Article in the Spectator yesterday - "It's time we stopped subsidising the railways"

[nw1]

There aren't really any free-market railways left to compare with anymore...

For one thing, the free market doesn't really work in a constrained system like railways, because there are only so many paths available. Some new operator can't just slot in a new regular clockface service if the railway is congested.

 

[jayah]

It's a weird argument. Should someone be paying for schools if they don't have children? Should generally tax payers pay for welfare and benefits they may never use? Should I pay for the upkeep of motorways when I don't drive a car?

You can use that argument any which way - it's what taxation is. I imagine due to my wage and my lifestyle I give more in taxation than I take out, but that is teh way of things.

There are benefits to the entire economy from education, so yes. Government spending is now £29k per household. It isn't sustainable and people are starting to wonder ask where it all goes.

On railways public spending has gone up from £7bn in 2010 to £18bn before the pandemic and £28bn during it.

I suspect some of that increase is related to how Network Rail is accounted for, by it was said by McNulty it wasn't sustainable and that before most of these increases.

For one thing, the free market doesn't really work in a constrained system like railways, because there are only so many paths available. Some new operator can't just slot in a new service if the railway is congested.

There are paths just about anywhere right now and if not the operators are running too many trains.

 

[nw1]

There are paths just about anywhere right now and if not the operators are running too many trains.

Now is strange and atypical though. I'm thinking of the more typical privatisation era from the late-90s to 2019.

And I doubt there would be many free paths in and out of Waterloo (to give an example), in any case. Any that are free are likely to be needed by SWR when the economy recovers. Last thing we need is to give them to some other operator running a "competition for the sake of it" Waterloo-Bournemouth service 4 minutes behind the SWR one, meaning that when SWR feel they can bring back their xx39 semi-fast to Poole (for example), the path will be gone and they'll be stuffed.

And that is the other problem with a pure-free-market railway. Many of the paths will be used for high-profit services competing with each other, and the less-profitable services squeezed out.

 

[507020]

So there is no socially necessary domestic air travel, apart from the socially necessary domestic air travel?

Yes, that’s exactly what I meant.

Those markets constitute rather large fraction of domestic air travel at this point.

Well that is obviously a good thing but something I failed to consider, however until it’s 100% there is still more to be done.

For one thing, the free market doesn't really work in a constrained system like railways, because there are only so many paths available. Some new operator can't just slot in a new regular clockface service if the railway is congested.

If a new open access operator bids to run a service where the paths are not available, shouldn’t they then be required to bear the full capital cost of the infrastructure intervention required to create the capacity?

 

[Horizon22]

There are benefits to the entire economy from education, so yes. Government spending is now £29k per household. It isn't sustainable and people are starting to wonder ask where it all goes.

On railways public spending has gone up from £7bn in 2010 to £18bn before the pandemic and £28bn during it.

I suspect some of that increase is related to how Network Rail is accounted for, by it was said by McNulty it wasn't sustainable and that before most of these increases.


There are paths just about anywhere right now and if not the operators are running too many trains.

There are benefits to the entire economy from a well served public transport network too. The railway can never be truly "free-market" because it serves a social need in those areas never fully profitable and also because there are some natural capacity issues, especially if you want a punctual and reliable service.

I certainly am wondering where some of my taxes go considering services don't seem to be getting much better, most of which I put down to mismanagement of finances by this (and the past 2-3 considering how many changes we've had!) government.

 

[yorksrob]

Fair point. It's not racist, but it's very much of the view that the market and for-profit operation is the solution to almost any problem.

Indeed. Deluded free-marketeers seem to be a particular bane of this country.

 

[nw1]

Indeed. Deluded free-marketeers seem to be a particular bane of this country.

The US right is even worse, of course (just look at their ridiculous health system: I won't use the term "far right" as that has racist connotations, so I'll use "extreme free-market right" instead) - which is why we must not look to the Republican Party as the organisation to emulate.

 

[the sniper]

The US right is even worse, of course (just look at their health system: I won't use the term "far right" as that has racist connotations, so I'll use "ultra right" instead) - which is why we must not look to the Republican Party as the organisation to emulate.

Even so, integrated, directly City/County/State funded and operated bus and rail operations are still the norm over there... The Republicans haven't been as successful as the Tories over the years, in that respect.

 

[jayah]

Now is strange and atypical though. I'm thinking of the more typical privatisation era from the late-90s to 2019.

And I doubt there would be many free paths in and out of Waterloo (to give an example), in any case. Any that are free are likely to be needed by SWR when the economy recovers. Last thing we need is to give them to some other operator running a "competition for the sake of it" Waterloo-Bournemouth service 4 minutes behind the SWR one, meaning that when SWR feel they can bring back their xx39 semi-fast to Poole (for example), the path will be gone and they'll be stuffed.

And that is the other problem with a pure-free-market railway. Many of the paths will be used for high-profit services competing with each other, and the less-profitable services squeezed out.

The privatisation era was characterised by waste. The tracks were filled with low capacity trains and then came demands for massive investment in more capacity while debt grew.

That era was strange and atypical, we shall likely see reversion to the norm.

There are benefits to the entire economy from a well served public transport network too. The railway can never be truly "free-market" because it serves a social need in those areas never fully profitable and also because there are some natural capacity issues, especially if you want a punctual and reliable service.

I certainly am wondering where some of my taxes go considering services don't seem to be getting much better, most of which I put down to mismanagement of finances by this (and the past 2-3 considering how many changes we've had!) government.

The mismanagement has been a long time, the economic growth 1995-2009 allowed it to be hidden.

The government is spending far too much money on things that are not their core responsibility.

Sure transport will not be entirely self funding, but £15-20bn a year just for railways, on top of the fares, cannot continue.

 

[43096]

For one thing, the free market doesn't really work in a constrained system like railways, because there are only so many paths available. Some new operator can't just slot in a new regular clockface service if the railway is congested.

Yet we have a free market in the airline industry, where there are only so many take off and landing slots (aka paths) available. It depends how you organise the allocation of paths.

 

[HullRailMan]

It’s a reasonable question to ask how much the taxpayer should subsidise the rail system by, given the limited benefits many taxpayers will feel.

Not everyone will directly use the education system, but will benefit overall from an educated population. Not everyone has a car, but everyone buys goods transported by road, or goes somewhere by road.

For many people, the rail system remains irrelevant. In that way, it could be said that rail isn’t a ‘universal’ public service like education, roads, energy etc, and so has a lower priority for the limited government spending pot.

 

[cygnus44]

I think the railway is just as bad operated privately as it would be state run, some of it is publicly run now anyway. Lots of money is being squandered by the railway on rubbish foreign companies making new trains, just look at the amount of brand new trains sitting in sidings rusting away because they don’t work properly , Artero comes to mind. The ones that do work take months if not years to enter service. This is almost as bad as the Gov/NHS PPE scandle.

 

[TUC]

Indeed. Deluded free-marketeers seem to be a particular bane of this country.

One could equally say that those who think that if something is state owned it must work better are the bane of this country.

 

[yorksrob]

One could equally say that those who think that if something is state owned it must work better are the bane of this country.

I don't see how. Every thing's been flogged off over the past forty years. This is marketeer "utopia".

They couldn't even leave directory enquiries alone, they had to balls that up.

 

[A0wen]

Even so, integrated, directly City/County/State funded and operated bus and rail operations are still the norm over there... The Republicans haven't been as successful as the Tories over the years, in that respect.

The US political system really isn't comparable to the UK.

The most powerful, from a domestic point of view are the state legislatures, followed by the City legislatures and finally Washington.

Washington is pretty powerless on most domestic matters. The constitution gives the power to the states.

 

[eldomtom2]

For one thing, the free market doesn't really work in a constrained system like railways, because there are only so many paths available. Some new operator can't just slot in a new regular clockface service if the railway is congested.

I think you slightly misunderstood my post. I was arguing against the idea of a free market being ideal by pointing out that I can't think of a country that doesn't have a fairly heavy degree of government involvement in its railways.

 

[43066]

Yet we have a free market in the airline industry, where there are only so many take off and landing slots (aka paths) available. It depends how you organise the allocation of paths.

Only at certain airports. Hence LoCo operators were able to start up and become successful using smaller airports. The railway realistically is far more constrained due to the specific infrastructure.

Aviation is also quite heavily restricted by the various international treaties in place, cabotage rules etc.

 

[Tetchytyke]

One could equally say that those who think that if something is state owned it must work better are the bane of this country.

The current railway industry is largely state-owned: its just owned by Italy, France, Holland and Hong Kong.

Free-marketism works where there is a genuine free market. It doesn't where there isn't. This is regardless of ultimate ownership; Emirates is a state-owned airline that exists successfully and entirely in a free market arena.

The problem with a lot of privatisation is that it isn't a free market, it is simply a rentier class.

The franchise/management contract owners are not in a free market and they do nothing that couldn't be done "in house" more cheaply; they are simply a rentier layer of revenue abstraction. Return On Capital Employed margins are staggeringly high for the franchise owners. Whilst their profit margin might only be 2%, their ROCE is many many times higher because they put sod all in.

The ROSCOs were largely the same until very recently, although the increasing use of lease-and-maintain contracts is belatedly starting to introduce some actual genuine competition into the market.

 

[the sniper]

Washington is pretty powerless on most domestic matters. The constitution gives the power to the states.

The Republicans aren't involved at State(s) level...?

 

[Mikey C]

I don't agree with the article's conclusions, but it DOES raise reasonable questions about the treatment of the rail and bus sectors. Buses are a form of transport which benefit the poor and disadvantaged far more than the railways, and have long been forgotten by politicians on ALL sides.

So many bus routes have been lost, even in the last 10 years, due to the loss of local council financial support, whereas the railways have had a far more protected existence. There's something wrong when an expensive to run "social" rail service can operate until late, when cheap to run buses often stop by 7pm.

 

[yorksrob]

I do agree that some subsidy of bus services to stabilise the network would be money well spent - however not as a stick to beat the railway with.

 

[HamworthyGoods]

Childless people pay for schools.

Yes you pay for schools through tax but you are basically paying off the money spent on YOUR OWN education.

 

[tbtc]

1. I’m not a fan of the Spectator, but we should be able to refute their argument without “shooting the messenger” - we need to be able to debate the individual points rather than simply dismissing them because “it’s in the Spectator”

2. A lot of the stuff that they publish is more about “generating reactions” than because they genuinely believe in it - they’ll enjoy sounding provocative and edgy (and being talked about, always ensure that people are talking about you!) - the Corbyn fans were sneering at Starmer winning “politician of the year” (as supposed evidence that he was a right wing sell-out) until it was pointed out that Corbyn won the same award previously - the Spectator know that they get more coverage if they occasionally do the “non-obvious” thing (in the way that organisations like Time Out will put somewhere like Hull in their list of “Top 100 International Cities To Visit In 2023”, because that’ll get more clicks than just listing the usual London/ New York etc)

3. At the moment, the Spectator is on the losing side of a number of arguments, Johnson turned out to be a load of bluster and froth, Truss crashed and burned, Sunak is struggling, the anti-Brexit arguments that were dismissed as “Project Fear” are looking annoyingly accurate after a few years, a dozen years of austerity have left us in a pretty weak situation… now Starmer is actually brave enough to take on a “sacred cow” and suggest removing tax breaks from Eton etc (something I don’t think the Labour leader would have had the guts to do a year or two ago, but he’s stepping away from the permanent “caution” that seemed to hamstrung Milliband)

4. So it’s important that the Spectator can shift the argument away from “VAT on school fees” or “Brexit will make us all better off” or “the sensible Conservative PM is a much better bet than the reckless Labour leader”… (If anything, Starmer’s unexciting pragmatic approach has gone down a lot better with right friends than other Labour leaders post-Blair)

5. All of those arguments (about “sunlit uplands” or avoiding a “coalition of chaos”) now feel a bit hollow… so churning out a standard “public subsidy of a public service is bad” article feels like an attempt at trying to distract from the maelstrom of bad news that the Spectator faces

6. I’m sure Spectator readers are happy with large public subsidies for trains as long as it means retaining the “Deerstalker Express” and other perks for the wealthy (maintaining services to Rannoch Moor is more important to some people than maintaining services to Rotherham), i wouldn’t worry too much about this article. However, I think that it’s no bad thing to assess subsidy levels from time to time, rather than assuming we can just keep adding billions to public debt each year - don’t be scared of justifying the public subsidy you think that the railway needs (or hide behind accusing your opponents of being “Serpell” etc)

I don't agree with the article's conclusions, but it DOES raise reasonable questions about the treatment of the rail and bus sectors. Buses are a form of transport which benefit the poor and disadvantaged far more than the railways, and have long been forgotten by politicians on ALL sides.

So many bus routes have been lost, even in the last 10 years, due to the loss of local council financial support, whereas the railways have had a far more protected existence. There's something wrong when an expensive to run "social" rail service can operate until late, when cheap to run buses often stop by 7pm.

Those are very good points

Funding for “socially necessary” bus services has been significantly stripped back over the years, but people somehow blame First/ Stagecoach etc for not providing - of the bus industry has the same guarantees age long term funding that the railway has enjoyed then we’d have taken a lot more cars off the road

Look at the situation on the Barton on Humber branch, where a station with three departing passengers a day (at its pre-Covid high) has had over a million pounds of infrastructure improvements spent on it - bus companies would kill for that kind of subsidy!

 

[CentralTrainer]

Clark has form for talking loudly and lying badly when it normally comes to rai stuff like HS2:

Liam Halligan was incandescent at the suggestion by Nigel Harris of Rail magazine that the Channel 4 Dispatches programme on the HS2 project, which he had fronted, was “selective and misleading tosh”. He had, he let it be known, sought out serious and informed opinion on the subject. His presentation was not a hatchet job, honestly.

Halligan’s credibility on the subject of HS2 has just been dealt a serious blow, the kind of blow that makes one wonder what Channel 4 were doing letting him on its airwaves in the first place. And the dealing of that serious blow has been down exclusively to himself. He saw an anti-HS2 article, endorsed it, and by doing so, he showed the world that he does not know one end of the rail industry - and specifically, that project - from the other.

“The cheaper, far more sensible alternative to the incoherent, grotesquely over-priced, vanity project that is HS2 … Well-worth reading” he Tweeted, giving his backing to “There is a far better option than HS2 - and it already exists” by Ross Clark, in the increasingly alt-right Spectator magazine. An alternative already exists?

Sadly, no it doesn’t. This is a selection of what Clark has written, with my corrections. “The alternative is the little-known Great Central Railway [it’s known to everyone in the rail industry, because know-nothing hacks are forever citing it as an HS2 alternative]. This ready-made high speed line [it was engineered for 75mph] takes almost exactly the same route between London and the Midlands as HS2 would [no it doesn’t].” There is more.

“It sits there, its viaducts and bridges unused [by ‘unused’, he means ‘demolished’], begging for trains [no. Just no] … It was built with the vision of operating 125mph expresses [no railway designed in the 19th Century was thus built], and used a ‘continental loading gauge’ [debatable] - which means that, uniquely for British lines, the wider trains used in mainland Europe could be run along it [no they couldn’t. Not a chance]”.

It gets worse. A lot worse. “The Great Central was one of the many casualties of the Beeching closures of the 1960s [mainly wrong - the run down of the GC began in 1958, five years before the Beeching Report], yet it remains almost totally intact [totally wrong]. A few agricultural buildings have been built across it, but otherwise its line remains clear [by ‘A few agricultural buildings’ he means ‘most of Nottingham city centre’]”.

The Great Central was closed mainly in 1966, with the last part, between Rugby and Nottingham, following in 1969. Clark’s article is as close to a flat-out pack of lies as makes no difference. It is fanciful nonsense; even if the line could be reinstated, it would not address the capacity problem that HS2 addresses. By so visibly and unequivocally endorsing this drivel, Liam Halligan has shown the world the extent of his knowledge.

Or perhaps that should read “lack of knowledge” - together with the implicit admission that his Dispatches edition was no more than an mean-spirited hatchet job?

 

[RobShipway]

I have not read the Spectator article and yes subsidy to the operating companies should not be going back into shareholders pockets. However, without it I do worry that many rail routes in this country would not be running and we would see more lines being closed than there was with Beeching.

 

[A0wen]

The Republicans aren't involved at State(s) level...?

Bit in bold - you don't have the same party structures that you do in the UK.

So, for example, the President isn't the leader of their party in the way the UK Prime Minister is the leader of theirs. There isn't a national manifesto that all candidates have to campaign on.

A governor in California might take very different policy positions to a governor from the same party in Texas or Florida. Where in the UK if a council leader or Mayor openly opposed and campaigned for different policies to the national party they would face expulsion, that's not the case in the US system.

And, to look at transport, most of that is handled at a state level - on rail specifically it's only Amtrak that the Federal govt really gets involved in - because it's running across the country through many states. To many Americans Amtrak is something of an irrelevance, whereas if they live in or near to a major city the metro system (which in some cases is akin to the suburban rail networks in the UK) is far more relevant to them. And it very much is local politicians doing things for local people - it's just that "local" in the US is somewhat bigger than the - Florida alone is the same size as England and Wales with 1/3rd of the population.

 

[Bletchleyite]

Look at the situation on the Barton on Humber branch, where a station with three departing passengers a day (at its pre-Covid high) has had over a million pounds of infrastructure improvements spent on it - bus companies would kill for that kind of subsidy!

Which is the point I have made a few times, but solving that can only really be viable by proper integration, with bus and rail managed under the same authority.

 

[Iskra]

Yes you pay for schools through tax but you are basically paying off the money spent on YOUR OWN education.

And I'd argue its worth paying for the people around you to be educated, that is something you benefit from.

 

[Tetchytyke]

"Railway inflation" certainly needs addressing, yes.

Railway inflation is a direct consequence of the outsourcing/privatisation dogma. Network Rail outsource to a contractor, who outsource to a sub-contractor, who will outsource to another sub-contractor. So that's two or three layers of profit added before a single hole is dug. "Private sector efficiency" is, by and large, an illusion, so all you've done by outsourcing is make your work 20% more expensive than you needed to.

This happens time and time again, with the same companies making the same killings on the same contracts. Serco keeps getting awarded huge contracts, on the railway and elsewhere. The Serco CEO, Rupert Soames, is the brother of a Tory MP, the grandson of Winston Churchill, and an Old Etonian Bullingdon Club associate of Johnson and Cameron, but I'm sure it's all completely above board and honest and transparent and not at all corrupt.

We are seeing exactly the same on HS2, sub-contractor after sub-contractor and spiralling costs. And HS2, the giant white elephant that it is, also rather puts paid to the idea that "there is no money". What are we up to now, £130bn? Good for the engineering conglomerates who so generously fund the main political parties.

 

[uglymonkey]

OK, if they cut services to match their cloth or whatever the expression is - on Thameslink, they can cut out services, but if they change a 12 car off peak to a 8 car - does that actually save any money ( less electric?). You can't split a 12 car, they were designed for a flow that hasn't returned ( squashed in in the peak - loads of standing room, wide aisles etc). You can't "drop down" in service, other than reducing the number of services run as the stock doesn't allow it.

The added costs is what scuppered the GWML electrication as well , I guess, with "layers" of contractors all taking a "slice" - they may have built it out of solid gold and unobtainium for the price !