Magazine article Management Today

Privatisation Goes off the Rails

Magazine article Management Today

Privatisation Goes off the Rails

Article excerpt

Roger Eglin reports on the progress of the unpopular policy of treating BR apart

As consumers reap the benefits of privatisation from more efficient public utilities, it is easy to forget the battles that punctuated progress towards the early privatisations as unions, managers and left-wing politicians fought their various corners. BT and BAA both won the struggle to remain intact. Electricity lost and was split up while the sale of the nuclear power industry was pulled at the last moment. But however tough these confrontations were, none of them matches the slugging match rail privatisation has become.

The Government has taken a drubbing from the Lords over whether BR should be allowed to bid for franchises. The unions are hostile, which is predictable, but more worrying for ministers is the evident lack of enthusiasm among their own backbenchers. It is not for nothing that the Guardian has asked why the Government is pursuing a policy which is 'unpopular with the public, distrusted by MPs, unattractive to potential purchasers and which, on all the accumulated evidence, will make the service offered by the railways more expensive and less good than it is now?'

Any politician who valued his hide would get out now. Even a more commercially run railway will still have its shortcomings and the Government's privatisation policy, guilty or not, will inevitaby get the blame. Faced with all this, only the most thick-skinned of ministers would plod on, hoping that somehow the storm would adate.

Yet here is an enterprise, subsidised by around 1 billion [pounds], with its customers falling in number. Even those who stay on board are becoming ever more critical. But if the Guardian is correct, rather than seeing salvation in privatisation, most of the public say hands off and let the train continue its rickety journey. No doubt the more confused dogmatists to believe this but the majority, one suspects, simply doubt whether this privatisation will do much to improve things.

Successful privatisations have two ingredients. First, the power of the politicians to meddle in the decision-making of management is ended in one clean cut. Second, there will have been some effort to fatten up the privatisation candidate with increased investment unless it is clear that it is well run enterprise which can generate sufficient investment funds. The outstanding example of this is BT. It would have been impossible to sell without the massive investment in the telephone network that had taken place.

Rail privatisation meets neither of these criteria. …

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