Welsh Minister Public Commitment to not for profit franchise

[route:oxford]

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.

It would be helpful if you had chosen to include the important caveat...

We recommend you continue to use your original membership card for your day to day shopping activity locally. To benefit from being an energy customer we recommend you sign up for Midcounties Co-operative membership. You will be awarded with points for every pound spent on your energy payments and for meter readings, which in turn entitles you to a Share of the Profits. You can even choose to have your Share of the Profits credited directly towards your energy bill.

 

[merlodlliw]

It would be helpful if you had chosen to include the important caveat...

I did it from memory,however ill remain a member of where it all started,thanks for the research.

 

[Railsigns]

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.

Why would Thatcher need to 'sign off' rail privatisation? She had ceased to be P.M. when that policy was pushed through Parliament. It was nothing to do with her.

 

[LateThanNever]

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

All of them! They walk away if they don't make money!

 

[Class 170101]

Why would Thatcher need to 'sign off' rail privatisation? She had ceased to be P.M. when that policy was pushed through Parliament. It was nothing to do with her.

Major was her 'choice' of successor why else do you think he was promoted so quickly in the dying days of her Premiership?

As for 'state' control how about Wales using the model that London uses - ie a Concession rather than a franchise?

I can see Transport Scotland going this way at the end of the Abellio franchise.

 

[LNW-GW Joint]

As for 'state' control how about Wales using the model that London uses - ie a Concession rather than a franchise?
I can see Transport Scotland going this way at the end of the Abellio franchise.

Concessions (Merseyrail, London Overground, and soon Crossrail) are essentially franchises where fare setting and revenue risk stays with the government.
They are still "for dividend" as far as the operator is concerned.
The recent tram systems operate this way too.
The new TSGN franchise isn't much different as a management contract.

Merseytravel are finding that a concession doesn't make life any easier when you want new trains, or funding for extensions.
They also rejected taking over their NR infrastructure, having looked at the costs.

 

[Gareth Marston]

Major was her 'choice' of successor why else do you think he was promoted so quickly in the dying days of her Premiership?

As for 'state' control how about Wales using the model that London uses - ie a Concession rather than a franchise?

I can see Transport Scotland going this way at the end of the Abellio franchise.

I'm told officials from Cardiff had discussions with officials from Edinburgh about NFP and concluded it was too complex to instigate and were worried about finding the Managers to make it happen. However the Minister is determined.
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Concessions (Merseyrail, London Overground, and soon Crossrail) are essentially franchises where fare setting and revenue risk stays with the government.
They are still "for dividend" as far as the operator is concerned.
The recent tram systems operate this way too.
The new TSGN franchise isn't much different as a management contract.

Merseytravel are finding that a concession doesn't make life any easier when you want new trains, or funding for extensions.
They also rejected taking over their NR infrastructure, having looked at the costs.

Wasn't Merysyrail and NR more to do with the Brothers kicking off and they still wield some influence on the banks of the Mersey?

 

[merlodlliw]

I'm told officials from Cardiff had discussions with officials from Edinburgh about NFP and concluded it was too complex to instigate and were worried about finding the Managers to make it happen. However the Minister is determined.
--- old post above --- --- new post below ---


Wasn't Merysyrail and NR more to do with the Brothers kicking off and they still wield some influence on the banks of the Mersey?

Thought Edwina Hart was not standing again for the Assembly? if so it will make it difficult for the next incumbent of whatever party to change her decision. We have have five main parties standing in 2016.
You are correct WG officials have been up to Edinburgh and the Scots advised the Welsh against it, being too complex & difficult to manage.

 

[Bletchleyite]

Concessions (Merseyrail, London Overground, and soon Crossrail) are essentially franchises where fare setting and revenue risk stays with the government.

Except they aren't - or not all of them.

The old Merseyrail (Arriva Trains Merseyside) franchise did not have revenue risk transferred to the operator. The new concession *does*.

Neil

 

[arfortune]

My main concern is the relative lack of experience in the Welsh Government for anything like this, especially from the politicians. There's lots of detail missing on this; for example if as many have pointed out, this 'new company' is to be publically owned than it currently isn't permitted to operate franchised railways in the UK.
One of the other problems with transport is when it is looked at in isolation to neighbours. Much of Wales' population relies on services in England for work, health, education, shopping etc), it's therefore vital that any agreements are made in conjunction with these neighboring authorities if you want the best for the public.
The South Wales Metro scheme (linked to this announcement) is a great idea but Cardiff Bay is pushing ahead with this without undertaking proper economic and social studies to understand demand. Most of the benefits could be achieved simply and fairly quickly,by trying to co-ordinate timetables and setting up a common, interchangeable ticketing scheme. They've also appointed the scheme's promoter as a Director which surely is a conflict of interest?
Whilst private companies take a profit, in the railways this is actually quite small compared to many industries, and there's no guarantee if the operator was public it would go back into rail.
This statement is all about ideology rather than getting the best railway system as the WG could specify new services, buy new trains build new stations and do things with the fares tomorrow if they wanted to, or more importantly if the money was available.
Unfortunately it's this last point which is key - there is none, and things are only going to get worse no matter who gets into government. Whilst I welcome all these announcements on investment across the UK, I won't be celebrating until they're built, open and public finances are back in control.
I'll be honest that I can't see a WG owned company running the Welsh franchise, however, I can see perhaps a more contract type agreement like London Overground.

 

[ReeceEmmitt]

The easiest way to do this and to meet the minimum political requirements in my view is to adopt the Dwr Cymru model: http://www.dwrcymru.co.uk/en/Company-Information/Glas-Cymru.aspx

Railffordd Cymru is set up as a company limited by guarantee to own, finance and operate Trennau Cymru, the TOC that operates the Wales & Border franchise.

It works.

 

[merlodlliw]

The easiest way to do this and to meet the minimum political requirements in my view is to adopt the Dwr Cymru model: http://www.dwrcymru.co.uk/en/Company-Information/Glas-Cymru.aspx

Railffordd Cymru is set up as a company limited by guarantee to own, finance and operate Trennau Cymru, the TOC that operates the Wales & Border franchise.

It works.

You can not compare a water utility with transport, they are totally different,there are also private water companies in Wales, that are excellent to customers, Wrexham Water for example which is now Dee Valley.

 

[8H]

I am a bit baffled at the list of insurmountable difficulties being listed as a barrier to a NFP model. The rest of Europe and the world are full of state railways doing OK who aren't predicated to exist to make wheelbarrows full of shareholder loot. And of course our own BR did well too despite those who rewrite history and rubbish it. It would be straightforward to create a NFP Cymru compared to smashing up a state railway into fragments�� we know what that can look like already!

 

[LNW-GW Joint]

I am a bit baffled at the list of insurmountable difficulties being listed as a barrier to a NFP model. The rest of Europe and the world are full of state railways doing OK who aren't predicated to exist to make wheelbarrows full of shareholder loot. And of course our own BR did well too despite those who rewrite history and rubbish it. It would be straightforward to create a NFP Cymru compared to smashing up a state railway into fragments�� we know what that can look like already!

The only problem is that it's against the (current) UK law, and Cardiff is not sovereign.
The only devolved power proposed for rail in the Smith report for Scotland is the ability for public sector bodies to bid for franchises (as is the apparent Labour intention).
The Welsh minister's proposal is not on the devolution agenda.
Also, the DfT retains responsibility for cross-border services.
That wipes out most of the rail services in the W&B franchise that are not part of the Valleys network.

 

[ReeceEmmitt]

You can not compare a water utility with transport, they are totally different,there are also private water companies in Wales, that are excellent to customers, Wrexham Water for example which is now Dee Valley.

Really? I think as far as it matters in the ownership structure the two are almost identical - especially in the monopoly way they operate (if you don't like Dwr Cymru, you can't move water companies, equally if you're not satisfied with Arriva TW, no one else operates (or can) Valleys Line services)

The only problem is that it's against the (current) UK law, and Cardiff is not sovereign.
The only devolved power proposed for rail in the Smith report for Scotland is the ability for public sector bodies to bid for franchises (as is the apparent Labour intention).
The Welsh minister's proposal is not on the devolution agenda.
Also, the DfT retains responsibility for cross-border services.
That wipes out most of the rail services in the W&B franchise that are not part of the Valleys network.

The setting up of a not for profit gets around all of these issues with the exception of perhaps the cross border issues - though what is the different between a not for profit operating cross border services and a for profit doing so?

 

[merlodlliw]

The only problem is that it's against the (current) UK law, and Cardiff is not sovereign.
The only devolved power proposed for rail in the Smith report for Scotland is the ability for public sector bodies to bid for franchises (as is the apparent Labour intention).
The Welsh minister's proposal is not on the devolution agenda.
Also, the DfT retains responsibility for cross-border services.
That wipes out most of the rail services in the W&B franchise that are not part of the Valleys network.

Heres the official written statement sent to me this afternoon from Cardiff Bay

WRITTEN STATEMENT
BY
THE WELSH GOVERNMENT


TITLE The Future Delivery of Transport Infrastructure Projects
DATE 5 December 2014
BY Edwina Hart MBE CStJ AM, Minister for Economy, Science and Transport

Today I am pleased to announce that I am establishing a not for dividend wholly owned subsidiary company of the Welsh Government, as a key part of our approach to delivering a more effective integrated transport system in Wales. This company will, in its first instance, concentrate on providing advice and technical expertise to drive forward the linked projects of the Metro, specifying and procuring the next Wales and Borders Franchise and the Valleys Modernisation and Electrification Project.
The work of the company and of my department on these projects will be guided by a new Strategic Advisory Board made up of high level industry experts with expertise in integrated transport and engineering. Discussions are ongoing with a number of individuals as potential SAB Members and I will make an announcement on the make up of this Board very shortly.
This new company will enable us to bring in the technical and commercial expertise necessary to augment my department in delivering these exciting projects. While its focus will be on the three linked rail / integrated transport projects it will also be able to provide advice as appropriate on other significant transport interventions. While, in its first iteration, the company will concentrate on providing advice, its remit and role will be able to be extended, as appropriate, to take on the delivery of key aspects of transport delivery and is therefore in line with the commitment to "examine the feasibility of the Wales & Border rail franchise being run on a not-for-dividend basis, such as Glas Cymru.

 

[LNW-GW Joint]

Heres the official written statement sent to me this afternoon from Cardiff Bay

That's more like it.
It looks like a "Transport Scotland" model for Wales.
That's very different from the assertion that she will run W&B directly.
"Examining the possibility" of not-for-dividend is a long way short of doing it.
No mention of taking over infrastructure from NR either.
Hopefully they will get some intelligent people on board.
I expect Stuart Cole will figure somewhere!
Where's the budget coming from? No doubt some of it will be devolved from DfT.

It is very south Wales biased though, with Metro and Valleys electrification as key projects.
There's probably still a lot to do on the scope of the W&B network the WG will be in charge of.

 

[8H]

So it still all looks fairly straightforward.

It's not as if the 1993 Railways Act is on a legislative level with the Ten Commandments after all. Primary secondary and tertiary legislation is frequently amended.

This may be a first glimpse of potential Mainland Britain Labour policy on rail in taking us away from the post '93 Major government revolving door franchising model ??

 

[Phil from Mon]

There seems to be the misconception that not for profit (ie the Hyder/Dwr Cymru Model) is some sort of quango at best, or state control at worst. Indeed, the whole concept was referred to on one moment of political madness as "Marxist." I am sure that the Dwr Cymru board would refute that strongly. They have the same sort of pay structures and governance as any Plc., and the only difference to me is that profit is reinvested in the infrastructure and services, rather than being siphoned off to shareholders, many of which in the case of the TOCs are foreign governments anyway. The solution seems eminently sensible to me, sure there will be problems, including legislation, to be overcome but it is a model that clearly works in one sector, and I for one see no reasons why it should not work in another. The only pre-requisite will would be that Welsh Government allow it to operate without interference, which seems to be their intention from the statement above.

 

[Arglwydd Golau]

There seems to be the misconception that not for profit (ie the Hyder/Dwr Cymru Model) is some sort of quango at best, or state control at worst. Indeed, the whole concept was referred to on one moment of political madness as "Marxist." I am sure that the Dwr Cymru board would refute that strongly. They have the same sort of pay structures and governance as any Plc., and the only difference to me is that profit is reinvested in the infrastructure and services, rather than being siphoned off to shareholders, many of which in the case of the TOCs are foreign governments anyway. The solution seems eminently sensible to me, sure there will be problems, including legislation, to be overcome but it is a model that clearly works in one sector, and I for one see no reasons why it should not work in another. The only pre-requisite will would be that Welsh Government allow it to operate without interference, which seems to be their intention from the statement above.

Yes, I quite agree with you. I don't expect state control in the political climate that we have today, so reinvesting profit in infrastructure and services is the next best thing to me (rather than some foreign government or some investment group that hides in a tax haven)

 

[arfortune]

Totally agree with LNW - it makes sense to have a proper 'Transport Wales' considering the role it plays in just about every aspect of live, although am not sure why a new company is needed especially.
I hope they look beyond the usual suspects for their membership too to ensure they get the best knowledge and skills available.

 

[Arglwydd Golau]

.
I hope they look beyond the usual suspects for their membership too to ensure they get the best knowledge and skills available.

I'll agree with that one too. In many aspects of Welsh policy the same old faces are trotted out and that isn't good enough. This is a very important issue and it deserves people who really do know what they are talking about.

 

[merlodlliw]

There seems to be the misconception that not for profit (ie the Hyder/Dwr Cymru Model) is some sort of quango at best, or state control at worst. Indeed, the whole concept was referred to on one moment of political madness as "Marxist." I am sure that the Dwr Cymru board would refute that strongly. They have the same sort of pay structures and governance as any Plc., and the only difference to me is that profit is reinvested in the infrastructure and services, rather than being siphoned off to shareholders, many of which in the case of the TOCs are foreign governments anyway. The solution seems eminently sensible to me, sure there will be problems, including legislation, to be overcome but it is a model that clearly works in one sector, and I for one see no reasons why it should not work in another. The only pre-requisite will would be that Welsh Government allow it to operate without interference, which seems to be their intention from the statement above.

I would still suggest Welsh Water is a utility, much of its board are appointed by politicians,railways are different to a water utility, what works in one sector does not mean it will work in others.
--- old post above --- --- new post below ---

I'll agree with that one too. In many aspects of Welsh policy the same old faces are trotted out and that isn't good enough. This is a very important issue and it deserves people who really do know what they are talking about.

I fear the board will be appointed with a political bias, as appears usual, had the Minister brought in rail experts, the mess of the Saltney/Rossett redouble would have ensured extra capacity was a reality for the future, which all in Cardiff Bay have overlooked.

 

[Gareth Marston]

Yes, I quite agree with you. I don't expect state control in the political climate that we have today, so reinvesting profit in infrastructure and services is the next best thing to me (rather than some foreign government or some investment group that hides in a tax haven)

All right re investing profit but the TOC's only account for a quarter of the profit made in the industry most goes to the construction companies NR gives enhancement contracts too. Most left leaning folk don't seem to realise this.

 

[8H]

So there has never been a successful state railway or not for profit model of railway operation anywhere in the world in the history of civilisation as right wing minded folk would think Why are several of you chaps in this genuinely interesting discussion so unwilling to face the fact that the "national railways" work well across Europe and the world, right now!

 

[PHILIPE]

I would still suggest Welsh Water is a utility, much of its board are appointed by politicians,railways are different to a water utility, what works in one sector does not mean it will work in others.
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I fear the board will be appointed with a political bias, as appears usual, had the Minister brought in rail experts, the mess of the Saltney/Rossett redouble would have ensured extra capacity was a reality for the future, which all in Cardiff Bay have overlooked.

It's rail experts from within the industry who should have been brought in and not outside consultants.

 

[LateThanNever]

It's rail experts from within the industry who should have been brought in and not outside consultants.

Agree in both respects, but even in spite of the disadvantages you mention it must be worth a whirl - it's better than, say, the Stagecoach Group 2% odd creaming, for shareholders, when that amount could be reinvested. There's a lot of cashflow, as WorstGroup knows, in Rail..

 

[tbtc]

All right re investing profit but the TOC's only account for a quarter of the profit made in the industry most goes to the construction companies NR gives enhancement contracts too. Most left leaning folk don't seem to realise this.

Agreed - I think that any "saving" made by keeping things In House would be so trivial that they wouldn't impact upon ticket prices (say a £7.70 return from Aberdare to Cardiff). Compared to the cost of subsidising an unprofitable franchise like Wales & Borders, the "profit" for the TOC isn't significant.

That's assuming that a "public" franchise could keep costs down, wouldn't end up with overstaffing, would be able to stand up to politicians wanting grandiose schemes, that the public purse would be able to deal with the fluctuating revenues etc etc.

I'd be interested to see whether a "public" franchise would work (DOR are paying a much smaller premium to the Treasury than Stagecoach/Virgin are proposing), but I don't think it'll affect ticket prices one way or the other - so I think that people's views really depend on their political preference.

(and before anyone says anything, costs like repainting/vinyling trains and putting up new signs are going to be required every few years regardless of whether it's public or private)

 

[ReeceEmmitt]

I would still suggest Welsh Water is a utility, much of its board are appointed by politicians,railways are different to a water utility, what works in one sector does not mean it will work in others.
--- old post above --- --- new post below ---


I fear the board will be appointed with a political bias, as appears usual, had the Minister brought in rail experts, the mess of the Saltney/Rossett redouble would have ensured extra capacity was a reality for the future, which all in Cardiff Bay have overlooked.

Just FYI, none of the Dwr Cymru board are appointed by politicians - the executive directors are all utilities experts, as is the senior management of the company. This would be reflected in the board/operations of any future Trennau Cymru set up I'm sure.

I think we've tangled ourselves into a mess in this thread a bit.

The Glas Cymru/Dwr Cymru ownership structure is no different than the current Arriva UK Trains/ATW ownership structure. The only difference is that rather than profits going to shareholders, they are reinvested back into the business.

 

[CapitalStar378]

The WAG could do a lot worse than run the franchise along the lines of TfL/London Overground.

Set up a Transport for Wales run at arms length from the WAG, specify fares & timetables then let the franchise on a management contract. Invest money in frequent services, new rolling stock and station facilities.

Get people out of their cars by offering such things as late evening and Sunday services, it's not rocket science!