Wednesday, 15 August 2012

Virgin, First and Rail Contracts

So, in the news today is that First have won a bid for running the West Coast mainline service, beating the incumbent Virgin bid, offering a great deal more for the service. The government has chosen, apparently, wholly on the big number, says Branson and he may be right. The difference between the two bids is largely on that number, as without altering the track, I see little ability to improve the service other than with lower fares.

Now, Virgin may be able to deliver and I hope they do, the better the train lines are, the better my transport around the country is likely to be (as an aside I have used the Virgin service on a number of occasions between Birmingham and London, and it is not too bad). However, I doubt that First can offer a great deal better service without new lines. This is the problem, the lines, the actual track is owned by the government and the contracts are awarded by the government (as has happened with this case). The reason the free market works so well for consumers is because those same consumers make a choice between different providers. When the government selects bids, they do not what is best for the end user, but for the government (in the short term) - so the size of the bid, hence why some companies collapse trying to offer the sort of bids they need to make to please the government. Alternate systems of rail travel are impossible, nobody can build a 7 foot gauge track like Brunel did, which can offer faster service with wider trains, the government will not allow it.

When our rail network was built initially, it was private, it was constantly expanding (apart from the war years where it was brought into government service), the London Underground was too, being the track of several companies competing to offer services for London. Whilst some companies over-expanded and collapsed, others kept going - there was a strong market and the customers were the winners. Now we have a system that is part-privatised. There is some competition, but for most people there is a monopoly of the places they go between, there is crucially only one set of tracks for each route. If you want to go by train, you have to use whatever battered old thing draws into the station. There have undoubtedly been huge improvements since the railways were "privatised"; the small improvements and efficiencies brought in through the prospect of bankruptcy to the private providers helped to stop the terminal decline in our rail network. When the "privatisation" occured, the decline in passenger numbers finally stopped and indeed reversed. But we still have a nationalised rail system, and as such government contracting.

The part privatisation of the railways under Thatcher was just that, a part-job, incomplete and in my personal opinion, a bit pathetic. The track itself needs to be sold off, and permission given for private companies to build new lines, whether they are "High-Speed" or otherwise. This means that investment in infrastructure can finally occur, and the improvements to the transport system, a hallmark of 19th century Britain, can happen again. Instead of mis-diagnosing the problems as those of "privatisation" with ridiculous rose-tinted glasses looking back upon the nightmarish nationalised system, we should get government out of the way finally. The failures of Thatcher's privatisations can be brought down to not being bold enough. Whilst I seriously doubt my internet connection would be as fast without Thatcher, I think it should be a lot faster - this is easily achievable. We need to finally privatise what remains of our utilities, ignore the "natural monopoly" claptrap and allow competition to rid the monopolies of their status.

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