Railtrack go bust because the government tries to force upon bit is overspend debts from the channel tunnel rail link. Obviously re-nationaising would demonstrate that privatisation was a humiliating mistake - so lets make something up, a pretend company Network Rail!
Railtrack never dealt with the over-staffed, over pensioned, under performing staff of British Rail. But because Network Rail is sort of similar to British Rail just ignore the problem, no point upsetting the unions and bringing down Network Rail, especially as government has run out of alternative ideas.
Then Network Rail sellout every asset of the railway to long term, bad value rail operators, just as long as they paint the platforms people will think things have got better and fares can sneak up and up. They will probably run a glossy TV adverts and offer free coffee on the last train on sunday.
Shareholders dont own Network Rail. DfT can't own it, what to do - time to make something up. Welcome the regulated Asset Base or RAB. The RAB is essentially a fantasy company with a fantasy balance sheet, fantasy P&L account and fantasy shares. It works out what Network Rail is worth, how much its made, how much its spent. Unlike the a real company that needs a real bank account, the RAB can be made up and manipulated. and if handled really carefully it can be made so complicated no-one will ever look at it and no-one ever need know it even exists.
The RAB is part of simple but costly equation that is: NR operating costs - RAB = Government subsidy. Costly because where does the revenue fit - ie. your train fare?
NR are unmatched revenue generators. dwarfing even giants like Tesco. Consider this if you commute from outside london. You pay around £200-£300 a month thousands a year. Consider this as a percentage of your monthly salary, its not far off the income tax take of an average salary.
Where does the money go, well not back into the operating and improvement costs of the railway. No the money is syphoned off by cats taking the cream. The RAB is then manipulated. The whole arrangement becomes a huge credit card paid for by the state and not the profits. Government buys full fat but only receives semi skimmed.
Except government can't get away with it, their comprehensive spending review prevents them raising government spending. Bill got to be paid, raise the train fares. Wonga.com is not the answer. You pay you bill today, but you end up giving away more money than you borrowed in the first pace for nothing. Debt spirals up, nothing gets improved.
Lets just hope everyone carries on going to work
