Oh, Mr. Porter

The Chris Cook Economics 3.0 column

One of my favourite lines in film is the response to Will Hay in the film “Oh, Mr Porter” when he arrives as the new station master at Buggleskelly station and enquires at the ticket office window...

“The next train’s gone!”

...shouts his new (in) subordinate as he slams shut the window.

The Department for Transport must be feeling as bemused as Will Hay’s character by yet another example of the “privatise profits, socialise losses” syndrome which occurred yesterday when National Express decided to walk away from its franchise to the East Coast London to Edinburgh line. The reason is, apparently, that the economic downturn has blown a hole in their projected income as business travel in particular has collapsed.

So what happens now?

The protagonists line up predictably. Firstly, National Express has the gall to expect that they should be entitled to continue to run other UK franchises or have any other contract with the public sector after walking away from their franchise.

Secondly, the DfT blithely aim to warehouse the franchise until some obliging train operator comes and takes it off their hands at the highest possible price, to be extracted by screwing the long suffering passengers (I refuse to use the term “customer”) on service, price or both.

Thirdly, the RMT look forward to a return to the good old days of beer and sandwiches at Number 10 as their members extract the best possible pay, terms and conditions from the government, who will again screw the long suffering passengers on service, price or both.

As anyone who has read my blogposts will know, I believe that there is in fact another way of structuring utilities which is neither Public, ie owned by the State, nor Private, ie owned by the particularly toxic legal entity known as a Public Limited Company.

Firstly, I would hand over all of the shares in an East Coast Line operating company in trust to Mr Crow’s membership, and to other staff, whether or not unionised.  What was good enough for Tyrone O’Sullivan and his fellow firebrand NUM members at Tower Colliery should be good enough for the RMT.

Then, with ownership remaining in the hands of the DfT or a “Custodian” entity on their behalf, the necessary capital for the operation of the railway would come from a “Capital Partner” who would share the gross revenues with the staff cooperative.

Part of the proportional “Units” or “n’ths” in the line’s gross revenues could and should be dedicated to pension obligations, and any balance would be available to be sold to investors interested in the gross revenues of the line.

All of the above is achieved through the use of a UK Limited Liability Partnership as a framework within which the above revenue sharing is carried out.

The outcome of such an East Coast Partnership is an interesting one. We could actually see Labour working with, rather than for Capital, and there is an opportunity for the staff and management to make common cause, share the revenues more equitably, and eliminate fat-cattery once and for all.

Moreover, there is an incentive for the operating member staff co-operative to operate to high standards of efficiency and quality, because the members will make more money if they do so.

Capitalism having failed, perhaps Mr Crow and his colleagues might give Venture Communism a try?