1.6.8 Privatisation: Railway Information
What is the rationale behind privatisation?
- Financial- financial gain from government selling assets.
- Efficiency improvements-private managers will be more x-efficient.
- Investment- private profits will help make industries more dynamically efficient.
Videos:
- Why did we sell off the railways? | FT Feature
- Should our railways be renationalised? - BBC Newsnight
- Why are Britain’s trains so bad - could nationalisation fix them?
More Railway Information:
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Economist Article: Nationalisation's High Short-Term Price and Higher Long-Term Cost
Article Summary: Nationalisation’s High Short-Term Price and Higher Long-Term Cost
- Labour’s manifesto (as of 2017) included nationalising many private industries, for example the water system, energy- supply network, Royal mail, and the railways.
- The cost would be high: £60bn for water industry, and £5bn for Royal Mail.
- If they were to take back the railways, they could do this for less money by simply taking them back at the end of the franchise running out.
- However, as the companies knew they would not get the franchise again they would probably cut back on investment.
- The long-term damage would mainly be due to the under-investment and inefficiency that were problems before privatisation. “Satisfaction in railways is higher than in most of Europe.”
- Counter-arguments about why things should change:
- Private companies in utilities still rip off customers.
- There is a lot of regulation: the ‘super-regulator’ of CMA, followed by individual regulators e.g. Ofgem. This leads to senior staff who are better at navigating the system rather than thinking about making the system better.
- How Privatisation Became A Train Wreck