Wednesday, 14 June 2017

Diagonal comparisons: Corbyn edition

From City AM Forum:

One part of Labour’s economic offer which really did strike a chord with the electorate was the promise to nationalise industries such as rail and water. To anyone with direct experience of the old British Rail or the Post Office (which made you wait six months to get a phone installed) this almost defies belief. But only those over 55 can remember...

What on earth do rail and water companies have to do with installing telephones? Corbyn might possibly have said re-nationalise the Post Office, this is now a quite distinct body to BT, the one which does the telephones and competes on a pretty level playing field with lots of private businesses. As anybody under 55 understands perfectly well.

(Both Corbyn and May both accused mobile phone companies of market abuse or something IIRC, which seems a bit off piste to me, they do a great job all in all. It's the internet providers who insist you pay top dollar for a landline you will hardly use if you want broadband who are taking the piss).

Prior to rail privatisation just after the 1992 election, the peak number of passenger journeys made each year was some 1.1bn in the mid-1950s. Faced with rapidly rising road competition, the rail industry saw journeys fall steadily, to a trough of around 750m in the mid-1990s.

After privatisation, massive investment programmes have been carried out and, in the form of the train operating companies, there is now a distinct part of the industry whose priority is the consumer. Journey numbers rose, passing the 1bn mark in 2003, to the current level of 1.7bn, a figure not seen since the early 1920s, when road competition was weak.

So the revealed preference of consumers seems to be that they rather like the current structure. They actively choose to use rail in massive numbers.

We've done that one. Yes, the number of passenger journeys on private rail has doubled in the last twenty years - but so has the number of journeys on the government-run, union-controlled, highly regulated etc London Underground network, so that proves nothing. Rail passengers couldn't care less who owns it or runs it, they just want a reliable service.


Bayard said...

"Rail passengers couldn't care less who owns it or runs it, they just want a reliable service."

Something that BR seemed unable to understand. BR always seemed much more interested in providing a faster service than a reliable one. Perhaps they were just trying to keep landowners happy.

formertory said...

I'd suggest that rail passengers want a reliable service and also a comfortable one. Virgin East Coast is so far ahead of the old days that it might well have come from a different universe. Book ahead, and I can get a first class ticket to Edinburgh and return for £10 or so more than second class. And the 3 hour 15 journey time is a lot quicker than I could manage (legally or sensibly) in the car.

Nationalisation? No. Not in my name. In fact, while we're on the subject, the NHS..........

Mark Wadsworth said...

B, can we stop slagging off BR pls, that has nothing to do with it, that was twenty years ago.

Transport for London does a great job most of the time. We don;t know what BR would be like today, if they'd received the same subsidies as the privatised rail companies etc.

FT, yes, but see my reply to B above.

Bayard said...

"We don;t know what BR would be like today, if they'd received the same subsidies as the privatised rail companies etc."

No, of course we don't, but BR always had a very negative mindset. They were never interested in re-opening stations or putting on new services, any such initiatives had to be pushed through by local authorities in the face of indifference or opposition from BR.
I think we can safely say that, if BR had continued as it was, the route mileage of the railways would be a lot less today than it was twenty years ago, instead of being greater.

Also LT isn't a very good example wrt reliability. If you run trains as frequently as the Tube does, it really doesn't matter if one is a bit late or one is cancelled. LT always did seem more reliable for that reason.

(Amusingly, my CAPTCHA for this comment involved identifying pictures of trains)

DBC Reed said...

When I were a lad, BR came in for universal abuse and the numpties looked back to "pre-war" with nostalgia, ignoring unemployment and ,amongst many other things, the near dereliction of parts of the wonderfully competitive railway system. A typical joke on the radio was: "The guard told me off when the train was delayed. I told him I had got out to pick flowers. He said 'There aren't any flowers.'I said 'I planted them' ".
Then there was the Beeching carve up, which might have been more sensible had there been LVT to feed raised local land values into the branch lines that boosted them.
MW is right : it doesn't really matter who owns the systems; its the management systems that fuck things up. Getting private companies to run publicly owned railways (and tower blocks)should not be subsidised.Public organisations have to run things at very tight margins;a private management cannot stick to such tight budgets and make a profit (without dangerous cost cutting etc).

Things fall apart.

Bayard said...

DBCR, when I were a lad, I was much influenced by my uncle, a manager himself, who maintained that 90% of industrial unrest was caused by bad management, and that BR was a classic example of this.
I also recall back then recall chatting to my local stationmaster and him saying that there were twice as many tiers of management above him than there had been when he started.
As to dangerous cost-cutting, I am not sure that BR in its latter days had any better record on safety expenditure than the companies that succeeded it. If they had followed the recommendation after the Clapham Junction rail crash to fit Automatic Train Protection, then the next two rail crashes would have been averted (Southall and Ladbroke Grove), but ATP was deemed too expensive.

Mark Wadsworth said...

As usual we have drifted off the topic. As to railways, I'm not fussed who runs them, I just worry about rent seeking if privatised badly (i.e. the new labour/Tory way).

Jonathan Bagley said...

For me, it's more to do with the increased congestion on the roads. The same for many of my fellow commuters. I certainly haven't noticed any concern for the consumer. Rail has failed to progress and road transport has got more unpleasant. Nothing for rail to boast about (apart from the money they make).

Lola said...

I actually do care as to whom owns and runs stuff.

Incentives matter. The incentives for private owners are to maximise profit and to achieve that they have to offer better than the competition. Competition keeps them honest. Whereas the incentives on state ownership are to expand the bureaucracy. And by observation no-one can refute that.

But like MW I do not care for rent seeking.

In the case of rail it seems to me that the benefit of most capex ends up in the hands of landowners along the route, not in the hands of the railcos themselves.

As to competition there is lots - bus, car, plane, re-locate, change jobs. (I did an exercise once. You could buy a taxed and MOT's Ford Sierra for less than the cost of taking four people to Newcastle, let alone Edinburgh, and back.)

Bayard said...

MW, As far as commuter fares are concerned, What The Market Will Bear is obviously a lot higher than they are at the moment, or else there would be no need for political control. Also, as I have pointed out before, the companies getting the subsidies aren't necessarily the same ones that are running commuter trains. It's very easy to say "The railway companies make a profit and they get subsidies" and thus imply that those subsidies are going straight into shareholder or management pockets, when in reality most of the subsidies are paid to keep lines like the Heart of Wales line open, where fares are already at WTMWB but the line is still unprofitable and the companies that are making the most money are the ones running commuter services into London and getting little or no subsidy. You may call charging WTMWB "rent-seeking", but I would counter that by saying that charging under that by a state-owned railway is a public subsidy to the commuter (which mostly feeds into higher land values, so in reality is just another public subsidy to landowners).

Mark Wadsworth said...

JB, good points.

L, I mean, I'm not rabidly for or against privately run or state run, main thing is reliability and price (including cost to taxpayer).

London bus routes and prices are decided by TfL and then private companies bid to run certain routes. Highest bidder gets the profitable ones and lowest bidder gets the routes requiring a subsidy. That seems to work fine.

Same with refuse collection, that's one area where services stayed same or improved and cost to the taxpayer went down after privatisation.

This is "bottom up" privatisation and usually works.

Bad privatisation is "top down" like giving away BA, airports, Royal Mail merely to enable the City to earn a shit load of commissions. Or the insane idea of privatising HM Land Registry. FFS.

B, you have made that point before, I will have to take your word for it as I have no way of checking up. AFAICS the whole thing was very badly done.

Bayard said...

"You could buy a taxed and MOT's Ford Sierra for less than the cost of taking four people to Newcastle, let alone Edinburgh, and back.) "

I wonder how the figures would look if you added in the cost of a driver for two days, paid, say, minimum wage and his lodging for the night.

"AFAICS the whole thing was very badly done."

As you might expect of something done by the Tories for entirely ideological reasons.

Mark Wadsworth said...

B, wasn't it Nulab who messed up the railway privatisation along true Tory lines? Can't actually blame that on the Tories.

Bayard said...

Wikipedia says privatisation was from 1994 to 1997, so it was a Tory idea, mostly carried out by them. I always thought of it as John Major trying to emulate Margaret Thatcher.

Mark Wadsworth said...

B, oops, sorry, let's blame it on the Tories after all.