02 July 2009

Hello darling, I'm on the *nationalised* train

Writing this on the, for want of a better word, British Rail - formerly National Express East Coast - train on the way from London to Newcastle, and I must say it's great to be back on the nationalised trains after all this time. Look, even the wi-fi's working.

You'll probably have seen this already if you're based in the UK as it's been all over the news, but yesterday talks between NXEC and the Department of Transport over a possible renegotiation of the East Coast rail franchise broke down. NXEC were meant to be paying the DfT £1.4bn over the 10 years' duration of the franchise but this was based on passenger forecasts that were optimistic to begin with, and as the recession bit, it became clear that NXEC was going to run a massive loss. Hence, the government had to step in to keep those goddamn trains running.

Whose fault is this? Well, really a combination of National Express (for making a reckless franchise bid) and the Government (for accepting that reckless bid in the first place). As a monopoly operator of the East Coast rail route, NXEC could expect to make substantial profits under normal economic conditions, but even so, £1.4bn is a hell of a lot for the govt to cream off from the railway. And environmentally it makes no sense whatsover - we should be subsidising the railways to get more people out of their cars and reduce overall CO2 emissions. (Network Rail, the infrastructure operator, does receive a subsidy but this is not enough to offset the East Coast franchise premium payments.

Of course, National Express have tried to weasel out of their liabilities for defaulting on the contract by claiming that NXEC is a separate company to the rest of the National Express group and so their liability should not extend into the rest of the company. For example, they argue that the Government shouldn't be able to take over the other 2 franchises that National Express runs (National Express East Anglia and C2C, which runs the Southend to London Fenchurch St line) as compensation for NXEC's failure. This is blatant financial engineering by National Express to try to swindle money out of the taxpayer by any means possible, and if necessary the Government should make retrospective changes to corporate law to make parent companies liable for losses incurred by fully owned subsidiaries so that National Express can't get away with this.

I'd be very happy to see the back of National Express on the East Anglia rail service as well. They deliberately run trains with fewer carriages despite overcrowding to save money on fuel costs. They have imposed progressively more ludicrous evening ticket restrictions to stop people travelling on cheap tickets in the evening rush hour - again to save money instead of running longer trains, which is what people really want. And they deliberately fail to advertise the Network Railcard, which provides 1/3 off off-peak fares, in case people find out about it and save money. F*** them.

And full marks to Transport Secretary Andrew Adonis - not my favourite politician at all most days - for standing firm in the face of National Express's attempts to renegotiate their franchise just because of the recession. Adonis reasoned - correctly - that if he gave way on this franchise it would open the floodgates and every other two-bit rail operator would be hammering on the door for the soft treatment. He did The Right Thing.

But he plans to re-franchise to a private operator as soon as possible, which is a pain. There have been some improvements to the rail rolling stock under private ownership, it's true (although that was partly the result of a dreadful lack of investment under British Rail, which was starved of cash from its inception in the 1940s). The crappy old slam-door trains are long gone, which we can all be grateful for. But in most other respects, privatisation has been a disastrous failure. Lack of maintenance caused a sequence of dreadful crashes and disasters - Hatfield, Potters Bar, Ealing, etc. - and forced the nationalisation of Railtrack (Steve Byers's finest hour!) Fares have rocketed sky-high, especially for people who want to buy their ticket on the day of travel. And investment in new lines and tracks - Eurostar excluded - has been piecemeal. The recession presents an ideal opportunity to bring public enterprise back to the railways and Labour would be best advised to grab it with both hands. At the very least, a pledge to renationalise would provide a clear dividing line with the Tories at the next election (unless Cameron copies it, which is very possible.)


Submariner said...

Actually it isn't nationalised yet, but it will be once NXEC actually defaults on its premium payments some time this autumn. Don't know why you are so keen on it staying the the public sector, though. As you pointed out yourself, that's the one way to ensure that it is gradually run down, just like British Rail did over several decades to the original network that the private sector built and paid for, that the Government nationalised and then starved of investment until the whole thing was worn out.

Van Patten said...

I agree that National Express (proprietor the legendary Gay rights activist Brian Souter) is a crock. The thing was badly managed from its inception back in the dying days of the Major government. There is nothing intrinsically wrong with a private operator per se (Go to Japan to see how a genuine private/public oligopoly works) but those that have been put in as franchisees in the UK mhave been almost without exception disastrous.

A couple of honourable exceptions to the rule are Chiltern and the Island line. Can I ask whether these operators would also face the chop under your proposed renationalisation?

Furthermore, if you are truly optimistic enough to think that this can possibly salvage Brown's government, now, it is agreed by most authorities, unchallenged in its incompetence by any admininstration since before the Roman arrival in the British isles, then sadly I think the incompetence of the privatised administration of the Uk's railways, again the worst in the known world, is the least of your problems!

giroscoper said...

@Submariner: you're absolutely right that the rail network was starved of funds under British Rail (mind you, so was much of British private industry at the same time. The Tories pumped plenty of money in during the late 1980s in the run-up to privatisation, which shows it can be done. I would say that nationalisation is a necessary, but not sufficient, condition for a well-functioning rail network. Obviously, high levels of infrastructure and rolling stock investment are also needed.

@Van Patten: if the management was doing a good job under the existing franchise you could just transfer them wholesale to the public sector - no problem.

I don't know if this alone will salvage Brown's govt but it's evidence that they are starting to Do The Right Thing after all these years.

red two said...

Followin National Express's logic, would it be possible to split every private company into essentially two parts? One which receives income, and the other which pays for things. The former would have to fund the latter of course and there may be tax implications... but even a modest tax hit would surely be agreeable if it enabled the "income receiving" half to deny responsibility for the "spending half" when things got dicey?

giroscoper said...

It's privatised gains and socialised losses - the essence of modern capitalism.