Network Rail to be broken up?

[6Z09]

We don't want another Hatfield.

Anyone who thinks it would improve things should have a wee think back to the days of Hatfield and other such incidents.

 

[yorksrob]

The other key fundamental is that the railway network requires too much public money to operate. It won't be profitable without subsidy and accounting shenanigans.

 

[nuneatonmark]

It's interesting to see those in favour of complete Nationalisation (as opposed to the half way house we have at the moment) trot out the mantra that it will be cheaper and better when totally in public hands when the public company that runs the infrastructure now has loads of debt and it's delivery record is hardly inspiring. Could that be a strap line for the a 'new' fully public owned railways system i.e. poor delivery and costs us even more?

Having said that Railtrack was a disaster, so we can't go back to that, can we? Is there any way that we can get an efficient, cost effective railway infrastructure body?

 

[Tetchytyke]

Oh, will that be the end of 'over-running engineering works'?

Probably.

Railtrack weren't very good at doing any engineering works, overrunning or otherwise...
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It's interesting to see those in favour of complete Nationalisation (as opposed to the half way house we have at the moment) trot out the mantra that it will be cheaper and better when totally in public hands when the public company that runs the infrastructure now has loads of debt and it's delivery record is hardly inspiring.

The debt has largely accrued as a result of a) Government accounting and b) rectifying the mistakes of Railtrack. The cost of buying Railtrack back from the fat cats was half a billion quid, and the cost of simply rectifying the immediate effects of the fat cats' negligence was estimated at £3.5bn. That's before we consider the backlog of maintenance.

The issues with cost control can largely be attributed to the sale of the infrastructure to Railtrack. The in-house engineering teams were all sold off, and it is generally more expensive to hire in contractors than it is to do the work using your own staff.

I'm not aware of many huge failures with Network Rail- despite the wibbling, the Christmas mistakes were not that bad in the grand scheme of things. And compared to the glory days of Jarvis Rail "forgetting" to put the tracks back in after routine engineering works at Kings Cross they're amazing.
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If you look at the data http://www.rssb.co.uk/Library/risk-...eporting/2014-07-aspr-2013-14-full-report.pdf (pp 16-17) you will see that the long-term trend has been a steady reduction in accidents and deaths (excluding suicide/trespass) irrespective of private or public ownership.

The trend was generally towards a steady reduction- better technology, safer trains, etc etc.

There was a noticeable spike in the period 1994-2002, though. I wonder why that could have been?

 

[Bishopstone]

They could usefully spin-off the property side.

I want Network Rail fixing the near-daily problems at London Bridge, without the diversion of the latest lease renewal for Burger King. Businesses with property empires always allow that side of things to consume disproportionate management time.

 

[misterredmist]

Did the disaster which was Railtrack not teach anybody anything ?


people with these ideas should be told in no uncertain terms that if profit driven incompetence causes accidents, then they should be doing considerable time behind bars...... may be it's an early April Fool by the DT ?

 

[yorksrob]

They could usefully spin-off the property side.

I want Network Rail fixing the near-daily problems at London Bridge, without the diversion of the latest lease renewal for Burger King. Businesses with property empires always allow that side of things to consume disproportionate management time.

But that's a useful income stream. We don't want that siphoned off - we want it spent on the railway.

 

[nuneatonmark]

Would Network Rail work better if they continued to do the 'Business as usual' work of maintenance etc and separate out any large scale infrastructure projects? It's common in the IT industry that large projects are completed by a different company than the one who runs the service. The company that runs the service and the 'project' company agree the acceptance criteria and how it will be handed over plus how any impact to existing services will be managed.
I am aware that NW subcontract some big projects but that is not quite the same.

 

[Clip]

Did the disaster which was Railtrack not teach anybody anything ?


people with these ideas should be told in no uncertain terms that if profit driven incompetence causes accidents, then they should be doing considerable time behind bars...... may be it's an early April Fool by the DT ?

What about normal personal incompetence then? Do they not deserve time behind bars too? Only if it is profit driven?

 

[yorksrob]

Would Network Rail work better if they continued to do the 'Business as usual' work of maintenance etc and separate out any large scale infrastructure projects? It's common in the IT industry that large projects are completed by a different company than the one who runs the service. The company that runs the service and the 'project' company agree the acceptance criteria and how it will be handed over plus how any impact to existing services will be managed.
I am aware that NW subcontract some big projects but that is not quite the same.

I'm inclined to think that it's better for the infrastructure owner to maintain and develop the capacity to undertake major projects. The alternative of forever contracting out everything is that they lose any grip on costs. The more experience they have of major projects, the more of a knowledge base they will accrue.

 

[Tetchytyke]

I want Network Rail fixing the near-daily problems at London Bridge, without the diversion of the latest lease renewal for Burger King. Businesses with property empires always allow that side of things to consume disproportionate management time.

The problem is that the retail revenue pays for the station upgrades. The SSP rent pays for the shiny new station buildings.

London Bridge's problem is that, due to stakeholder pressure, they're simply trying to run too many trains through the station.
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What about normal personal incompetence then? Do they not deserve time behind bars too? Only if it is profit driven?

I still find it amusing disgraceful that it was Network Rail who coughed up the fines for Ladbroke Grove and Hatfield, rather than the man who should have- Gerald Corbett.

 

[Bishopstone]

But that's a useful income stream. We don't want that siphoned off - we want it spent on the railway.

Network Rail could develop all sorts of commercial sidelines which in theory would create profit for the core activity, but I want them focussed on safety and reliability - and they have been woeful on the latter in my patch - rather than buying shopping centres at Victoria.

 

[lejog]

I think that the next government, whichever party is in power, will look to reverse 2014s "renationalisation" of Network Rail, forced on the coalition by the Office Of National Statistics.

http://www.theguardian.com/business/2014/aug/28/network-rail-piublic-sector-dont-call-it-nationalisation

Even a Labour chancellor will find it difficult not to cut £34bn off the national debt by finding a way to return Network Rail to its pre September 2014 status, cutting the debt by 3% and the deficit for that year by say 20% in one go.

 

[Clip]

The problem is that the retail revenue pays for the station upgrades. The SSP rent pays for the shiny new station buildings.

London Bridge's problem is that, due to stakeholder pressure, they're simply trying to run too many trains through the station.

Not only that but those who deal with the lease for Burger King have absolutely nothing to do with the engineering projects concerning trackworks - that may be difficult for people to grasp though.

 

[D60]

The story has been covered by other papers too, some not exactly right leaning. But it is, of course, a deliberate leak. There is a lot of tension between the DfT and NR at the moment, not political tension but operational and financial tension.

Thank goodness David Serpell is not about any more!

Yep, that seems to be how it works... A proposal 'emerges' from whichever Dept of State... story planted in the press to start "a discussion".. phone-ins on BBC and local radio.. etc, etc, etc...

Meanwhile, there is little to no chance of this appearing in any party's manifesto... but that doesn't prevent it from filtering through into policy, or being enacted upon... I don't recall the 'bedroom tax' being included in any party's manifesto in 2010 for any of us to vote upon...

In the case of this story, it's all quite curious... Govt seems to have concluded in recent years that taxpayer-backed investment in rail infrastructure is necessary to keep the wheels of the economy moving, lest the whole thing grinds to a halt, putting its magical 2% growth pa target at risk, because its present and future tax-generators can no longer efficiently get from their dwelling places to their work-places, or places of study..

This being why the taxpayers millions are now being re-directed towards the creation of a "northern powerhouse", complete with the necessary transport infrastructure investment... because the "London and SE powerhouse" is overheated and running at close to capacity in every way...

So in such a scenario it is difficult to foresee "cutbacks" in the rail network.. especially in view of the unprecedented growth in passenger numbers in recent years...

But what of Network Rail and its future..? Is this just a manifestation of frustration and dissatisfaction from within the DfT, and from TOCs, at recent acknowledged failings in performance, most notably in the delivery of the electrification programme..?

Or are there other, as yet unknown, influences at work..? It was eu "convergence criteria" and "competition rules" that led to the govt ("notionally") divesting itself of responsibility for our national rail network... and a change in eu rules regarding govt debt levels that allowed it to transfer Network Rail's billions of debt back onto the Treasury's books on 1 Sept 2014, effectively "renationalising" our railway infrastructure from that date...

Maybe there is pressure being applied "within the Department", to allow (state-owned) Deutsche-Bahn, or SNCF, to "invest in", ie take control of, chunks of our rail infrastructure.. (thereby 'conveniently' helping to reduce the national debt..)

 

[infobleep]

I think its unlikely that a workable privatisation solution could be found, bearing in mind the Market knows what happened to Railtrack. Civil servants were meeting to discuss how it could be achieved, likely as they have been asked by the Government to create a post election strategy. The motivation is clear, Network Rail has £36bn of debt that will rise to approaching £50bn by the end of the decade. Privatising it will reduce the national debt by 3.3% and stop more commercial borrowing appearing as state borrowing.

As a privatised entity though its likely only a few routes would be commercially profitable so you would end up with Government privatising the best bits and keeping the rump.

This is how Industry finances by route currently stands for the year 13/14:

Route/Commercial income/Industry expenditure/Government subsidy/Surplus or "profit" before tax and pensions

Anglia £1120m -£1189m +£143m = £75m
Kent £890m -£1132m +£322m = £79m
LNE £1362m -£2063m +£535m = -£167m
LNW £1908m -£2963m +£1194m = £139m
East Midlands £626m -£513m +£208m = £321m
Sussex £858m -£885m +£59m = £32m
Wessex £1079m -£1079m -£15m = -£14m
Western £909m -£1126m +£295m = £79m
Wales £261m -£555m +£320m = £26m
Scotland £469m -£1173m +£728m = £24m

As you can see only Anglia, Sussex and Wessex routes are anywhere close to be financially independent enough to spin off without heavy ongoing public infrastructure subsidy. East Midlands route was the only route that was commercially profitable before subsidy but still attracted a quite hefty subsidy likely to cover low level of services (only route where service cost wasn't 50-100% larger than infrastructure costs, in fact they were 2/3 the infrastructure costs)

£8.9bn of industry costs were rail services, £6.2bn of it is infrastructure, there is a £3.2bn shortfall in commercial income compared to total costs and an extra £3.7bn of government subsidy added on top to cover that gap.

Why is so little government subsidy required for the Essex route when it is - £14m. The east Midlands is +£321m and that has a larger subsidy. I don't understand the figures.
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Interesting, and to think BR was privatised because it was costing the taxpayer about £1bn a year ?

Is that £1b at today's prices?

 

[WatcherZero]

The Wessex the goverment is net taking money out rather than paying a subsidy, as the commercial income pretty much covers the costs you can see why its occuring.

With the east midlands its likely that their is commercial income but far from covering service costs, this could be indicative of a greater proportion of infrastructure being dedicated to freight rather than passengers, or long distance services passing through the region with minimal revenue activity on the route itself.

 

[yorksrob]

Network Rail could develop all sorts of commercial sidelines which in theory would create profit for the core activity, but I want them focussed on safety and reliability - and they have been woeful on the latter in my patch - rather than buying shopping centres at Victoria.

I'm afraid the railway will need such income streams into the future. BR made use of them, NR makes use of them, and so will the future railway, whatever form it takes.
--- old post above --- --- new post below ---

I think that the next government, whichever party is in power, will look to reverse 2014s "renationalisation" of Network Rail, forced on the coalition by the Office Of National Statistics.

http://www.theguardian.com/business/2014/aug/28/network-rail-piublic-sector-dont-call-it-nationalisation

Even a Labour chancellor will find it difficult not to cut £34bn off the national debt by finding a way to return Network Rail to its pre September 2014 status, cutting the debt by 3% and the deficit for that year by say 20% in one go.

Some sort of accounting fudge a la "not for profit company" may be in order again.

 

[IanXC]

Or another stick with which to beat the Regional Railway if we're not careful.

Anglia £1120m -£1189m +£143m = £75m
Kent £890m -£1132m +£322m = £79m
LNE £1362m -£2063m +£535m = -£167m
LNW £1908m -£2963m +£1194m = £139m
East Midlands £626m -£513m +£208m = £321m
Sussex £858m -£885m +£59m = £32m
Wessex £1079m -£1079m -£15m = -£14m
Western £909m -£1126m +£295m = £79m
Wales £261m -£555m +£320m = £26m
Scotland £469m -£1173m +£728m = £24m

As in the current NR routes - generally the kind of integrated Regional and Intercity multipurpose set up we've previously spoken about.

 

[matacaster]

Whilst I agree that Railtrack was a complete abortion, arguing that because one private company screwed up very badly means that NO private company could be trusted to run maintain and develop the national rail infrastructure isn't reasonable.

Until BR was formed, NO railway was in public ownership, yet the world did not collapse, and many companies (later 4 groupings) managed to run both the trains and look after the infrastructure quite successfully. Grouping and nationalisation were largely the results of the two world wars which left the companies with huge backlogs in maintenance, old locomotives, poor track, low speeds, lack of affordable manpower and prospective passengers with little money. The companies never received the monies which the amount of wartime traffic they handled deserved. Add to that the coming of the motor car and effectively, the grouping companies were nigh on bankrupt and couldn't raise capital to bring their product up to date. So they were nationalised.

I thus don't see why ONLY a nationalised infrastructure company can be successful and safe anymore than a private one. Nationalised BR had its share of disasters I seem to recall.

Where I would concur is that if the management whether public or private (but more likely private) is out to feather its own nest, then safety might well take a less high profile.

On the other hand, excessive safety can in itself lead to reduced safety. Pricing oneself out of the transport market has never been easier!

eg Rail made incredibly safe, cost extortionate, ticket price enormous
= Passenger goes by car, which is LESS SAFE
Safety has a cost and it needs to be realistic as does disability stuff.
= Hardly any new stations as even simple ones cost millions now.

Whilst I am not advocating this at all, people in much of the world seem to cope without thousands of miles of lineside fencing and manage to cross tracks too - are the British really that different?

Be careful what you wish for!

 

[yorksrob]

Anglia £1120m -£1189m +£143m = £75m
Kent £890m -£1132m +£322m = £79m
LNE £1362m -£2063m +£535m = -£167m
LNW £1908m -£2963m +£1194m = £139m
East Midlands £626m -£513m +£208m = £321m
Sussex £858m -£885m +£59m = £32m
Wessex £1079m -£1079m -£15m = -£14m
Western £909m -£1126m +£295m = £79m
Wales £261m -£555m +£320m = £26m
Scotland £469m -£1173m +£728m = £24m

As in the current NR routes - generally the kind of integrated Regional and Intercity multipurpose set up we've previously spoken about.

I'd still be wary. History tells us that there's no guarantee that that the railway will be divided up in a way that has been suggested or even agreed by the incumbent management, so there's no knowing what we could end up with. It could be the latest fantasy of some clown in the DfT, and we all know that they've had the best interests of railway passengers at heart for the past sixty years don't we.
It could be the latest fantasy of some clown in the DfT, and we all know that they've had the best interests of railway passengers at heart for the past sixty years don't we.

 

[DT611]

Whilst I agree that Railtrack was a complete abortion, arguing that because one private company screwed up very badly means that NO private company could be trusted to run maintain and develop the national rail infrastructure isn't reasonable.

Until BR was formed, NO railway was in public ownership, yet the world did not collapse, and many companies (later 4 groupings) managed to run both the trains and look after the infrastructure quite successfully. Grouping and nationalisation were largely the results of the two world wars which left the companies with huge backlogs in maintenance, old locomotives, poor track, low speeds, lack of affordable manpower and prospective passengers with little money. The companies never received the monies which the amount of wartime traffic they handled deserved. Add to that the coming of the motor car and effectively, the grouping companies were nigh on bankrupt and couldn't raise capital to bring their product up to date. So they were nationalised.

I thus don't see why ONLY a nationalised infrastructure company can be successful and safe anymore than a private one. Nationalised BR had its share of disasters I seem to recall.

Where I would concur is that if the management whether public or private (but more likely private) is out to feather its own nest, then safety might well take a less high profile.

On the other hand, excessive safety can in itself lead to reduced safety. Pricing oneself out of the transport market has never been easier!

eg Rail made incredibly safe, cost extortionate, ticket price enormous
= Passenger goes by car, which is LESS SAFE
Safety has a cost and it needs to be realistic as does disability stuff.
= Hardly any new stations as even simple ones cost millions now.

Whilst I am not advocating this at all, people in much of the world seem to cope without thousands of miles of lineside fencing and manage to cross tracks too - are the British really that different?

Be careful what you wish for!

the problem is, privatization is done only for 2 reasons
1. "get it done on the cheep" which as we know doesn't work out and can lead to various outcomes.
2. to benefit "special" friends of the government.

both mean the user is the last thought

 

[TUC]

No reason for Network Rail to be in the public sector, anymore than the companies that own telephone lines or gas pipes. They're just means to an end as infrastructure.

 

[D60]

No reason for Network Rail to be in the public sector, anymore than the companies that own telephone lines or gas pipes. They're just means to an end as infrastructure.

Which raises the curious question of why, under a tory-led coalition, Network Rail's debts of £34bn were transferred back from an "arms length" entity (underwritten by the taxpayer..), back directly onto the Treasury's books (as allowed for/required by a change in eu rules over govt debt..), and effectively back under state control..? Especially at a time when the UK govt appears desperate to reduce public debt..?

I suspect that the choice ahead of us is no longer "public vs private".. but which state-owned operator takes control of (parts of?) our national rail infrastructure... rather in the manner that, for instance, most of our "privatised" electricity supply is now actually owned by French and German state-backed operators..

Except that none of us will have any say in any of this... (How many UK rail operations does Deutsche-Bahn now own..?)

 

[Robertj21a]

the problem is, privatization is done only for 2 reasons
1. "get it done on the cheep" which as we know doesn't work out and can lead to various outcomes.
2. to benefit "special" friends of the government.

both mean the user is the last thought

Presumably, you have no facts, no evidence, in fact nothing at all to support such ridiculous statements ?

 

[LNW-GW Joint]

I suspect that the choice ahead of us is no longer "public vs private".. but which state-owned operator takes control of (parts of?) our national rail infrastructure... rather in the manner that, for instance, most of our "privatised" electricity supply is now actually owned by French and German state-backed operators..

The investors are much more likely to be banks and pension funds, as for the ROSCOs, HS1 and Eurostar.
Recent big buyers of infrastructure companies have been Canadian pension funds (Ontario Teachers and Caisse du Quebec).
These are both essentially Canadian public sector funds invested for their members, and are hardly Osborne's chums.
So how about the RMT, ASLEF and TSSA pension funds buying Network Rail?

 

[DT611]

Presumably, you have no facts, no evidence, in fact nothing at all to support such ridiculous statements ?

well, where would i even start. do you genuinely think the government privatize things because they care a lot about the user and have the users best interests at heart? or is it more likely that there is something in it for the government?

 

[Yabbadabba]

So how about the RMT, ASLEF and TSSA pension funds buying Network Rail?

I wouldn't of thought that the amount of staff even collectively employed by the unions that pay into their employees pension fund ie the unions themselves would have enough money to invest in that type of scale. Or are you saying that the staff that pay into the NR pension scheme from the various Unions should ask the railway pension scheme NR section to invest their funds to buy their company?

 

[D60]

The investors are much more likely to be banks and pension funds, as for the ROSCOs, HS1 and Eurostar.
Recent big buyers of infrastructure companies have been Canadian pension funds (Ontario Teachers and Caisse du Quebec).
These are both essentially Canadian public sector funds invested for their members, and are hardly Osborne's chums.
So how about the RMT, ASLEF and TSSA pension funds buying Network Rail?

Quite possibly...

I was just pondering, in answer to my own question about which UK rail operations are now controlled, owned, or part-owned by Deutsche-Bahn.. and I think the answer is something like :- EWS, ATW, AXC, Chiltern, Wrexham & Shropshire (defunct), Grand Central, LOROL, (and Tyne & Wear Metro)..

That's quite a big chunk of operations, across a sizeable area of the country (ok, the whole country, in the case of EWS, sorry DBS..)..

They must be paying a fortune in track access charges! What's the betting they'd prefer to be paying it to themselves..? Do the governing eu rules allow for this kind of vertical integration? How does it work in Germany and France these days, for DB and SNCF? I know that for many years the German and French govts were being fined annually by the eu commission for failing to adequately "open up their railways to competition", as our govt did so diligently and thoroughly, way back in 1996..
--- old post above --- --- new post below ---

well, where would i even start. do you genuinely think the government privatize things because they care a lot about the user and have the users best interests at heart? or is it more likely that there is something in it for the government?

Our govt "privatises" things, because eu single market competition rules require state-owned infrastructure, utilities and public services to be "opened up to competition"...

Here in the UK, Whitehall civil servants and govt advisors pounced on this requirement with enthusiastic relish and vigour, and implemented a gold-plated programme of sell-offs of public assets.. and in the case of the railways, there was a lucrative revolving door between the Treasury, Dept of Transport, and some of the initial sell-offs, such that some of the early newly-enriched railway 'entrepeneurs' were the former civil servants and govt advisors who had set the whole thing up..

Meanwhile, continental govts chose to follow different models.. which is how much of our rail network is now operated by the state railways of other countries.. (doh.. weren't we the fools..)

 

[Robertj21a]

well, where would i even start. do you genuinely think the government privatize things because they care a lot about the user and have the users best interests at heart? or is it more likely that there is something in it for the government?

You clearly stated that there were only 2 reasons -

- to get it done on the cheap
- to benefit 'special friends'

I simply asked for the facts behind such statements. Surely you can answer such a simple question ?