Saturday, 4 October 2008

First Watch: 2008

I have a long-standing beef with First Group, and the government that gives them a licence to print money. I've just had a look at their latest annual report and was unsurprised to see that their rail profits have risen yet again, to £120 million pounds from £108 million last year. And I have to stress that this is profit, not turnover.

The thing is, this is the second year in a row in which the government has allowed First to issue fare increases greatly above inflation. Who are you working for, government? I mean, really?


Chris Hutt said...

First's UK rail profits of £120 million are only 6% of revenue (turnover) which is hardly excessive. On UK bus they managed 11% profit which makes the rail profit look piddling. Which would you rather have your pension fund invested in?

Ian Walker said...

Neither, because I feel it is somewhat immoral for a private company to be making a profit out of public transport. Transport systems should be run by the nation for the benefit of the people OR we should go the whole hog and privatise all transport - including the roads. Whilst some bits of our transport system are private and some public, people do not have equal choices, and the playing field is not level. At the moment I have the choice of driving to work, which is subsidized, or going by train, where I have to pay a premium for First's profits. It's MUCH cheaper for me to drive, even though this negatively affects everybody else.

The idea of privatising all the roads is a useful thought experiment, I think, when we look at public transport. Let's say a company had just made £120 million clear profit from running the UK's roads. In this case, the British public would rise up en masse, pointing out that the whole thing should have been provided by the state for £120 million less!

Chris Hutt said...

From 1948 until well into the 1980s transport systems were run "by the nation for the benefit of the people". So what happened? The people voted with their feet and bought private cars by the million. The "nation" slashed the rail network down to a fraction of its former size, bus services lost patronage everywhere, and all that well before the return to privatisation.

Following privatisation the decline in patronage of rail and bus has been largely reversed. Making a profit requires efficiency of operation, cutting out layers of pointless middle management, etc. Remove the profit motive and the fat creeps back on.

In terms of your commute, another option would be to live nearer to your work (or vice versa) so that you could walk or cycle. It isn't realistic to expect the state to bale you out because you've made an unsustainable lifestyle choice.

Ian Walker said...

I definitely don't expect to be bailed out. I'm just concerned about the disparity. Regardless of how far I live from work, the basic issue remains: if I choose to drive a car there I am subsidised, but if I choose to use a more sustainable mode I have to pay a premium. Which am I going to choose? The deck is stacked against sustainability. Obviously it's better to walk, but when that's not going to happen, as it isn't for most people, it would be much better if the government wasn't financially encouraging the greater of two evils.

You didn't say anything about this issue of roads being nationalised whilst rail is not. You seem quite pro-nationalisation: do you think road system should go the same way? It would at least then be consistent.

The thing is, at the moment the state is bailing out our unsustainable lifestyle choices, but only for the car: they provide a free-at-the-point-of-delivery road network which I am able to abuse to my heart's content, driving 200 metres to buy a bottle of milk if I want and leaving the engine running whilst I'm in the shop. They don't provide this sort of freedom with the alternatives.

I don't agree with the idea that state-owned businesses are necessarily inefficient and that privatisation is the answer. Admittedly state owned businesses were often run badly in the past, but past performance is no guarantee of future performance! Our energy industry has recently been taken over by France's nationalised energy company, showing that a national company can in practice do better than a private or semi-private one. Several banks have had to be taken over by the state because they didn't work in private hands.

(I'm not sure there is any logical order to these paragraphs, but I'm too tired to move them around...!)

Chris Hutt said...

I agree with your general point about the use of the roads being subsidised, but that benefits buses and coaches too, doesn't it? Plus there are other subsidies that public transport enjoys, like the fuel tax rebate or whatever it's called these days.

The duty on fuel represents at least a substantial contribution towards the cost of providing and maintaining road infrastructure, so it can't really be said to be "free at the point of delivery", except for cyclists and walkers of course.

I'd favour privatisation of the road network, subject to the fundamental right to pass along roads not being compromised (as it currently is for cyclists and walkers). I wouldn't mind paying to use the roads, even (in principle) when cycling providing the charges were proportionate.

With respect to your commute (Salisbury - Bath?) I guess the peak hour trains are packed anyway so maybe it would be problematical if you (and by extension a load of other drivers) transferred onto rail. They'd have to provide extra rolling stock just for that peak hour use which probably wouldn't be cost effective.

So it might be best to look at the bus as an option. Not very glamorous for a young male professional I know, but really that's the practical alternative to the car, unless maybe you can make car sharing work.

Ian Walker said...

I've no issue with the image of the bus - it's just the time that would be a problem as it takes hours!

Of course, this is largely because the roads are full of HGVs carrying freight that should be going by rail and single-occupant cars. But those are two separate moans...

Chris Hutt said...

Privatisation of the roads might be a way of resolving some of those problems. Clearly privatised roads would have to be toll roads, but with charges that were variable to reflect demand.

So peak hour travel between Salisbury and Bath for example would be highly priced, "driving off" traffic that doesn't particularly need to use the road at those times, like HGVs and some private car traffic. Then buses could operate more efficiently, although at a price to cover the high tolls.

Then buses/coaches could really compete with rail. Although maximum speeds wouldn't be as high a non-stop coach service between say Salisbury and Bath might offer similar journey times, better frequency and more comfort (guaranteed seat, lap top space, etc).

Of course in theory road pricing could be introduced without privatisation, but in reality it would take a major carrot like the prospect of serious revenue to the government from privatisation to persuade a government to push through such an unpopular change.

Chris N said...

Couldn't a seat for everyone with space for a laptop also be achieved by using longer trains between Salisbury and Bath?

I can't quite understand why this wouldn't be cost effective, more people paying peak fare prices - and more likely to if they can travel in comfort. Well ok, I know that if you have the same people on as cattle in a smaller train then you will make larger profits, and there's the rub about a privatised "public" transport, you can't make less profit (and as we all know our media tends to portray any company that has made less profit than the year before as having "lost" money when nothing of the sort has happened)

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