Tuesday, 27 August 2013

IEA Conference - 10 economists and an MP discussing rail transport

Fascinating debate on privatisation of trains, and the differences across Europe - identifying successes and causes for failure. Led by Dr David Tyrell of Stafford University we assessed the problem of UK Railways in that the track and the operator are not linked, and lack integration.
My economist colleagues at the conference made the point that the provision of some public services eg water, gas, electricity is very different from the provision of a transport service like a railway, because railways are so dependent on the quality and extent of the infrastructure. David Tyrell's argument was strongly in favour of reintegration of network rail and the train operators.
We discussed the assessment of true operating cost. Is this a direct cost excluding investment? Or does maintenance included in operating cost. Being economists the experts all wanted hard data as to costs. The improvement in passenger numbers, and increased safety, was noted post UK privatisation.
Everyone agreed that you need a very long term view when assessing railways and noted that few other countries have a system where the network and the operator are different. The point was made that a nationalised service always lacks investment that privatised systems do provide. That will be the inevitable consequence if East Coast stays in the nationalised model; the evidence on this issue is overwhelming and fascinating. Temporary nationalisations constitute and compare to a war or a recesssion on a business: the service will carry on as previously, using previous investment, for a finite period before there is a requirement for widespread re-investment. Will governments in the future provide this? The evidence is clear that they have persistently failed to do this.
Some suggested a middle way for East coast - unification of the network and the operator in a future privatised model: this would be neither the nationalised model that Labour wants, nor the re privatisation that some Coalition government ministers want. It is an argument worth detailed study and I shall return to this. It would effectively see a return to a private regional line, but with control over its network, which is a crucial add on and benefit for the service, the company and the consumer.