Now then children, can we say “Crowding out”? Yes, good, that’s right, crowding out…
It is not necessarily true that more government means more of the thing government is now additionally doing. It could be that government is now just replacing what would already be done without government. True, true, government might be doing it better. Or worse, obviously. Equally obviously it is not necessarily true that not using government means additional production of that thing - it might be that private provision of whatever just replaces what government would have provided. This process of non-additionality is known as “crowding out”.
As well as turning down Virgin’s application, the regulator also snubbed proposals from FirstGroup and Wrexham, Shropshire & Midlands Railway (WSMR) over fears that the West Coast mainline north of the capital was already too busy.
Virgin, which had planned to offer an alternative to state-run trains on the inter-city route, said the decision was “a blow for consumer choice and competition”.
It comes after the Government and senior Whitehall officials lobbied against the so-called open access applications, arguing that new services would have robbed Labour’s new nationalised railway of vital ticket revenue.
It was a message drummed home a fortnight ago by one of her officials — Richard Goodman, head of rail reform and strategy at the department for transport — who made a highly unusual intervention on the eve of an ORR decision.
In another letter to Collier, he said “open access must genuinely add value and not simply divert revenue from existing operators”, adding that, on DfT maths, the “live” applications for new routes could “abstract” £229 million a year from present services. He requested such considerations were “enacted immediately” in ORR decisions.
We cannot allow private train operators because they would crowd out the state supplied services.
Now, we’re not - not here and now at least - trying to insist that the private operators would be better. Even though that’s clearly our actual view we’re not insisting in this right here and now. We’re not even insisting that there actually would be crowding out - it’s potentially at least possible that the new services will induce enough demand, maybe more, to fill them.
What we do insist though is that government is worried about crowding out. They’ve said so, directly. Therefore we’ve got to accept crowding out as a sensible proposition. At which point things get interesting, don’t they? So, what is it that government currently does that would just be done by the private sector if the government actions disappeared? What is it, that is, that has already been crowded out by our bloated public sector? For, if this is something they’re worrying about then it’s something to worry about, isn’t it?
Tim Worstall