George Bathurst

The free market is the key to fixing Britain’s railways

As the political argument over the East Coast railway franchise continues, it’s easy to lose sight of the passenger interest. Last year, the Campaign for Better Transport found that nationally over 50 per cent of trains were late or cancelled. This is despite fares and costs that have risen sharply for the last 14 years.

Chris Grayling, confirmed last week as the Secretary of State for Transport, is right to be reforming the franchises, such as re-integrating track and train, to address the confused responsibility for poor service that characterises the current system. But tweaks to the status quo will only get us so far. Also heralded in the government’s vision for rail, published at the end of last year, is a move towards market-led proposals, away from the current model of predict-and-provide and perhaps more like that practised in Australia or the US.

Predict-and-provide has been root of the problem with the railways since they were brought under state control for the First World War. Central government forecasts demand and advises Parliament to spend taxpayers’ money accordingly. Officially, it is a rigorous process but that is difficult to reconcile with either the Beeching cuts or the lists of new schemes and their prevalence in marginal constituencies.

The problem with predict-and-provide isn’t the absence of a reliable crystal ball, it’s the conflict of interest. Ministers are obliged to be both advocates and judges in their own causes. Instead of being on the side of the people, judging the schemes of others in the national interest, they find themselves effectively working for councils, lobbyists or even the rail industry itself. Some schemes that do get funded but then go wrong cause embarrassment for ministers because they look like a failure of delivery, when often they were supported based on necessarily incomplete information.

Markets handle this much more constructively.

Canals, for example, were a great development of the early 19th century.

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