Welsh Minister Public Commitment to not for profit franchise

[Gareth Marston]

From http://www.walesonline.co.uk/news/wales-news/future-wales-borders-rail-service-8230827

This was suppose to have gone off the boil with advice taken from Scottish a government of the problems of finding someone to run the not for profit franchise the biggest stumbling block.

The future Wales and Borders rail service will be taken over on a not-for-profit basis, minister indicates

Edwina Hart says she wants to see a not-for-profit run many Welsh rail services after the Welsh Government gains new powers over trains

Many rail services in Wales are likely to be run on a non-profit basis after the power over the Wales and Borders franchise is devolved, a Welsh Government minister has indicated.




Transport minister Edwina Hart told the Assembly Enterprise and Business Committee on Thursday she intends to go for a not-for-dividend model when the Welsh Government takes control of the contract.

The committee heard that a company would be set up to deliver the franchise, while an arms-length firm would also be established to work on the South Wales Metro.

But the minister suggested there may first need to be an extension to the current Arriva Trains Wales franchise.

Currently rail franchises are contracted out to private companies, but there have been long-standing calls for a not-for-profit outfit to run services in Wales.

Ministers will decide who runs the new franchise after Arriva’s runs out in 2018.

Ms Hart told the committee: “I do intend to go for a not-for-dividend model in future when we have the powers devolved to us. Work will commence on that.

“They are likely to establish an arms-length company. Eventually the Metro will become a subsidiary of that company.”

Ms Hart said the company would deliver the franchise across Wales.

The minister added that work was starting to develop a separate arms-length company to take the strategic development of the Metro, which includes bus, rail and tram projects.

Moves to devolve the Wales and Borders rail franchising process in Wales followed a deal between the Welsh and UK Governments to fund electrification of the Valleys Lines.

Plaid Cymru transport spokesman Rhun ap Iorwerth welcomed the announcement, saying: “We’ve long believed that rail has to work for the people of Wales, and that putting the next franchise in public hands is the way to do that. The Minister was clear that there are pitfalls ahead, but having called for this in the last election Plaid Cymru fully supports this option.”

But Welsh Conservatives accused Ms Hart of having an ideologically-led policy on the issue.

Byron Davies, Welsh Conservative transport spokesman, said: “Preventing private businesses from running Welsh railways is another example of Labour’s ideological aversion to the private sector and inability to create wealth and prosperity in the Welsh economy.”

A statement on the issue is expected from the minister next week.

 

[WelshBluebird]

But Welsh Conservatives accused Ms Hart of having an ideologically-led policy on the issue.

Byron Davies, Welsh Conservative transport spokesman, said: “Preventing private businesses from running Welsh railways is another example of Labour’s ideological aversion to the private sector and inability to create wealth and prosperity in the Welsh economy.”

Oh the irony!
And THIS is why a lot of people are disillusioned with politics.

 

[Gareth Marston]

Fragmentation is not addressed and of course ROSCO's can still make a profit from leasing stock and contractors doing enhancement work for NR.

 

[LNW-GW Joint]

I don't see how this squares with the Railways Act.
The devolution on offer is for WG to specify, let and manage the new Wales & Borders franchise, as Scotland has just done with Scotrail.
Franchises still have to be competed for, and only Labour has indicated that it will allow public sector bids.
I don't think she has thought this thing through.

 

[Phil from Mon]

Well, if the model they are going to use is the same as for water, we have in Dwr Cymru, Welsh Water or Hyder or whatever it calls itself an excellent example, with higher investment and I think fewer complaints than any of the privatised water companies in England

 

[LNW-GW Joint]

Well, if the model they are going to use is the same as for water, we have in Dwr Cymru, Welsh Water or Hyder or whatever it calls itself an excellent example, with higher investment and I think fewer complaints than any of the privatised water companies in England

But you need a change of primary legislation for that (ie Westminster agreement).
Cardiff can't just unilaterally do its own thing.
Water was sold off by HMG, rail (passenger) is only franchised.

 

[merlodlliw]

Well, if the model they are going to use is the same as for water, we have in Dwr Cymru, Welsh Water or Hyder or whatever it calls itself an excellent example, with higher investment and I think fewer complaints than any of the privatised water companies in England

Many experts have said, you can not compare Welsh Water with railways which is transport, Scotland weighed up the argument and decided,it would not work & that from a nationalist Government.
The current Minister signed off the Saltney to Rossett redouble without realising it did not include extra capacity, she now blames everyone except herself for the shambles.
While we are at it, Wrexham Water now Dee Valley, is also one of the best performers in the UK,this was always a private company with low bills,

I do find it alarming that one Minister can make this decision,that will effect those Countys in England which Wales & Borders serves, like the Wrexham redouble the not for dividend TOC has not been thought out,

Bob

 

[Emyr]

This topic has already improved my day.

I look forwards to seeing which organisations are interested in operating this franchise.

TUC?

 

[Greenback]

It's an excellent idea in principle, but there are a lot of issues that need to be addressed in practice.

 

[Envoy]

I hope the Welsh Government realise that with responsibility for the 'Welsh Franchise' that they also have a duty to the people in England who use their services. I can remember attending one meeting of Passenger Focus in Cardiff with some people from England present. They complained that the
when they contacted the Welsh Government about 'issues' with ATW, that the WG did not not want to know. They said that they were only responsible for services in Wales and the residents of Wales.

If the Welsh Government are responsible for the 'Welsh Franchise', then I must say that they are also responsible to those in England who are served by these services. It is also in the interests of Wales to have services that penetrate far into England for ease of travel and hence the Welsh economy.
It would be totally ridiculous for everybody to have to change trains at Chester, Shrewsbury or Chepstow.

 

[DarloRich]

And my cynical response is: aye aye pal - whatever!

Won’t this require greater devolution and a redrafting of the Railways Act? I agree this is what SHOULD happen - I just don’t think it will!

 

[Greenback]

And my cynical response is: aye aye pal - whatever!

Won’t this require greater devolution and a redrafting of the Railways Act? I agree this is what SHOULD happen - I just don’t think it will!

My thoughts are similar. The practical problems are not insurmountable, but will probably be sufficient for it not materialise.

 

[merlodlliw]

This topic has already improved my day.

I look forwards to seeing which organisations are interested in operating this franchise.

TUC?

In my opinion if its not for dividend, no private sector rail company will be interested, so that leaves Welsh Government, Scotland would have been an easy option for not for profit, hardly any crossing the border, unlike in Wales,but realised it would not work
If this is the way forward in Wales with railways, why do WG want to sell off Cardiff Airport,
What guarantee the dividends would be put back in the railway if WG have their hands on it,after all the railway would have to make a profit to reinvest dividends, no profit then its like the COOP this year, no divi for members who own it. A lot of thought would have to go into it,political dogma is one thing,& has for Plaid at the last election,they came third. Asking ATW to extend the franchise for saye another five years,would mean no growth due to Politicians who set up the Wales and Borders franchise.

 

[Gareth Marston]

In my opinion if its not for dividend, no private sector rail company will be interested, so that leaves Welsh Government, Scotland would have been an easy option for not for profit, hardly any crossing the border, unlike in Wales,but realised it would not work
If this is the way forward in Wales with railways, why do WG want to sell off Cardiff Airport,
What guarantee the dividends would be put back in the railway if WG have their hands on it,after all the railway would have to make a profit to reinvest dividends, no profit then its like the COOP this year, no divi for members who own it. A lot of thought would have to go into it,political dogma is one thing,& has for Plaid at the last election,they came third. Asking ATW to extend the franchise for saye another five years,would mean no growth due to Politicians who set up the Wales and Borders franchise.

Most peoples concerns will be if WG becomes distracted in the practicalities/difficulties of making this work rather than focusing on improving services.

 

[Yew]

It's an excellent idea in principle, but there are a lot of issues that need to be addressed in practice.

Indeed, the Thatcherites responsible for privatisation have put up a lot of barriers to try and protect their neoliberal pseudoeconomic ideology.

 

[merlodlliw]

Indeed, the Thatcherites responsible for privatisation have put up a lot of barriers to try and protect their neoliberal pseudoeconomic ideology.

Indeed one view, the major concern with devolving Wales & Borders is will it be beneficial to those of us,living on the borders, every train departing Wrexham crosses into England within a few minutes in all three directions,North/South and West, I agree the current Wales and Borders franchise is a dogs dinner with no growth,but that was politicians who signed it off.

 

[Railsigns]

I don't see how this squares with the Railways Act.
The devolution on offer is for WG to specify, let and manage the new Wales & Borders franchise, as Scotland has just done with Scotrail.
Franchises still have to be competed for, and only Labour has indicated that it will allow public sector bids.
I don't think she has thought this thing through.

The Smith Commission has published its report, which includes a specific recommendation that the Scottish Parliament be given the power to allow the [UK] public sector to bid for future rail franchises in Scotland. Sadly, this has come a little too late to prevent the recent franchise award to Abellio.

 

[aelius]

Sir Richard Branson may be willing to bid on a non-profit basis. He tried to win the franchise for the National Lottery on that basis and made a fuss when he didn't win.

 

[LNW-GW Joint]

The Smith Commission has published its report, which includes a specific recommendation that the Scottish Parliament be given the power to allow the [UK] public sector to bid for future rail franchises in Scotland. Sadly, this has come a little too late to prevent the recent franchise award to Abellio.

The problem is that, the way the report reads, the WG intends to set up a company to run the franchise (ie no competition).
At face value that is a state monopoly, which is far from what the Smith proposal is (which isn't law yet, certainly not in Wales).
I think the report might be muddling up the Metro development proposals with running the wider rail franchise.

 

[merlodlliw]

Sir Richard Branson may be willing to bid on a non-profit basis. He tried to win the franchise for the National Lottery on that basis and made a fuss when he didn't win.

He was correct in making a fuss, he won the nat lotto franchise, but it was taken from him under circumstances that were political, however the lotto is not railways.
--- old post above --- --- new post below ---

The Smith Commission has published its report, which includes a specific recommendation that the Scottish Parliament be given the power to allow the [UK] public sector to bid for future rail franchises in Scotland. Sadly, this has come a little too late to prevent the recent franchise award to Abellio.

My understanding is, The Scottish Government on professional advices,decided to steer away from any form of state ownership.

 

[Railsigns]

My understanding is, The Scottish Government on professional advices,decided to steer away from any form of state ownership.

Hardly. Awarding the franchise to Abellio is, without question, a form of state ownership.

 

[Wolfie]

The problem is that, the way the report reads, the WG intends to set up a company to run the franchise (ie no competition).
At face value that is a state monopoly, which is far from what the Smith proposal is (which isn't law yet, certainly not in Wales).
I think the report might be muddling up the Metro development proposals with running the wider rail franchise.

My understanding is that a state monopoly would be contrary to EU law and would face legal challenge in the European Court.

 

[Bletchleyite]

My understanding is that a state monopoly would be contrary to EU law and would face legal challenge in the European Court.

Provided the infrastructure and passenger operations are accounted separately (is there any suggestion Network Rail would be devolved?) and open access operators are given access on the same terms as the main Government operator, I can't see any reason why there would be a problem with it.

Neil

 

[merlodlliw]

Provided the infrastructure and passenger operations are accounted separately (is there any suggestion Network Rail would be devolved?) and open access operators are given access on the same terms as the main Government operator, I can't see any reason why there would be a problem with it.

Neil

It has been suggested by people who are in discussions with the Minister that she wants control of Network Rail Wales as well.
I now wonder about the highly profitable Chester to Manchester line,ATW on behalf of WG manage stations Chester to Runcorn east could this be on the way to Northern.

 

[rf_ioliver]

My understanding is that a state monopoly would be contrary to EU law and would face legal challenge in the European Court.

Not necessarily. The requirement is to separate track and operations. For example, in Finland we have VR which is a state owned company running the trains (both freight and passenger) and RHK which run the infrastructure.

Technically Finland has private operators that can have access to the infrastructure - there is at least one freight company that has been trying to start operations for a few years. The passenger operations are however not open until 2019 at the earliest.

t.

Ian

 

[Gareth Marston]

Not necessarily. The requirement is to separate track and operations. For example, in Finland we have VR which is a state owned company running the trains (both freight and passenger) and RHK which run the infrastructure.

Technically Finland has private operators that can have access to the infrastructure - there is at least one freight company that has been trying to start operations for a few years. The passenger operations are however not open until 2019 at the earliest.

t.

Ian

The EU directive requires only seperate accounts not seperate companies.
--- old post above --- --- new post below ---

It has been suggested by people who are in discussions with the Minister that she wants control of Network Rail Wales as well.
I now wonder about the highly profitable Chester to Manchester line,ATW on behalf of WG manage stations Chester to Runcorn east could this be on the way to Northern.

There's already much angst in the Marches about "Cardiff" control. The cooperative tradition that the Minister was citing as a tradition in Wales is not necessarily the case in Marcher England.

 

[tsubaki]

This would probably be a very good idea, if only the Welsh Government werent the ones implementing it.
--- old post above --- --- new post below ---

It has been suggested by people who are in discussions with the Minister that she wants control of Network Rail Wales as well.
I now wonder about the highly profitable Chester to Manchester line,ATW on behalf of WG manage stations Chester to Runcorn east could this be on the way to Northern.

One would imagine the Borderlands Line would probably be shooed off to Merseyrail as well (which might not be a bad thing for those who use it).... one can just imagine the WAG being surprised to find out Buckley is in Wales.

 

[alexl92]

Indeed, the Thatcherites responsible for privatisation have put up a lot of barriers to try and protect their neoliberal pseudoeconomic ideology.

Ironic, considering that the Iron Lady herself considered the privatisation of the railways a step too far. She only, reluctantly, signed it off when it became apparent that either she would or someone else would.

 

[route:oxford]

Which franchises operate on a "not for loss" basis?

 

[merlodlliw]

The EU directive requires only seperate accounts not seperate companies.
--- old post above --- --- new post below ---


There's already much angst in the Marches about "Cardiff" control. The cooperative tradition that the Minister was citing as a tradition in Wales is not necessarily the case in Marcher England.

This may interest you,I switched my electric account to the COOP, due to Scottish Power/Manweb uping their prices, I got reduced service charges,dividend as a coop member and less hassle.
I received an e mail earlier this year telling me due to complaint from the regulator, I would not be getting dividend any longer as Midshires COOP run the scheme and I live in North Wales, another COOP area.
However the COOP, its stores/Bank and the rest are in such a financial turmoil
no members can expect any dividend until 2016.You put someone with no knowledge in charge of the bank and it goes bust,akin to a politician in charge of Welsh Railways, with no railway knowledge the Saltney to Rossett redouble is an example of, we spend £44million and did not realise capacity should have been involved.
The Marches have a lot to worry about, Cardiff already controls all their stations on the Hereford to Shrewsbury line.