What has the UK become?

[Bodicoteblue]

Privatisation was sold to us on the basis that service would be better and cheaper than before.
that worked well…..

Twenty years later we bought brexit with very much the same packaging.
’Those who fail to learn from history are doomed to repeat it’

 

[Don Karleone]

 

[Chippy_boy]

Privatisation was sold to us on the basis that service would be better and cheaper than before.
that worked well…..

It's a textbook example of how monopolies cannot work to the consumer's advantage unless properly regulated.

The government cocked up the privatisation by creating long term monopolistic franchises instead of the model for airlines where that is not the case, i.e. airlines pay for "slots" at the different airports at which they want to operate out of. Had the government done that with trains, so you could have actual choice between different train companies on the same route, then we would not be in this mess.

But having cocked that up, they then proceeded to cock it up even further by creating a toothless, incompetent regulator that tolerated above RPI ticket price increases for 30 years. In the cut and thrust of commercial competition, such a luxury rarely if ever occurs. Competing companies drive to reduce costs to be more competitive so they reduce prices where they can, they run promotions to tempt customers to buy from them and not from the competition, they offer reward schemes with benefits. In short they do everthing they can to attract customers

Sometimes cost cutting comes at the expense of quality, but if quality suffers too much, they lose business anyway so they are bound to try at least to maintain quality, or even improve it, as a competitive advantage.

But the regulator required the train companies to do NONE of the above. They just listened to the bleating of the traing companies' negotiating teams crying about investment costs, and allowed them to increase their prices year, upon year upon year. When in fact they should have been requiring ticket price decreases in many years.

It is an absolute disgrace. But people should not be fooled into thinking this is a failing of capitalism and privatisation. Clearly customer service, low prices and private business are NOT mutually exclusive or we would not get great service from businesses like Marks & Spencer and many others.

No, it's a failing of three things:

1. Establishing monopolies
2. Allowing those monopolies to abuse a monopolistic position
3. Lack of government subsidy, especially compared to e.g. European train networks.

A profit motive is a powerful and useful driver to improve services and reduce costs, but unless checked it results in the shit show that is our rail system.

 

[tommybooth]

We are on a sledge out of control.

 

[gordondaviesmoustache]

It's a textbook example of how monopolies cannot work to the consumer's advantage unless properly regulated.

The government cocked up the privatisation by creating long term monopolistic franchises instead of the model for airlines where that is not the case, i.e. airlines pay for "slots" at the different airports at which they want to operate out of. Had the government done that with trains, so you could have actual choice between different train companies on the same route, then we would not be in this mess.

But having cocked that up, they then proceeded to cock it up even further by creating a toothless, incompetent regulator that tolerated above RPI ticket price increases for 30 years. In the cut and thrust of commercial competition, such a luxury rarely if ever occurs. Competing companies drive to reduce costs to be more competitive so they reduce prices where they can, they run promotions to tempt customers to buy from them and not from the competition, they offer reward schemes with benefits. In short they do everthing they can to attract customers

Sometimes cost cutting comes at the expense of quality, but if quality suffers too much, they lose business anyway so they are bound to try at least to maintain quality, or even improve it, as a competitive advantage.

But the regulator required the train companies to do NONE of the above. They just listened to the bleating of the traing companies' negotiating teams crying about investment costs, and allowed them to increase their prices year, upon year upon year. When in fact they should have been requiring ticket price decreases in many years.

It is an absolute disgrace. But people should not be fooled into thinking this is a failing of capitalism and privatisation. Clearly customer service, low prices and private business are NOT mutually exclusive or we would not get great service from businesses like Marks & Spencer and many others.

No, it's a failing of three things:

1. Establishing monopolies
2. Allowing those monopolies to abuse a monopolistic position
3. Lack of government subsidy, especially compared to e.g. European train networks.

A profit motive is a powerful and useful driver to improve services and reduce costs, but unless checked it results in the shit show that is our rail system.

How does that choice to which you refer operate on a line which can only support one train an hour (for example)?

If I don’t like the operator that leaves at 8am do I get the next train at 9am ran by its competition and be late for work?

Some business models don’t sit on all fours with the well-established benefits of capitalism that you describe in your post. The railways being one of them.

 

[Chippy_boy]

How does that choice to which you refer operate on a line which can only support one train an hour (for example)?

If I don’t like the operator that leaves at 8am do I get the next train at 9am ran by its competition and be late for work?

Some business models don’t sit on all fours with the well-established benefits of capitalism that you describe in your post. The railways being one of them.

I agree entirely that capitalism is not best suited in all cases. And if we are to have 10-year franchises with no competition, I think that is probably one of those use cases. I still think it could have worked well however if implemented and managed better, and by managed I mean a regulator doing their job properly.

But IMO it is absolutely wrong to extrapolate the issues with the trains and conclude that capitalism is incompatible with all public services. State ownership is no panacea and has a raft of its own problems. Public sector workers on average earn 7% more than their private sector counterparts, get on average 1 week more annual holiday allowance and since 1995 have taken on average double the number of sick days. We have councils with employees working in Australia and Dubai, councils moving to 4 day weeks with no loss of pay and all sorts of other things that may be great for the employee but not so much for the public needing good service.

 

[gordondaviesmoustache]

But IMO it is absolutely wrong to extrapolate the issues with the trains and conclude that capitalism is incompatible with all public services.

I accept that, but don’t believe that the railways or utilities are amongst the grouping that is broadly compatible.

I also think technological advances would make many industries more efficient in state ownership than they were 40 odd years ago.

 

[I'm With Stupid]

I agree entirely that capitalism is not best suited in all cases. And if we are to have 10-year franchises with no competition, I think that is probably one of those use cases. I still think it could have worked well however if implemented and managed better, and by managed I mean a regulator doing their job properly.

But IMO it is absolutely wrong to extrapolate the issues with the trains and conclude that capitalism is incompatible with all public services. State ownership is no panacea and has a raft of its own problems. Public sector workers on average earn 7% more than their private sector counterparts, get on average 1 week more annual holiday allowance and since 1995 have taken on average double the number of sick days.

The main issue with state ownership is that over half of the time, the state is run by a party that has no interest in running public services and grinds them to dust. But some people see that as an issue with state ownership rather than an issue with that party running them.

 

[gordondaviesmoustache]

The main issue with state ownership is that over half of the time, the state is run by a party that has no interest in running public services and grinds them to dust. But some people see that as an issue with state ownership rather than an issue with that party running them.

The other thing that often gets ignored about the inefficiencies of state industries is how much waste and inefficiency is associated with large corporations.

 

[Chippy_boy]

I accept that, but don’t believe that the railways or utilities are amongst the grouping that is broadly compatible.

I also think technological advances would make many industries more efficient in state ownership than they were 40 odd years ago.

Agreed re your 2nd paragraph. 1st one, I'm not sure but you may be right. I used to work for SAP selling solutions to the utility companies and it is interesting how Yorkshire Water transformed itself from the absolute bottom of the pile in terms of customer service to the very top, all whilst in private ownership. I have lost touch since but I think they have slipped back again. The point though is, it is possible to be excellent whilst being privately owned with a profit motive. What kicked YW into shape was the extremely strong incentives (and penalties) the regulator put in place. Basically the amount of profit they were allowed to take was explicitly linked to their performance against a set of meaningful KPIs, like the amount of waste, the number of sewage "events" etc, so the management team were very, very focused on the right things.