A fixation on whether public services should be privatised or nationalised misses the larger, more impactful considerations
It has happened! The failed delivery model whereby a public sector authority specifies the services it wants and then contracts private firms to deliver them is over! Hooray for rail renationalisation. Unless, of course, you’re a bus user in Manchester, where this delivery model is not the outdated relic of a failed past but the shining vision of an exciting future.
This contradiction highlights 40 years of distraction. Since the 1985 Transport Act deregulated buses (I was just starting play school at the time), the dominant debate in transport has been public versus private.
Yet the evidence that this is the most important question is comparatively limited. In terms of customer satisfaction, one of the best-performing rail franchises has consistently been the service that, from 1996, was branded as GNER (a private business owned by Sea Containers) and is now called LNER (a public sector company owned by the Department for Transport). Some of the best bus services in the UK outside London are in Nottingham: run by the publicly-owned Nottingham City Transport and the private sector TrentBarton. The highest bus mode shares in the country are London (regulated) and Brighton (deregulated).
The Isle of Man has a fantastic quality modern, dense bus network, plus an electric railway and a steam railway – all in the public sector. The Isle of Wight has a fantastic quality modern, dense bus network, plus an electric railway and a steam railway – all in the private sector.
The best-performing major railway in Europe is Swiss State Railways, run in the public sector by SBB. Last time I was in Switzerland, I was gobsmacked by the fact that they put on an ‘Ersatzzug’ (replacement train) to ensure we were able to leave Basel on time, as opposed to wait for the planned train which was… horror!.. 19 minutes late. It had been delayed on its way in from Germany by Europe’s worst-performing major railway: German State Railways (DB), also in the public sector.
Italian regional trains are slow and unreliable (with a superb side-line in all-over bodywork grafitti). Italian Frecciarossa high-speed trains are incredible – reliable, great quality service, customer-focused. Both Frecciarossa and the regional trains are run by state-owned Trenitalia. Part of the reason Frecciarossa trains are so good is competition from private open-access operator Italo. So is Frecciarossa a triumph for the private sector or the public sector?
In Switzerland, the transport network is a magical thing: fully integrated, incredibly high quality and universal. Fares, ticketing and timetables connect up throughout the whole country. The Swiss, on average, make roughly twice as many rail journeys per year as the Brits. I mean, you would, wouldn’t you? While much of the network in Switzerland is public, 40 railways are private. Rural services are provided by the iconic yellow PostBus: owned by Swiss Post. Is it public or private? It operates as a public company but under a special statutory regime, allowing it to function with significant entrepreneurial freedom. I don’t know. Should I care?
The reality is that public sector companies screw up and private sector companies screw up. Each time, we genuflect towards the other
The reality is that public sector companies screw up and private sector companies screw up. Each time, we genuflect towards the other. Don’t like the way the water networks are run? Nationalise them – like the Post Office! Oh, but Alan Bates is on record as saying that he wishes the Post Office was run by Amazon…
That’s not to say that it’s random – that companies are good or bad arbitrarily, and the quality of service is a tombola. There are common themes and factors. It’s just that ownership has become a distraction from what really makes a difference.
Size matters
One pretty consistent feature is that small is beautiful. Rail businesses that have innovated have tended to be the smaller ones: LNER, Chiltern Railways, Lumo, Merseyrail. In the bus sector, the owning group that has consistently delivered the highest customer satisfaction and consistent margins has been the one with a policy of local delegation and empowerment: the Go-Ahead Group. 15 years ago, First Bus was highly centralised and struggling. Today, First has local brands and has made real efforts to empower local managers. But Arriva and Stagecoach are highly centralised and struggling (the former, by the way, under the ownership of German state-owned DB until recently: the latter, private sector). This is also true of the public sector (refer to the Isle of Man, above).
My subheading is misleading. Size doesn’t matter: what matters is being connected to customers and being empowered to make decisions. It’s just that these things are much easier to achieve in a small organisation. Amazon employs around five times the number of people than DB (and is the largest transport operator on earth), but they put huge amounts of effort into decentralisation and enabling teams to innovate. They recognise that a big organisation naturally becomes a bureaucracy, so they have very intentionally created rules, mental models and heuristics to maintain the agility and innovation of a small organisation.
Test your organisation. Are your people connected to customers? Are they empowered to make decisions? Do they feel incentivised to innovate?
Test your organisation. Are your people connected to customers? Are they empowered to make decisions? Do they feel incentivised to innovate? Ask them. Those characteristics are easier to create in small organisations but they can occur anywhere. It’s just that the bigger the firm, the more deliberate it needs to be. In small ones, these traits emerge naturally. As GBR (Great British Railways) seeks to replace small organisations with one big one, it’s crucial it learns these lessons.
It doesn’t matter whether a cat is black or white, as long as it catches mice
This is not to say that public or private firms are identical. The public sector feels very different to the private sector. The public sector is slower, less pressured, more bureaucratic and less focused. It is also more socially-minded, more concerned about equity and more thoughtful. The private sector is more focused, faster and more ruthless – sometimes rapacious. These are real differences.
My point, though, is that while these things are real and important, they are not the most important determinants of quality. Leadership is key, and there are good and bad leaders in both public and private sector. Great leaders will promote customer focus, agility and empower managers to innovate.
After leadership, the fundamentals matter most. For buses, this means a lack of congestion. For all markets, it means strong demand and a commercially viable service. For transport, it means a close partnership with the local authorities.
A fixation on whether public services should be privatised or nationalised misses the larger, more impactful considerations that truly drive service quality and customer satisfaction.
No more distractions
On my blog, www.freewheeling.info, I recently calculated the cost of bus franchising in Manchester. By my estimate, it’s about £700m over five years. That’s a lot of money to spend changing the governance model. On the other hand, it’s only a lot of money in bus world, not in the context of the overall transport budget. Northern Rail receives nearly this amount every year and carries around 90 million passengers annually – just over half the number of passengers the Greater Manchester bus network carries each year. To put it another way, Northern Rail’s subsidy is around £7 per passenger (excluding Network Rail costs, which includes all the track), whereas the cost of franchising is around £1.50 per passenger.
But franchising will not make the buses go faster if the roads are still congested. London proves this, where bus speeds have been falling for a decade: simultaneously increasing costs and reducing the revenue potential. The important question is how to get a pricing model for roads that can command political and public support. And how to pull off the trick that Transport for London achieved in the early 2000s of investing first in improvements so that the congestion charge arrived in the context of visibly improving services.
And this is before we get to the AI revolution. AI is going to transform customer contact. This isn’t something organisations can wait for. You’re about to be bombarded with an exponential increase in customer contact, as customers’ own AIs take over contacting you on their behalf. Some people say that AI can replace customer contact staff. That’s not the right question. Those customer contact staff need to become managers of AI agents, responding to customers’ own AIs. Sound dystopian? Maybe. But it’s coming.
AI will dramatically improve how organisations can work
AI will dramatically improve how organisations can work. In a sector struggling with an aging workforce, AI will also democratise learning. Training will shift from one-size-fits-all to tailored life-long learning. Bureaucratic tasks, from regulatory submissions to traffic orders, will be automated, streamlining workflows and cutting costs. AI will reshape the whole way technology works; empowering individual teams to create their own tech solutions by ‘writing’ their requirements in plain English, which the AI translates into computer code. The challenge, however, is that customers will expect a new level of agility and responsiveness from firms’ tech products, as this is what they’ll start to see from other sectors. Are we ready?
And that’s before we get to the most exciting thing of all. While we’ve been focused on public v private, autonomous vehicle technology has made enormous progress. Is it ever going to be safe enough for you to sit on the back seat watching a film while a car drives you to see the family? Not sure. We’re a long way from that.
But is it good enough to be able to drive a vehicle autonomously in a defined region and where local human intervention can easily be made? Why, yes. Because it’s already happening. Waymo robotaxis are already live and in daily use in multiple US cities. But we’re leaving this technology to the Silicon Valley crew, who assume it’s for cars. Why? This technology could transform public transport.
Whereas autonomous cars need to be genuinely autonomous, public transport autonomous vehicles can have the back-up of a room full of video operators. One operator can be responsible for escalations from hundreds of vehicles. If the vehicle isn’t sure what it can safely do in a particular situation, it can propose a solution for a human to check.
A shuttle that stays within a defined suburb will have far fewer issues than a Tesla that needs to know every streetscape on Earth. That means that each suburb, town and village can be connected by high-frequency autonomous shuttles to the core public transport network. This would be transformational. And it will become possible.
Public transport without the cost of fuel or drivers (obviously these vehicles will be electric) is public transport that can be delivered for a fraction of the current minimum
Public transport without the cost of fuel or drivers (obviously these vehicles will be electric) is public transport that can be delivered for a fraction of the current minimum. Imagine the places that it will be possible to profitably connect if public transport connectivity can be provided for £1 per vehicle mile. This isn’t about replacing anything we currently do: it’s about public transport reaching every suburb and every village with a frequency that makes it not just viable but attractive. As the peripheral network becomes larger, the core network becomes stronger. It’s Beeching in reverse.
We’re living through a technological revolution. We need to transform the ways our organisations work to make them agile and responsive. We need to focus on customers, partnerships and change that makes a difference. Let’s celebrate the passing of the renationalisation act, not for ideological reasons, but in the hope that it marks the end of the age of distraction.
ABOUT THE AUTHOR: Thomas Ableman is the founder and CEO of Freewheeling. He was previously director of strategy and innovation at Transport for London and commercial director at Chiltern Railways.
This story appears inside the latest issue of Passenger Transport.
Ownership has become a distraction
by Passenger Transport on Nov 29, 2024 • 2:25 pm No CommentsA fixation on whether public services should be privatised or nationalised misses the larger, more impactful considerations
It has happened! The failed delivery model whereby a public sector authority specifies the services it wants and then contracts private firms to deliver them is over! Hooray for rail renationalisation. Unless, of course, you’re a bus user in Manchester, where this delivery model is not the outdated relic of a failed past but the shining vision of an exciting future.
This contradiction highlights 40 years of distraction. Since the 1985 Transport Act deregulated buses (I was just starting play school at the time), the dominant debate in transport has been public versus private.
Yet the evidence that this is the most important question is comparatively limited. In terms of customer satisfaction, one of the best-performing rail franchises has consistently been the service that, from 1996, was branded as GNER (a private business owned by Sea Containers) and is now called LNER (a public sector company owned by the Department for Transport). Some of the best bus services in the UK outside London are in Nottingham: run by the publicly-owned Nottingham City Transport and the private sector TrentBarton. The highest bus mode shares in the country are London (regulated) and Brighton (deregulated).
The Isle of Man has a fantastic quality modern, dense bus network, plus an electric railway and a steam railway – all in the public sector. The Isle of Wight has a fantastic quality modern, dense bus network, plus an electric railway and a steam railway – all in the private sector.
The best-performing major railway in Europe is Swiss State Railways, run in the public sector by SBB. Last time I was in Switzerland, I was gobsmacked by the fact that they put on an ‘Ersatzzug’ (replacement train) to ensure we were able to leave Basel on time, as opposed to wait for the planned train which was… horror!.. 19 minutes late. It had been delayed on its way in from Germany by Europe’s worst-performing major railway: German State Railways (DB), also in the public sector.
Italian regional trains are slow and unreliable (with a superb side-line in all-over bodywork grafitti). Italian Frecciarossa high-speed trains are incredible – reliable, great quality service, customer-focused. Both Frecciarossa and the regional trains are run by state-owned Trenitalia. Part of the reason Frecciarossa trains are so good is competition from private open-access operator Italo. So is Frecciarossa a triumph for the private sector or the public sector?
In Switzerland, the transport network is a magical thing: fully integrated, incredibly high quality and universal. Fares, ticketing and timetables connect up throughout the whole country. The Swiss, on average, make roughly twice as many rail journeys per year as the Brits. I mean, you would, wouldn’t you? While much of the network in Switzerland is public, 40 railways are private. Rural services are provided by the iconic yellow PostBus: owned by Swiss Post. Is it public or private? It operates as a public company but under a special statutory regime, allowing it to function with significant entrepreneurial freedom. I don’t know. Should I care?
The reality is that public sector companies screw up and private sector companies screw up. Each time, we genuflect towards the other. Don’t like the way the water networks are run? Nationalise them – like the Post Office! Oh, but Alan Bates is on record as saying that he wishes the Post Office was run by Amazon…
That’s not to say that it’s random – that companies are good or bad arbitrarily, and the quality of service is a tombola. There are common themes and factors. It’s just that ownership has become a distraction from what really makes a difference.
Size matters
One pretty consistent feature is that small is beautiful. Rail businesses that have innovated have tended to be the smaller ones: LNER, Chiltern Railways, Lumo, Merseyrail. In the bus sector, the owning group that has consistently delivered the highest customer satisfaction and consistent margins has been the one with a policy of local delegation and empowerment: the Go-Ahead Group. 15 years ago, First Bus was highly centralised and struggling. Today, First has local brands and has made real efforts to empower local managers. But Arriva and Stagecoach are highly centralised and struggling (the former, by the way, under the ownership of German state-owned DB until recently: the latter, private sector). This is also true of the public sector (refer to the Isle of Man, above).
My subheading is misleading. Size doesn’t matter: what matters is being connected to customers and being empowered to make decisions. It’s just that these things are much easier to achieve in a small organisation. Amazon employs around five times the number of people than DB (and is the largest transport operator on earth), but they put huge amounts of effort into decentralisation and enabling teams to innovate. They recognise that a big organisation naturally becomes a bureaucracy, so they have very intentionally created rules, mental models and heuristics to maintain the agility and innovation of a small organisation.
Test your organisation. Are your people connected to customers? Are they empowered to make decisions? Do they feel incentivised to innovate? Ask them. Those characteristics are easier to create in small organisations but they can occur anywhere. It’s just that the bigger the firm, the more deliberate it needs to be. In small ones, these traits emerge naturally. As GBR (Great British Railways) seeks to replace small organisations with one big one, it’s crucial it learns these lessons.
It doesn’t matter whether a cat is black or white, as long as it catches mice
This is not to say that public or private firms are identical. The public sector feels very different to the private sector. The public sector is slower, less pressured, more bureaucratic and less focused. It is also more socially-minded, more concerned about equity and more thoughtful. The private sector is more focused, faster and more ruthless – sometimes rapacious. These are real differences.
My point, though, is that while these things are real and important, they are not the most important determinants of quality. Leadership is key, and there are good and bad leaders in both public and private sector. Great leaders will promote customer focus, agility and empower managers to innovate.
After leadership, the fundamentals matter most. For buses, this means a lack of congestion. For all markets, it means strong demand and a commercially viable service. For transport, it means a close partnership with the local authorities.
A fixation on whether public services should be privatised or nationalised misses the larger, more impactful considerations that truly drive service quality and customer satisfaction.
No more distractions
On my blog, www.freewheeling.info, I recently calculated the cost of bus franchising in Manchester. By my estimate, it’s about £700m over five years. That’s a lot of money to spend changing the governance model. On the other hand, it’s only a lot of money in bus world, not in the context of the overall transport budget. Northern Rail receives nearly this amount every year and carries around 90 million passengers annually – just over half the number of passengers the Greater Manchester bus network carries each year. To put it another way, Northern Rail’s subsidy is around £7 per passenger (excluding Network Rail costs, which includes all the track), whereas the cost of franchising is around £1.50 per passenger.
But franchising will not make the buses go faster if the roads are still congested. London proves this, where bus speeds have been falling for a decade: simultaneously increasing costs and reducing the revenue potential. The important question is how to get a pricing model for roads that can command political and public support. And how to pull off the trick that Transport for London achieved in the early 2000s of investing first in improvements so that the congestion charge arrived in the context of visibly improving services.
And this is before we get to the AI revolution. AI is going to transform customer contact. This isn’t something organisations can wait for. You’re about to be bombarded with an exponential increase in customer contact, as customers’ own AIs take over contacting you on their behalf. Some people say that AI can replace customer contact staff. That’s not the right question. Those customer contact staff need to become managers of AI agents, responding to customers’ own AIs. Sound dystopian? Maybe. But it’s coming.
AI will dramatically improve how organisations can work. In a sector struggling with an aging workforce, AI will also democratise learning. Training will shift from one-size-fits-all to tailored life-long learning. Bureaucratic tasks, from regulatory submissions to traffic orders, will be automated, streamlining workflows and cutting costs. AI will reshape the whole way technology works; empowering individual teams to create their own tech solutions by ‘writing’ their requirements in plain English, which the AI translates into computer code. The challenge, however, is that customers will expect a new level of agility and responsiveness from firms’ tech products, as this is what they’ll start to see from other sectors. Are we ready?
And that’s before we get to the most exciting thing of all. While we’ve been focused on public v private, autonomous vehicle technology has made enormous progress. Is it ever going to be safe enough for you to sit on the back seat watching a film while a car drives you to see the family? Not sure. We’re a long way from that.
But is it good enough to be able to drive a vehicle autonomously in a defined region and where local human intervention can easily be made? Why, yes. Because it’s already happening. Waymo robotaxis are already live and in daily use in multiple US cities. But we’re leaving this technology to the Silicon Valley crew, who assume it’s for cars. Why? This technology could transform public transport.
Whereas autonomous cars need to be genuinely autonomous, public transport autonomous vehicles can have the back-up of a room full of video operators. One operator can be responsible for escalations from hundreds of vehicles. If the vehicle isn’t sure what it can safely do in a particular situation, it can propose a solution for a human to check.
A shuttle that stays within a defined suburb will have far fewer issues than a Tesla that needs to know every streetscape on Earth. That means that each suburb, town and village can be connected by high-frequency autonomous shuttles to the core public transport network. This would be transformational. And it will become possible.
Public transport without the cost of fuel or drivers (obviously these vehicles will be electric) is public transport that can be delivered for a fraction of the current minimum. Imagine the places that it will be possible to profitably connect if public transport connectivity can be provided for £1 per vehicle mile. This isn’t about replacing anything we currently do: it’s about public transport reaching every suburb and every village with a frequency that makes it not just viable but attractive. As the peripheral network becomes larger, the core network becomes stronger. It’s Beeching in reverse.
We’re living through a technological revolution. We need to transform the ways our organisations work to make them agile and responsive. We need to focus on customers, partnerships and change that makes a difference. Let’s celebrate the passing of the renationalisation act, not for ideological reasons, but in the hope that it marks the end of the age of distraction.
ABOUT THE AUTHOR: Thomas Ableman is the founder and CEO of Freewheeling. He was previously director of strategy and innovation at Transport for London and commercial director at Chiltern Railways.
This story appears inside the latest issue of Passenger Transport.
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