Jim Armitage: If state-controlled firms are so useless, how do they win so many UK deals?


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The Independent Online

Outlook It’s an established fact that European governments are all skint and rubbish. At least, it is among government and business circles. John Lewis’s Andy Street even went so far last week in an unguarded moment to say that France was “finished” and that “nothing works and nobody cares”.

The overwhelming ideology seems to be that we should sneer at the continentals for their old-fashioned state-owned way of running their infrastructure. The thing is, if these government-controlled fuddy duddies are so useless at running stuff, and if the countries that own them are so financially hopeless, how come we seem to let them take control of everything over here?

Yesterday, Dutch state-owned Abellio was granted the ScotRail train franchise, the French state-controlled EDF was finally approved to run the Hinkley Point nuclear power station, and bids came in from two French companies to buy Britain’s 40 per cent stake in Eurostar, where the French government already owns 55 per cent.

According to the Scottish transport minister Keith Brown, ScotRail went to Abellio because it’s a “world class” operator. It certainly seems no worse than our private UK operators from the performance tables, operating the Greater Anglia line and having stakes in the Merseyrail and Northern franchises. On top of that, it also runs a big chunk of the London bus network.

In short, it’s a successful business. Successful for Dutch taxpayers, too. Recent accounts for Abellio Transport Holdings state that, thanks to the largesse of its UK passengers, it paid a dividend back to Holland of £15m last year.

Ah well. I’ve always liked the Dutch. I hope they enjoy spending the profit they make off my bus fare on their excellent schools and hospitals. But I can’t help thinking I’d rather it went to my daughter’s comp, or the local A&E.

The reason I like the Dutch is because they’re quite like us. And, like us, they went through a neo-liberal period in the 1980s and 1990s when they decided to break up their train system, splitting the state company into chunks with a view to privatising the lot. Another thing we share is that it all went horribly wrong. Investment collapsed, delays went up, chaos reined.

But that’s where our shared experience diverged.

Amid all this lunacy – and before their actual privatisation had happened – the Dutch train operator’s board resigned en masse and the whole rail revolution was reversed. The idea of rail companies competing with each other was abandoned and the state operator took over all main routes.

Calm was restored, performance improved and it launched Abellio on our chaotic side of the North Sea.

Similar events took place in Germany, where the government thought of privatising Deutsche Bahn until sensible heads realised it was a stupid idea. Now, the Bahn is doing splendidly well. So well, in fact, that it took over Britain’s Arriva four years ago.

Ah well. I’ve always liked the Germans. I hope they enjoy spending my train fare profits on their excellent autobahns.

For the sake of balance, though, I should point out that our transport fares don’t all go towards improving foreign countries. The East Coast line returned £220m to the taxpayer in dividends and premiums last year. It’s run and owned by the state, since National Express handed back the keys in 2009, so we get to keep every penny of its surplus profit.

Not for long though. Inevitably, it’s being privatised next year. One of the most compelling tenders is from the French-government controlled Keolis, in a joint bid with Eurostar.

Ah well, I’ve always liked the French…