11 ms·

Err UK rail was famously terrible before "privatisation". Not that privatisation is the answer, nor that being public was at fault, but I'm not sure rewriting

Err UK rail was famously terrible before "privatisation". Not that privatisation is the answer, nor that being public was at fault, but I'm not sure rewriting history is helpful. Looking at UK water companies being privatised so their owners can stuff them full of debt to get around the profit caps is probably a better case study. Profit percentage caps are silly because the obvious way to make more money is to make the entire service more expensive by wasting money, this increasing turnover, thus increasing the size of that 4%. Monopolies being privatised doesn't seem super helpful either, but hey, that's the UK for you.

elcomet 8y ago
I read in a lot of articles that it is actually more terrible for a lot of tracks after privatisation in the UK. What happens is that companies focus on the most profitable tracks, so the other ones are not well maintained. An example: https://www.theguardian.com/commentisfree/2017/dec/05/the-guardian-view-on-rail-privatisation-going-off-the-tracks https://www.theguardian.com/commentisfree/2017/dec/05/the-gu...
- C1sc0cat 8y ago
  And when franchises change the outgoing franchisee just milks it for the last two years or so - which lead to the complete fracking disaster of the thames link.
- ownagefool 8y ago
  I'm not sure that article say's it's worse than pre-privatisation, just that it's not great now and they're right, I pay over £400 a month to sit on the floor for a train that turns up when it wants to. It's not exactly amazing. But, as a counter: https://www.ft.com/content/d192b1b4-458b-11e5-af2f-4d6e0e5eda22 https://www.ft.com/content/d192b1b4-458b-11e5-af2f-4d6e0e5ed... Now indeed, the terrible service in the past was most likely due to underfunding, but recent history suggests we'll consistently vote in a Government that starves national infrastructure then sell it off to it's mates, so it's hard to see public ownership lasting and resulting in success.
- nickik 8y ago
  Its always easy to pick you some things that are worse. But the UK train system was terrible and getting more terrible constantly year after year with total stagnation of new lines and other advancements. You can just as easily point to a number of other metrics that 'private' or whatever you want to call it British system has actually improved. The people dislike of anything to do with privatization ends up people and journalist just looking for the problems. But the problems they find are not actually that much worse then the problems they had before.
james1071 8y ago
What you said about the water companies is not correct. They are regulated on the basis of price - the regulator sets a pricing formula for the industry RPI + X (i.e. X is the annual price increase above inflation). There are no caps on profit. The reason why companies carry large amounts of debt is that debt finance is much cheaper than equity. Given that a utility has stable cashflows, it makes sense for it to use a high proportion of debt finance.
- ownagefool 8y ago
  Fair enough, I defer to somebody who obviously knows more. I admit I likely conflated several industries anyway ( I believe rail is on a 4% cap). However, there still seems to be questions around the debt, divididends, and asking Government for investment. https://www.bbc.co.uk/news/business-41152516 https://www.bbc.co.uk/news/business-41152516 https://www.theguardian.com/commentisfree/2013/aug/03/water-industry-exploitation-pollution https://www.theguardian.com/commentisfree/2013/aug/03/water-... https://www.ft.com/content/5878de66-9c7d-11e7-8cd4-932067fbf946 https://www.ft.com/content/5878de66-9c7d-11e7-8cd4-932067fbf... Now obviously we live in a country of outrage, and fairly poor reporting, but the reporting does make it seem like we regularly get privatised profits and socialised losses.

elcomet 8y ago

I read in a lot of articles that it is actually more terrible for a lot of tracks after privatisation in the UK. What happens is that companies focus on the most profitable tracks, so the other ones are not well maintained. An example: https://www.theguardian.com/commentisfree/2017/dec/05/the-guardian-view-on-rail-privatisation-going-off-the-tracks https://www.theguardian.com/commentisfree/2017/dec/05/the-gu...

C1sc0cat 8y ago
And when franchises change the outgoing franchisee just milks it for the last two years or so - which lead to the complete fracking disaster of the thames link.
ownagefool 8y ago
I'm not sure that article say's it's worse than pre-privatisation, just that it's not great now and they're right, I pay over £400 a month to sit on the floor for a train that turns up when it wants to. It's not exactly amazing. But, as a counter: https://www.ft.com/content/d192b1b4-458b-11e5-af2f-4d6e0e5eda22 https://www.ft.com/content/d192b1b4-458b-11e5-af2f-4d6e0e5ed... Now indeed, the terrible service in the past was most likely due to underfunding, but recent history suggests we'll consistently vote in a Government that starves national infrastructure then sell it off to it's mates, so it's hard to see public ownership lasting and resulting in success.
nickik 8y ago
Its always easy to pick you some things that are worse. But the UK train system was terrible and getting more terrible constantly year after year with total stagnation of new lines and other advancements. You can just as easily point to a number of other metrics that 'private' or whatever you want to call it British system has actually improved. The people dislike of anything to do with privatization ends up people and journalist just looking for the problems. But the problems they find are not actually that much worse then the problems they had before.

james1071 8y ago

What you said about the water companies is not correct. They are regulated on the basis of price - the regulator sets a pricing formula for the industry RPI + X (i.e. X is the annual price increase above inflation). There are no caps on profit. The reason why companies carry large amounts of debt is that debt finance is much cheaper than equity. Given that a utility has stable cashflows, it makes sense for it to use a high proportion of debt finance.

ownagefool 8y ago
Fair enough, I defer to somebody who obviously knows more. I admit I likely conflated several industries anyway ( I believe rail is on a 4% cap). However, there still seems to be questions around the debt, divididends, and asking Government for investment. https://www.bbc.co.uk/news/business-41152516 https://www.bbc.co.uk/news/business-41152516 https://www.theguardian.com/commentisfree/2013/aug/03/water-industry-exploitation-pollution https://www.theguardian.com/commentisfree/2013/aug/03/water-... https://www.ft.com/content/5878de66-9c7d-11e7-8cd4-932067fbf946 https://www.ft.com/content/5878de66-9c7d-11e7-8cd4-932067fbf... Now obviously we live in a country of outrage, and fairly poor reporting, but the reporting does make it seem like we regularly get privatised profits and socialised losses.