Okehampton - Exeter open a year- success?

[LNW-GW Joint]

Why must everything be about "profit" with some?

You haven't heard about the public finance "black hole" of £55 billion then?

If GWR is told to cut its costs by 10% next year, will it affect the Okehampton line (or anywhere else)?
That seems to be the practical situation we are facing.
Doubtless a question for another thread.

 

[AzureOtsu]

Define, please, 'success'.

Is it 'successful' financially? That is, does the additional fare income cover the additional movement costs? Does the additional fare income make any contribution to the infrastructure operational and maintenance costs or even help recover the capital investment?

If none of these things are true then it has been 'successful' in making the tax payer cough up...

Seeing success as £ on a screen is a very daunting mindset to have in the transport industry.

Im sure you apply the same logic to other public transport sectors? roads, cycle lanes, airports etc?

 

[yorksrob]

It is amusing. When trying to get a line reopened, a cast iron business case is the only think that matters.

Then as soon as a line is reopened and beats is business case, the naysayers splutter and say "but..but.. it wasn't a proper business case, it wos deliberately underestimated I tells ye....."

 

[zwk500]

It is amusing. When trying to get a line reopened, a cast iron business case is the only think that matters.

Then as soon as a line is reopened and beats is business case, the naysayers splutter and say "but..but.. it wasn't a proper business case, it wos deliberately underestimated I tells ye....."

Not sure if this is a dig at me or not, but what I was suggesting is that we use a neutral assessment of the line in the context of the actual railway to critique the business case, rather than critiquing the line against the business case.

This then allows you to improve the modelling for business cases, and therefore improve the quality of decision making for future projects. I'm all for improving the modelling and I will readily admit current forecasting ability is variable.

Performance tells you whether the operational decisions were correct. Load factor tells you whether the economic and commercial decisions were correct (supply vs demand is more important than raw numbers).

 

[yorksrob]

Not sure if this is a dig at me or not, but what I was suggesting is that we use a neutral assessment of the line in the context of the actual railway to critique the business case, rather than critiquing the line against the business case.

This then allows you to improve the modelling for business cases, and therefore improve the quality of decision making for future projects.

Performance tells you whether the operational decisions were correct. Load factor tells you whether the economic and commercial decisions were correct (supply vs demand is more important than raw numbers).

Not you at all.

More a general observation of the forum !

 

[zwk500]

Not you at all.

More a general observation of the forum !

Fair enough! . What I will say is that you don't really know how a line is performing until 5 years or so in. 1 year on people it's still shiny and new, the service is still fresh in people's minds, etc. The long-term (20+ year) view only becomes apparent as the gloss fades.
However, starting strong is still a good thing to happen!

 

[Bletchleyite]

One possible definition of success for a rural railway taking people to a National Park might be if it has reduced road traffic to/in/through the Park. Has it?

I wonder what the funders' criteria were? There must have been some, otherwise all you're really doing is spending the taxpayer's money on a 12" to 1' scale model railway.

 

[BrianW]

It's been a year since "levelling up" reopened the 16 odd miles from Exeter to Okehampton. Passenger numbers seem up, has it been a success for all concerned?

Many comments pick up rightly on 'it depends how you assess 'success'. The pedant in me also picks up on the near impossibility of success for all concerned.
I guess if I had my house demolished for someone else's 'improvement' I wouldn't consider that a success (unless I got what I considered a 'better' house!)

The Business Case must at least feature, while recognising it is likely to have contained some rather 'marginal' gains and arguably 'overestimated' useage(why not- it is designed to support the case and for others to assess!). There may also be unexpected gains.

So an evaluation of successes (and failures if one might use that word!) is appropriate in a quest for the rather maligned 'lessons learned'!

 

[30907]

More recently bus connections at Okehampton station have been improved. In addition to buses from Tavistock, those from Bude and Launceston are also going up to the station and connect into and out of trains every two hours.

Excellent news.

A colleague reported that a morning train from Exeter arrived with 4 passengers but departed with 60+, thanks to the crowd from Bude and Holsworthy.

60 is a decent loading for an off-peak train (though below 50%) but wouldn't be so good for (say) the prime Saturday morning shoppers' train to Exeter.

I would be wary of judging a reopening after one year, anyway.

An upgrade from 40 to 60mph would be a journey time reduction of around 40% (1 mile takes 1'30 vs 1 mile takes 1', some benefit is lost at stops and not full length at 60mph). It's about 8 miles from Cowley Bridge Jn to Crediton so potential savings of 3/4 minutes, more if you can get 75mph.

Indeed, but the 40mph Coleford (Jn) to Crediton is 4.5m which would save max 2min. Worth doing when renewal is needed, certainly.

 

[dk1]

Or any line, to be fair.

For me, the 'true' measure of success is whether the overall impact to the economy of the intended service catchment was positively influenced by an amount close to or exceeding the subsidy, but that's impossible to measure.

So I'd go for 2 measures: performance, and percentage loadings. A train service must be reliable to be of any use, and a reasonable utilisation of the capacity indicates a good balance between demand and supply, somewhere in the 75% Peak/50% off-peak region would be my personal benchmarks.

Sounds good.

== Doublepost prevention - post automatically merged: 23 Nov 2022 ==

Why must everything be about "profit" with some?

Because they know the cost of everything but the value of nothing.

 

[norbitonflyer]

Excellent news.

60 is a decent loading for an off-peak train (though below 50%) but wouldn't be so good for (say) the prime Saturday morning shoppers' train to Exeter.

I would be wary of judging a reopening after one year, anyway.


Indeed, but the 40mph Coleford (Jn) to Crediton is 4.5m which would save max 2min. Worth doing when renewal is needed, certainly.

Has it really only been open a year? I rode it for the first time yesterday. Only a few passengers on my train, but it was early afternoon, midweek, and November! Seemed to build up quite a speed between Yeoford and Okehampton - quite like LSWR days.
A line my mother used a lot during the War, as she spent much of it with her aunt in Devon (going to school in Okehampton) whilst her parents stayed in London.

 

[Essexman]

I've used the line several times for walking on Dartmoor this year - rather than driving.
The line seems to be well used with mostly local people but some visitors and Dartmoor walkers.

I used the previous Summer Sunday trains occasionally and travelled on it several times to access Dartmoor prior to closure.
I even got a ride in the DMU cab back to Exeter once (I was about 9) and recall us doing 70MPH.

 

[Craig1122]

The Business Case must at least feature, while recognising it is likely to have contained some rather 'marginal' gains and arguably 'overestimated' useage(why not- it is designed to support the case and for others to assess!). There may also be unexpected gains.

Very arguable given it's been widely reported passenger numbers are double the original predictions. If anything business cases have tended to consistently underestimate demand as this isn't the first time that's happened:

Dartmoor Line bringing tens of thousands of visitors into Okehampton

THE latest figures have revealed that the new Dartmoor Line is bringing tens of thousands of visitors into Okehampton, providing a welcome boost to town businesses which bodes well for the future.

www.okehampton-today.co.uk

 

[Railwaysceptic]

But surely since a reopening lives or dies by the strength of the business case, it stands to reason that its success should be measured against the business case.

It is amusing. When trying to get a line reopened, a cast iron business case is the only think that matters.

Then as soon as a line is reopened and beats is business case, the naysayers splutter and say "but..but.. it wasn't a proper business case, it wos deliberately underestimated I tells ye....."

I normally disagree with you on the subject of closing or re-opening railway lines, but you have a very good argument here, one I can't fault.

 

[Pinza-C55]

Define, please, 'success'.

Is it 'successful' financially? That is, does the additional fare income cover the additional movement costs? Does the additional fare income make any contribution to the infrastructure operational and maintenance costs or even help recover the capital investment?

If none of these things are true then it has been 'successful' in making the tax payer cough up...

Since roads are paid for by the taxpayer you could make that argument with equal utility for roads but it seems like they are exempt from the requirement to make a profit.

 

[Western Sunset]

Relatives who live in Camelford now drive to Okehampton to catch the train there, rather than to Bodmin Parkway as previously, if travelling up to London.

 

[coppercapped]

Why must everything be about "profit" with some?

Because some of us have thought more deeply about the implications of not generating a profit than is apparent from this remark?

For normal businesses a profit is necessary in order for the business to keep going. If it makes a loss it will be dismembered and the remaining profitable parts (if any) sold and the proceeds used to pay the creditors. In any case jobs will be lost. The State then loses the taxes that the previously employed paid - and not only that they are likely to be financially supported by the State - in other words by taxes from other sources - until they find another employment.

Profit is vital in the world of normal business - from the largest to my window cleaner. The State takes its money by skimming off a percentage of the money-go-round, i.e., by taxing individuals in employment, the self-employed and business entities.

No profit - no tax. It's that simple.

The State has decided that, for a variety of reasons, it is prepared to 'publicly fund'/'subsidise'/'cover the losses'/<insert own choice of phrase> the railways. In view of the myriad of calls for 'the Government must do something' from many pressure groups the amount of money available for any particular interest group is limited as a government's ability to increase taxation levels is limited. (For the avoidance of doubt 'tax' in this context refers to all forms of tax, not just income tax).

Across the OECD (Organisation for Economic Cooperation and Development) countries the tax-to-GDP ratio ranged from 17.9% in Mexico to 46.5% in Denmark. The bulk of the countries lie in the 30% to 40% range; the OECD average is 33.53% (in 2020) with the UK at 32.77% so the UK government's tax take is in line with other countries.

This tax take ratio is critical - if it is too high for some types of business then the business either downsizes, closes or moves to a lower tax country. There are a range of pressures which limit a government's freedom of action.

This means that 'the railways' have to be seen to be careful in their use of the money supplied by the State. Which means that the expenditure has to be justifiable, both immediately and in the long term. With no transparency how does anyone know whether the Okehampton re-opening gives a better return than if the capital was spent on, say, re-opening the fourth platform at Westbury? It may even be that the fourth platform at Westbury is also environmentally sound in promoting the use of rail.

So, what is the subsidy paid by the tax payer for each passenger-km on the Okehampton line? Is it more or less than that paid for a passenger to, say, Torquay? And how much is it in absolute terms?

'Sustainable' is not just a word connected with environmental protection, it also refers to the long term willingness and ability of Government to fund the activity in question.

 

[yorksrob]

Fair enough! . What I will say is that you don't really know how a line is performing until 5 years or so in. 1 year on people it's still shiny and new, the service is still fresh in people's minds, etc. The long-term (20+ year) view only becomes apparent as the gloss fades.
However, starting strong is still a good thing to happen!

Yes, I can see that it would be useful to reflect on how it's doing five years in (if the entire railway system hasn't been ballsed up by then).

 

[30907]

Very arguable given it's been widely reported passenger numbers are double the original predictions. If anything business cases have tended to consistently underestimate demand as this isn't the first time that's happened:

Does this apply beyond the first couple of years? Being cautious in forecasting at the beginning is quite sensible IMO

 

[Xavi]

Because some of us have thought more deeply about the implications of not generating a profit than is apparent from this remark?

For normal businesses a profit is necessary in order for the business to keep going. If it makes a loss it will be dismembered and the remaining profitable parts (if any) sold and the proceeds used to pay the creditors. In any case jobs will be lost. The State then loses the taxes that the previously employed paid - and not only that they are likely to be financially supported by the State - in other words by taxes from other sources - until they find another employment.

Profit is vital in the world of normal business - from the largest to my window cleaner. The State takes its money by skimming off a percentage of the money-go-round, i.e., by taxing individuals in employment, the self-employed and business entities.

No profit - no tax. It's that simple.

The State has decided that, for a variety of reasons, it is prepared to 'publicly fund'/'subsidise'/'cover the losses'/<insert own choice of phrase> the railways. In view of the myriad of calls for 'the Government must do something' from many pressure groups the amount of money available for any particular interest group is limited as a government's ability to increase taxation levels is limited. (For the avoidance of doubt 'tax' in this context refers to all forms of tax, not just income tax).

Across the OECD (Organisation for Economic Cooperation and Development) countries the tax-to-GDP ratio ranged from 17.9% in Mexico to 46.5% in Denmark. The bulk of the countries lie in the 30% to 40% range; the OECD average is 33.53% (in 2020) with the UK at 32.77% so the UK government's tax take is in line with other countries.

This tax take ratio is critical - if it is too high for some types of business then the business either downsizes, closes or moves to a lower tax country. There are a range of pressures which limit a government's freedom of action.

This means that 'the railways' have to be seen to be careful in their use of the money supplied by the State. Which means that the expenditure has to be justifiable, both immediately and in the long term. With no transparency how does anyone know whether the Okehampton re-opening gives a better return than if the capital was spent on, say, re-opening the fourth platform at Westbury? It may even be that the fourth platform at Westbury is also environmentally sound in promoting the use of rail.

So, what is the subsidy paid by the tax payer for each passenger-km on the Okehampton line? Is it more or less than that paid for a passenger to, say, Torquay? And how much is it in absolute terms?

'Sustainable' is not just a word connected with environmental protection, it also refers to the long term willingness and ability of Government to fund the activity in question.

By definition the state cannot make a profit on every transaction. Some people really struggle with that simple fact when it comes to public services, particularly rail.

 

[Dr Hoo]

Whatever it is its not that.

The fact that passenger numbers have exceeded those expected in the business case for opening, is a clear definition of success.

Can anyone provide (a) the definitive 'assumed ramp-up' passenger numbers in the business case as at the 'get go'/final version; and (b) the actual numbers after the first year? Always useful to have some hard data!

Thanks

(Not a dig at @yorksrob )

 

[Goldfish62]

Thank you - my point exactly.

That's an easy one. How does it stack up in terms of passenger numbers and revenue as compared to the business case benefit:net cost ratio.

Better or equal = success
Worse = not success.

Simples!

 

[Xavi]

Having visited Exmouth, I was not impressed.

The 1 million users per year of Exmouth Station on a branch line once proposed for closure may care to differ.

== Doublepost prevention - post automatically merged: 23 Nov 2022 ==

Can anyone provide (a) the definitive 'assumed ramp-up' passenger numbers in the business case as at the 'get go'/final version; and (b) the actual numbers after the first year? Always useful to have some hard data!

Thanks

(Not a dig at @yorksrob )

Business cases do not normally include a ramp up, BCRs assumed a fixed number of journeys.

 

[Bald Rick]

Business cases do not normally include a ramp up, BCRs assumed a fixed number of journeys.

Yes they do, And no they don’t.

It is set out in the Passenger Demand Forecasting Handbook, and is typically 60-70% in year one, 80-85% in year two, 90-95% in year three, with full demand in year 4. Background growth is also applied as well.

Business cases can diverge from this, but they need to provide evidence as to why, and a sensitivity test is useful.

I do agree with @yorksrob that comparison to the business case is the way to judge whether a project is a success or not. Passenger numbers are just one part of the business case though, any assessment must also check on whether other benefits have been delivered (eg journey time benefits, reduction in road traffic, economic development enabled, etc), and also what the costs were (and continue to be). As projects such as this are a long term investment, the ‘success’ assessment should also be over a reasonable timespan, and certainly not just the first year.

For those who question the purpose of ‘business cases’ - pretty much every physical item you use in life has been the subject of a ‘business case‘ at some point, it is often just called something else.

 

[Dr Day]

Business cases include more than just financial projections, arguably schemes can still be successful if they meet their strategic, economic or environmental objectives. In a good business case these should be 'SMART' - Specific, Measurable, Achievable, Relevant, and Time-Bound - enabling the scheme to be evaluated 1 and 5 years down the line. This evaluation would include logical analysis of the secondary and tertiary outcomes - eg more passengers using train -> fewer cars on road -> reduced congestion -> better air quality, noting that care needs to be taken to ensure the outcomes are directly attributable to the scheme. For example, a measured reduction in air quality may have been attributable to something else such as a switch to more electric cars. But generally the higher the patronage, providing capital and operating costs have remained under control, the more likely a scheme will have been deemed successful

 

[coppercapped]

By definition the state cannot make a profit on every transaction. Some people really struggle with that simple fact when it comes to public services, particularly rail.

Quite so, much of what the State does does not, and cannot, make a 'profit' in the accountancy sense of the word. Which is why I wrote:

The State has decided that, for a variety of reasons, it is prepared to 'publicly fund'/'subsidise'/'cover the losses'/<insert own choice of phrase> the railways.

Your point being?

 

[Busaholic]

That's an easy one. How does it stack up in terms of passenger numbers and revenue as compared to the business case benefit:net cost ratio.

Better or equal = success
Worse = not success.

Simples!

You encapsulate it in a nutshell.

Regarding bus travel between the two places referred to earlier, a few journeys a day is hardly a frequent service and, in any case, before the rail line reopened passengers had been left behind on occasion at Okehampton and probably at places further east, but then you'd need to either live in the area or follow these things on local media to be aware of that.

 

[Xavi]

Yes they do, And no they don’t.

It is set out in the Passenger Demand Forecasting Handbook, and is typically 60-70% in year one, 80-85% in year two, 90-95% in year three, with full demand in year 4. Background growth is also applied as well.

Business cases can diverge from this, but they need to provide evidence as to why, and a sensitivity test is useful.

I do agree with @yorksrob that comparison to the business case is the way to judge whether a project is a success or not. Passenger numbers are just one part of the business case though, any assessment must also check on whether other benefits have been delivered (eg journey time benefits, reduction in road traffic, economic development enabled, etc), and also what the costs were (and continue to be). As projects such as this are a long term investment, the ‘success’ assessment should also be over a reasonable timespan, and certainly not just the first year.

For those who question the purpose of ‘business cases’ - pretty much every physical item you use in life has been the subject of a ‘business case‘ at some point, it is often just called something else.

Agreed, the confusion stems from my reference to ‘Base’ or ‘Core’ Benefit to Cost Ratio which may be based on a single patronage figure but calculated using an assumed period of growth.

The highest profile reopening in recent times, Borders Railway, was recently quoted on this forum as having BCR of 0.5 and was (understandably) used by some as a basis for dismissing railway reopening.

However, the 0.5 BCR was only the Core Scenario BCR based on approximately 650,000 return journeys in part calculated using capped growth in 2027. The 650,000 was an average of a preference survey along the route assuming the growth and trip modelling based on population. The rail journeys were expected to remove a very significant 530,000 car journeys along the route.

The Final Business Case also included several sensitivity scenarios including:

- an increased ‘Patronage levels’ scenario BCR of 0.9 based on an additional 250,000 return journeys. This is similar to actual pre-Covid journeys from year 2.

- a ‘Demand growth cap’ scenario BCR of 0.6 that allowed for a further 5 years of growth to 2032.

Wider Economic Benefits are not included above; the Core BCR increased to 0.7 when they were added.

None of the above included accessibility and social inclusion benefits which, when included as a sensitivity, increased the Core BCR to 1.3.

Hopefully, this is helpful for others to understand the subjective nature of a Business Case (notably the BCR) and how difficult some of the benefits are to measure for real.

In the case of Okehampton, in my opinion, there have been considerable ‘wider economic’ and ‘accessibility and social inclusion’ benefits, but don’t ask me to measure them!

 

[Bald Rick]

Agreed, the confusion stems from my reference to ‘Base’ or ‘Core’ Benefit to Cost Ratio which may be based on a single patronage figure but calculated using an assumed period of growth.

The highest profile reopening in recent times, Borders Railway, was recently quoted on this forum as having BCR of 0.5 and was (understandably) used by some as a basis for dismissing railway reopening.

However, the 0.5 BCR was only the Core Scenario BCR based on approximately 650,000 return journeys in part calculated using capped growth in 2027. The 650,000 was an average of a preference survey along the route assuming the growth and trip modelling based on population. The rail journeys were expected to remove a very significant 530,000 car journeys along the route.

The Final Business Case also included several sensitivity scenarios including:

- an increased ‘Patronage levels’ scenario BCR of 0.9 based on an additional 250,000 return journeys. This is similar to actual pre-Covid journeys from year 2.

- a ‘Demand growth cap’ scenario BCR of 0.6 that allowed for a further 5 years of growth to 2032.

Wider Economic Benefits are not included above; the Core BCR increased to 0.7 when they were added.

None of the above included accessibility and social inclusion benefits which, when included as a sensitivity, increased the Core BCR to 1.3.

Hopefully, this is helpful for others to understand the subjective nature of a Business Case (notably the BCR) and how difficult some of the benefits are to measure for real.

In the case of Okehampton, in my opinion, there have been considerable ‘wider economic’ and ‘accessibility and social inclusion’ benefits, but don’t ask me to measure them!

This is all true.

Although you didn’t mention that the Borders Final Business Case assumed a capital cost less than half of what it actually did cost.

(Note the repeated “this section has been removed due to commercially sensitive information…” I bet it was sensitive! )

 

[D Williams]

You have to remember that reinstating passenger service to Okehampton was every bit as political as the Borders Railway.

The £40m or whatever that it cost will never be recouped in direct ticket sales. An express bus service would have done as well but , at present, railways are politically correct, roads are not.

The government has been seen to throw a large dollop of money at the South West , where it has lots of MPs. I believe the service has carried about 100,000 pax in the first year of operation which isn't bad for a branch line in Devon, or Cornwall for that matter.

Devon CC is faffing around with a park and ride scheme that will increase usage as Okehampton would / could become a railhead for North Cornwall and West Devon but this depends on frequency, reliability , realistic fares and through connections. These will require upgrading of the track and signalling from Coleford Junction to Cowley Bridge ( yet more dosh) and a review as to whether the railway network in general is viewed as a cash cow or a public service.

Of course the RMT are doing their best to reduce public confidence. This is always the weak link.

Meanwhile Tavistock to Bere Alston is gathering pace with further surveys being funded but the crunch will be finding another bucket of cash for the whole project as this one is more complicated than Okehampton as somebody has removed the track!

Reconnecting Tavistock to Okehampton is wishful thinking as there is no business to be had. Remember, this line was only built to get the LSWR to Plymouth.

During the Dawlish break passengers transferring to a coach at Tiverton arrived in Plymouth and stations beyond sooner than the timetabled rail service would have allowed. Millions are being thrown at the sea wall and to reinforce the cliffs ( that caused as much trouble as the sea). This is much more cost-effective than reopening a rambling railway around Dartmoor.