the service. Wages are a major factor in transport costs. As can be seen by the dire state of any sector which is still Unionised.

It’s exactly how such things usually work. In market after market, the trend is toward monopolies; the only reason we have a significant number of supermarket operators in the UK, for instance, is because of government intervention to prevent takeovers. If you ignore the wider consequences for other sectors of the economy, a monopoly is better for shareholders than a competitive market.

Sorry but this is utter rubbish. The trend is not to monopoly. We have a significant number of supermarkets in the UK because foreign companies have been moving in and starting up. Aldi is a a recent one for instance. I am not sure monopolies are better for shareholders. They may be in the short term. But they are notoriously hard to achieve. It is a question of diminishing returns and rising costs. To buy 75% of the supermarket market is easy. To buy the last 10% is extremely expensive and to buy the last 5% probably impossible. Which is why, barring government intervention, monopolies rarely occur and when they do, they rarely last for long. Monopolies are a feature of government regulation, not markets.

59. So Much For Subtlety

54. Leon Wolfson

Most hospitals are marginally viable as it is. Take away some of the better-paying services for the private sector, and…whoops!

I doubt that is true, but in so far as it is true, it is true that the present NHS-run hospitals, with their bloated bureaucracies and gross inefficiencies, are only marginally viable. They are not run for profit. They are run on bureaucratically imposed criteria. Which means if you don’t spend your budget, they take it away from you next year. If you have money, you must spend it. Which means all hospitals are running close to the edge. It is the only way to make sure they will give you more money next year. So they splurge on salaries, perks and other useless things like Disability officers. In a non-market situation, we have no idea if they are really adding value or making a profit.

The NHS might remain “free at the point of contact”, but that point can be a few hundred miles away, and that statement still remain technically true.

Which is precisely what is happening now. The NHS is run for the convenience of its owners – the bureaucrats and to a lesser extent the doctors and nurses. Which means that they want large hospitals in big towns where the shopping is good. They want more management and “co-ordination”. So they are closing local hospitals and building bigger, newer, ones in larger towns.

The only way to combat this is to return power to the public. Which means giving the patients the power to choose and imposing costs on those that do not attract customers. A market in short.

This isn’t a *scientific* claim, for which I would indeed provide a link.

@58 – “It is illegal to not provide seat belt”

Actually, no, it isn’t, besides on the front seat. However, if they’re fit into the vehicle, they must be worn. Also, insurers often require that they’re fitted if the premium is to be remotely affordable…but that’s not the *law*.

Wait, the government also mandates insurance, you must oppose that too!

“As can be seen by the dire state of any sector which is still Unionised.”

Oh, you mean the sectors with deacent employee morale and benefits? The ones which are generally, doing just fine compared to the generally lousy worker morale, with high stress levels and falling pay? Oh, right, those. No, can’t have those, workers have to suffer.

@59 – Many are marginally viable, yes. They’re still there precisely because it’s not been acceptable to make people travel hundreds of miles to access hospital services.

“Which is precisely what is happening now.”

No, outside your delusions, the people working to close hospitals are the government, with a bill which washes their hands of providing effective provision of health services.

It is not coincidence that very few health professionals support the Government’s bill.

Private companies will cherry-pick the profitable work, leaving what hospitals remain to clean up their messes. And right, you’re advocating placing the costs on the consumers, you don’t have time for the free at the point of contact fig leaf, even.

Your capitalism is the problem, not the solution. And you keep conflating it with the market, which is something else entirely. There’s no room in your world for people, only profits.

61. So Much For Subtlety

60. Leon Wolfson

Oh, you mean the sectors with deacent employee morale and benefits? The ones which are generally, doing just fine compared to the generally lousy worker morale, with high stress levels and falling pay? Oh, right, those. No, can’t have those, workers have to suffer.

Anyone with any experience of the real world knows that morale is worst precisely in those sectors that are most heavily unionised. The civil service for instance. Nor do the sectors that provide the best benefits tend to have Unions although the worst also tend to lack Unions.

Many are marginally viable, yes. They’re still there precisely because it’s not been acceptable to make people travel hundreds of miles to access hospital services.

You continue to claim this, but given the lack of real accounting or competition or markets to determine value, you have no idea. They are simply close to spending their budgets. No more.

No, outside your delusions, the people working to close hospitals are the government, with a bill which washes their hands of providing effective provision of health services.

Of course. Which is what I said. Isn’t it?

Private companies will cherry-pick the profitable work, leaving what hospitals remain to clean up their messes. And right, you’re advocating placing the costs on the consumers, you don’t have time for the free at the point of contact fig leaf, even.

And why isn’t all work profitable? So what if they do? We do not fund the NHS for the benefits of the workers of the NHS. We do so for the public’s benefit. And if they benefit from having an operation done in a better hospital, why shouldn’t they have it?

Your capitalism is the problem, not the solution. And you keep conflating it with the market, which is something else entirely. There’s no room in your world for people, only profits.

I agree markets and capitalism are not the same. What the NHS needs is markets. With or without capitalism. Capitalism is not a problem. Fighting reality is. The market is made up of people. My focus is entirely on them. Apart from a few cliches it seems all you have is empty and irrelevant slogans designed to protect the bureaucracies. Go figure.

62. Leon Wolfson

@61 – You’re simply making things up to suit your Tory, anti-worker agenda.

You’re here to troll and belittle, and to disrupt conversation.

You claimed, outright, that NHS doctors were trying to close hospitals. When it’s ConDem politicians and the private health sector’s bureaucrats.

“And why isn’t all work profitable?”

Because there are social benefits to a lot of work which means it’s worth doing even if it’s not profitable. This is an alien concept to you, I understand – you understand the value of nothing and the price of everything. It’s a cliche, but it’s true.

You are focusing entirely on corporatism, not on the people. You don’t have a problem with the devastation of what is still for a short time, a first-world health system. Your Tory buddies are increasing, not decreasing, the amount of bureaucracy. All so that companies can syphon off NHS money as profits.

That’s your reality.

Care to name which TOCs are a net contributor to the government after taking into account subsidies to network rail covering track access charges?

Irrelevant – those are subsidies paid by the government to Network Rail to provide the tracks. If coach companies were forced to pay the government millions in exchange for the right to operate, the fact that the government pays to build nad maintains the road they run on would not change that fact.

Every franchise makes money – for its owners – while most receive subsidy from the Government in one form or another.

No in both cases. It’s generally accepted in the industry that DB/Arriva is losing money in Wales (and is keeping the contract because it doesn’t want to trigger cross-default issues). And most franchises are unsubsidised apart from the sense in which coaches are subsidised.

If takings fall, or costs rise and the franchisee decides to throw in the towel, they can – for them its a win-win scenario.

Not if they want to remain in the industry, they can’t. National Express highlights this: it lost tens of millions of pounds on East Coast, and eventually put the business into administration because the parent company couldn’t afford to do what DB is doing in Wales. As a result, the DfT decided not to award National Express any further franchises, effectively ending its UK rail business.

First Great western has just said that they wont be taking up an option to extend its franchise – the 3 years when it was supposed to be making repayments to the Government, and the basis for it winning the franchise back in 2006.

“Not exercising a specific, dated option to extend” is distinctly different from “throwing in the towel”.

@63 – Ending? They’ve kept their other franchises, including c2c (with no advance tickets, no less).

And this Government has not ruled out their being allowed to bid…

The best public transport is provided by the public-specced, privately-operated TfL concessionaires

The best public transport in the UK (certainly much better than the tube) is probably the Heathrow Express – entirely privately owned and operated.

There is no one who doubts the French have a better health system.

The French also have a notoriously socialist regional government infrastructure which acts as a counterweight to the notoriously conservative federal administrations. As a result, their mixed-provider system was structured to benefit patients, not entrepreneurs. We do not have this luxury, so any shift away from the current model will be structured to benefit capitalists and gamblers (insurance providers), not patients: as with the US.

French employment law is a lot better for actual employees than ours, too, and I don’t hear English right-wingers asking for a move in the French direction in that field.

Tim J: Yeah, and running precisely one shuttle route, regularly travelled by the richest people in the world. I’ve used it, back when I worked in telecommunications and got paid reasonably for my work. I never got a chance to use it before, couldn’t afford it, and I’ll probably never get to use it again now I earn a normal person’s money. Slightly fourth-form debating tactic, there.

Slightly fourth-form debating tactic, there.

I don’t think it is really. It might be if I were using the LHR express as a reason why private sector provision is always or necessarily better, but that’s not what I was doing.

@65: “The best public transport in the UK (certainly much better than the tube) is probably the Heathrow Express – entirely privately owned and operated.”

The Heathrow Express is basically a simple direct rail service between one principal bording point and one principal alighting point.

The real challenge is with running a complex public transport system, with interconnections, to serve all of London, which has the largest metropolitan population in Europe with the single possible exception of Moscow. In London, public transport is relatively well used compared with most other conurbations in Britain.

The public transport system in London is highly regulated. Occasionally, a public debate breaks out over whether to deregulate London bus services but, so far, no administration has been willing to take the risk of doing that.

70. So Much For Subtlety

66. John Q. Publican

The French also have a notoriously socialist regional government infrastructure which acts as a counterweight to the notoriously conservative federal administrations.

Sorry but what? First of all, France does not have a federal system. France is famous for not having a federal system. France is a text book case of a non-federal system. Secondly, France’s “regional” governments are no such thing. They are administrative conveniences for better co-ordinating central subsidies. Has the French government been notoriously conservative? I doubt it.

As a result, their mixed-provider system was structured to benefit patients, not entrepreneurs.

Their system was introduced in the 19th century when they had no form of regional government – even mayors were appointed centrally – or federalism at all. So I have no idea what you’re trying to say. But the State was relatively poor and weak. They could not afford an NHS-style system and the Catholic Church was too strong anyway. So they went another route.

We do not have this luxury, so any shift away from the current model will be structured to benefit capitalists and gamblers (insurance providers), not patients: as with the US.

I would ask why you think that but I doubt it is worth it.

French employment law is a lot better for actual employees than ours, too, and I don’t hear English right-wingers asking for a move in the French direction in that field.

For people with a job, sure. For everyone else, no. Their employment law is stupid by any standard.

71. So Much For Subtlety

62. Leon Wolfson

You’re here to troll and belittle, and to disrupt conversation.

Projection is an amazing thing Leon.

You claimed, outright, that NHS doctors were trying to close hospitals. When it’s ConDem politicians and the private health sector’s bureaucrats.

Quote me. Because I didn’t. The previous government also tried to close down hospitals. And they succeeded often enough. So it is not the Con-Dems. Nor do private sector health companies have the power to do so. Only the NHS and its bureaucrats do. Which is what they are doing.

Because there are social benefits to a lot of work which means it’s worth doing even if it’s not profitable. This is an alien concept to you, I understand – you understand the value of nothing and the price of everything. It’s a cliche, but it’s true.

If there is a social benefit to it, why isn’t it profitable? If it benefits people, why aren’t they willing to pay for it?

You are focusing entirely on corporatism, not on the people. You don’t have a problem with the devastation of what is still for a short time, a first-world health system.

Actually I do have a problem with it. The NHS inherited the world’s best health care system and they have slowly run it into the ground. It is worse than a shame, it is a crime.

Your Tory buddies are increasing, not decreasing, the amount of bureaucracy. All so that companies can syphon off NHS money as profits.

I agree with the first bit – because they do not have the guts to do the right thing. But we need to move away to a mix of providers and a proper market.

72. Leon Wolfson

@71 – Well yes, why do you do it then? I mean, except for the obvious fact you’re a Tory troll who is simply here to disrupt any deacent conversation among the left.

And quote you? Of course!

“If there is a social benefit to it, why isn’t it profitable? If it benefits people, why aren’t they willing to pay for it?”

As I said, you understand the value of nothing and the cost of everything. A civilised society does many things which are not immediately and visibly profitable, because they are the correct thing to do to sustain that society. Hacking away at those pillars costs us all, far more, later on.

And we need to demolish the NHS and start letting people die in agony as in the US model. This makes you a uncivilised barbarian and a Tory, but I repeat myself.

And of course employment law which gives deacent protections against abusive employers is “stupid” in your book, we should shut up and be good little helots.

71
‘The NHS inherited the world’s best health care system’
Please explain

74. So Much For Subtlety

72. Leon Wolfson

And quote you? Of course!

So I can’t help notice you have not produced a quote saying what you claimed I said. Which is not surprising as I have never once said anything you said I said.

As I said, you understand the value of nothing and the cost of everything. A civilised society does many things which are not immediately and visibly profitable, because they are the correct thing to do to sustain that society. Hacking away at those pillars costs us all, far more, later on.

I agree as it happens. The NHS is not one of them, but volunteers at Churches across the country have been doing good works for centuries. Savaged by the Left of course.

And we need to demolish the NHS and start letting people die in agony as in the US model. This makes you a uncivilised barbarian and a Tory, but I repeat myself.

People do not die in agony in the US. We do not need to demolish the NHS. We need to make it work. It is failing.

And of course employment law which gives deacent protections against abusive employers is “stupid” in your book, we should shut up and be good little helots.

Please learn to spell Decent. A law that will not let you fire someone who is lazy, incompetent, who steals from you and takes drugs is not giving decent protections to anyone. It is stupid. It also inhibits employers from taking on new workers – hence France’s massive youth unemployment rate. But you only measure good intentions, right? Not the outcomes?

73. steveb

Please explain

Why? Is it in doubt?

74
The fact that you have answered my request with a question ‘Why, is it in doubt?’ suggests that it probably is.
As we are on the subject of volunteers, the NHS is thought to attract the largest number of volunteers in all services. Perhaps because it is a ‘public service’
As I understand it, churches across the country still do ‘good works’, perhaps you know better.
The real problem, which has always faced the NHS, is the fact that it is a socialist concept which has to operate in a capitalist system, indeed that’s the problem with all publically owned services, the contradiction can’t be ironed-out, as much as the state tries.

What a wasted article. You correctly draw the conclusion that there is no free market competition on the railways and then say it is the fault of the free market!

We invented the railways and they were done privately without government involvement (except in allowing them to be built). There was active competition between, for example, the district and circle lines and the various northern routes in and out of London.

What we have now are government funded private monopolies, not free market competition. The tubes, all being one group, can all strike together because their monopoly incentivises this.

We need the free market back in the rail services. This country is perfect for railways. When private companies ran the tubes and railways, they were marvels of engineering and speed. It now takes longer to get into London from the commuter belts than the 1940’s, the pendolinos go at the same speed as British built steam trains could get upto in the 1940s and the tube has barely changed (in terms of lines and stations) since the 1950s. This is absolutely shocking and something we should not be proud of.

76
Your idea that there was a golden age of private railway systems does not stand-up to the evidence.
The railways were nationalized in 1947 and by the early 1950s it was clear that they were not equiped for modern society, hence the 1955 Modernization Plan, which included the introduction of electric trains.
Comparison can give us a good idea about the value of one thing against another but you have to compare like with like.
In 1939 the population of London reached its’peak of just over 8 and half million, in 2006, the population had fallen to just over 7 and half million, bearing in mind that the populations in the surrounding areas grew. The growth in commuter traffic is vast compared to that of the 1940s. Just like the nationalized railway systems in 1947, the tube was not fit for purpose.
Btw, the average speed of motor cars through cities is around 40mph, which is less than in 1950.

The railways were nationalized in 1947 and by the early 1950s it was clear that they were not equiped for modern society, hence the 1955 Modernization Plan, which included the introduction of electric trains.

Do you think anything might have happened in the previous decade or so that could have impinged on the ability of rail companies to invest?

78
The advent of WW2 affected investments in all areas, however, the main four railways had already become unprofitable well before the beginning of the war, mainly because of competition from the new road networks.
We can never know if the post-war railway system would have been brought up to speed if it were still in private hands, I would say not due to the massive demands of the post-war settlement and the need to re-build and massively expand at the same time.

@77

You need to understand that free market privatisation does not guarantee never ending profits, but rather you must adapt or die – hence why the free market ensures more responsiveness than the socialised industries.

Yes, there were problems with the rails. However, besides the war, the biggest issue was the state subsidising roads. Of course the railways could not compete (also, as a side note, why socialising industry is a massive violation of labour freedom).

However, rather interestingly, the graphs show a decline in passenger numbers until ‘privatisation’ (what I would call corporatisation).

No, no doubt the networks competed rigourously with each other prior to nationalisation in comparison to the staid network we have currently.

Furthermore, train times into London had not improved much from the 1950s-2000.

I take the same sort of train I used to take when I started using trains in the late 90s (and it wasn’t new then).

The trains are not run in any free market privatised way as stated previously. As per all socialised industries, you are getting price inflation, poor standards and poor passenger responsiveness (my current network lengthened platforms, but couldn’t lengthen trains – i.e. the consumer demand is there and don’t talk about it taking 20 minutes to travel less than 8 miles). The problem is government and government needs to find someway of getting back what the country once had.

@76. roshan

What a wasted article. You correctly draw the conclusion that there is no free market competition on the railways and then say it is the fault of the free market!

We invented the railways and they were done privately without government involvement (except in allowing them to be built). There was active competition between, for example, the district and circle lines and the various northern routes in and out of London.

What we have now are government funded private monopolies, not free market competition. The tubes, all being one group, can all strike together because their monopoly incentivises this.

We need the free market back in the rail services. This country is perfect for railways. When private companies ran the tubes and railways, they were marvels of engineering and speed. It now takes longer to get into London from the commuter belts than the 1940?s, the pendolinos go at the same speed as British built steam trains could get upto in the 1940s and the tube has barely changed (in terms of lines and stations) since the 1950s. This is absolutely shocking and something we should not be proud of.

The idea that we can return to some halycon earlier era of railways is pie in the sky. We are living in a very different era from when they were first built.

From the Victorian era until about the 1920s the railways had a virtual monopoly of the transport system, and thus they could operate at a profit. By the 1930s they were facing competition from other modes of transport, and were barely breaking even. By the time they were nationalised in the 1940s, the private owners were happy for the state to take them of their hands.

The concept of a privatised railway today is fundementally flawed for the simple reason that that they require public subsidy to survive. And so as the government is paying the bills, they will quite rightly want to have a big say in how the public money is spent. And as the interests of the private companies are not always the same as those of the wider traveling public. State involvement is inevitable.

And so today we have the absurd situation where the “privatised” railway has far more direct state intervention than it ever did when it was nationalised. Rail privatisation was always a spectacularly dumb idea however it was done.

We can only ever have a publicly owned railway, or a pseudo-private one like we currently have.

Furthermore, the private train operators are leeching profits from public subsidy, for which they have added no value to justify, adding a completely unnecesary cost to the taxpayer and farepayers. We could easilly cut a big cost of running the railways by cutting out these unnecesary middlemen and taking the franchises back into public ownership or a not for profit company.

80
The free-market does not guarantee profits but an unprofitable organization with outdated stock is not likely to attract massive investment.
I do agree that the government involvement with road infrastructure probably impacted on the ability of railway companies to make a profit, but instead of attempting to compete by investing and updating, they did nothing but complain.
Nonetheless, the post-war required a massive investment in transport and fast and enormous modernization, regardless of the reason why the railways were found to be in the state they were in. And I doubt if private investment could have come anywhere near the speed and quantity that government spending could provide.
The whole infrastucture of all big cities required redevelopment, so passenger number doen’t necessarily represent the level of improvement, due to railways needing to be assimilated into other systems such as roads and other developments. As I have already pointed out, driving through cities in a motor car takes longer than in the 1950s but car performance has certainly improved since that time.

81

The train companies went bust due to government subsidies of the roads. No ifs and or buts on that point.

Halycon days: Yes they were there. When they were is a matter for discussion Remember these things were built without government money and something like the tube lines in London have seen little in the way of new lines since nationalisation.

On financial profitability: Why privatise everything at once? Start off in London, ensure all the lines are owned by different companies and encourage competition between say, the Jubilee and Metropolitan Lines. Start off with the Waterloo and City and then progressively more. I find it difficult to believe that the tubes could not make a profit. However, here, the government needs to be involved to ensure the viability of the Oyster Card scheme and to decide on how intersection stations would be owned. Also, remember rail passenger numbers are on the up. If this works, extend it to the commuter belt overground lines etc. But, what would need to happen on the overground lines is that multiple companies should be allowed to compete on individual routes.

Summary of points which I feel have not been rebutted in any significant way:

1) The creation and establishment of the train networks was through private funding
2) Companies went bust due to government subsidising roads
3) Under British Rail, I see little evidence that we improved as much as our continental neighbours did (of course over time, technology improves)
4) Current train speeds from the commuter belt into London have not changed much since the 50s
5) Little evidence exists of rail network expansion under nationalisation, particularly in London
6) The train service is not currently privatised in any free market way
7) Bankruptcy of services does not mean a failure in the free-market, but rather evolution
8) Our current high speed pendolinos’ average speed is equivalent to the fastest British steam train made in the 1950s
9) Passenger numbers have gone up since ‘privatisation’
10) Fares continue to increase for little reason under the corporatist structure
11) There is a huge incentive for striking under the current arrangements

82 – ‘modernisation’ is one of those awful ‘big government’ words.

In the case of transport, it meant ripping up railways, ripping up town centres etc.

@84 roshan

Summary of points which I feel have not been rebutted in any significant way:

1) The creation and establishment of the train networks was through private funding
2) Companies went bust due to government subsidising roads
3) Under British Rail, I see little evidence that we improved as much as our continental neighbours did (of course over time, technology improves)
4) Current train speeds from the commuter belt into London have not changed much since the 50s
5) Little evidence exists of rail network expansion under nationalisation, particularly in London
6) The train service is not currently privatised in any free market way
7) Bankruptcy of services does not mean a failure in the free-market, but rather evolution
Our current high speed pendolinos’ average speed is equivalent to the fastest British steam train made in the 1950s
9) Passenger numbers have gone up since ‘privatisation’
10) Fares continue to increase for little reason under the corporatist structure
11) There is a huge incentive for striking under the current arrangements

1) Yes they were in this country and many others, at a time when it was possible to operate a rail network profitably. In some countries such as France and Belgium, the state was heavilly involved in the construction of the railway network from the beginning.
2) Partially correct, but the main factor was the chang in technology in the early 20th century which made lorries, buses and cars viable competitors to the railways and took a lot of their trade. Where you are partially right, is that the government worsened this situation by refusing, until the 1950s, to release the railway companies from restrictive ‘common carrier’ regulations, which had been created at a time when the rail companies had a virtual monopoly, and which forced them to carry any freight offered to them at a set rate whether or not it made a profit. This meant that profitable freight operations had to cross subsidise unprofitable ones, and was one of the main reasons why the railways were barely making any money by the 1930s.
3) You mean the state owned continental railways! Well that was of course a political decision. On the continent they recognised the value of having a first class railway system and were prepared to invest in it. In this country by-and-large, we didn’t, governments were far too in hoc to the road lobby, we chose to run our railways on a shoe string, and spend our money on motorways instead.
4) I’m sure they probably have with improved accelleration and braking of modern rolling stock. Although with no comparisons I can’t really say. Bear in mind though that much of the commuter network around London is stuck with the obsolete third rail electric system dating which limits perfomance.
5) Very true, see #3. On the continenent they’ve been expanding their railways, in this country we had Doctor Beeching! In America, the once great passenger rail system would have become extinct in the 1970s if the government had not stepped in and created Amtrak.
6) True but this is not easy to do on a system like railways, where there are many practical problems with allowing this to happen: Try reading this article by Christian Wolmar http://www.christianwolmar.co.uk/2011/02/rail-664-wrexham-debacle-highlights-weakness-of-open-access/
7) I’m not entirely sure what you mean by that, but train services cannot simply be treated like any business operation as they perform an important role in allowing the economy to function. They cannot simply be abandoned because they are unprofitable. Any more than the M25 could be closed because of the costs of maintaining it.
8) I’m fairly sure that’s wrong. In the 1930s, the fastest services on the West Coast Main Line took 6 1/2 hours from London to Glasgow. today it is down to about 4 1/2 hours http://en.wikipedia.org/wiki/West_Coast_Main_Line
9) They have also gone up on the publicly owned London Underground. It’s hard to explain this as a product of privatisation, since fares have risen sharply over inflation and the number of services has only increased by about 10% http://www.christianwolmar.co.uk/2010/11/rail-657-an-open-letter-to-sir-roy-mcnulty/
10) True, read the above link.
11) Not sure why you think that.


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