Maybe some sort of system the encourages good interiors? Regional railways are often a fair way behind modern busses in interior quality. Until recently In mansfield we had unrefurbished 156's competing against brand new busses with leather seats and such. Imagine that on a regional DMU
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How To Reform The Franchise Tendering System
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Maybe some sort of system the encourages good interiors? Regional railways are often a fair way behind modern busses in interior quality. Until recently In mansfield we had unrefurbished 156's competing against brand new busses with leather seats and such. Imagine that on a regional DMU
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The question to ask is what the problems with our rail system currently are? I'd argue the three biggest problems are: lack of capacity; outdated stock; high Anytime and Season Ticket prices.
The question is how the tendering process affects these? Is it just a case that it is poort value for money, so removes scope for investment in track/stock, and requires higher ticket prices, or is there a more direct relationship?
The question is how the tendering process affects these? Is it just a case that it is poort value for money, so removes scope for investment in track/stock, and requires higher ticket prices, or is there a more direct relationship?
Really? They might be expensive in terms of up front cost, but they remain good value (sometime very good value) on a per journey basis. Taking two examples firstly Peterborough to Kings Cross travelling in the peak both ways:
Code:
Peterborough - Kings Cross
FCC Only SOR 50.50
Any Perm SOR 99.00
Annual Season FCC Only 5600.00
Annual Season Any Perm 6608.00
Assume 250 working days, [B]per journey cost 22.40/26.40[/B]
Monthly Season FCC Only 537.60
Monthly Season Any Perm 634.40
Assume 20 working days, [B]per journey cost 26.90/31.70[/B]
Weekly Season FCC Only 140.00
Weekly Season Any Perm 165.20
Assume 5 working days, [B]per journey cost 28.00/33.05[/B]
*First number is FCC Only, second is Any Perm*Those seem to be both very good savings and in fact quite a reasonable price for a peak time journey on that route. For comparisons sake, if you were to walk up every day of the year and buy a Any Permitted ticket you'd be looking at forking out about £24,000! The second example is Leeds to Manchester leaving before 0830 and travelling only on TPE:
Code:
Leeds - Manchester Piccadilly
Any Perm SOR 25.70
Annual Season Any Perm 2708.00
Assume 250 working days, [B]per journey cost 10.80[/B]
Monthly Season Any Perm 260.00
Assume 20 working days, [B]per journey cost 13.00[/B]
Weekly Season Any Perm 67.70
Assume 5 working dyas, [B]per journey cost 13.55[/B]As with the first example I'd suggest this represents a very good saving and a very reasonable price for a peak time journey on this route. I'm afraid to say that I don't buy that season tickets are too expensive, I'll agree that the initial outlay might be high but they still represent very good value for money.
tbtc
Veteran Member
Biggest problems?
I'd suggest that the (increasing) cost to the Treasuary would be a bigger issue than the cost of season tickets or the age of stock (it's maybe not the overall age of stock that is the problem, but the distribution of stock around the country, meaning for example that Birmingham sees 170s and 172s on local DMU services whilst Cardiff/ Manchester etc are stuck with 1980s equivalents on local DMU services).
I'd maybe put something like "fragmentation" or "too confusing to outsiders" on the top three too. Season ticket holders and other regular travellers know the railway - but to a car driver the choice of tickets/ restrictions etc must be baffling.
Ticket prices are largely down to government policy. There is nothing to suggest that a change in the franchising system, or indeed re-nationalisation, would make any difference to these. Indeed, I was talking to someone who used to work in this area under BR - their policy was to increase price in line with demand, i.e. as the train became crowded the price went up. You'd be paying more under that system!
Outdated rolling stock - that is the problem with the way that the ROSCOs were set up, nothing at all to do with franchising.
Lack of capacity; that's down to NR, effectively still in public ownership, and again nothing to do with franchising.
Well, nought out of three ain't bad....
Tiny Tim
Member
The ROSCOs may not be part of the franchising system, but they are a major obstacle for the TOCs. If we believe that the franchise system has been optimised as much as it can, then the ROSCOs are the next candidate for reform.
Not read all the way through the thread so forgive me if I'm being repetitious...
I would re-map the franchises so they are all roughly revenue neutral i.e. combine routes requiring subsidy with route generating premiums. Require all bids for these new franchises to have revenue/subsidy payments of £0, and judge the bids solely against what they are offering, be it upgrades or fare reductions.
As a side note, I would have the rolling stock "belonging" to the franchise itself, so no more inflated ROSCO payments.
I would re-map the franchises so they are all roughly revenue neutral i.e. combine routes requiring subsidy with route generating premiums. Require all bids for these new franchises to have revenue/subsidy payments of £0, and judge the bids solely against what they are offering, be it upgrades or fare reductions.
As a side note, I would have the rolling stock "belonging" to the franchise itself, so no more inflated ROSCO payments.
I agree, there are far too few.
It should also be possible for government to own rolling stock and lease it to TOC's. In doing so Local Government could spend Section 106 money from developers on trains for lines for their area, so TOC's could run longer/better trains.
As they would have no/low upfront costs then they could ensure that the cost to the TOC's was the same to run, say, a 3 coach train (including access charges) as it would for them to run an over crowded 1 coach train, with a function that meant that they recieved a share of the extra profits upto the standard charge for a 3 coach train. Over time it would enable lines to have a better service than is currently an option, it would also enable nationilsation of the ROSCO's on the cheap.
WatcherZero
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Its been tryed, just resulted in the franchises investing in the routes that could generate a return and neglecting the ones that wont meaning over time the gulf gets larger.
Pen Mill
Member
Basically , they would still lease but from a high street lessor like HSBC for example ? as they just simply couldn't afford and wouldn't want the capital outlay (they would have to borrow the money anyway) . Very similar answer to now in my view.
Exactly; there has been a review, and they couldn't find anything seriously wrong. The point is that the government don't want the trains on their books.
WatcherZero
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The Government also doesnt like the local authorities having valuable assets, it forced SYPTE to sell the rolling stock it had to contribute towards the upgrade of Leeds station if it wanted a grant for the work. And in general the policy is the local authorities are not supposed to own capital assets with revenue earning potential that compete with or could be self sufficent in the private sector.
Tiny Tim
Member
As The Ham says, there are too few ROSCOs. They are, in effect, a cartel. I wouldn't accuse them of colluding to restrict supply or keep leasing prices high, they don't need to. Nobody's going to rock the boat when there's plenty of money to share between only four players. I can't envisage a way to change this other than the government taking over the ownership, supply and leasing of rolling stock. I don't see how increasing the number of ROSCOs would substantially improve matters, nobody in their right minds is going to build a load of new trains on the offchance that someone will lease them.
tbtc
Veteran Member
It worked for Porterbrook once (though that was only three 170s, hardly a scientifically significant number).
I'd like to know what a ROSCO expects to make back on the cost of a £1m EMU coach over the expected thirty five year (?) life span - to give an idea of the profits available.
Tiny Tim
Member
That's the point really, at £1 million for an EMU coach, they're not going to risk having many of them sat idle. Worse still, surplus rolling stock needs to be stored somewhere and that isn't cheap. Porterbrook's purchase of three Turbostars 'on spec' is a rare case of a ROSCO taking a risk. With the best will in the world, expecting ROSCOs to operate like this is unrealistic. I wonder who thought that the ROSCOs would create a 'competitive' market to supply the TOCs?
I'd also like to know what rate of return the ROSCOs expect, but I'm not anticipating a straight answer.
Essentially they're bankers. I think you can safely bet that the return is rather more than you or I would think is reasonable. Certainly the TOCs all think that the ROCSOs overcharge for the service they provide.
Pen Mill
Member
That seems to be the view. In that case , if they really care it's upto the TOCs to see if they can source alternate funding at better rates and then challenge Dft with it to pressurise the existing Roscos to drop theirs.
I suspect cheaper funding won't be available for railway stock although I don't know.
tbtc
Veteran Member
If you believe in the free market then it suggests that if ROSCOS are making excessive profits then someone could come along and offer to purchase new rolling stock from manufacturers and lease it back at a lower rate which was still profitable - maybe even some manufacturers could lease their stock directly.
But as we all know, the free market and railways don't seem to mix.
Pen Mill
Member
In the haulage industry where I worked for many years , Vehicle manufacturers formed partnerships with leasing companies so that the operators had options other than high street borrowing to build or replace their fleets , subject to credit worthiness of course.
Would this work in the rail industry ? it may do but it would have to be driven by Siemens , Alsthom, Bonbardier etc andof course jump all of the red tape hurdles !.
Would this work in the rail industry ? it may do but it would have to be driven by Siemens , Alsthom, Bonbardier etc andof course jump all of the red tape hurdles !.
tbtc
Veteran Member
Interesting.
I've never heard of any suggestion of integration between manufacturers and operators in the rail industry, compared to (say) how Brian Souter owns part of Alexander Dennis
Oddly enough I heard a rumour that Siemens are setting up their own bank with backing from the German government. If so it will give them a big edge IMO.
We currently offer finance solutions for people purchasing our products. ( remember that from my 2 week long powerpoint presentation/ Indoctrination last year)
What about Manufacturers working as ROSCOS? It could be cheaper to contract the use and maintainance of stock directly, than go through the middleman of a ROSCO
One way of improving the system and potentally reducing cost would be to invite operators to bid for the maximum amount of the network that they would be prepared to operate without subsidy. Where TOCs made similar bids there would then be a negotiation as to what further additional routes they would be prepared to operate with the TOCs that took on the most that would get the rights. It would only be the routes that were left after these processes that would go out to tender for subsidy. That would help squeeze maximum efficiencies from the system
Pen Mill
Member
Nice idea but they need working capital to build the stock.
They would then have to support the asset with only monthly repayments from the TOC to pay off the working capital borrowings . On a 20 year lease it would probably be more than 10 before they see the bulk of their outlay back.
With a ROSCO involved they get paid straight away. Sorry but I don't think it's practical.
Bombardier did have a finance company called Bombardier Capital but ti downsized it in 2001 and sold it off to GE capital in 2005.
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