Saturday, 19 May 2018

It's time to give up on franchising.

Once again, the East Coast Main Line franchise has failed leading the government to take back the route and hand it to to a nationalised "operator of last resort". Last time it was National Express East Coast who couldn't afford the premium payments they had agreed to. This time it's Virgin Trains East Coast. Exactly the same problem, exactly the same result.This time, instead of branding the line "East Coast", the nationalised franchise will be called "LNER", to perhaps evoke the good old days of the pre-nationalised operator. Back then of course, LNER owned all the track, designed, built and ran all their own trains without the government specifying their services. Franchising is a different kettle of fish. Tracks are owned by public sector Network Rail, trains are leased from ROSCOs, and the new IEP trains that will replace BR-era rolling stock on the route is being specified by the Department for Transport. The franchisee is merely there to sell tickets and provide customer service. Which makes privatisation a joke. In any other business (including on the railways before 1948), a private company raises capital and invests it in making and/or selling goods/services. They have total freedom to specify the design of their product, the level of service they provide and the price they can charge. On the railways, the franchisee bids to run a service. They tell the government how much they will pay back to the treasury (or how little subsidy they want in the case of loss-making services) and the DfT picks the highest bidder. Services are tightly specified by the government, taking all decision making out of the hands of the franchisee. The flaw is, if the company overbids (as was the case on the East Coast route) they can run out of money and then have to pull out leaving the government to pick up the pieces. The trains must still run even if the franchise fails. All for the illusion of private enterprise. It's a farce. It would be far simpler to go back to British Rail. Have the whole network run by the public sector. Profits go back into the railways instead of the pockets of private shareholders. The service remains the same. The need for re-branding every few years is eliminated. The need for rewriting contracts every few years is eliminated. Money is saved by getting rid of a pointless and expensive bidding process. The taxpayer wins, railway employees win, passengers win.

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