Commentary: No way to rent out a railroad

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The Independent Online
The Department of Transport yesterday published detailed proposals setting out how private operators will gain access to the railways when the network is privatised and the basis on which they will be charged.

The document merely serves to confirm what many had already concluded - that whatever this privatisation is about it is not about creating a competitive market in rail transport.

Scant surprise, then, that the proposals failed to impress either BR managers faced with the break-up of their network or private operators who fear that too much power will be vested in Railtrack, the government body that will own, manage and rent out the rail infrastructure.

Any bidder winning a franchise to run commuter services will be guaranteed a monopoly since there is not enough capacity at peak times to permit more than one operator.

Monopoly will also be the order of the day on regional rail services since no one in his or her right mind would take over this section of BR's business on any other basis.

Even on potentially profitable InterCity services competition will be severely limited, since the Government will be obliged to offer a degree of exclusivity to encourage franchisees to take the plunge.

Ministers and civil servants respond that the bite of competition will be provided through the auction of franchises, which will encourage higher-quality services. This may not prove the case if bidders are, understandably, preoccupied either with tendering for the lowest level of state subsidy in the case of loss-making services or the highest track usage charge in the case of profitable routes.

Auctions of this nature are not guaranteed to result in a higher-quality product, as the experience of selling off the ITV franchises demonstrates.