Our Whitehall insider imagines what’s going on inside the minds of the mandarins at Great Minster House, home of the DfT

Call me old fashioned, but I had always thought that the purpose of privatisation was to see formerly state-owned, public sector organisations move into the private sector. When you look at the totality of the railway industry, one has to question whether that core fundamental principle of privatisation has been secured.

Network Rail moves back into the public sector in a formal way in September when its debt is taken back on the government’s balance sheet. OK, its debt was always guaranteed by the taxpayer anyway, so you could argue that the infrastructure company has effectively been in the public sector ever since Railtrack went bust.

A number of train operating companies are run, or part run, by organisations that are ultimately state-owned. And in the ultimate of ironies, having made such a determined effort to get East Coast out of Directly Operated Railways and back into the private sector, we manage to end up including in the shortlist for the franchise competition a company – Eurostar – that is 40% owned by, er, the government. If the Eurostar/Keolis consortium ends up winning the competition – and of course Keolis is itself ultimately owned/funded by the French government through SNCF – you really do have to wonder what the point of all of this really is.

I’m not saying whether the privatisation was right or wrong. And let’s be clear the railways under British Rail were absolute rubbish. But I find it very hard to understand how it is possible to privatise the railways in the 1990s only to see a Conservative-led government allow a gradual drift back into state, or part state, operation and control. And let’s be clear. The reclassification of Network Rail’s debt is not just some dry accounting change, however hard ministers try to present it as such. Ministers will in future have to account for Network Rail’s performance in a very direct way to parliament – in a way they have not had to when the debt was treated as off balance sheet. This, for my money, fundamentally changes the dynamic of the relationship between us here in the DfT and Network Rail. And we will almost certainly appoint a non-executive special director to the Network Rail Board.

I think you can only conclude that the railways are no longer a genuinely privatised industry and haven’t been for some time. I wonder how long it will be before it moves back into the public sector, lock stock and smoking barrel!

Last week, Ed Miliband delivered a key note speech setting out his agenda should he win the next election, with the “cost of living crisis” being the central theme. The Labour leader tells us he’s going to sort out the energy companies, the banks and a whole host of other things besides. He is going to sort out the “broken markets” – and he included transport in this.

Sadly, he did not explain why he sees transport as a “broken market” or even say how he is proposing to fix it – although I’m hardly surprised by that! But it seems to me there is a fundamental problem here. Politicians are playing with language, and setting out views about how industrial sectors should be reformed, without the slightest idea of what impact their remarks have on the confidence and performance of the sectors concerned.

Unless we can understand why the Labour Party see the transport market as “broken” I am at a loss to know how we in Great Minster House can come up with solutions to “mend” the market. I think it behoves Ed Miliband – or perhaps Mary Creagh as his transport spokesman – to explain what he means by “broken”. Is it just that the Labour Party does not like the idea of rail privatisation and bus deregulation, or what? It’s curious, isn’t it? The entire focus of the deregulation / privatisation debate is on public transport. Nobody – even politicians in the Labour Party – questions the fact that British Airways, once state-owned, is now a private company, or that the ports sector, once state-owned and controlled, is now almost exclusively privately-owned and operated.

Why not? Ports and aviation are as fundamental to our economic and social well-being as buses and trains. Yet it is OK for our ports, on which we rely almost exclusively for our imports and exports, to be in the private sector, but it is not OK for our buses and trains to be in private hands.

Come on Mr Miliband – indeed politicians of all parties – I think you have some explaining to do.

 

This article, and many others, appears in the latest issue of Passenger Transport.

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