Tuesday 17 July 2007

Another fine mess you got me into, Gordon:


So it comes to pass that Ken of this parish has managed to get his own way in the end. The official Labour Mayor of London has triumphed over the Labour Government.

Ken never wanted the PFI deal for the underground network. in his defence he threw millions, hundreds of millions (Other People's Money of course, taxpayers OPM) actually in the way of Gordon Brown's Treasury team. Oh what joy this brought to the poor families of the lawyers and consultants of London.

Now thought Metronet is certain to enter administration. From which it will not likely recover as its backers have had enough and are giving the keys back; A sad end for their shareholders too.

So who has one out of this PFI mess? Repairs have been completed in London, but are behind what was a heroic schedule. More money will be spent on a new group to take-over and now TFL will inherit more control over the network.

This may be a welcome development to many, but the cost to administer this mess is well over £1 billion.

Also key questions remain unanswered, Iain points out how much Mr Brown has to explain of his role. Why does PFI seem to do such a bad job at delivering services?

It seems to me that socialists are incapable of making rational choices and instead seek to complicate and regulate to such an extent that creativity is driven from any process. Profit too is so hated that they try to eradicate any potential. In doing this an unsustainable administrative burden is created, on purpose by the likes of Ken.

Many of the Conservative outright privatisations worked, look at BT and British Airways for example. Even the much derided water companies are doing a better job than the state managed too. Yet the railways were a disaster, even worse than British Rail, that have cost taxpayers more money (£20 billion and counting for Railtrack and its descendants) and this latest tube fiasco adds to that.

Would the railways be better is state hands? Or is it just terrible execution of the privatisation plan as Wat Tyler says?

My gut feeling tells me it is the latter. An example in today's Telegraph speaks volumes. Metronet was required to repaint Lancaster gate grey 3 times by TFL; socialist sabotage by the Newt King.

16 comments:

Nick Drew said...

Great guts think alike ... I'd point also to the (ultimately) very successful energy privatisations / liberalisation programme - it can be done.

Genius McBroon, eh? Another hapless dupe of the outrageous scamming of the 'big consultancies' - £500 million on consultants' + lawyers' fees on this one alone. One can reasonably assume the legal advice would have been technically sound at least: but as for the rest, well, I am sure we all have our favourite consultancy stories.

Have they never heard of the bankruptcy option which companies like Metronet enjoy, courtesy of limited liability?

Presumably there is another decade of stuff like this in store for the taxpayer...

Old BE said...

Decade? Aren't the contracts 30 years long? I might be mayor by then ;-)

I don't think Major thought too carefully about the railways or maybe he did think too carefully. I would have (with hindsight) favoured each line being sold off individually, with the owner controlling the track and the trains. That way there would be no buck passing. I understood that the Railtrack plan was such that at some later stage competition between train operators would be introduced so that more than one operator would compete for custom on major routes. This didn't happen except in a handful of cases and has now been eliminated with the regional franchises.

But if SW trains owned all its own bits and its customers could see what a raw deal they were getting in comparison to SE trains, would there be a bit of pressure to improve?

Same with the tube, had it all been sold off as one the whole company might have done a lot better.

But then again maybe trains just can't make money and only serve as a public service...

CityUnslicker said...

ND - Yup, the £500 million is a staggering sum.

What next, I think this may cost a shed load too. Ken is never scared of throwing more money at something he wants done.

CityUnslicker said...

Ed - Good post. I have not come to a conclusion myself about state owenership or not of the railways. It seems to be the default position for the UK.

But railways did not get built this way did they? Nationalisation brought that about at Government behest under national security concerns (see how cycles repeat themselves!).

What is proven is that tthe government can wreck any private involvement at will; as such there will be very little appetite for the private sector to get involved.

pommygranate said...

just a total shambles. hopefully this will expose PFI for what it really is - just more (hidden) govt liabilities.

Mark Wadsworth said...

"Would the railways be better in state hands?"

On all the evidence, yes. Some things you can privatise, some you can't. Trial and error.

As PG says, PFI is shit. It's a waste of taxpayer's money.

Tuscan Tony said...

"socialists are incapable of making rational choices and instead seek to complicate and regulate to such an extent that creativity is driven from any process."

Very well said that man!

Old BE said...

CU, the thing is Major's privatisation wasn't really red-blooded privatisation, because the operating contracts are only of finite length so there is not enough incentive to invest for the long term, and as Byers proved it was all too easy for the government to take Railtrack back.

Also remember that the privatisation was intended to cut government liabilities on an ever declining railway, but promptly after they were sold off they started growing again (cause or effect not sure) and then the current problems of needed to invest in increasing capacity reared their ugly heads.

Newmania said...

Would the railways be better is state hands?

I think they may well be CU but Eds points are interesting ( as they often are actually). Perhaps the formula can be put right . The market is not a magic bulet though , I deal with a market that frequently acts against the inetrests of everyone but insiders and itself. Doctrinal marketeers often have little experience of the real thing

Old BE said...

Thanks N

The advantage of state ownership of transport infrastructure is that the government can use them to fulfil separate policy goals (such as getting people out of cars onto rail or running lines which could never make money) more easily by co-ordinating investment and pricing strategies AND cross subsidy from profitable lines to less profitable ones.

CityUnslicker said...

Ed- you raise the issue of the tyranny of the majority - which is an important concept in market limitations.

I think you make some excellent points Ed. However, politically I can see no mileage int eh UK for many a year for greater private ownership of the railways.

Old BE said...

I agree, but it's worth contemplating these things even if they will never happen. I don't think Labour have the balls for a full blown renationalisation now that the money's run out and Brown's fiscal rules are shot to pieces.

CityUnslicker said...

Ed - Working out the ideoogy, something you are very good at, is certainly a good idea.

But you are right, we will be stuck with the current mish mash for a while.

Anonymous said...

The Metronet saga is bad enough, but somebody should be arrested for waste that is NHS PFI. I'd also suggest that Wat's 'Simple Shopper' is better characterised as a revolving door. It's not good enough, IMO, to just blame inept procurement (though this much in evidence). Ask Patsy and all her management consultancy kin.

Interesting that many of us slack-jawed public sector types were derided for opposing such idiocy.

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