6
(c)
(d)
(e)
(f)
(g)
to run efficient and reliable passenger and freight services of a frequency commensurate with emerging demand;
to operate its services on a commercial basis, i.e. to complete with other carriers and to maximize net revenue consistent with objective (b) above: in other words to earn a fair return on investment;
to respond quickly to market influences;
to recruit, train and employ staff to provide these services;
to develop railway land on a commercial basis (including air space above stations);
to develop ancilliary revenue sources such as from advertising.
The question is whether these objectives could be met by a strengthened organisation which nevertheless retains the KCR as a Government department; and the answer appears to be no, because Government systems and procedures are not designed to meet this range of challenges.
The Advantages of Hiving-off
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The alternative would be to move towards some form of corporation separate from the Government to run the railway. The advantages of this would seem to be:-
(a)
it would result in a more flexible organisation which could operate on a fully commercial basis;
(b)
(c)
(d)
proper weight could be given to commercial development, to matters such as land use, marketing, advertising and other similar functions; the railway must be sold to the users;
an independent organisation would have more flexibility with regard to fares and freight charges (taking into account transport policy considerations) and to take whatever decisions were necessary to meet its budgets, which Government will need to establish;
it would be easier to recruit senior staff in both the management and professional streams if it was not necessary to follow civil service procedures and to maintain parity of remuneration and conditions with the rest of the civil service;
CONFIDENTIAL