How much do ROSCO's charge?

[EntTrains]

How much does it cost train operating companies to lease rolling stock from Rolling Stock Leasing Company's like Angel Trains?


Rolling stock such as: class 165, class 450 etc. also high speed trains like, class 43's and pendolinos?

thank you

 

[BestWestern]

Way, way more than it should - particularly for the ex-BR stuff which has earned its keep many times over. One of the biggest unjustified costs of the privatised system.

 

[AlanFry1]

It depends on the train but as "BestWestern" has said is nothing more than a waste of money...

 

[Rhydgaled]

Alot. According to figures I've been given by folks from various internet fourms I think it is about £100,000 per anum per coach for a Sprinter, although it varies alot by class. I estimate that the anual leasing bill for ATW's fleet of 125 DMUs is £30,280,000. I reckon (don't hold me to it, I don't have any offical figures to work from) the cost to all TOCs combined is about £1bn per anum (in fact I think it might even say as much in the McNulty report). I'm also not sure whether the lease costs I have are for dry, wet or soggy leases (refering to how much maintenance is included in the price).

Even if we keep the operation of trains privatised, I think rolling stock should be state owned and made available (on a zero-cost lease) to train operators as part of the contract (or try to move to a model where operators own their own stock, like bus companies, but I doubt that would work with the railways). The ROSCOs could still bid for maintenance contracts for the state-owned stock, at least there'd be competiton between them then whereas there can be no competition for leasing trains (unless each ROSCO had enough stock to run all the country's train services).

 

[HSTEd]

They charge as much as they can get away with. With is far more than the stock is worth.

 

[455driver]

They charge an amount that is fair, at least that is what the "independant" enquiry found!

 

[Rhydgaled]

They charge an amount that is fair, at least that is what the "independant" enquiry found!

Do you mean the Competition Commission enquiry? If so, I doubt the question of whether the pricing was 'fair' was within their remit, they just found that the ROSCOs were not breaching competition laws (deliberatly working together to keep prices high). The ROSCOs don't need to play dirty to make prices high, it just doesn't seem (to me) to be a market where competition can really exist.

 

[455driver]

Do you mean the Competition Commission enquiry?

That was it!

It was a pity (or intentional?) that the question of price wasnt in their remit.

 

[tom1649]

The stock should be owned by the TOCs outright, or by the state. The ROSCOs main aim seems to be to suck money out of the subsidised railway. You won't find this as a mission statement on any of their websites unfortunately though. The current system benefits no one except the ROSCO shareholders.

 

[Manchester77]

If its owned by TOCs then when the TOC changes the former TOC would become a ROSCO.

 

[tom1649]

If its owned by TOCs then when the TOC changes the former TOC would become a ROSCO.

They would have to transfer across to the new TOC just like the staff and other assets do.

 

[gimmea50anyday]

I don't thinks will ever find he answer as every request for the figures I can recall has been met with the response, "commercially sensitive information!"

 

[Flamingo]

I remember talking to a passenger once who worked for a bank, who said the rail leasing side was looked on as one of their most lucrative branches, moneyfor nothing was the phrase used.

 

[Gareth Marston]

I remember talking to a passenger once who worked for a bank, who said the rail leasing side was looked on as one of their most lucrative branches, moneyfor nothing was the phrase used.

I had the ATW costs per annum a few years back (may have changed though)

158 =£250,000
175 =£450,000
150 =£150,000
142/143 = £85,000

TOC's claim its 11% of their costs on average so using Rhydgaleds c£30 million estimate for ATW is probably not far off the mark as their turnover was £275 million in 2011.

 

[tom1649]

Did the Mcnulty report into cutting costs on the railway look into the subject of ROSCOs, or was it conveniently ignored and swept under the carpet?

At least the ludicrous and expensive franchising system is talked about, although no one seems to be bothered to do anything proactive like abolishing it.

If the government is looking to cut subsidy then surely looking at removing the ROSCOs is surely one of the first places to look.

 

[jrhilton]

According to their 2012 accounts Stagecoach Group will pay £138.3m for the year ending 30 April 2013 and £100.9m in the year ending 30 April 2014 for trains and rolling stock (though they don't split out by rail operation/country).

As a comparison for track, stations and depots they pay NR £146.1m and £140.1m for the same periods as above.

 

[Ediswan]

Do these costs include maintenance ?

 

[HSTEd]

Do these costs include maintenance ?

Some do, some do not.

But most do not as I understand it as maintainance seems to be accounted seperately in the NR Electrification RUS (although that is now massively out of date).


Problem is all that rolling stock that was sold off for a pittance is gone and we can't get it back without paying full commercial value, which I believe the ROSCOs could argue is much the same as the cost of simply buying a huge fleet of new vehicles (thanks to how lucritive it is).

So if we were to go for an all electric railway fairly rapidly we could simply dispose of all the ROSCO owned diesel units, but that would require the aforementioned order of a huge fleet of new vehicles.

 

[455driver]

They would have to transfer across to the new TOC just like the staff and other assets do.

So the first TOC gets new trains, runs them into the ground and hands them over to the new TOC.

Who is going to pay to refurbish the insides and fix all the mechanicals that havent seen so much as an oil change for 5 years?

 

[tom1649]

So the first TOC gets new trains, runs them into the ground and hands them over to the new TOC.

Who is going to pay to refurbish the insides and fix all the mechanicals that havent seen so much as an oil change for 5 years?

Well they could be required to maintain them to a certain standard as part of the franchise. The current system doesn't stop operators running stock into the ground. Stored 508s anyone?

 

[cuccir]

In my former life working with a Local Authority, we were told by Northern that one reason they wouldn't put new services on a line was that it would only be worth their while if the new services were very full. This is because of the extra charges they'd have to pay to the ROSCO if their units did more than the contracted miles.

Now this may have been Northern passing the buck a bit, but if there's any truth to that it strikes me that ROSCOs are definitely contributing to some of the indsutry's problems.

I'd be interested to hear someone make the case for ROSCOs: why would you want them?

 

[tbtc]

I'd be interested to hear someone make the case for ROSCOs: why would you want them?

They are a necessary evil in a world of short term franchises, where TOCs would have little incentive to upgrade stock and would be reluctant to invest in new stock.

Plus what would happen if a TOC goes bust? Would the lawyers/ administrators just allow the assets of the old company (i.e. the trains) to continue in use?

Would a new TOC have the know how to deal with the messy stuff?

Obviously with longer term franchises there's a lot less justification for ROSCOs (and there's no justification for them to make mega-profits in any circumstances), but nobody has given me a better way of dealing with the ownership of long term assets (trains) in a world where TOCs are only in existence for five years or so.

 

[route:oxford]

So the first TOC gets new trains, runs them into the ground and hands them over to the new TOC.

Who is going to pay to refurbish the insides and fix all the mechanicals that havent seen so much as an oil change for 5 years?

That's fine if they do!

When the relevant audit is undertaken and the stock is analysed for condition and value (by a suitably qualified individual), they will attribute a value to it varying from peppercorn/scrap to mint condition.

The former franchisee will then get a fair value from it.

The question is...

Would a franchisee deliberately run stock into the ground (risking Network Rail fines for fails and fines for short formed units and cancelled services) and cut the value of their asset for want of maintenance?

or

Maintain their stock as an asset with shareholder value?

 

[NSEFAN]

They are a necessary evil in a world of short term franchises, where TOCs would have little incentive to upgrade stock and would be reluctant to invest in new stock.

Plus what would happen if a TOC goes bust? Would the lawyers/ administrators just allow the assets of the old company (i.e. the trains) to continue in use?

Would a new TOC have the know how to deal with the messy stuff?

Obviously with longer term franchises there's a lot less justification for ROSCOs (and there's no justification for them to make mega-profits in any circumstances), but nobody has given me a better way of dealing with the ownership of long term assets (trains) in a world where TOCs are only in existence for five years or so.

Is there the option of a single not-for-profit ROSCO, in the style of Network Rail, or would this fall foul of some kind of competition rule? Even then, would this approach reduce costs?

 

[TDK]

I had the ATW costs per annum a few years back (may have changed though)

158 =£250,000
175 =£450,000
150 =£150,000
142/143 = £85,000

TOC's claim its 11% of their costs on average so using Rhydgaleds c£30 million estimate for ATW is probably not far off the mark as their turnover was £275 million in 2011.

Interesting I was informed that a class 172 was not much short of 1,000,000 so it is a good business, the coaching stock that is used on Chiltern and formerly WSMR was owned by the TOC as they purchased them and this saves both companies a lot of money

 

[Rhydgaled]

They are a necessary evil in a world of short term franchises, where TOCs would have little incentive to upgrade stock and would be reluctant to invest in new stock.

...

nobody has given me a better way of dealing with the ownership of long term assets (trains) in a world where TOCs are only in existence for five years or so.

Why not state-owned (nationalised) rolling stock assets, with TOCs granted a free lease on stock as part of their concession/franchise contract? Either the TOC would be required (by their operating contract) to issue a tender for maintenance of the stock or the state could issue such tenders on behalf of the operators if longer-term maintenance deals are desirable.

the coaching stock that is used on Chiltern and formerly WSMR was owned by the TOC as they purchased them and this saves both companies a lot of money

I thought the stock was owned by the DB parent company, not by the TOC itself, so they would still need to pay leasing fees to their parent company. Am I right?

 

[tom1649]

Why would anyone want an organisation that effectively creams off public money as profit? The only people I would imagine being in favour are the ROSCOs themselves and their shareholders.

Could responsibility for rolling stock not be transferred to Network Rail? At least then any profit made is reinvested in the network rather than Mr/Mrs Shareholder's shiny new car.

 

[tbtc]

Is there the option of a single not-for-profit ROSCO, in the style of Network Rail, or would this fall foul of some kind of competition rule? Even then, would this approach reduce costs?

Presumably there's no barrier to any new entrants into the market (IEP and the 378s aren't owned by conventional ROSCOs)?

But then, if the current "big three" are making excessive profits, it's interesting that nobody else has tried to muscle in on the market.
--- old post above --- --- new post below ---

Why not state-owned (nationalised) rolling stock assets, with TOCs granted a free lease on stock as part of their concession/franchise contract? Either the TOC would be required (by their operating contract) to issue a tender for maintenance of the stock or the state could issue such tenders on behalf of the operators if longer-term maintenance deals are desirable

I suppose part of the story is that the Government don't want the responsibility of owning things, so they can blame someone else for problems?

Not sure why the stock should be "free" though?

 

[Rhydgaled]

I had the ATW costs per annum a few years back (may have changed though)

158 =£250,000
175 =£450,000
150 =£150,000
142/143 = £85,000

TOC's claim its 11% of their costs on average so using Rhydgaleds c£30 million estimate for ATW is probably not far off the mark as their turnover was £275 million in 2011.

Now that you have posted this information publicly, I feel I can reveal my source which was a PM from you back in November 2010.

The leasing costs you gave me then were:
175 (2-car) 400K per annum
158 250K per annum
150 180K per annum
Pacer & 153 100K per annum
I made a spreadsheet to divide each by the number of vehicles in the set to get the cost per vehicle, then multiply by the size of ATW's fleet of each class to get the total figure I posted earlier.

Could responsibility for rolling stock not be transferred to Network Rail? At least then any profit made is reinvested in the network rather than Mr/Mrs Shareholder's shiny new car.

I said make rolling-stock state-owned, but I suppose Network Rail could perform the same role.

 

[BestWestern]

The source of the problem I would guess was the Government of the day making a few quid by selling off rolling stock assets for whatever they could get, rather than having the common sense and forsight to keep these pivotal assets in public ownership. It is farcical that today's TOCs are shelling out millions for certain trains which once belonged to the railway!

Having said that, I suppose the obvious argument in favour of ROSCOs is their willingness to invest in new stock, albeit in the knowledge that they will make a profit eventually. Even if the Government was able to directly reduce a TOCs subsidy by the amount it pays in leasing costs if the stock was publicly owned instead, the direct cost back to Government when new stock was required would presumably outweight the savings. It would be interesting to know whether a fully centralised system would save money though. So the Government own all rolling stock, reducing TOC subsidy as the leasing costs would be removed. The Government funds all new stock, which is viewed as part of the overall transport investment budget. The same Government agency also retains one or two major ex BR workshops, where all major maintenance, overhaul and refurbishment work is carried out on all TOC stock, reducing staffing and engineering costs at those TOCs. Would the total saving to the Government in reduced subsidy be worthwhile, or would it be eclipsed by the cost of that new rolling stock?!