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Governments are stupid Part 3792: Railway franchising

A couple of weeks ago the government announced (with pens hovering over contracts) that it was prematurely ending the process for awarding the West Coast Main Line (WCML) franchise. This came after Virgin – the loser – initiated legal action to force the government to disclose why it had provisionally awarded the contract to First. During the process of preparing for the case the Government discovered that it had got its sums wrong.

We can argue that it shows that the government is incompetent. We can argue that it shows that Beardie is not a man you want to mess with. We can possibly argue that over-optimistic assumptions about the economy have a lot to do with this. And we can certainly argue that this creates a lot of uncertainty and this is a bad thing because train operators will not be able to make any plans.

But really this is wood for the trees stuff. The fact is that the government (or, to put it another way, the violent part of society) should have nothing to do with the railway. Decisions about the railway should be made by the market (i.e. the peaceful part of society).

Hence, we shouldn’t have franchising, or subsidy, or the split between the wheel and the rail. Yes, unbelievable as it may sound to the uninitiated, in Britain train operators are not allowed to own the track and track owners (or owner – there’s only one) are not allowed to run trains. Railways should be liberated from the state and allowed to stand or fall on their own merits.

My guess is that they will stand (or at least the WCML will). I’ve just returned from Japan where the railways were (mostly) liberated from the state 25 years ago. Trains are frequent, clean and modern. The main railways are profitable.

At this point people someone’s bound to complain that Japanese trains are overcrowded. What about all those people pushers? Every time I’ve been in Tokyo (this was my fourth trip) I’ve tried to find them and haven’t succeeded yet. True, most people have to stand in the rush hour, and from time to time things get very uncomfortable but much the same is true of London too. And for the same reason: fare control which depresses the price and increases demand.

Yamanote Line train somewhere between Shinagawa and Shibuya 0730, Thursday 11 October 2012:

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11 comments to Governments are stupid Part 3792: Railway franchising

  • 'Nuke' Gray

    My own idea is that the government should own the railroads, just like public roads, but anyone with a licence could then use them. Let lots of private companies compete! Private railways, yes!

  • Alsadius

    I don’t think it’s even fare control. I think people and companies just like a normal schedule, and are willing to put up with some crowding on the way home to get it. And you can make more money on 100 standing fares than 50 sitting anyways.

  • I agree with both comments, is not fair.

  • Having multiple private railways running trains on a single track sounds like a great idea until you realise that railways are not like roads. Most roads can accept most vehicles. This is not the case with railways. Railways can only accept certain trains and trains can only operate on certain railways. A train can fail to be operable on a railway for any number of reasons: wrong loading gauge, wrong track gauge, clearances, all sorts of electrical incompatibilities, axle weight, signalling even length. Even if it were possible it is difficult to see how trains would be timetabled.

    There are reasons why in a free market he who owns the track also runs the trains.

    My idea is that roads should be privately owned.

  • Michael Taylor

    Yes Japan’s trains are wonderful, and the Tokyo chikatetsu truly one of the miracles of mankind. But you’re deluded if you think they are the product primarily of private endeavour. Rather, they are one of the most spectacular triumphs of thorough-going corporatism/money politics in the modern world, initiated primarily under Tanaka.

  • Andrew Duffin

    The separation of track ownership from train operation is required by an EU regulation.

    Yes, yes, I know, it doesn’t happen in France or Italy or Germany or … but required it is, nonetheless.

  • The regulation in question is 91/440. I know there was a separation in France and I assume it is still in place. But I don’t think it was a franchise.

  • Andrew

    It’s not a good idea to separate ownership of the track and the trains, as anyone who knows anything about how railways actually work will tell you. This was tried at the very dawn of the railways and soon changed to the vertically integrated system we had until comparatively recently. There’s no technology changes that make that reality much different today.

    Beyond that, why bother with franchises, just privatise the railways and if you must, subisidise certain routes or trains for social reasons but let the majority of the business run as a business. I see no reason why they cannot.

  • qsi

    Just to amplify Michael Taylor’s point: railways in Japan, much like anything else (it seems to me), have very little to do with free enterprise, certainly not in the way I would see it. More importantly: Japan is not Tokyo. What you see in Tokyo is not representative of the Japan that is not a megalopolis.

    I recently came across this wistful and depressing account (Link)of a train line in Japan. Note the economics.

  • Paul Marks

    I agree Patrick.

    British railways are government owned – and that does not work.

    It sets my teeth on edge when people talk about the “private” British railwasy and how a system that is government owned should be “returned to public ownership”.

    It is like the last budget – where taxation on wealthy was INCREASED and the entire debate after the budget was over whether the “cut” in taxation of the rich was a good thing or a bad thing.

    It is not so much the collectivism here that is driving me potty (or more potty than I have long been) – it is the counter factual nature of everything.

    “Cuts” that are increases.

    A “private” railway system that is state owned.

    “Free market” publications that are rabidly interventionist…. supporting the welfare states and ever more bank bailouts.

    And on and on….

    It is like seeing the world in a twisted mirror.

  • Laird

    Orwell would be proud, Paul.