Great British Railways: scope for money savings?

[Bletchleyite]

One of the purposes of GBR consolidation is to save money. What options are there to do this, and what are their implications?

A few posts from another thread (where they were a bit OT) on this as a starter:

Though if it was merged they would use that as an excuse to reduce staff, and getting punted around departments still happens within a single organisation!

There should (and will) absolutely be a consolidation of backoffice functions like customer service and ticketing resulting in an overall reduction of staff in those functions - that's one of the main savings available to GBR.

Rather ironic if the union demands for nationalisation results in savings mainly through job losses rather than evil capitalist profits.

Many of these losses are likely to be outside of their remit, e.g. if GBR created a single ticketing site and it was any good Trainline might go out of business or scale back substantially.

 

[sjoh]

I would imagine that merged HR/payroll, marketing/PR, and such have the potential to save a significant amount in the medium to long term, once the costs of systems integration etc is overcome. Think about all of the ancillary roles in each TOC that are repeated across the country that could be centralised and streamlined. Each individually isn't much, but taken together I'd imagine something in the region of a £10-15m saving per year.

For example, lets say TPE and Northern each have 5 HR/payroll employees. Once you're paying someone, the difference in workload for managing payroll for 8000 employees isn't really a huge amount more than for 3000 employees. Merge and reduce to 7 HR employees as "People Team North" (or some equally new-age department name), and you've got a saving of 3FTEs per year - which is already around the £120k mark. (I know TPE and Northern are both already DFTO run, but just using as an example). Coupled with the fact that you can migrate to one payroll system rather than paying for two seperate subscriptions/software licenses etc, and then also the reduction in things such as carpark space for staff (potential to sell or re-use land), cutting layers of line management, etc, and the potential for savings does get noticeable.

 

[Harpo]

First port of call should be wherever money changes hands between what were different organisations. Those interfaces are usually surrounded by contracts, account teams and bureaucracy.

A radical overhaul of the regulatory law downwards on track access agreements will assist future planning.

There will also be many examples of man-marking and parallel roles.

 

[sjoh]

First port of call should be wherever money changes hands between what were different organisations. Those interfaces are usually surrounded by contracts, account teams and bureaucracy.

A radical overhaul of the regulatory law downwards on track access agreements will assist future planning.

There will also be many examples of man-marking and parallel roles.

Absolutely! Contracts definitely potential for big savings! A) fewer contracts with varying terms etc, and B) better buying power as a larger organisation are both operational efficiency targets 101!

 

[Sir Felix Pole]

National T & Cs for new entrants going forward, leaving the old TOC conditions to wither on the vine. There is a big 'hump' in staff retirements coming up which will accelerate the process. Rationalisation of train crew depots will produce big savings - I would expect XC to be divvied up between the regions (if that is the organisational structure to be adopted).

 

[RT4038]

National T & Cs for new entrants going forward, leaving the old TOC conditions to wither on the vine. There is a big 'hump' in staff retirements coming up which will accelerate the process.

What scope for savings will there be in doing this?

 

[Rail_Midlands]

The biggest advantage I see under the BR umbrella is scope for government to government deals. For example, rolling stock, electrification etc can be done through tie up with countries like India/Japan (who managed to do 99% electrification in the last decade, Has built a rapid rail system - Delhi/Meerut with in 4 years, building the High speed rail, have built new rolling stock and in the process of mass production). Also can cooperate in building challenging rail projects like bridges/tunnels etc. Due to their vast manpower and technical experience in the past decade - hundreds of kilo meters of tunnel built in the last decade. There's a huge cost advantage in going with them.

 

[sjoh]

What scope for savings will there be in doing this?

I would imagine mainly in systems management rather than actual payroll savings in the short to medium term. Cheaper to manage 1 or 2 pension schemes, 1 or 2 payband structures, etc. Unions will still be strong enough to fight for decent pay, but perhaps in the longer term their strength could be diminished because there aren't other options - not like someone can up ship and go work for another TOC etc. Conversely their strength may be strengthened because industrial action could have a larger effect on the whole network rather than just in one TOC area. Hard to tell!

 

[Harpo]

National T & Cs for new entrants going forward, leaving the old TOC conditions to wither on the vine. There is a big 'hump' in staff retirements coming up which will accelerate the process. Rationalisation of train crew depots will produce big savings

Its no silver bullet.

Every TOC agreed terms that optimised their own resource plans, a fine piece of union flexibility. Forcing every operation to convert it’s staff (after TUPE) to one-size-fits-all T&Cs will probably inhibit as much as it helps.

Similarly on traincrew depot rationalisation, first put everybody through huge training programmes to be able to cross-cover. RDW and overtime reliance would need to increase to make that happen.

 

[HSTEd]

The only post GBR rationalisations I can see that have much chance of actually reducing costs will require reductions in staffing.

I think there is probably only limited opportunity for attrition to achieve those reductions (either through retirement or voluntary redundancy). Anything based around compulsory redundancy would lead to strike action that the government probably won't want to risk given the money it spent to end disputes on the railway after taking power.

I suppose you could try and write a unified set of T&C for new entrants that might make it easier to implement working practice changes later, but that will take many years to have a significant impact.

In summary, I can't see much ability to reduce expenditures without a fight with the unions. At least, on the short timescales that the government will likely care about.

 

[Rail_Midlands]

The only post GBR rationalisations I can see that have much chance of actually reducing costs will require reductions in staffing.

I think there is probably only limited opportunity for attrition to achieve those reductions (either through retirement or voluntary redundancy). Anything based around compulsory redundancy would lead to strike action that the government probably won't want to risk given the money it spent to end disputes on the railway after taking power.

I suppose you could try and write a unified set of T&C for new entrants that might make it easier to implement working practice changes later, but that will take many years to have a significant impact.

In summary, I can't see much ability to reduce expenditures without a fight with the unions. At least, on the short timescales that the government will likely care about.

There's another way to handle it without any reduction in staff. There's sufficient demand for rail all over UK for increased services, increase the rolling stock and increase the supply. This will take care of the additional staff. There may be some change of roles or movement to different regions involved, but it is possible to maintain the staff without any forced redundancies.

 

[Meerkat]

There's another way to handle it without any reduction in staff. There's sufficient demand for rail all over UK for increased services, increase the rolling stock and increase the supply. This will take care of the additional staff. There may be some change of roles or movement to different regions involved, but it is possible to maintain the staff without any forced redundancies.

This is supposed to be saving money…….

 

[biggerisbetter]

I think there are lots of opportunities if managed properly including:

- Reduction in HR and marketing staff through centralised functions - also can apply to a reduction in wider management and admin roles such as delay repay and customer services;
- Reduction in administration and legal staff through removal of the need to prepare, consider and award franchises and reduction in the administration of delay apportionment;
- Reduction in rolling stock acquisition costs through introduction of standard unit types purchased through larger orders and subsequent reduction in maintenance and training costs;
- Reduction in staffing costs through reduction in ticket offices more sensitively and pragmatically managed; and,
- Increased use of DOO.

The last two whilst controversial I think can be better achieved through a coherent national approach and commitment to no compulsory redundancies through a slower process. For example, only increasing DOO services where trains are introduced over time with level boarding sections on particular routes.

The opportunities for maximising revenue are even greater in my view but perhaps better for a separate thread.

 

[Manutd1999]

In the short-term the savings seem minimal - limited to the 2% "management fee" currently paid to the TOCs and a few back-office savings.

Longer term I think there are significant opportunities though:

1) A "guiding mind" to help push through timetable reform. It would be controversial, but altering service patterns to simplify the network and optimise turnarounds could reduce the number of diagrams, which in turn reduces cost.
2) A new entrant contract is an easy way of ending the reliance on rest day working in the long-term, which would (eventually....) reduce staff costs.
3) Savings on rolling stock procurement by committing to larger, standardised orders.
4) Elimination of some competition. Cheaper tickets to Birmingham on LNR, or Northern Manchester-Leeds via Bradford, may become a thing of the past.
5) Like it or not, introduction of more LNER-style dynamic pricing is almost certain for InterCity routes IMO. This will raise revenue on core routes.

 

[Rail_Midlands]

This is supposed to be saving money…….

There's a difference between operational cost savings and capital cost savings. This is purely for operational savings. But the political class often confuse them both and come up with half baked ideas.

 

[yorksrob]

4) Elimination of some competition. Cheaper tickets to Birmingham on LNR, or Northern Manchester-Leeds via Bradford, may become a thing of the past.
5) Like it or not, introduction of more LNER-style dynamic pricing is almost certain for InterCity routes IMO. This will raise revenue on core routes.

I'm not sure I'd count it as a "saving" if it just means rinsing more money out of passengers. A saving surely means reducing the cost of operations.

 

[Bletchleyite]

5) Like it or not, introduction of more LNER-style dynamic pricing is almost certain for InterCity routes IMO. This will raise revenue on core routes.

Modern Railways has reported (as I mentioned on another thread) that the fare increase trial has thus far been approximately revenue neutral.

 

[HSTEd]

Competition likely costs the railway in increased operational costs, by dispersing the traffic.

I'm not sure, given the loss of a lot of ultra high value business traffic, that the increase in revenue from market segmentation actually offsets it.

EDIT:

As an example, currently avanti hauls air at peak times, whilst people instead require longer trains to be used on the slower trains on the route.

If the peak was made less stark, we could price the trains so that they remain full throughout the day and reduce operational expenditure strengthening the slower trains, which are made of units that operate in multiple.

 

[Meerkat]

There's a difference between operational cost savings and capital cost savings. This is purely for operational savings. But the political class often confuse them both and come up with half baked ideas.

The railway loses money operationally, making it bigger loses more money operationally.

 

[Rail_Midlands]

The railway loses money operationally, making it bigger loses more money operationally.

That's a very broad stroke of generalisation. Do you think increasing the number of coaches in cross country will result in bigger operational loss?

 

[Bletchleyite]

That's a very broad stroke of generalisation. Do you think increasing the number of coaches in cross country will result in bigger operational loss?

To know that you'd need to research how much suppressed demand there is, or whether most of it is still travelling but crammed in.

 

[Grumpy]

For example, lets say TPE and Northern each have 5 HR/payroll employees. Once you're paying someone, the difference in workload for managing payroll for 8000 employees isn't really a huge amount more than for 3000 employees. Merge and reduce to 7 HR employees as "People Team North" (or some equally new-age department name), and you've got a saving of 3FTEs per year - which is already around the £120k mark. .

It's some years since my responsibilities included a payroll department.
However my recollection is that broadly the number of payroll clerks needed depends on both the number of payees and the type of employee. Thus dealing with salaried staff who have the same fixed pay each month needs less work (eg changing tax codes, joiners and leavers) than for wages type staff each of whose pay might have to be adjusted for different hours worked each week, different premium pay for unsocial hours, different overtime rates etc.. In either case the number of payroll staff needed will be pro rata to the number of payees. If you've still the same number of staff to pay, merging wont reduce the number of HR/payroll staff needed.

 

[Andover]

Speaking of the operational side of things, I wonder how likely it is that the flexibility of having a (at least theoretically) single business is regained. As mentioned in OP, there's probably the danger that the TOCs effectively carry on existing as shadow divisions within GBR.

 

[styles]

Ideally? Consolidating back-office roles like admin, finance, HR, etc.

In practice? Barely any.

Under GBR it appears (happy to be corrected) that the franchises will remain, but each eventually nationalised. Unless the gov is going to commit to consolidating operators, which I think is unlikely, it'll make very little on the cost front.

 

[dk1]

I would never be surprised when (or should I say if) this goes through that that the railway ends up costing more money than it does now.

 

[Clarence Yard]

TOC’s won’t remain. Peter Hendy has been very clear in parliament about what he expects to happen - integrated regional organisations. Interestingly, both he and the Secretary of State are saying that harmonising pay is not one of GBR’s priorities.

If this takes place, there will be a reversion to the pre-sector BR structures, with maybe a nod to the sectors when it comes to some of the commercial activities.

The savings will be substantial as 14 English TOCs fit into 4 Regions. All the transactional stuff that takes place between TOC and GBR (for example, in train planning) will be abolished and presumably all costs and revenue will be just allocated, not transferred (again, as BR used to do it pre-sector). You don’t now need 14 sets of HQ back offices but their overall functions will remain, just done elsewhere and on a more efficient basis.

For the staff on the ground, nothing much should change initially but as time goes by you can see that, for example, streamlining train crew depots and moving staff onto a common pay spine will need to take place. But the first job is to get those (regional?) GBR organisations set up and running.

 

[irish_rail]

TOC’s won’t remain. Peter Hendy has been very clear in parliament about what he expects to happen - integrated regional organisations. Interestingly, both he and the Secretary of State are saying that harmonising pay is not one of GBR’s priorities.

If this takes place, there will be a reversion to the pre-sector BR structures, with maybe a nod to the sectors when it comes to some of the commercial activities.

The savings will be substantial as 14 English TOCs fit into 4 Regions. All the transactional stuff that takes place between TOC and GBR (for example, in train planning) will be abolished and presumably all costs and revenue will be just allocated, not transferred (again, as BR used to do it pre-sector). You don’t now need 14 sets of HQ back offices but their overall functions will remain, just done elsewhere and on a more efficient basis.

For the staff on the ground, nothing much should change initially but as time goes by you can see that, for example, streamlining train crew depots and moving staff onto a common pay spine will need to take place. But the first job is to get those (regional?) GBR organisations set up and running.

Interesting. I just hope all of this comes to fruition before the 2029 general election when it could well all just be un done. On the face of it what you are saying sounds positive.

 

[HSTEd]

The savings will be substantial as 14 English TOCs fit into 4 Regions. All the transactional stuff that takes place between TOC and GBR (for example, in train planning) will be abolished and presumably all costs and revenue will be just allocated, not transferred (again, as BR used to do it pre-sector).

You won't be able to eliminate that transactional stuff without prompting legal trouble with the freight and open access operators over state aid and collusion.

As Starmer has committed to retain freight operators outside the state railway structure, the bulk of the bureaucracy must remain as now.

 

[The Planner]

You won't be able to eliminate that transactional stuff without prompting legal trouble with the freight and open access operators over state aid and collusion.

As Starmer has committed to retain freight operators outside the state railway structure, the bulk of the bureaucracy must remain as now.

It will be substantially reduced though.

 

[Meerkat]

TOC’s won’t remain. Peter Hendy has been very clear in parliament about what he expects to happen - integrated regional organisations. Interestingly, both he and the Secretary of State are saying that harmonising pay is not one of GBR’s priorities.

If this takes place, there will be a reversion to the pre-sector BR structures, with maybe a nod to the sectors when it comes to some of the commercial activities.

Wasnt that structure got rid of for very good reasons?
back to an engineer lead railway with the passengers getting in the way and services being whatever is most convenient to provide.