On Sat, 16 Dec 2006 15:49:03 +0000, Dave Arquati wrote:

The whole point of a penalty/incentive regime is that the need to make a
profit forces the concessionaire to deliver high performance - because
if they don't, they will lose money and eventually have to give way to a
more efficient company.

The difficulty running the service publicly is precisely the one you
just pointed out for a private company. Will the public sector employees
deliver a high performance service just because they have a warm, fuzzy
feeling about working for the public? Some of them may, but certainly
not all. On the other hand, the concessionaire will have to run a
high-performance service because if they don't, they will be penalised.

There have been plenty of cases of companies deciding it's more
profitable to make substantial cutbacks and pay the penalties for poor
performance than it is to perform well. Whilst it's true that when the
contract expires the company may have to give way to a better
performing one, you're underestimating the preference for short term
profit over long term viability - particulary with train operating
companies, which own very few assets and make very little investment
(e.g. all their trains are owned by someone else and leased, and a
full complement of staff is often TUPE'd in ready-made) and can be
brought into and out of existence with relative ease.

I don't buy the maxim that private companies always run things better
than the public sector. There are plenty of counterexamples
(Railtrack, Connex, Multiplex, etc). At the end of the day there are
good and bad private companies, and good and bad public entities. TfL
has always struck me as a good one (though perhaps I'm mistaken ,
and I'd be more confident if they were running the Overground rather
than potentially a bunch of cowboys.