Great British Railways: scope for money savings?

[Harpo]

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.

What happens today stems from the original privatisation legislation and the regulatory framework it required. I’d be surprised if that legislation remains unscathed.

As for FOCs, only an incredibly dumb government would impede their future growth. So I guess it’s possible!

 

[Bletchleyite]

Though while I don't think actually nationalising FOCs makes much sense, if GBR would find freight operations profitable they should absolutely start doing them themselves to compete in the market and make money to put into improving the network and the passenger service. There might be an argument for rolling DRS, which is already nationalised, into GBR.

 

[HSTEd]

What happens today stems from the original privatisation legislation and the regulatory framework it required. I’d be surprised if that legislation remains unscathed.

It is unlikely to be tenable to change it whilst the FOCs and OAOs exist, because it would open up huge state aid and collusion claims from them towards the state railway bloc.
THe processes will have to remain intact to fend off those claims.

== Doublepost prevention - post automatically merged: 22 Jan 2025 ==

Though while I don't think actually nationalising FOCs makes much sense, if GBR would find freight operations profitable they should absolutely start doing them themselves to compete in the market and make money to put into improving the network and the passenger service. There might be an argument for rolling DRS, which is already nationalised, into GBR.

If GBR takes an "all up" approach to pricing, essentially no freight operations would be profitable in terms of reducing net subsidy.

The government will command them to continue providing cheap paths etc to freight operators, but it is not in their financial interest to encourage additional freight operations.
Sure, GBR might benefit from seizing market share from the other players, but overall expansion is likely to worsen their financial position and require additional (explicit) aid from the Treasury.

 

[43066]

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

Missing the point once again that the railway isn’t supposed to turn a profit. Making it bigger on the right places can lead to significant economic benefits that outweigh any additional costs, as per Crossrail.

Interestingly, both he and the Secretary of State are saying that harmonising pay is not one of GBR’s priorities.

No great surprise there. After nearly three decades the privatised railway some TOCs have differences in Ts and Cs between depots that date back to the BR era. Then of course pay differentials have increased massively. It would be an exercise in futility to try and harmonise them at this point.

== Doublepost prevention - post automatically merged: 22 Jan 2025 ==

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.

Indeed. There’s obviously some scope for savings in terms of eliminating duplication of functions between TOCs, but whether they will be significant enough to justify the cost of nationalisation is anyone’s guess. My guess is not and that, rather than reinventing the wheel, they’d have been better off tweaking the franchising system, for example by making franchises longer, to allow longer term planning.

 

[Bletchleyite]

No great surprise there. After nearly three decades the privatised railway some TOCs have differences in Ts and Cs between depots that date back to the BR era. Then of course pay differentials have increased massively. It would be an exercise in futility to try and harmonise them at this point.

I work for a company that I joined as a startup and it has been taken over, spun out and taken over again repeatedly and is now part of a large corporate. My contract is still the original one. It's just not a problem. New staff should be on a standardised contract (including Sunday in the working week!) but there may not be a case for ever going through the extreme pain of harmonising everyone, particularly not people who only have maybe 10 or fewer years to retirement, though an offer could certainly be made to get people to voluntarily switch if they'd prefer.

 

[43066]

New staff should be on a standardised contract (including Sunday in the working week!) but there may not be a case for ever going through the extreme pain of harmonising everyone, particularly not people who only have maybe 10 or fewer years to retirement, though an offer could certainly be made to get people to voluntarily switch if they'd prefer.

I suspect what they really mean by saying they are going to harmonise pay is that they aren’t going to try and harmonise Ts and Cs.

It’s the plethora of differences that have been negotiated by individual TOCs over the years that will be the issue: In general terms the TOCs that pay the most have more stringent Ts and Cs. So how do you go about imposing a “standard” set of Ts and Cs across the industry?

The idea of new people being on different (worse) Ts and Cs isn’t really one the unions will swallow. Even if you ignore the union objections it would cause a great deal of complication in terms of rostering; having different links of Sundays inside and Sundays outside can just about work, but if drivers also have different movements off spare, different annual leave entitlements etc. it becomes a great deal more complex. It would also take many years to filter through if the changes only apply to new joiners.

In short, I can see why they aren’t going to go there: it’s too complicated, and with very little scope for meaningful savings.

This sort of thing is less of a problem in office based roles where (broadly) everyone just expects to work standard-ish office hours Monday to Friday, and there’s much less variation. Even then you can get issues with differing pension and annual leave entitlements etc. when different businesses merge.

 

[Bletchleyite]

Even then you can get issues with differing pension and annual leave entitlements etc. when different businesses merge.

You certainly can, and for various historical reasons I get 2 more days than most people in the company.

We have buying/selling of leave, though, so it'd be easy to standardise that if they wanted - replace the 2 extra days with 2 more days worth of gross pay, then I can buy them back at the annual buy/sell round for that same sum, and my position is essentially unchanged. (Or I could choose to have the extra money instead).

Though I suspect the railway doesn't, due to the complexity, offer that anywhere.

 

[Meerkat]

Missing the point once again that the railway isn’t supposed to turn a profit. Making it bigger on the right places can lead to significant economic benefits that outweigh any additional costs, as per Crossrail.

It is supposed to restrict its drain on the taxpayer. Which places are these?
You are also ignoring the cashflow aspect - if the cash isn’t going direct to the Treasury then it isn’t paying off the borrowing and is a problem. The cash to spend also has to be found from somewhere and is in very restricted supply.

I suspect what they really mean by saying they are going to harmonise pay is that they aren’t going to try and harmonise Ts and Cs.

It’s the plethora of differences that have been negotiated by individual TOCs over the years that will be the issue: In general terms the TOCs that pay the most have more stringent Ts and Cs. So how do you go about imposing a “standard” set of Ts and Cs across the industry?

You go for the end state contract for all new starters. And pay enough to attract and retain enough decent people. That pay doesn’t have to be the same across TOCs.

In short, I can see why they aren’t going to go there: it’s too complicated, and with very little scope for meaningful savings.

Over time it reduces complication and cost. If you don’t start you have complication locked in forever.
The unions can’t demand nationalisation and then demand that it doesn't affect them.
They will need to be very careful about which fights they choose.

 

[43066]

It is supposed to restrict its drain on the taxpayer. Which places are these?
You are also ignoring the cashflow aspect - if the cash isn’t going direct to the Treasury then it isn’t paying off the borrowing and is a problem. The cash to spend also has to be found from somewhere and is in very restricted supply.

I’ve given one example already. You are again ignoring the whole reason why the railway is subsidised in the first place. Let’s not get into another pointless debate about whether the railway should be subsidised or not.

You go for the end state contract for all new starters. And pay enough to attract and retain enough decent people. That pay doesn’t have to be the same across TOCs.

That simply isn’t going to happen, for various reasons, as appears already to have been stated by senior industry figures.

Over time it reduces complication and cost. If you don’t start you have complication locked in forever.
The unions can’t demand nationalisation and then demand that it doesn't affect them.
They will need to be very careful about which fights they choose.

The unions are in favour of nationalisation for political reasons (that I don’t personally agree with), but they can and will resist changes to Ts and Cs that are to the detriment of their members, at least without recompense. That needs to be factored into the decision of whether those changes are worth making in the first place.

Harmonisation of Ts and Cs is likely to be in the “too difficult/costly” pile for the foreseeable future, and probably forever, because the short term cost and disruption is unlikely to justify any long term (hypothetical) savings.

 

[Harpo]

Harmonisation of Ts and Cs is likely to be in the “too difficult/costly” pile for the foreseeable future, and probably forever, because the short term costs and disruption is unlikely to justify any long term (hypothetical) savings.

Harmonised driver T&Cs bring genuine pitfalls if they enforce changes to diagram content which in turn could unravel some train services that have been constructed to optimise diagrams. Whole traincrew strategies could be at risk.

This is why each TOC has it’s own bespoke business-orientated T&Cs currently.

 

[Bald Rick]

The initial savings will be all in the transactional stuff. For example by aligning objectives and incentives - that in itself will reduce cost as there won’t be a need for lengthy ‘discussions’ on (for example) how to deliver projects, operational contingency plans, etc; it will just be doing what‘s best overall without separate companies own interests at heart.

It will be interesting to see what happens with the Network Code, Track Access Agreements etc; if these go for GBR operations then that will save a fair amount of organisational friction.

The success measure for me will be a measurable reduction in industry people being quoted in press releases about an individual project. I think the record that I’ve seen is 13 people quoted in one press release, essentially saying the same thing.