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The lesson of the railways: private is not always best

Posted By kurtnimmo On January 5, 2012 @ 6:22 am In Economic Crisis | Comments Disabled

Ben Chu
The Independent

January 5, 2012

As the McNulty report points out, one of the main objectives of rail privatisation in 1993 under John Major’s government was to reduce the level of public subsidy. That particular train is not just late, it’s heading in the wrong direction.

What we have here is a lesson for those tempted to assume that wholesale privatisation of public services always produces greater efficiency and reduces public expenditure. McNulty says the British railway system is around 30 per cent less efficient than publicly controlled European peers.

And why are our railways so inefficient?

This passage from McNulty (p28) suggests an explanation:

“Differences in performance gains between Great Britain and these European examples may result from differences in the approach taken to franchising. While Great Britain has franchised all services, franchising in Europe has tended to focus largely on subsidised regional services, with main-line services continuing to be operated by the former state monopoly. This has allowed new franchised operators some flexibility over staffing, with staff given the opportunity to transfer to the new operators or remain with the state incumbent…It has allowed new operators to improve labour productivity and therefore reduce  overall costs.”

Read full report and see stats here 

Related: Commuters spending a fifth of their wages on rail fares as costs soar by up to 11%

 


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