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    Howard
    They are part of the secondary public sector to the extent that they rely on public money as do all private firms that do that. Private sector firms are private sector only to the extent that they are not reliant upon pubic money.

    The way the railways operate, very simplified is this.
    Operators will bid to run a route/service/region. They will decide if that route/service/region is profitable and if so they will bid to pay money to run that service. If they think it is a loss making service then they will make a bid based on receiving a subsidy from the government to do so. Clearly in a competitive bid the lowest subsidy or highest payment to the government has the best chance of winning. A bid will include meeting a minimum service level they can also include enhancements to that service along with a capital investment which may improve profitability helping them minimise the subsidy or maximise the payment to the government.

    This is how local government has operated contracting out successfully for years, something I was heavily involved with in the late 80's (nothing to do with railways I must add but along a similar principal).

    There clearly has to be proper competition between bidders for it to work to the benefit of taxpayers plus proper contract supervision to ensure that the promised service delivery is met.

    A lot of rail services are just not able to be run on a profitable basis hence the need for them to be subsidised as a public service. What is needed is the lowest possible subsidy for the best level of service, something the bidding system helps achieve.

    By the way. It is not always the lowest subsidy bid or higher payment bid that wins. Viability has to be taken into account along with the track record of the bidder when reviewing them. This is a complex process and in my day at DDC when contracting services I did not, on more than one occasion, award a bid to the highest bidder (bids then had to be approved by committtee incidentally).

    It does work.

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