Infra dig

Media pundits to the left and right of the political spectrum are having a joyful time putting the boot into the airports operator BAA, as Heathrow airport remains largely locked down three days after the last measurable snowfall. For the first couple of days of the crisis, BAA was sending out a poor curly-haired intern called Andrew Teacher to face the media throngs, but in the last day or so its CEO has finally manned up and ventured out to offer his apologies to the stranded thousands. He has promised that BAA will learn the lessons from the debacle, a promise not made since the last time Heathrow was caught short by the arrival of snow in winter, about ten months ago.

It's not just BAA that needs to learn lessons. People are starting to wake up to the fact that flogging off vital national infrastructure to companies whose sole strategy is "sweat the asset" might not be the smartest way forward. Here's a (long) extract from a piece in the Toronto Globe and Mail, written by Carl Mortished, a Canadian freelancer living in London:

Consider the airports: long privatized, they are now foreign-owned. BAA, the Heathrow operator, is controlled by Ferrovial, a debt-burdened Spanish building company. Ferrovial was forced to sell three airports to satisfy competition concerns and last year Gatwick was snapped up by Global Infrastructure Partners, a private equity firm backed by Credit Suisse and GE.

Britain’s airports, its power companies and its water companies are controlled by foreign enterprises. E.ON and RWE of Germany and Electricité de France have the lion’s share of the power grid while Canadian pension funds have partially filled the vacuum in domestic transport. Ontario Teachers' Pension Plan controls the airports of Bristol and Birmingham, while Borealis and Teachers together have agreed to buy High Speed 1, the Channel Tunnel Rail Link.

You might wonder why the British are not keen to invest in their infrastructure when the business case for power and transport is clear. It could be a profound loss of collective will. These are strategic investments which require not only commercial but also political and national vision, and that has been dwindling for many years. When BAA was privatized, its new owners rapidly turned the airports into a highly profitable series of shopping malls. It was to be a short-term property play rather than long-term infrastructure game, and an attempt was made to do the same with the railroads until the privatized network began to collapse in confusion and terrible accidents.

The reference to the Channel Tunnel Rail Link (now known as High Speed 1, though passengers travelling at 20 kph on the line during the current snowfall may wish to dispute that) is a reminder that the policy of selling off the nation's furniture to buy gin has continued under the present government. The Canadian buyers have snapped up this asset for a fraction of its capital cost from an apparently desperate vendor. In current circumstances some may take comfort from the fact that Canadians surely know a lot about snow, but sadly they don't know very much at all about railways*. Like Heathrow and so many other privatised assets, HS1 will be sweated to produce the greatest possible short-term returns, with little concern for passengers and none whatsoever for the national interest.

In the meantime, the government is still struggling to find a regulatory regime that will encourage private investors to rebuild the country's electrical grid before the lights go out, and is pushing forward with a plan to build a high speed line from London to Birmingham at a per-mile cost many times higher than France's (state-owned) SNCF routinely manages. As I said, it's not just BAA that needs to learn lessons.

* Anyone who needs proof that there are worse ways to travel than Virgin Cross Country would be well advised to take a ride between Toronto and Montreal. Each city has a population of about 3 million and they are about 500 km apart -- and there are about six short trains between them each day. On one occasion I boarded a train in Toronto and ordered a cup of coffee. The steward moved to take the coffee away from me as soon as the train began to move, so that I wouldn't get scalded as we pitched and rolled down the tracks. "Believe me" he said, "you won't want that coffee anywhere near you once we start moving".