Parallel universe

In a parallel universe, not dissimilar to our own, Alison Forster the Managing Director of First Great Western, runs train services. Miss Forster has complete control over all aspects of her operation: she is not coerced by government, she is not answerable to politicians and she calls all the shots.

Because Miss Forster knows that her company owns rail the operation outright and that it cannot, without the consent of shareholders, be taken away she is able to make long term decisions. She can, for example, borrow money for capital projects such as buying new rolling stock or improving stations. Investors, because they know the company has a long term future, are willing to lend the money; Miss Forster, because she knows she has time to see that money work for the company and generate a return, is prepared to borrow it and pay interest on the credit she has been extended. Miss Forster has recently purchased a lot of brand new trains because she knows that passenger numbers are rising and she can make money out of running more services.

Miss Forster also has control over the infrastructure her trains run on. If she doesn’t like the way maintenance is being undertaken, she can sack the contractors. If she believes maintenance work is getting in the way of providing a good customer service, she can reschedule it to a time which is more convenient for her passengers. She is also able to direct funding to where it is most needed:: Miss Forster has recently had new signaling put in at key pinch-points on her network to alleviate congestion, reduce journey times and to allow more of her new trains to run without having to build new lines.

Miss Forster and her staff are also responsible for the timetable. They decide what runs, where it runs and when it runs. Fortunately, the First Great Western team is expert at rail operations – many of them have been in the industry for years, so they know exactly what they’re doing. Miss Forster sets her timetable to help her make a good profit. This means she provides services to satisfy the maximum number of people. True, there is a trade off between maximizing profit and the number of services run, but Miss Forster knows she has to provide a decent level of provision otherwise the First Great Western brand becomes tarnished and it becomes more difficult to persuade customers to travel which harms long term growth prospects.

The lesson from the parallel universe is that systems run under a free market perform far better than those controlled or run by the government. They are more responsive to passengers, more efficient at allocating resources and more effective at taking longer term decisions. If you doubt it, just examine today’s economy. Those areas run or heavily controlled by the state, including rail, are riddled with problems; those run by private industry are, by comparison, paragons of efficiency.

The first step to a better rail service is the complete removal of the government influence which has, for too long, held back an industry desperately in need of free market forces.