InterCity East Coast: Doomed to Fail?

[BantamMenace]

The only way to stop this from happening again is to ban the operator of the ECML from employing a legal team that are better educated and more intelligent than civil servants and MPs.

Richard Branson has been head of the Virgin Business through the reign of 9 Prime Ministers and probably at least 100 leaders of the various UK opposition parties. His partner at Stagecoach around 6/80.

They remain the leaders of their business - because they are good at what they do and employ the best people to do it.

Or award it to someone as a management contract only allowing:

- The DfT access to all the non-reinvested profits. (As under DOR)
- The DfT to avoid the embarrassment of another collapse.
- The DfT to have their profits/returns dependent on the inflated IEP costs they negotiated.
- The DfT to bare the infrastructure risk that they have the power to sort it they have the desire.

This surely avoids the risk of another media disaster whilst still allowing the dft a return and they can still claim its in the private sector.

 

[yorksrob]

Any sort of contracting is a game of chess between specifier and contractor. If you don't like it you take it in House and establish direct control.

 

[FQTV]

I'm aware that this has been asked in at least one other thread, but I don't think that it has been satisfactorily (if at all) answered there, either.

So, my question is: exactly what has Network Rail or the Department for Transport not yet delivered that has had such a catastrophic effect on Virgin Trains East Coast's reported revenues to date?

There seems to be a pervading and happy (for the operator) conflation between 'commitments' not yet delivered on-time, and the incumbent's hapless handling of the operation of a strategic part of the country's transport network over a three year period.

Anyone? No-one?

Try my post in another thread.

It is clear there are two issues - and this has been clear for some time to those that watch such things closely, for example financial journalists. This thread is very late to the party.

Nope, still nonethewiser, I'm afraid.

I'm aware of what may or may not happen in the future, but to repeat:

My question is: exactly what has Network Rail or the Department for Transport not yet delivered that has had such a catastrophic effect on Virgin Trains East Coast's reported revenues to date?

If it's not possible to identify these undelivered commitments, then I'd suggest that no-one should be referring to them as 'facts'.

As passengers, we can identify fare increases and reduced availability of lowest tier Advances, reduced station and on-board staffing, unreliable onboard service provision, diminished website functionality, lack of onboard facilities (e.g. disabled toilet provision, especially) et al.

Are we therefore saying that none of these identifiable situations have had an effect on operational performance to date, but that unidentifiable 'facts' of failures on Network Rail and/or the Department for Transport have - and that the latter are so compromising that Virgin Trains East Coast had or has NR and DfT over a barrel?

Or am I just being exceptionally dim?

 

[coppercapped]

Nothing - but quotes at the time of privitisation clear spoke of on rail competition not some secret back room weighing of bids
SNIPPED

To clarify: five models for privatisation were put forward by different groups (the Cabinet Office, the DfT, the Treasury and outside parties) at different times. Very briefly these were:

• Regional - essentially re-creating the ‘Big 4’ (but could have been up to 12)
• Track Authority - but see below
• BR plc
• Business Sectors
• a hybrid of the above.

So several models were available - and the supporters of each produced their own arguments. The was no ‘basic premise’ apart from the feeling that costs could be reduced and the quality of service improved if the private sector were to be involved.

The first two options were produced by right-wing ‘Think Tanks’, the Centre for Policy Studies and the Adam Smith Institute. They both proposed breaking up BR before privatisation, but for different reasons.

The concept you mention, of on-rail competition with a separate track authority with the train operators bidding for paths, was proposed by the Adam Smith Institute following a similar line of thought which led to bus privatisation and deregulation in 1985.

The results of the bus policy was not as successful as its chief protagonist, Nicholas Ridley, had envisaged, (partly because of the weak financial position of many of the bus operators - which was even more obvious in the case of BR and its continuing subsidy) and in the final run-up to the Railways Bill the idea of on-rail competition was dropped because the Government didn’t again want to suffer the bad press that it received after the bus business.

There were all sorts of arguments within the working groups on how to handle the necessary on-going subsidy and it became clear that bidding for paths on a monthly or bi-monthly basis was not applicable for railways because of the inter-related nature of its operations. So that was dropped as well. It was decided the best way to handle the subsidy issue was for potential train operators to bid for a group of services - a clear figure was available for each area and any cross-subsidy between profitable and loss-making services was up to the individual operators to manage. This avoided the DfT having to identify costs and revenues on an individual service basis.

So, although on-rail competition was considered in the early phases of the privatisation debate it was dropped as it wasn’t compatible with the realities of railway operation. There is a good description of the events and discussions leading up to the Railways Act 1993 in the book All Change. British Railway Privatisation edited by Freeman and Shaw and published by McGraw-Hill in 2000.

 

[coppercapped]

Anyone? No-one?



Nope, still nonethewiser, I'm afraid.

I'm aware of what may or may not happen in the future, but to repeat:

My question is: exactly what has Network Rail or the Department for Transport not yet delivered that has had such a catastrophic effect on Virgin Trains East Coast's reported revenues to date?

If it's not possible to identify these undelivered commitments, then I'd suggest that no-one should be referring to them as 'facts'.

As passengers, we can identify fare increases and reduced availability of lowest tier Advances, reduced station and on-board staffing, unreliable onboard service provision, diminished website functionality, lack of onboard facilities (e.g. disabled toilet provision, especially) et al.

Are we therefore saying that none of these identifiable situations have had an effect on operational performance to date, but that unidentifiable 'facts' of failures on Network Rail and/or the Department for Transport have - and that the latter are so compromising that Virgin Trains East Coast had or has NR and DfT over a barrel?

Or am I just being exceptionally dim?

And I stated that there were two parts to the issue. The drop in income seen until now is not attributable to uncompleted enhancements but to other causes. This is of no concern to the DfT as Stagecoach and Virgin are, at a significant cost to themselves, ensuring that the DfT receives its contracted premium payments until 2020.

I made this clear before so I not only don't understand why you found it necessary to ask the question again, I also don't understand your concern - there is no direct cost to the state or taxpayer.

The issues arise from the improvements planned for the train services from 2020 leading to an increase in income. As the enhancements to the infrastructure on which these faster and more frequent trains were to run will not be completed by 2020, it is necessary to revisit the franchise agreement. There is nothing unusual about contract re-negotiations - they happen all the time.

 

[DarloRich]

To clarify: five models for privatisation were put forward by different groups (the Cabinet Office, the DfT, the Treasury and outside parties) at different times. Very briefly these were:

• Regional - essentially re-creating the ‘Big 4’ (but could have been up to 12)
• Track Authority - but see below
• BR plc
• Business Sectors
• a hybrid of the above.

So several models were available - and the supporters of each produced their own arguments. The was no ‘basic premise’ apart from the feeling that costs could be reduced and the quality of service improved if the private sector were to be involved.

The first two options were produced by right-wing ‘Think Tanks’, the Centre for Policy Studies and the Adam Smith Institute. They both proposed breaking up BR before privatisation, but for different reasons.

The concept you mention, of on-rail competition with a separate track authority with the train operators bidding for paths, was proposed by the Adam Smith Institute following a similar line of thought which led to bus privatisation and deregulation in 1985.

The results of the bus policy was not as successful as its chief protagonist, Nicholas Ridley, had envisaged, (partly because of the weak financial position of many of the bus operators - which was even more obvious in the case of BR and its continuing subsidy) and in the final run-up to the Railways Bill the idea of on-rail competition was dropped because the Government didn’t again want to suffer the bad press that it received after the bus business.

There were all sorts of arguments within the working groups on how to handle the necessary on-going subsidy and it became clear that bidding for paths on a monthly or bi-monthly basis was not applicable for railways because of the inter-related nature of its operations. So that was dropped as well. It was decided the best way to handle the subsidy issue was for potential train operators to bid for a group of services - a clear figure was available for each area and any cross-subsidy between profitable and loss-making services was up to the individual operators to manage. This avoided the DfT having to identify costs and revenues on an individual service basis.

So, although on-rail competition was considered in the early phases of the privatisation debate it was dropped as it wasn’t compatible with the realities of railway operation. There is a good description of the events and discussions leading up to the Railways Act 1993 in the book All Change. British Railway Privatisation edited by Freeman and Shaw and published by McGraw-Hill in 2000.

Knowing all that it is odd the minster at the time forgot to mention the only competition would be for franchises...........

 

[fowler9]

The WCML has Coventry, Birmingham, Wolverhampton, Liverpool, Manchester and Glasgow (That whole area between Liverpool and Manchester has Wigan, Preston, Stoke, Wigan and Warrington), plus there is Chester and North Wales. The ECML has fields plus some small towns, Leeds and York. I don't mean that to be insulting but really huge swathes of the WCML are just an ongoing urban area, the ECML is farm land.

 

[ChathillMan]

VTEC will not fail but I do think the DaFT need to look at open access operators and the effect they have on the ECML.

 

[fowler9]

VTEC will not fail but I do think the DaFT need to look at open access operators and the effect they have on the ECML.

Why? If they are still competing effectively then it works. (I say this as someone who thinks the way the railways were privatised was idiotic, but why restrict companies that are doing fine?)

 

[ChiefPlanner]

Why? If they are still competing effectively then it works.

But they only pay a % of Track Access costs , unlike the main TOC's - and the inevitable gap for renewals and enhancements comes from a block fund paid direct from the DfT via the Treasury. In very simple terms.

Lots of stress on ECML upgrades where a franchised operator pays above the odds for track access + government grant , only for the open access teams to benefit. Yes I know there is a social benefit somewhere.

 

[fowler9]

But they only pay a % of Track Access costs , unlike the main TOC's - and the inevitable gap for renewals and enhancements comes from a block fund paid direct from the DfT via the Treasury. In very simple terms.

Lots of stress on ECML upgrades where a franchised operator pays above the odds for track access + government grant , only for the open access teams to benefit. Yes I know there is a social benefit somewhere.

Mate I don't agree with railway privatisation but if one company can turn a profit in a free market economy and another can't what is your problem?

 

[B&I]

And I stated that there were two parts to the issue. The drop in income seen until now is not attributable to uncompleted enhancements but to other causes. This is of no concern to the DfT as Stagecoach and Virgin are, at a significant cost to themselves, ensuring that the DfT receives its contracted premium payments until 2020.

I made this clear before so I not only don't understand why you found it necessary to ask the question again, I also don't understand your concern - there is no direct cost to the state or taxpayer.

The issues arise from the improvements planned for the train services from 2020 leading to an increase in income. As the enhancements to the infrastructure on which these faster and more frequent trains were to run will not be completed by 2020, it is necessary to revisit the franchise agreement. There is nothing unusual about contract re-negotiations - they happen all the time.

What are these improvements, how long are they likely to be delayed, what specific services agreed under the franchises will delay with them prevent, and has anyone suggested delaying the service improvements pending the infrastructure upgrades, rather than VTEC bailing at considerable cost to the taxpayer?

 

[B&I]

The WCML has Coventry, Birmingham, Wolverhampton, Liverpool, Manchester and Glasgow (That whole area between Liverpool and Manchester has Wigan, Preston, Stoke, Wigan and Warrington), plus there is Chester and North Wales. The ECML has fields plus some small towns, Leeds and York. I don't mean that to be insulting but really huge swathes of the WCML are just an ongoing urban area, the ECML is farm land.

But also Edinburgh and beyond, Newcastle and the rest of the north east, Peterborough, Lincoln, Doncaster, Bradford and most of Yorkshire outside the Sheffield area. Indeed, if track capacity and train availability allowed, it could easily split Nottingham and Sheffield with the MML too.

 

[fowler9]

But also Edinburgh and beyond, Newcastle and the rest of the north east, Peterborough, Lincoln, Doncaster, Bradford and most of Yorkshire outside the Sheffield area. Indeed, if track capacity and train availability allowed, it could easily split Nottingham and Sheffield with the MML too.

Part of the reason Edinburgh is so accessible down the East Coast is that nothing is in the way. Lincoln isn't on the ECML, nor is Bradford, Sheffield or Nottingham. If you live in Bradford, Sheffield or Nottingham you are going to be looking at other routes to get a cheaper train. There are no big cities up the ECML until Leeds and after there none until Newcastle, and they aren't on the same route.

 

[ChiefPlanner]

Mate I don't agree with railway privatisation but if one company can turn a profit in a free market economy and another can't what is your problem?

(I am not your mate) - and I am merely pointing out the conflicts between an operator who basically pays a much higher charge for access - and one who does not - the whole ethos of privatisation and "let the market rip" is not something applied easily to railways - as opposed to say competing pizza businesses. (competing on the street) - the whole process was fudged with Moderation of Competition , guaranteed track access slots and an awful lot more.

If the market had been "fully commercial" - there would not have been the protection that there is now for the social railway - even parts of the Inter City (sic) service groups are loss makers - let alone chunks of the so called London and South Eastern area (I will not be drawn on the outside the SE battleground)

I did make the comment about the open access operators have clearly added social and economic value. But at terms that some think are less contributary to overall finances. If Inter City in BR days had not been set strict non support targets by (guess who) - the DfT , then the likes of Cleethorpes , Hull , Shrewsbury and so on would have retained services , which could have survived with a modest Public Service Obligation to cover the gaps between costs and revenue.

 

[ChiefPlanner]

Part of the reason Edinburgh is so accessible down the East Coast is that nothing is in the way. Lincoln isn't on the ECML, nor is Bradford, Sheffield or Nottingham. If you live in Bradford, Sheffield or Nottingham you are going to be looking at other routes to get a cheaper train. There are no big cities up the ECML until Leeds and after there none until Newcastle, and they aren't on the same route.

Not a lot of population north of Preston to Carlisle when you think of it either.....

 

[fowler9]

(I am not your mate) - and I am merely pointing out the conflicts between an operator who basically pays a much higher charge for access - and one who does not - the whole ethos of privatisation and "let the market rip" is not something applied easily to railways - as opposed to say competing pizza businesses. (competing on the street) - the whole process was fudged with Moderation of Competition , guaranteed track access slots and an awful lot more.

If the market had been "fully commercial" - there would not have been the protection that there is now for the social railway - even parts of the Inter City (sic) service groups are loss makers - let alone chunks of the so called London and South Eastern area (I will not be drawn on the outside the SE battleground)

I did make the comment about the open access operators have clearly added social and economic value. But at terms that some think are less contributary to overall finances. If Inter City in BR days had not been set strict non support targets by (guess who) - the DfT , then the likes of Cleethorpes , Hull , Shrewsbury and so on would have retained services , which could have survived with a modest Public Service Obligation to cover the gaps between costs and revenue.

Yeah you aren't my mate, which is about the only thing you made clear there. From everything else you said I find it hard to work out what it is you do like or want.

 

[fowler9]

Not a lot of population north of Preston to Carlisle when you think of it either.....

York to Newcastle is hardly a thriving metropolis.

 

[ChiefPlanner]

Yeah you aren't my mate, which is about the only thing you made clear there. From everything else you said I find it hard to work out what it is you do like or want.

Pretty clear if you read it -

 

[ChiefPlanner]

York to Newcastle is hardly a thriving metropolis.

Indeed ....Population tends to drop a bit until you get to the Central Scottish belt - a question I was asked in an interview for an unified railway we had a bit of a time ago , in a different century?

 

[fowler9]

Pretty clear if you read it -

No really, it isn't. It starts with something I said in brackets and then has a lot of random things with hyphens all over the place. Don't apply to be a speech writer.

 

[ChiefPlanner]

No really, it isn't. It starts with something I said in brackets and then has a lot of random things with hyphens all over the place. Don't apply to be a speech writer.

This could get meaty , but "no comment" is probably the best approach - try reading a bit of a background before you get all academic - thank you.

 

[fowler9]

This could get meaty , but "no comment" is probably the best approach - try reading a bit of a background before you get all academic - thank you.

I apologise but I find your style of writing unreadable. You just go off on random trails and stick the occasional hyphen in for some reason. Maybe I need sleep but it is hard work. Sorry for calling you mate I guess.

 

[ChiefPlanner]

I apologise but I find your style of writing unreadable. You just go off on random trails and stick the occasional hyphen in for some reason. Maybe I need sleep but it is hard work. Sorry for calling you mate I guess.

No issue - chill out and if you want , I will buy you a pint and explain in some detail.

 

[fowler9]

No issue - chill out and if you want , I will buy you a pint and explain in some detail.

Ha ha. Fair play. Many apologies if I offended you, I call everyone mate and maybe I shouldn't. I know my dad isn't keen on being called that. Anyway, all the best to you.

 

[B&I]

Part of the reason Edinburgh is so accessible down the East Coast is that nothing is in the way. Lincoln isn't on the ECML, nor is Bradford, Sheffield or Nottingham. If you live in Bradford, Sheffield or Nottingham you are going to be looking at other routes to get a cheaper train. There are no big cities up the ECML until Leeds and after there none until Newcastle, and they aren't on the same route.

It's not as densely-populated as WCML territory, but the line structure is similar, with a long trunk from London, passing through numerous medium-sized towns (plus Newcastle) and terminating in Scotland, and numerous lines branching off to major cities. One of those branches does reach Bradford, albeit with a woeful service. I wasn't saying it currently serves Sheffield and Nottingham, but pointing out that theoretically it could. (15 years ago, when I lived in Nottingham, there were some fares to Kings Cross, changing at Grantham, which were cheaper than going to St Pancras on the MML.)

 

[coppercapped]

What are these improvements, how long are they likely to be delayed, what specific services agreed under the franchises will delay with them prevent, and has anyone suggested delaying the service improvements pending the infrastructure upgrades, rather than VTEC bailing at considerable cost to the taxpayer?

Once again - VTEC has NOT 'handed back the keys'. There is no 'cost to the taxpayer'.

The improvements that NR was intended to complete before 2020 was a power supply upgrade between Bawtry and Scotland to enable two Class 80X trains per hour to run to Edinburgh as well as additional electric services from VTEC (as listed in the franchise agreement) and other operators. It was also going to increase capacity, in the south to allow for the additional Thameslink trains not to delay VTEC's services - for example by re-working the Kings Cross throat (the proposals originally published two or three years ago showed an additional track through the disused bore of Gasworks Tunnel, this has now been replaced by a proposal putting two tracks through it), four tracking the stretch between Woodwalton and Huntingdon. There were some other tweaks that I can't be bothered to look up but which were intended to reduce the Kings Cross - Edinburgh time to 4 hours for one of the two hourly trains, and work to improve the reliability of the infrastructure: track, signalling and overhead.

As a result of the Great Western electrification cock-up the 2015 Hendy report pushed the completion dates for all this work out by two or three years.

 

[Dr Hoo]

For both Control Periods 4 and 5 there were schemes commonly described as 'East Coast Connectivity' or similar. The idea was that details would be worked out after the financial 'settlement' but hundreds of millions of pounds were allowed.

Some schemes such as Hitchin Flyover, Doncaster North Chord, Holgate Junction four-tracking, Doncaster additional platform and south end re-modelling, the upgrade of the 'Joint Line' via Lincoln for freight, etc. have gone ahead but only provided limited capacity uplift over the entire route because of bottlenecks remaining elsewhere.

Schemes still awaited (having been expected by around 2020) include those already mentioned but also things like the Werrington diveunder, parallel working at the north end of York station and more freight loops between Northallerton and Newcastle.

As a result paths for additional long distance trains, which would generate additional revenue for the franchise, are likely to remain scarce for longer than originally anticipated.

Rather than waiting for a financial crisis in 2020 as the originally planned franchise premiums ramp up both parties have seen it coming.

 

[backontrack]

For both Control Periods 4 and 5 there were schemes commonly described as 'East Coast Connectivity' or similar. The idea was that details would be worked out after the financial 'settlement' but hundreds of millions of pounds were allowed.

Some schemes such as Hitchin Flyover, Doncaster North Chord, Holgate Junction four-tracking, Doncaster additional platform and south end re-modelling, the upgrade of the 'Joint Line' via Lincoln for freight, etc. have gone ahead but only provided limited capacity uplift over the entire route because of bottlenecks remaining elsewhere.

Schemes still awaited (having been expected by around 2020) include those already mentioned but also things like the Werrington diveunder, parallel working at the north end of York station and more freight loops between Northallerton and Newcastle.

As a result paths for additional long distance trains, which would generate additional revenue for the franchise, are likely to remain scarce for longer than originally anticipated.

Rather than waiting for a financial crisis in 2020 as the originally planned franchise premiums ramp up both parties have seen it coming.

Things are really starting to bear a resemblance to Operation Princess in many respects, and I can't help but wonder whether they'll eventually lead to Virgin's ambitions being scaled back - so that Thornaby & Middlesbrough, Dewsbury & Huddersfield, and Knaresborough & Harrogate fail to see those shiny new services come about.

 

[tbtc]

Once again - VTEC has NOT 'handed back the keys'. There is no 'cost to the taxpayer'.

The improvements that NR was intended to complete before 2020 was a power supply upgrade between Bawtry and Scotland to enable two Class 80X trains per hour to run to Edinburgh as well as additional electric services from VTEC (as listed in the franchise agreement) and other operators. It was also going to increase capacity, in the south to allow for the additional Thameslink trains not to delay VTEC's services - for example by re-working the Kings Cross throat (the proposals originally published two or three years ago showed an additional track through the disused bore of Gasworks Tunnel, this has now been replaced by a proposal putting two tracks through it), four tracking the stretch between Woodwalton and Huntingdon. There were some other tweaks that I can't be bothered to look up but which were intended to reduce the Kings Cross - Edinburgh time to 4 hours for one of the two hourly trains, and work to improve the reliability of the infrastructure: track, signalling and overhead.

As a result of the Great Western electrification cock-up the 2015 Hendy report pushed the completion dates for all this work out by two or three years.

A really interesting post - thank you.

I wonder if someone in the Government must have decided that it was good economics to defer the infrastructure improvements and forgo the premium payments that VTEC had committed to (rather than do their side of the bargain so that they could demand Stagecoach kept making the premiums)?

This is one of the things that concerns me about nationalisation - I'm left of centre but it frustrates me when I look at all the times that "Government" defers/ delays/ cuts projects. At least with private contracts we know what improvements the TOC is committing to over the next "seven" years - whereas there's no "penalty" if the Government doesn't do what it promised to do.

Things are really starting to bear a resemblance to Operation Princess in many respects, and I can't help but wonder whether they'll eventually lead to Virgin's ambitions being scaled back - so that Thornaby & Middlesbrough, Dewsbury & Huddersfield, and Knaresborough & Harrogate fail to see those shiny new services come about.

Any proposed improvement over the past decade seems to be described as "another Operation Princess" at some stage on the Forum.

That said, I wouldn't be surprised if "luxuries" like Middlesbrough/ Huddersfield have to be sacrificed due to VTEC being constrained at the southern end of the ECML due to lack of paths.

Worth remembering that DOR cut back on improvements proposed under NXEC (the additional services to Lincoln/ Harrogate that National Express had obtained the 180s for), but this wasn't as big a deal as it wasn't a "franchise commitment" - DOR were free to cancel/ postpone anything they wanted to.