Monopoly

The original article is here

(The Guardian 6th December)

Britain could be set for a fully privatised rail line, as transport secretary Chris Grayling outlines plans for a new line connecting Oxford and Cambridge.

Chris Grayling unveils plans for fully privatised rail line

“What we are doing is taking this line out of Network Rail’s control,” Grayling told BBC Radio 4’s Today programme.
The transport secretary said the new private line, to be funded by “private finance, in a form to be decided”, would provide “a degree of comparison with Network Rail to say, ‘can we build lines quicker and cheaper than we are at the moment?’.”

This amounts to a state regulated private monopoly

On the plus side a fully integrated rail system owned by one organisation will surely create efficiencies, on the minus side, there surely is nothing more economically deleterious than a complete 100% private monopoly. 

At least with a public monopoly, the profit motive does not extract resources away from the particular public service, and health and safety concerns are paramount.
I wonder what the competition and markets authority will think of this state regulated private monopoly? Even if the contract is put out to tender every ten years or so, whilst in operation, it is still a monopoly.

We will see higher fares

Given that all passenger train operating companies (TOCs) operate on the franchise model and that most franchises are between seven and ten years, what happens when a TOC, in the last year or two of their franchise, knows they won't get a franchise renewal? Are they going to keep spending their own money to maintain a network they know they'll be handing to a competitor in the near future or are they going to maintain it on a shoe string budget to maximise their own profits?
Also, what happens to operators who run trains on more than one company's section of line? Cross Country for example? Suddenly they are going to have to pay a premium to several other operators, rather than the current single access charge to Network Rail. You can guess how thry are going to recoup the cost.

Let them raise their own capital

If private companies really are so wonderful at owning, providing and managing infrastructure, why not let them rise their own capital and take care of crossrail, HS2 and Heathrow? Oh right, they couldn't.
Why spend billions from the public purse one one rail line only to allow private companies to cream off the profits from an existing one?

There will still be subsidies

Does fully privatised mean that the government will give them no subsidies, that there will be no special tax breaks, that they will actually stand on their own two feet as no other privatised industry seems to be able to do?

Rail requires a monopoly - state or private

Deutsche Bahn runs practically everything in Germany. So yes it works as long as there is no competition. You can only run a railway if everything is under the control of one organisation. Which should be either the state or a heavily regulated and accountable monopoly.



Privatisation?