Two mysteries for Wednesday

Malcolm’s every-constant Wednesday puzzle is whether this is a two-wheelie-bin week or just the green recycling. Just as Thursday morning issues are: what did they refuse to collect, and why?

Leave that aside: we have bigger issues to hand.

FirstGroup on the West Coast Mainline

The Times first leader (lots of firsts here), having spat on ever-escalating train fares from a great height,  was remarkably tart on this:

A rethink is more urgent in the case of FirstGroup’s apparently successful bid for the West Coast mainline franchise. By any reasonable assessment the company’s record as holder of the Great Western franchise has been poor. Stung by passenger boycotts and the nickname Worst Late Western, it has improved its punctuality over the last five years. But it is still rated the worst operator for crowded trains and stations and in 2008 received an official reprimand for failing customers and misreporting cancellations.

Now burdened with £1.8 billion of debts, First Group is attracted by £860 million the West Coast franchise earned Virgin last year. For their part ministers are attracted by the 15 per cent premium that FirstGroup is believed to have offered for the franchise over Virgin, its only rival.

An extravagant bid coupled with a weak balance sheet and a dismal record of customer service are hardly the qualifications that the Government should be seeking in an operator for a rail service that is also a strategic national asset. the Department for Transport promised to consider “feasibility” as well as “profitability” in assessing the bids. First Group’s bid is not feasible, any more than double-digit fare increases are tenable. Message to Whitehall: switch tracks before it is too late.

Precisely.

Lest we forget, we have been here before. National Express took the East Coast Main Line in similar circumstances, bidding £1.3 billion for the franchise. When it didn’t work for them, and their whinges of despair cut no ice with the outgoing Labour government, National Express walked away, leaving an aching void which had to be filled by a spatchcocked directly-owned operation. Before National Express, the Great North Eastern Railway (or rather its parent company, Sea Containers) had gone through a similar experience, and similarly offed in a huff.

Three operators in just seven years (with a possible fourth next year, if the franchise can be spun out): no wonder the East Coast Main Line needs — desperately needs — security and a make-over. Richard Branson makes just that point in his regrets today:

… this is the fourth time that we have been out-bid in a rail tender. On the past three occasions, the winning operator has come nowhere close to delivering their promised plans and revenue, and has let the public and country down dramatically. In the case of the East Coast Main line, both winners – GNER and National Express – over promised in order to win the franchise and spectacularly ran into financial difficulties in trying to deliver their plans. The East Coast is still in Government ownership and its service is outdated and underinvested, costing passengers and the country dearly as a result.

Insanity is doing the same thing over and over again and expecting different results. When will the Department for Transport learn?

Interestingly before Virgin took over the West Coast there were more passengers using the East Coast than the West Coast. Now there are 12 million fewer.

The other mystery: those employment statistics

Surely something wrong here.

In the last three months official figures estimate that national output has fallen back by 0.7%. Yet this smaller economy is apparently employing 201,000 more. More folk are — it seems — in jobs but doing and making less. In one quarter that would be an aberration. Over two years, though, it is inexplicable. The UK national economy is, it seems, ever so slightly — the odd 0.1% or so — down on where it was when Labour lost power. Since when public sector employment has been culled. Even so, over half-a-million are now working than were then. hat would imply, not a flat-lining economy, but one growing at about 2% over the period.

So, we are left with a whole stack of suppositions:

  • Many of these “new jobs” are part-time work, replacing lost “full-time” ones. Certainly we are hitting new heights in the numbers saying they are working part-time because they cannot find full-time employment.
  • Self-employment is on the up. Well, a quarter of these “new jobs” seem to be self-employment. Either the black economy is thriving, or these bods are tooling around fooling themselves the work is there.
  • Wages are falling. The British worker is now cheaper and therefore being employed as an alternative to investment and  better-productivity. Or employers are hoarding labour in hope of an up-swing, which is another way to be less-productive. Neither of those bodes well for a future recovery.
  • It’s the Olympics, innit? Certainly the new employment — perhaps 90% of it — seems to be in the London region, at the expense of the Midlands and the North. And the Olympics bonanza of capital expenditure is now over.

Here’s one last thought: in 1992 a quarter of 18-24 year olds were in education. Today it’s 41%. That represents a huge drain of the potentially-unemployed. Thanks to the ConDem squeeze on student fees, for the second year in succession we are seeing a serious decline in university entrants. There’s another future crisis in the making.

As Malcolm’s Dear Old Dad would always have it: “It’s got to be true. It’ll be in tomorrow’s papers.”

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Filed under Britain, Daily Telegraph, economy, education, railways, Times

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