View from City Road: Railway hard line leads nowhere

AS A witch doctor with his potions, so the Government still believes in the infallible magic properties of privatisation. How else explain its persistence in continuing with the privatisation of British Rail in the face of the icy water poured on the whole idea by Sir Bob Reid, chairman of BR, at the weekend?

Even that card-carrying Thatcherite Lord Ridley has said that the railways are an unprivatisable service rather than a privatisable industry.

The Government has already found that the idea of the 'public interest' does not automatically disappear with privatisation. The quoted water companies, which own the whole chain of supply from reservoir to water closet, are at the receiving end of public stick as they raise charges to pay for the enormous investments required as a result of neglect during decades of public ownership. With electricity, the Government took care to separate out generation from transmission and distribution. This has not prevented the emergence of arguments about the 'public good', with miners' jobs balanced against the commercial requirements of power generators and distributors.

As with power, so with rail; the Government is trying to separate the infrastructure, which will remain publicly-owned, from the services, to be franchised out to private operators.

But these would take on BR's tracks only if they - and their signalling - receive an enormous injection of capital investment. It will take up to pounds 1bn to upgrade the west coast route through Birmingham and Manchester to Glasgow alone.

So the Government is faced with an unappetising choice: either to allow many of these routes to disappear or to invest gigantic sums of (public) money to the benefit of the (private) operators.

At the moment the Government seems prepared to let the services wither on the vine, forcing BR to charge high rates for freight operators, and thus driving more freight onto the roads.

But the Government could take advantage of the well-developed science for evaluating non-commercial risks and investments in monetary terms.

It could easily compare investment in roads with that in rail, allowing for social costs (such as the fact that road travel is 12 times more dangerous than rail) and to ensure that grants to cover running costs of uneconomic services were equally well- spent.

At the moment capital investment in roads does allow for social factors, whereas poor old BR is judged on strictly economic criteria.

If BR were allowed a level playing field, then the Government could get the best of both worlds, attracting (private) freight onto the tracks while providing a proper publicly-owned passenger service.

(Photograph omitted)