All of which leads to the much more important question of whether it is a good idea for the railways to be in private hands. Personally I have never believed that the issue of state run or privately run services should be an issue of fundamental principle. I think it is an issue of practicalities. When and in what circumstances does the state do things well? When and in what circumstances does the private sector do a good job?
There are plenty of examples where privatisation has worked very well. Having a single state provider of telephone services called British Telecom was never a great way to ensure flexible imaginative communications. I would far rather have a choice of networks and lots of competition.
There are also plenty of cases where privatisation is extremely unlikely to work well. The railways are one of them. You simply cannot set up choice between rival private sector providers on the 11am service from London to Edinburgh. There is only one train and you are either on it or you are not.
In order to have that service run by a private provider it is necessary for the government to let out a contract. Supposedly a competitive contract. Imagine for a minute the difficulties of drawing up that contract. You have to find companies capable of delivering the contract so you are down to a choice of very few potential bidders. You then have to let the contract for a significant length of time or else there is no point in the company taking it on undertaking any investment. If it is for five years then how do you predict the level of traffic that far in advance? How many trains should the company be required to run? Which services should they be allowed to close or reduce? How much ability should they be given to change the service in response to changing demand? How do you measure quality of delivery? What fares should the company be allowed to charge and by how much should they be allowed to raise them? What level of public subsidy is appropriate? What safety regulations will be placed on the company? How much does the company get for journeys that are booked with a rival but require the use of its trains? What happens about any investment that needs to be paid for when the contract is drawing to a close?
All of these things and many more have to be specified by the government when it lets the contract. Not surprisingly those drawing up the contracts often get it wrong. Not least because they are often relatively poorly paid civil servants. The people bidding for the contracts employ the most expensive lawyers, well paid specialist bid writers and rail experts, and a number of ex civil servants who don't mind revealing the secrets of the bidding process in return for a few quid. Oh, alright, quite a few quid.
As a result many of the contracts are flawed right from the start. By the end of a 5 or a 10 year letting period they are often outright wrong. When they are wrong in favour of Virgin or the like then what happens is very simple. Mr Branson collects a lot of money and keeps it. When they are wrong in favour of the taxpayer then it is a different tale. When that takes place there is a strong tendency for the company in question to turn round to the government and say that they can't make it pay and they want to hand the contract back.
Incredibly this is allowed. In any private sector business deal you cannot turn round to your customer and say "I know we signed a contract but I'm losing money on it so I'm not going to bother to deliver and you'll have to do it yourself." That is exactly what has happened on several occasions in the rail service. Twice the contract for the East Coast line has been handed back to the taxpayer. On both occasions the public sector took over and ran the service just as well as the previous contract holder. And they also did so profitably.
Put simply the private sector is on a one way bet with rail. They have monopoly power over their customers and contracts that are impossible to police properly. The customer is faced with a bewildering mess of different companies offering different ticket deals that don't seem to connect properly. Nothing is added to the experience of sitting on a train. Everything adds to the cost and the uncertainty for the taxpayer.
Ah but what about all that investment that the private sector brings to the party? It should be obvious after a moment's thought that this isn't made out of charity. It all has to be paid for. The only way of doing this is either through fares or through taxpayers subsidies. So the ordinary customers and taxpayers are the only source of the investment funding and we are also required to pay a premium to allow for the companies to make normal operating profits and for any errors in the contracting process that favour the private supplier.
In the rail industry privatisation automatically means increased costs, increased confusion, incoherent supply and no improvement in the service. Most people in the north want a co-ordinated local rail network having a single ticketing system like London underground and connecting one huge employment market flexibly and efficiently. George Osborne called it the Northern Powerhouse. That is made virtually impossible by the plethora of different private suppliers who would need to collaborate on such an arrangement. As a result the whole of the north faces disjointed erratic services operated often on trundling trains that are decades out of date dragging miserable carriages over rickety track. Meanwhile in London customers are faced every day with inhuman cattle truck style delivery with no means of exercising effective customer power over the supplier.
So it should be pretty obvious that this is one area where privatisation simply hasn't worked and can't be made to. The only possible reason for sticking with it is ideology. We are dealing not with a search for the best solution but a blind belief that markets are always the best solution and that the private sector must by definition be much more cutting edge and efficient. And the ultimate irony of all this? Several of the services have been contracted out not to the private sector but to the state sector. Not the UK public sector of course as that is not allowed to apply for and win contracts. No - the cutting edge private sector firms supplying our railways have included the French nationalised railways and the German nationalised railways.
Clearly the government thinks the public sector can only be efficient if it is foreign. You couldn't make it up.