I heard Branson on the World at One at lunchtime saying that if the Department of Transport can't run a tendering process for a rail contract they should never run a railway. And it made me realise just what a dogmatic person he is.
The reality, as I suggested this morning, is that what's very clear is that the tendering system introduced by the Tories post 2010 is impossible to use. I've no doubt errors were made: but let's not blame the minutiae here, let's blame the people who put the system in place.
The reality is you can't ask people to bid for 15 year contracts without either guaranteeing they'll go bust or that you overpay them - with neither party having a clue which it will be at the outset. There are simply too many unknowns over such a period to ask for lowest common denominator (or highest payment) bids without massive risks arising for all parties.
And that's not the way to run a railway. This is infrastructure. It is at the core of our economy. It is fundamental to well being. It is part of the base on which the private sector in this country depends but is much to vulnerable to be exposed to private sector risk.
I did, of course, make all these arguments in The Courageous State (see right), but they're worth making again. You can re-run this process at a cost of £40 million, but the outcome will still be a mess. Rail arteries do not belong in the private sector. They can only exist with implicit state guarantee. That's why the lesson of the banks has to be learned - and such activities have to be under national and nationalised control.
An then the DfT will be quite capable of running them - because that is what it's good at.
The same, of course, applies to the NHS, education, electricity, water, gas and so much more as well.
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Response to Mr Branson. If the private sector can’t train a few security guards or fix the leaks in the water mains, what’s the logic in letting them try railways!
“An then the DfT will be quite capable of running them – because that is what it’s good at.”
The DfT screws up a simple tendering exercise but they can run a railway?
The DfT were asked to do an impossible task by some pretty dumb politicians
Note that the blame for this balls up is being laid firmly on civil servants and not ministers.
Would this be the same Branson who admitted in his autobiography that he got a leg up in his early days in business from a successful (as in, he got away with it) VAT fraud?
How far back does this disaster go? Did the error only arise during the current administration or does it go back into the Labour period. I am talking about the particular error which is the source of the current uproar not the error of privatisation in the first place!
John Major
He began this
Labour should have stopped it
And didn’t
Wow!
I almost agree with you!
Anything that cannot readily or sensibly be made truly competitive and then proportionately regulated by the State, should be run by the State.
Utilities, Roads, Rail, Justice, Defence, Regulation, Policing (this is not a comprehensive list)
Anything that CAN sensibly and readily be made truly competitive should be privatised, then proportionately regulated (heavily for all at the beginning, lightly for all but incumbents at the end, with obvious exceptions like pharma and food prep)
The only way of running an industry that is worse than the State is corporatism.
Unfortunately when corporatism fails the statists turn away from privatisation entirely and run wailing back to the State, failing to notice that had they actually introduced competition + proportional regulation the failings would never have emerged.
And of course statists consider “corporatism” to be “the free market”!
Apologies for the lengthy post.