Alternatives to UK Nationalisation

[Bletchleyite]

My criticism of the government's nationalisation strategy isn't what they're doing with GBR; it's what they're not doing.

For example, nationalising the rolling stock companies, which is where a lot of the money disappears.

Nationalising the existing ones is is likely to be expensive. However they probably could and should start buying rolling stock directly rather than financing it by way of ROSCOs, as say Merseytravel have done.

I would arguably like the government to subsidise fares by running a commercial freight operator also.

Isn't DRS sort of that?

 

[styles]

Nationalising the existing ones is is likely to be expensive. However they probably could and should start buying rolling stock directly rather than financing it by way of ROSCOs, as say Merseytravel have done.

Yeah it wouldn't be cheap, but it would deliver returns as a solid investment.

Isn't DRS sort of that?

Yeah I did think of DRS, but their focus appears to just be shifting rolling stock around these days. They could expand their operations back to hauling goods, or it could be a separate company to keep things clean, no strong opinions on that really.

 

[quantinghome]

Any non-nationalised option needs to address the following issues:

1. UK railways are generally unprofitable. Numerous studies and massive cuts in network size from the 50s to the 80s demonstrated that if a profitable network does exist, it is very small and would not be countenanced by anyone apart from the odd free-marketer type. So government subsidy (currently running at around half the railway's operating costs) is inevitable. This undercuts the profit motive of any private business running the network (or parts of it) as their focus will be on

2. For those advocating competition, how would this work for the infrastructure? Apart from the few cases where there are multiple lines connecting the same cities, infrastructure would need to be owned or operated by a neutral party. So that would have to sit separately, either privatised like Railtrack, or nationalised like Network Rail. This immediately creates a major contractual interface at the same point as the main physical one - the rail-wheel interface. This is not a good idea. Track and train should be an integrated system and separating the two into different organisations is problematic.

3. How would competition then work for the train services? There's no real capacity to expand services, nor are there the surplus train sets for an operator to take on to run a service. In other words the barriers to competition are high.

All these issues were considered during the process of privatisation in the early 90s. The problems with full-on competition drove the government to adopting a franchising model, which failed more than it succeeded (Chiltern and GNER were IMO the only franchises which fulfilled their potential). Which leads us to where we are.

 

[WAO]

What is needed is a proper traditional single national Railway Company, with a departmental structure of engineering, operations and commerce, etc, overseen and integrated by an all-powerful general manager, responsible to a board of directors representing the owner. Because the undertaking is a strategic operator, it cannot be owned by ephemeral private shareholders who may wish to asset strip, leverage, sell on or close down the undertaking. State oversight is unavoidable for safety reasons alone and other regulation, such as service standards (like the food industry etc) will also need oversight.

The settled railway may eventually find some operations profitable (such as InterCity); others would need a State contract (like the 1968 Transport Act attempted) with a subsidy. How much the departments used the private sector should be up to them. One would imagine that rolling stock would be financed through a merchant bank, not leased, (it's now costing 31% of revenue!) with/without external maintenance contacts as appropriate (some in-house maintenance works, equally some out-sourced maintenance is better, such as the EE Deltics). Whether operations of sectors/subsectors should be contracted out should just be an internal decision for the railway.

The lessons of the Victorian era should be remembered; regulation yes, central control yes, within-mode competition, no.

I think that GBR goes someway towards this but the pace will be slow because of expensive previous mistakes and where there are good DfT ideas they will be squashed by the Treasury which would have contradictory motives as both owner and purchaser of services, the railway's continuing Achilles' heel.

WAO

 

[Russel]

Feel exactly the same. On the face of it it looks like the nationalisation is just going to be more of the same. Same livery and TOC name, same uniform, same restrictions over what traincrew will drive what and to where. Same fragmentation that has blighted the privatised railway.

I get where you're coming from here, but it's the years of privatisation that have caused the fragmentation and I think things are too far gone to even hope for a fully unified BR style railway, it'll take years and eye watering amounts of money to untangle everything.

 

[Dr Day]

Fragmentation may be reducing in some parts of England but even under GBR and nationalised still isn’t going away for many journeys.

 

[AndrewE]

To answer the thread topic, a German or Swiss model would work quite well if it remains free of political meddling. GBR runs the long-distance routes, with the regions contracting out local rail services. That way you can get an actually integrated network (particularly in places that also have bus franchising) as well as a bit of healthy competition. For example, I'd keep WMR and Merseyrail as they are, due to their effective branding and integration with bus & tram.
Would only work though if a national railcard or D-ticket equivalent was introduced, to prevent costs on long-distance routes skyrocketing without introducing intercity OAOs to the mix.

And the Swiss model is pretty well wholly publicly owned! See (e.g.) the BLS. Wikipedia:

BLS AG is a Swiss railway company created by the 2006 merger of BLS Lötschbergbahn and Regionalverkehr Mittelland AG. Its ownership is divided, with 55.8% of it owned by the canton of Berne, and 21.7% by the Swiss Confederation.

which I think is the norm across the whole country.
The difference is their preparedness to work together - and their federal structure which ensures that one region doesn't gobble up all the investment or train operating subsidy.

 

[Backroom_boy]

I don't feel there is much objection to nationalisation on here; but the idea that nationalisation automatically improves matters is critiqued. The structure and the interfaces are the important bits

 

[Sorcerer]

I don't feel there is much objection to nationalisation on here; but the idea that nationalisation automatically improves matters is critiqued. The structure and the interfaces are the important bits

Much of the support for nationalisation is most likely to be support for a more vertically integrated and simplified system that is passenger-friendly and value for money. I think many on the forums are likely to be more pragmatic about it than the general public and would support a privatised system if it meant achieving a more efficient railway, as would many passengers in my opinion. The only unconditional support for nationalisation would likely be from a position of ideology, including my own to some extent; I would prefer a Swiss model of nationalisation, but I'm not so steadfast that I would oppose any other option.

 

[The Ham]

Nationalising the existing ones is is likely to be expensive. However they probably could and should start buying rolling stock directly rather than financing it by way of ROSCOs, as say Merseytravel have done.

I get where you're coming from here, but it's the years of privatisation that have caused the fragmentation and I think things are too far gone to even hope for a fully unified BR style railway, it'll take years and eye watering amounts of money to untangle everything.

There's something which could be done which would do both of these things but actually reduce costs.

It's also something which @Irish Rail would probably like.

I've talked about it before on other threads.

Basically you lengthen about 1/2 the 5 coach sets at GWR and LNER to be 9 coach sets, most of the other half of the 5 coach sets are then sent to XC.

However, you can keep the number of coaches on lease at GWR and LNER the same by retaining +1 × 5 coach set for every 5 sets which are lengthened.

For example, the 36 × 5 coach class 800's at GWR require 180 coaches and create 18 full length equivalent trains (I.e. either a 9 coach set or a 5+5 train is full length).

If that were to be 15 × 9 coach sets and 6 × 5 coach sets (165 coaches) GWR could also have a further 3 × 5 coach sets and the number of coaches they lease would still be 180 coaches.

Only the number of full length equivalent trains is 19.5 rather than 18. That doesn't sound much until you remember that's basically extra capacity for almost free (subject to lease costs being the same when adjusted for inflation).

Then the extra sets from GWR and LNER can go to XC and even in a 1:1 coach swap XC gets more capacity with lower running cost (and just the reduction in track access charges could allow the same number of coaches as getting the stored 221's to be in service with XC but needing to attract far fewer passengers to make the business case work).

Whist it could be complex to buy the extra coaches which are added to a leased set you could probably do a coach swap, so some of the new coaches become leased but some of the old sets become owned.

The lease company would be happy (those new coaches will likely cost them less in maintenence over the term of existing contract than the original coaches) and GBR own some sets.

 

[irish_rail]

There's something which could be done which would do both of these things but actually reduce costs.

It's also something which @Irish Rail would probably like.

I've talked about it before on other threads.

Basically you lengthen about 1/2 the 5 coach sets at GWR and LNER to be 9 coach sets, most of the other half of the 5 coach sets are then sent to XC.

However, you can keep the number of coaches on lease at GWR and LNER the same by retaining +1 × 5 coach set for every 5 sets which are lengthened.

For example, the 36 × 5 coach class 800's at GWR require 180 coaches and create 18 full length equivalent trains (I.e. either a 9 coach set or a 5+5 train is full length).

If that were to be 15 × 9 coach sets and 6 × 5 coach sets (165 coaches) GWR could also have a further 3 × 5 coach sets and the number of coaches they lease would still be 180 coaches.

Only the number of full length equivalent trains is 19.5 rather than 18. That doesn't sound much until you remember that's basically extra capacity for almost free (subject to lease costs being the same when adjusted for inflation).

Then the extra sets from GWR and LNER can go to XC and even in a 1:1 coach swap XC gets more capacity with lower running cost (and just the reduction in track access charges could allow the same number of coaches as getting the stored 221's to be in service with XC but needing to attract far fewer passengers to make the business case work).

Whist it could be complex to buy the extra coaches which are added to a leased set you could probably do a coach swap, so some of the new coaches become leased but some of the old sets become owned.

The lease company would be happy (those new coaches will likely cost them less in maintenence over the term of existing contract than the original coaches) and GBR own some sets.

Nice idea, but I cannot see any real investment in the southern part of Britain anytime soon, especially if North west orientated Andy Burnham ends up in Number 10. HS2 to Liverpool and Manchester plus probably new fleets (again) for the northern based operators like TPE will be the rail investment we will see. Whether GWR or XC could then benefit from cascaded TPE 802s is possible I suppose?

 

[35B]

I don't feel there is much objection to nationalisation on here; but the idea that nationalisation automatically improves matters is critiqued. The structure and the interfaces are the important bits

Absolutely. So is the assumption that, because privatisation involved a) splitting public facing operations from the underlying infrastructure and b) outsourcing passenger operations on time limited contracts ("franchising"), the alternative is necessarily "nationalisation". As we're seeing, it's hard to see how consolidation into GBR will change things at the coal face.

Two dimensions haven't then been discussed much. The first is rejoining public facing operations with the underlying infrastructure, the second going beyond the current "privatisation" model to actually transfer ownership to the private sector. I would also suggest a third leg to that, which is that this operator ought to run not just passenger services but also freight.

There are reasonable objections around the risk of asset stripping, fares policy, service frequency, and capacity. Those, though, are regulatory issues which already exist today - see any number of threads bemoaning XYZ issue with services. And it's not as though BR weren't also prone to a certain amount of asset stripping, sometimes driven by HM Treasury (those 1980s singling schemes), sometimes internal (see the indecent haste to lift track and flog both land and materials).

Against that, you would be creating one or more large companies with asset ownership, giving them the ability to raise funds as businesses on a secured basis, and without being caught up in public sector expenditure constraints. If freight were part of the main company(s) scope, that would provide incentives to ensure paths were available, but in a way that also gave opportunities for flexibility between passenger and freight railway that currently just don't exist.

Regulation would be an issue, and things like minimum standards would need to be both defined (tricky) and enforced (harder). I'm not naïve enough to just wish that away. However, the idea that the current DfT + ORR regime does that in any way effectively is repeatedly refuted by what we see on the network, and the deep control of DfT over GBR demonstrates strongly that the treatment of the railway as just another government department is unlikely to stop any time soon.

I would retain the open access rules more or less as they stand today, save to rebalance them to prevent the owning company using their power over the network to frustrate bids (there's a parallel here in how Royal Mail is regulated, with the wholesale arm kept apart from the main business). The existence of competition, or even the threat of competition, would act to limit owners' ability to raise fares and lower standards.

Subsidised services would continue to be required, and would be subject to grant arrangements as they were in the BR era. Whether that would be the original per line grants post-1968, or the simpler block grants introduced a few years later would need to be worked through - my preference would be the former, provided that the data is available to support that. This is because, rather than saying "we're cutting subsidy by £xm - cut your coat to match the cloth" it would focus decisions on "which line(s) are being cut" and therefore sharpen the political risk of such cuts.

 

[eldomtom2]

The problem with the idea that a vertically integrated private railway provide a better result than the privatised system the UK actually adopted is that it seems unlikely a private company would be able to change the status quo of the railways as a whole being unprofitable. The end result would be a situation where the railways were still run by a company dependent on government subsidies, but the incentive to do a good job running subsided services - that another company might win the franchise - would be absent.