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June 9, 2009

London: Imminent Tube strike shows privatization’s nuances

Nicole Gelinas

A major transit union may shut down London’s Tube for two days starting tonight, “making life wretched for most of the working population,” in the words of the Evening Standard. The strike, if it happens, is partly the legacy of the national government’s failed privatization of the Tube system.

In 2003, then-Chancellor of the Exchequer (and now beleaguered prime minister) Gordon Brown privatized the Tube’s investment and maintenance programs to two big-name consortia under 30-year contracts.

Three and a half years later, one of the consortia, Metronet, which included contractor Bombardier, went bankrupt, handing responsibility for the work right back to the government.

The failed venture has cost taxpayers and riders at least $700 million, partly because the government had guaranteed some of Metronet’s debt.

Today, Tube workers plan to strike partly because of a pay dispute, but also partly because London Underground, which runs the Tube, has inherited Metronet’s employees, “resulting in duplication of staff,” the Standard reports. Now, LU wants to lay some of the duplicate staffers off.

London transportation isn’t the clear-cut story of a privatization failure, though. It just shows that privatization is complicated. 

Private operators run London’s public buses quite successfully, and the buses will keep running during any strike. 

The saga shows that for government agencies, competently managing private-sector infrastructure partnerships is, if anything, more complex than running the infrastructure directly.

Even on the buses, the private operators succeed only because of strong government leadership — not just in managing the contracts, but also in keeping bus lanes reasonably clear and in setting up a uniform quick-pay system that seems to work efficiently.

Filed under: Buses, Infrastructure, London

1 Comment »

  1. [...] There’s another advantage to bus-service contracting, too. Weakening the MTA’s monopoly on nearly all transit services would mean that the MTA’s unions don’t have as strong a hold on New York’s economy. Subway workers could go on strike, but buses would still run, like in London. [...]

    Pingback by NY Fiscal Watch — July 9, 2010 @ 12:16 pm

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