If I compare British rail with Trenitalia the Italian owned public rail company where I can go from Naples to Milan for 50 euros and the price of a rail journey in the UK. You have to ask who is the sale of any public assets actually benefiting, the tax payer as a citizen consuming services or the privatised companies who now see me as a customer to be charged as much as possible, whilst the get as much subsidy from taxation as possible.
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UK for sale
- Thread starter 3point14
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The question of rail subsidy is a thorny one. If the cost of a rail ticket is subsidised by 30% source: then all of us non-travelers in rural Wales are subsidising the richy-rich commuters in London.
Personally I subscribe to a different view which is that an effective and efficient public transport system is vital to the success of the country as a whole so even as a non-user I still reap the benefits arising from increased economic activity.
Yes, I did. I relied on them. I spent thousands of hours on the trains in those days. They were truly awful.........although there were lots of porters available at the stations.
Beerina
Sarcastic Conqueror of Notions
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They can get a boost of money to spend now by consuming decades of investment in a year or two. This benefits them in elections by lavishing it on the voters.
Many states in the US went through this in the past 15 years, selling off things and immediately signing 99 year leases to rent it back.
See also multi-billion dollar tobacco settlements to the states to "pay" for 50 years of extra cancer health expenses, spent over 2-3 years.
Many states in the US went through this in the past 15 years, selling off things and immediately signing 99 year leases to rent it back.
See also multi-billion dollar tobacco settlements to the states to "pay" for 50 years of extra cancer health expenses, spent over 2-3 years.
Mojo
Mostly harmless
What I never understand is how, since this is apparently to make money the government keep managing to off-load these assets that can't make money.... and why are other governments and companies so happy to purchase these assets that can't generate revenue?
Skepticemea
Master Poster
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Because they can make money if the government (ie us) continues to pay for it. Otherwise, in order to make a profit, a single off-peak ticket from A to B would cost you the price of a family car.
It's amazing how inefficient private business can be when it receives shedloads of tax-payer subsidies.
w.r.t Eurostar, there's no suggestion (apart from me) that it isn't making money, just that the current government thinks that it shouldn't be in the business of running a railway. Effectively it's a business divesting itself of non-core operations. I happen to disagree with the current government about running railways but that's a bigger consideration.
A company which operates outside government control does have have number of potential advantages to allow it to become (more) profitable than it is under government control:
- The company has access to other sources of borrowing. Although government borrowing is cheap, a government may be unwilling to increase the deficit to, for example, pay for new rolling stock
- Once outside government control, the company has greater scope and flexibility to change working conditions and practices
- The company also doesn't have to adhere to government pay scales. In another thread I've pointed out that prison officers in privately run prisons earn 23% less than their public equivalents
- The privately-owned company can take a different approach to how it deals with the assets. The old CEGB was IMO a maintenance organisation that happened to generate electricity. The focus was on ensuring that the generating assets were in tip-top condition and that there was a generous over-capacity. These days the generating assets are worked until they squeak (even at the expense of operating lifetime) and capacity margins are wafer-thin. Bad for the country's security of supply but more lucrative for the generator
- The government-owned business can be combined with existing operations to achieve economies of scale
Looking back at the early '80s, Pickfords the removal company was owned by the government. I don't think that the U.K. government should be in the removals business so divesting itself of Pickfords made sense to me (especially if it can strike a reasonable deal).
BTW I disagree with many of the privatisations over the past years, especially:
- The utilities
- The railways
- Royal Mail
- Qinetiq
Others I'm reasonably happy with
- BT
- BA
- BL
- Amersham International
- Pickfords
The Greater Fool
Illuminator
Anything a modestly paid fan could get on the cheep?
Information Analyst
Penultimate Amazing
Growing up in Hull, the GPO/BT meant little....
Lucrative for the energy consumer, the ultimate funder of all this? At present these providers are heavily regulated, with price control or limitation by external bodies; and they have to be, because in the nature of things there isn't a completely free market in which consumers can go at any moment to a multitude of separate outlets to buy energy, in the way one can buy potatoes. An energy undertaking whose only motive is profit can plunder the consumer and wreck the environment unless checked.
It's difficult to say whether it's lucrative for the energy consumer, we don't have a copy of the UK market to run as a control. Energy prices are dependent on a number of factors but fuel cost is a key factor and something over which generators have limited control (they can advance buy and hedge but ultimately price rises in fuel make their way through).
The lack of capacity has allowed EdF to hold the government hostage over Hinkley Point and agree to a very high price guarantee.
I mean, it is accepted that we need to stop the providers from behaving like Enron, which the character of energy provision (not really a free market) might enable the suppliers to do.
In the same way, there has to some sort of regulation of buses and trains, although the cost of transport in the UK seems exorbitant to me, compared with other places where there is more government control. Here in Glasgow we don't have an integrated ticketing system, as they do in large continental cities. At one place in the city, there is a transport hub served by several bus companies, an underground railway and a main line suburban station. Each with different ticketing.
Does privatisation really necessitate absurdities like that? If so, I don't want it.
Beerina
Sarcastic Conqueror of Notions
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In the US, bridges and toll roads: they are selling (99 year leasing out, actually) taking as the price, a decent chunk of the next 99 years of tolls, so they can spend it now hooooo doggy that lets us not have to cut spending or raise taxes or borrow more.
Thanks, previous decades of citizenry, for providing us with this one-time, quickly used-up windfall!
Tough s. future generations. No steady income for you!
They sell prisons and other buildings, too, then lease back for 99 years, thus essentially borrowing a ton of money from the future to spend now. You, 50 years from now, will happily pay lease to a prison we sold and spent that money you are paying, 50 years in your past.
Have we said thanks? No, we don't need to. See, we neeeeeeeeeeeeeeeeed it...to keep getting re-elected.
These sales have nothing to do with political arguments about the propriety of privatization of government assets or duties, and everything to do with political greed of the current politicians and heir cronies, to inhale a century's worth of investment to be spent in a year or two, and if a crony gets ahold of it for a nice steady income (said government's prorated fraction after 99 years will be zilch, like a reverse mortgage), well...
Thanks, previous decades of citizenry, for providing us with this one-time, quickly used-up windfall!
Tough s. future generations. No steady income for you!
They sell prisons and other buildings, too, then lease back for 99 years, thus essentially borrowing a ton of money from the future to spend now. You, 50 years from now, will happily pay lease to a prison we sold and spent that money you are paying, 50 years in your past.
Have we said thanks? No, we don't need to. See, we neeeeeeeeeeeeeeeeed it...to keep getting re-elected.
These sales have nothing to do with political arguments about the propriety of privatization of government assets or duties, and everything to do with political greed of the current politicians and heir cronies, to inhale a century's worth of investment to be spent in a year or two, and if a crony gets ahold of it for a nice steady income (said government's prorated fraction after 99 years will be zilch, like a reverse mortgage), well...
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ddt
Mafia Penguin
Ah yes, like the Dutch Mail which has replaced many of its postal workers with lower-educated ones that just about can read.
How was that done? Does BT still own the grid or has that been split?
An interesting challenge for the big energy producers are the upcoming small producers: a house with solar panels on the roof, or a farm with a small windmill next to it. IIRC, in Germany such producers already account for a double digit percentage of the total energy production. It's also a challenge for the stability of the net, btw.
What do you mean "cities"? In Holland, we've had national tickets since about 1980. First paper tickets, and now a chip card like the London Oyster card. It still works, though the traditional semi-public bus companies now are also really private companies, and regions of bus provision are tendered out for five year periods.
Belgian thought
Master Poster
Really?
Dog boxes
On the last train
Nobody eating
No burger stains
No voices screaming
About your bags
Or slippery platforms
In case of rain
The Milk Train
Charring Cross
Slipped a fiver
To the driver
To Dover
With my girl
All lights out
Sparks from tracks
Lit our night
The lovely clunk
Of slamming doors
Which could be opened
Reaching your stop
Skipping off
The moving bulk
Like a hero
Oh happy days
Now?
Electronic doors
Often stuck
Metro readers
Kindle lovers
Candy crush
Hoping to beat
The laborious rush
In broken seats
With no repair
Crazy prices
Missed Devizes?
Pay a fine
You should have known
Feeding their game
To fill their pockets
Simply just
To board a train
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Largely yes, BT owns the network. There are areas of the UK where cable/fibre optic providers link the BT network to dwellings (In Bristol it was Telewest but strangely they only did this for properties around ground floor so in the house in which we had an apartment, the basement and ground floors could connect via Telewest but we on the second floor were stuck with BT) but by and large the infrastructure is provided by BT and BTOpenreach (broadband).
The competition is provided by individual service providers who, I presume, lease capacity from BT and sell it on for whatever they can get. Our provider (Talktalk) is significantly cheaper than BT for our specific use (many hours of international telephone calls weekly). Comparing our costs to those of friends and family in the U.S. the market is working, ours is comparatively inexpensive. we pay about £35 a month for:
- Line rental - just getting the service - about £12 a month
- Unlimited UK calls (except "premium" (i.e. sex) lines)
- Unlimited international calls - subject to each call being no longer than 59 minutes 59 seconds
- 100 minutes monthly of calls to mobile phones
- Unlimited high speed (fibre to the cabinet) broadband
- Access to a limited number of Sky channels
The comparative success of the BT privatisation is underpinned by significant technological advances.
3point14
Pi
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WRT to energy companies, there seems to be no competition at all.
If there were a competition then prices would be comprehensible, as they were before privatisation at X pence per unit business or domestic. It's now the case that all the providers, who are all on the same network and all use the same suppliers are desperately trying to show there's some competition with tariffs that are horrifically complicated with, as far as I can tell, the only aim being obfuscation of prices. If one thinks one is competitive one does not obscure ones prices.
ddt
Mafia Penguin
It's the same over here. And I've often wondered why. First, why would the government divest of the copper grid which was a huge investment and infrastructure. Second, why keep it in hands of the incumbent who then can create artificial barriers for competition which has to lease their lines. Splitting it in two would have made much more sense, particularly as it's very easy to do line sharing for phone services. Cable companies (which have about 99% coverage over here) and fiber companies also offer phone service, as well as ISPs that offer VOIP over *DSL, but my impression is that most people stay with copper for their fixed phone service.
By contrast, the Dutch national railways has been split into three: a still government-owned company owning the rails, a company doing personnel trains and a company doing freight trains. And that has caused quite some problems as you can't as easily share a rail track with tight time slots - one delayed train causes ripples throughout the country. And control of the tracks and trains has been split accordingly, which causes quite some communication problems between controllers who used to share the same room.
The impression I get is that the telecommunications regulator does a decent job in forcing/encouraging BT to play nicely and to offer competitors access to their network. Effective regulation and technological advances may both have had a significant contribution to the comparative success of the BT privatisation.
There is an initiative under way to ensure that 95% of rural households have access to high speed (classified as > 2 mbps so hardly earth-shatteringly quick) broadband. Some of the contracts aren't a great deal for the supplier and so while some of the competition have shown willing to do it in, say, the South, here in rural Wales BT have stepped up to the plate. Puzzling.
Don't even get me started on UK rail privatisation. To me it looks like a committee of very smart people sat down and tried to decide what model would be most unwieldy, most expensive for hte government, least good for strategic rail planning and worst value for the consumer - and gone with that one.