UK for sale

[3point14]

The UK government continues in its quest to sell off, well, apparently everything that's not nailed down. The government's profit making share in Eurostar is for sale.


As well as:

"Other state-owned assets being lined up for sale include the legacy Royal Mail pension assets, the uranium enrichment company Urenco, the income-contingent student loan book and further public sector wireless communication spectrum."

 

[Information Analyst]

The UK government continues in its quest to sell off, well, apparently everything that's not nailed down. The government's profit making share in Eurostar is for sale.


As well as:

"Other state-owned assets being lined up for sale include the legacy Royal Mail pension assets, the uranium enrichment company Urenco, the income-contingent student loan book and further public sector wireless communication spectrum."

George Osborne sayeth: "I am determined that we go on making the decisions to reform the British economy and tackle our debts. So we will proceed with the potential sale of the UK’s shareholding in Eurostar today. Ensuring we can deliver the best quality infrastructure for Britain and the best value for money for the taxpayer are key parts of our long-term economic plan."

I wonder if it'll be the same "best value for money for the taxpayer" as was the case with flogging off Royal Mail...?

 

[Skepticemea]

Ensuring we can deliver the best quality infrastructure for Britain and the best value for money for the taxpayer are key parts of our long-term economic plan

Which is why you continue to sell off parts of Britain's infrastructure? Moronic.

 

[MikeG]

Which is why you continue to sell off parts of Britain's infrastructure? Moronic.

What, like the (private) Royal Mail's pension fund? The Student Loan company? Part of Britain's infra-structure?........Really, get a grip.

I can't see any benefit to the government owning these. Why should the government own any businesses? If they should (not that I can see why they should), why should they own, say, the Student Loan Company as compared to say, Gregg's sandwich shops, or British Airways?

 

[The Don]

The government is proposing selling off its stake in Eurostar, which runs the trains rather than Eurotunnel which owns the infrastructure. Eurostar is described as making an operating profit which, given that the profit before tax isn't mentioned, usually means that it makes a substantial loss after financial and exceptional costs.

I'd argue that unless the government is willing to renationalise the whole rail industry (personally I think a case could be made for it based on the mess that is the franchising system but IMO it's beyond the scope of this conversation) then it shouldn't be in the business of running some rail services.

That said, to bill it as a way to reduce the deficit is a bit rich (the £300m it may raise will barely touch the sides) and it will almost certainly be under-priced to ensure that the sale is successful which means that George and Dave's mates in the city will be on a good little earner. I suspect (but cannot be sure) that the sale will also involve the government writing off or assuming some of Eurostar's liabilities.

Even if it is a matter of political dogma to privatise everything that isn't nailed down, there's no reason why it cannot be done in a way that delivers a fair return for taxpayers but I fear that it won't.

 

[Craig B]

What, like the (private) Royal Mail's pension fund? The Student Loan company? Part of Britain's infra-structure?........Really, get a grip.

I can't see any benefit to the government owning these. Why should the government own businesses? If they should (not that I can see why they should), why should they own, say, the Student Loan Company as compared to say, Gregg's sandwich shops, or British Airways?

The Royal Mail was "nationalised" in the seventeenth century, if not before. It differs from Gregg's sandwich shops in that it is part of the national infrastructure and is required to be kept going. There's a case for nationalising (or at least very strictly regulating) those things that are "too big to fail" and therefore aren't really part of a free market. Also, in the case of important infrastructural entities like the railway network; I have read somewhere that the private companies now receive more subsidy than the nationalised undertaking did in the days of British Rail. If so, that isn't right.

 

[The Don]

The Royal Mail was "nationalised" in the seventeenth century, if not before. It differs from Gregg's sandwich shops in that it is part of the national infrastructure and is required to be kept going. There's a case for nationalising (or at least very strictly regulating) those things that are "too big to fail" and therefore aren't really part of a free market. Also, in the case of important infrastructural entities like the railway network; I have read somewhere that the private companies now receive more subsidy than the nationalised undertaking did in the days of British Rail. If so, that isn't right.

Since the mid 2000s annual Government support to the rail industry has been significantly larger than in the 1980s and 1990s. A peak was reached in 2006/07, when real terms support of £7.3 billion was provided. Support in 2012/13 is around 30% lower than this peak,at £5.1 billion.

Source: www.parliament.uk/briefing-papers/SN00617.pdf

 

[MikeG]

The Royal Mail was "nationalised" in the seventeenth century, if not before. It differs from Gregg's sandwich shops in that it is part of the national infrastructure and is required to be kept going.

We're talking about the pension fund, not Royal Mail itself. I guess you've forgotten that the Royal Mail has already been privatised. And to proclaim that it is part of the national infrastructure deserves this:

..........I have read somewhere that the private companies now receive more subsidy than the nationalised undertaking did in the days of British Rail. If so, that isn't right.

Is this before or after correcting for inflation?

Given how awful the railways were under British rail, frankly I'll take virtually any ownership model as a better way of doing things. Given that the railways are, by any measure, out-of-sight better than they were under BR, if it is costing more in subsidy then I'll live with that. Don't forget that the railways were (mainly) built privately by Victorian entrepreneurs before we all get too excited about things being "national infrastructure" and "too big to fail".

 

[The Don]

Is this before or after correcting for inflation?

After - see the link to the briefing paper

Given how awful the railways were under British rail, frankly I'll take virtually any ownership model as a better way of doing things. Given that the railways are, by any measure, out-of-sight better than they were under BR, if it is costing more in subsidy then I'll live with that. Don't forget that the railways were (mainly) built privately by Victorian entrepreneurs before we all get too excited about things being "national infrastructure" and "too big to fail".

At least one prominent industry commentator, Christian Wolmar, has said that if British Rail had received anything like the subsidy of the post-privatisation rail industry then the quality of service would have been equal to if not higher than the current quality of service.

Then again Christian Wolmar is a big fan of railways and has been a vocal critic of the way in which rail privatisation was carried out.

 

[Information Analyst]

What, like the (private) Royal Mail's pension fund? The Student Loan company? Part of Britain's infra-structure?........Really, get a grip.

I can't see any benefit to the government owning these. Why should the government own any businesses? If they should (not that I can see why they should), why should they own, say, the Student Loan Company as compared to say, Gregg's sandwich shops, or British Airways?

The Royal Mail pension fund was part of Royal Mail, which was part of British society's infrastructure.

 

[Information Analyst]

The government is proposing selling off its stake in Eurostar, which runs the trains rather than Eurotunnel which owns the infrastructure. Eurostar is described as making an operating profit which, given that the profit before tax isn't mentioned, usually means that it makes a substantial loss after financial and exceptional costs.

I'd argue that unless the government is willing to renationalise the whole rail industry (personally I think a case could be made for it based on the mess that is the franchising system but IMO it's beyond the scope of this conversation) then it shouldn't be in the business of running some rail services.

So where does that put the East Coast franchise, which is operating far more effectively under public ownership that any past private franchisee, or indeed any other rail franchise?

 

[Information Analyst]

The Royal Mail was "nationalised" in the seventeenth century, if not before. It differs from Gregg's sandwich shops in that it is part of the national infrastructure and is required to be kept going. There's a case for nationalising (or at least very strictly regulating) those things that are "too big to fail" and therefore aren't really part of a free market. Also, in the case of important infrastructural entities like the railway network; I have read somewhere that the private companies now receive more subsidy than the nationalised undertaking did in the days of British Rail. If so, that isn't right.

Yes, they do. And the one franchise receiving the least... is the publicly-owned East Coast Trains.

 

[Skepticemea]

So where does that put the East COast franchise, which is operating far more effectively under public ownership that any past private franchisee, or indeed any other rail franchise?

I thought that was being put out for tender again as well.

I agree that the state has no place in providing alternatives to services or products where there is a competitive market, however when required to make intervention in the running of private companies by subsidy I believe there is a case to answer as to whether those companies have a viable business in the first place.

Where profit is being made, why sell to private ownership?

 

[Information Analyst]

We're talking about the pension fund, not Royal Mail itself. I guess you've forgotten that the Royal Mail has already been privatised. And to proclaim that it is part of the national infrastructure deserves this:

[qimg]http://i.imgur.com/69pBojh.gif[/qimg]

Yes, an artificial separation cause by flogging off one bit, but not including the other.

Given how awful the railways were under British rail, frankly I'll take virtually any ownership model as a better way of doing things. Given that the railways are, by any measure, out-of-sight better than they were under BR, if it is costing more in subsidy then I'll live with that. Don't forget that the railways were (mainly) built privately by Victorian entrepreneurs before we all get too excited about things being "national infrastructure" and "too big to fail".

Oh yes, the bad old days of British rail, when you could get a ticket from A to B, and could do the journey via C - if it was on a "reasonable route" - and even do that split across different days, and you didn't get "fined" for getting on the "wrong" train.

 

[Information Analyst]

At least one prominent industry commentator, Christian Wolmar, has said that if British Rail had received anything like the subsidy of the post-privatisation rail industry then the quality of service would have been equal to if not higher than the current quality of service.

Then again Christian Wolmar is a big fan of railways and has been a vocal critic of the way in which rail privatisation was carried out.

Unfortunately, Wolmer is the prospective Labour Mayor of London candidate we will probably not get to vote for.

 

[Information Analyst]

I thought that was being put out for tender again as well.

I agree that the state has no place in providing alternatives to services or products where there is a competitive market, however when required to make intervention in the running of private companies by subsidy I believe there is a case to answer as to whether those companies have a viable business in the first place.

Where profit is being made, why sell to private ownership?

Well, precisely. Past fanchisees have uniformally failed to run the East Coast Mainline properly, yet now that their publicly-owned successor has been able to do so, they want to flog it off to more of George's mates in the City again.

 

[3point14]

...Given how awful the railways were under British rail...

Genuine question: Did you use the rail much in the days of BR?

The popular, and possibly true, Meme is that it was all awful under BR. Was this actually the case? How about if one compares the service to the privately provided one?


I simply don't see the case for privatisation in an essential service that doesn't make money and requires very long term planning and investment that's just not in the nature of private industry.

 

[Information Analyst]

Genuine question: Did you use the rail much in the days of BR?

The popular, and possibly true, Meme is that it was all awful under BR. Was this actually the case? How about if one compares the service to the privately provided one?


I simply don't see the case for privatisation in an essential service that doesn't make money and requires very long term planning and investment that's just not in the nature of private industry.

I think part of the perception problem is that some people judge the standard of rail travel "now" against how it was seventeen years ago, without taking account the same seventeen years of technological improvements. It's a bit like saying TV sets in 1997 were crap compared to TV sets now.

 

[ddt]

Maybe the UK government is prescient and foresees a dramatic decrease in train travel to France once you leave the EU.

Count me in among those who think that things like Rail and Mail are essential infrastructure that should be in state hands, and who are not convinced of better performance when it's privatized.

But this article doesn't stop with Eurostar. Nobody noticed this part?

Other state-owned assets being lined up for sale include the legacy Royal Mail pension assets, the uranium enrichment company Urenco,

What? Urenco has cutting-edge enrichment technology, and can produce weapons-grade uranium. You want to lose control over that?

 

[The Don]

I think part of the perception problem is that some people judge the standard of rail travel "now" against how it was seventeen years ago, without takign account the same seventeen years of technological improvements. It's a bit like saying TV sets in 1997 were crap compared to TV sets now.

I used to commute by train from Bristol Parkway to London Paddington 1992-94 and again 2007-09 and my observations are as follows

• It became a lot slower post privatisation. Typically it took 1 hour 15 minutes for the journey and there was one non-stop service in each direction daily during rush hour which took 59 minutes. Now it takes 1 hour 30 minutes
• As a result of increased demand (but no more capacity) post privatisation, the trains are far more crowded. These days on the wrong train it is possible to stand all the way, both ways
• It is significantly more expensive. A Bristol-London season ticket is 30% more expensive in real terms
• These days you have to battle to the buffet car to get anything to eat or drink. Back in the day, the trolley would deliver a Friday-night sharpener to your seat
• If you can get a seat, there is more airline-style seating these days which I prefer
• We are of course still travelling on the same rolling stock

Other people's experience may be different (maybe commuters in and around London where there are replacements for the 1950s rolling stock I was used to back in the 1980s), but in my case there are many negatives and very few positives for the privatised railway.