Following the incidents in Spain, some are blaming liberalisation. Even though it has nothing to do with it

If privatisation is evil, the privatisation of infrastructure is the absolute evil. And that of the railways is even worse. Even when there is no basis for it, as in Spain. “We must renationalise them,” thunders Irene Montero – along with many other left-wing figures – former Minister for Equality in the second Sánchez government, Vice-President of the Left in the European Parliament and Podemos’s candidate in the forthcoming general election. In order to bring them back under state control, the railways would first have had to be privatised – something that never happened. Adif, the company that manages the tracks and is responsible for regulating train traffic, is wholly state-owned. Renfe, the company providing transport services on both the conventional and high-speed networks, is also 100 per cent state-owned. From 2021 onwards, two other companies will be operating in competition with Renfe (with its two brands, AVE and the low-cost Avlo) on this part of the infrastructure: Ouigo, a French company owned by SNCF, which is also wholly state-owned, and Iryo, a company whose majority shareholder is FS International, a subsidiary wholly owned by Ferrovie dello Stato Italiane, which in turn is wholly owned by the Italian state through the Ministry of Economy and Finance (MEF).

Although there is as yet no conclusive evidence, responsibility for both serious accidents that occurred on the Spanish high-speed rail network this year – at Adamuz in January and at Urda in October – appears to lie with the network operator. In last January’s accident, a weld between two sections of track probably failed, resulting in the derailment of the Iryo train and its subsequent collision with a Renfe train. In the more recent incident, there was a malfunction in the train spacing system, followed by an incorrect decision by the control centre, which allowed a train to proceed at high speed rather than ‘on sight’ as should be the case in such situations.

Moreover, the assumption that safety standards would deteriorate is not borne out by the only two examples of genuine large-scale privatisation: that of Japan in 1987 and that of Great Britain in 1994. According to an analysis carried out by Andrew Evans, a researcher at Imperial College, in both cases the privatised railways recorded a lower number of rail accidents – albeit not to a statistically significant extent – than would have been expected based on extrapolating the historical trend, which was already very positive (-5 per cent per year).

The argument, stripped down to its bare essentials, put forward by those opposed to privatisation is as follows: unlike a public monopoly, private operators, in their quest to maximise profits, cut back on maintenance costs, force workers into harsher working conditions and, in doing so, increase the risk of accidents. However, the argument can be turned on its head: a private concessionaire has a greater incentive than a public one to keep the network in good condition, because in the event of an adverse incident, not only would it suffer negative repercussions in terms of profitability, but it would also risk losing its concession.

Similarly, in the service sector, the liberalisation of air transport has led to fierce price competition and, consequently, a sharp reduction in production costs, without this resulting in a decline in safety standards, which, on the contrary, have continued to improve.

A publicly-run operator, on the other hand, is not subject to the same incentives and may therefore be tempted to let its guard down in day-to-day management, concentrating resources on the construction of new lines – a move far more likely to win votes. In recent decades, Spain has sought to be top of the class: it has built 4,000 km of high-speed rail lines, 50 per cent more than France and four times as much as Italy. The demand generated has not been proportional and, despite the undoubted success of liberalisation, average traffic per kilometre of network remains, even today, far lower than in the other two countries. Furthermore, in many cases, the negative economic assessment of these investments, expressed in the past by more than one economist, remains valid.

Spending more seems to have been prioritised over spending wisely and managing effectively. To paraphrase Margaret Thatcher, one might say: private companies are controlled by the public sector (as well as by their own shareholders), but who controls the public ones?