THE LIVED EXPERIENCE OF PRIVATISING A NATIONAL UTILITY WHAT HAPPENED WHEN THEY PRIVATISED THE RAILWAYS.

. By a railwayman who was there Wasted Money: There are activities under rail privatisation that do not contribute to the running of trains and were not needed before privatisation. For instance, there is a whole organisation within Network Rail and smaller groups within train operating companies whose sole job is to establish which organisation is responsible for a train being delayed and then determine who is responsible for paying compensation. By its very nature this is very confrontational and has its own arbitration arrangements for when the various parties fail to agree the attribution. This is a whole organisation that did not exist pre-privatisation and ultimately its costs are borne by the fare paying public. Instability: in an attempt to get watertight contracts Railtrack and the Dept of Transport had contracts with punitive compensation arrangements should the contractor fail to deliver. This makes it more likely that the contractor/franchise operator will withdraw from the contract at short notice if they see no prospect of making money from the contract. The commissioning organisation is then left with the problem of finding another contractor/operator. The health service, like the railways, has to provide a continuous service and has to find an alternative contractor very quickly (putting the commissioner at a contractual disadvantage) or has to run the service, at least temporarily, itself. Fragmentation: the large number of organisations responsible for the operation of the privatised railway (infrastructure owners, infrastructure maintainers, train operating companies, rolling stock owners etc.) means that any proposals to change the railway (e.g. to change the track layout at a station) has a complex and protracted consultation process with stakeholders having pre-determined times to respond to change proposals and another arbitration organisation to resolve conflicting views. Prior to privatisation the regional general manager resolved these conflicts. Now the lawyers get involved and timescales are extended. Almost impossible to plan: Network Rail, rolling stock owners (ROSCOs) and the train operating companies (TOCs) have completely different planning timescales. Network Rail and to some extent the ROSCOs are looking thirty years ahead whereas a train operating company franchise may be as little as five years. The TOCs have to make their money in a very short timescale and therefore are less strategic in their outlook. If you have only seven years of train operating you have little interest in the shape of the railway network thirty years out. Does privatisation actually offer choice?: When the railways were privatised the former maintenance and design/build organisations within the nationalised railway were formed into smaller private organisations (small because it made them easier to sell to the private sector). Very few new players entered the market and those that did poached skilled staff from the former nationalised groups. These small organisations produced the following effects:

1. they were too small to have the capacity to recruit and train new staff, 2. they poached staff from other organisations leading to an escalation in costs and 3. they lacked a "critical mass": they were too small to have all the skills required. They might have design offices of a couple of dozen staff, but the design organisation of the nationalised companies numbered hundreds and my experience was that you could always find someone to answer a particular technical problem as the breadth of experience was there. Do private companies have the same ethos? My experience was that the staff transferred from the nationalised organisation retained their values, though the senior management of the companies who were largely from outside the railway industry did not. Competition and Quality: As few new players came into the supply market, and with wage inflation as a result of poaching, costs of infrastructure projects and maintenance rocketed in Railtrack days, one of the first actions of the new Network Rail (when the privatised Railtrack went into administration a new not for dividend company Network Rail was formed, a quasi- nationalised organisation),was to bring maintenance and some design back in house to attempt to stabilise these costs. Quality has generally been maintained but to do so requires "informed buyers" and inspectors etc. within the commissioning organisation. Railtrack believed, at Privatisation in 1994, that it would be a lean organisation with project risk being passed to its contractors. It soon became clear that there were some areas of expertise that the contractors did not have or didnt care to have e.g. the organisation/booking of track possessions. The lean organisation grew to service those areas of expertise that the contractors were unwilling to acquire. Principally these activities were very labour intensive Skill levels: It took ten years from privatisation for the training issue to be addressed and it was the quasi nationalised Network Rail that led the drive for training courses, being the only organisation large enough to fund it.