Nationalisation vs repatriation

[najaB]

There are a lot of threads on the go at the moment dealing with privatisation v renationalisation of the railway and the ownership of the companies bidding for franchises.

A lot of the comments have been around foreign state companies having a stake in our industry and (according to some) using our money to subsidise their local operations.

So I thought a poll might be in order to get the feel for different possible models for the UK rail industry. The options I can see are:

• The current model with no changes.
• Fully foreign-owned entities allowed to tender for franchises, but state-owned companies are excluded.
• Foreign investment allowed, but limits on percentage - e.g. no more than 49% foreign investment.
• Full privatisation with no foreign investment allowed at all (any UK-based organisation can invest with no limits).
• No foreign investment allowed, UK investment must include a minimum percentage from the public sector, unions or similar.
• Full nationalisation.
• Other

Any thoughts as to what 'other' could look like are appreciated.

 

[Domh245]

So long as it works properly, I couldn't care less

 

[TheDavibob]

Foreign state companies subsidising their own operations differs from private companies making a profit how?

I'm mostly happy with the setup, but think (a la DB) the UK state company should be allowed to bid for franchises, if it makes sense.

 

[najaB]

Foreign state companies subsidising their own operations differs from private companies making a profit how?

I agree, but there have been some quite pointed posts about it in other threads.

 

[Simon11]

I find it amusing how many people across the UK have the attitude that railways are far better run in Europe and Japan, with a better quality of services and punctuality.

However, the same people also dislike that the railway companies from Europe coming to run our railways and taking the 'profits'.....

We should be proud and excited that we are attracting the best railway talent from across the world who are investing time, resources and money into running a better railway in the UK.

 

[416GSi]

I think we need a railway under unified management and ownership, i.e. with the same company owning the infrastructure, trains and operating the railway.

Who owns it, either public or private sector, is irrelevant as long as we have that unified management.

 

[najaB]

I think we need a railway under unified management and ownership, i.e. with the same company owning the infrastructure, trains and operating the railway.

That can't happen while the UK is still part of the EU, and to be honest I don't think that vertical integration would really make that much difference. One infrastructure operator and one train service operator would work out pretty much the same.

 

[Railsigns]

We should be proud and excited that we are attracting the best railway talent from across the world who are investing time, resources and money into running a better railway in the UK.

It would be fine if they actually did invest anything in our railways. Don't kid yourself - they're only here to hoover up subsidies and make an easy profit.

 

[Bletchleyite]

I don't overly mind who runs what; that should really be chosen as the cheapest option for the quality we want delivered. What I'd be more interested in is restructuring to reduce TOC independence and create a genuine single network with a single set of products and a unified branding more like ScotRail, so TOCs can stop spatting among themselves over fewer than 10% of the travel needs of the UK and start hitting the car hard and winning passengers from there.

Same with buses - on road competition is a petty spat over a tiny number of passengers compared to the benefits a unified network could bring in removing cars from the road.

 

[najaB]

It would be fine if they actually did invest anything in our railways. Don't kid yourself - they're only here to hoover up subsidies and make an easy profit.

I guess I imagined Project Evergreen and the new rolling stock coming in to the Northern and GA franchises (among others)?

 

[Railsigns]

I guess I imagined Project Evergreen and the new rolling stock coming in to the Northern and GA franchises (among others)?

Are the TOCs doing these things out of the goodness of their hearts, or are they franchise obligations, taken into account when evaluating bids? If it's the latter, then it's the taxpayer who's paying.

 

[najaB]

Are the TOCs doing these things out of the goodness of their hearts, or are they franchise obligations, taken into account when evaluating bids? If it's the latter, then it's the taxpayer who's paying.

They are part of the franchise agreements, but they have gone above and beyond the minimum of what was required under those agreements.

 

[Railsigns]

Of all the investment that goes into our railways, only 1% comes from the private sector. That's pretty pathetic.

 

[tbtc]

Foreign state companies subsidising their own operations differs from private companies making a profit how?

Agreed.

This is the argument that I struggle to understand. Like the “outraged” people who cried foul at the idea of the Italians running C2C – who were presumably happy for National Express profiting from the line. Or the Scottish politicians unhappy that the Dutch “profit” from ScotRail, yet seemed to be fine with First Group having performed that role for a few years previously.

For me, the only two options are the status quo or we go back to a “nationalised” railway. A halfway house seems worse than either of these options. I’ve voted for the status quo because I don’t trust that a nationalised railway will be run particularly well (given the problems we’ve had with properly funding lots of other “Government” things in recent years).

I don’t understand people who are happy for privatisation but don’t want high quality train companies bidding for franchises.

If you don’t want Abellio/ DB etc bidding then who else is qualified? Why would you limit the competition and restrict the pool of bidders? Take out the “train” companies and who else will be left to bid for franchises, other than “bus companies? Outsourcers like G4S? Private equity vulture capitalists?

Please, if someone can explain why it’s fine for nominally-UK firms (like Stagecoach, Serco, Virgin) to make a profit from our railways but they don’t want the experience of overseas railways then I’d love to see the argument. Whilst I understand “nationalisation” and “privatisation” I’m struggling to see why anyone would restrict the range of bidders under a privatised railway.

I'm mostly happy with the setup, but think (a la DB) the UK state company should be allowed to bid for franchises, if it makes sense.

Ideally, but the thing which puts me off this is the cost (and complexity) of bidding. Would you pay a few million pounds every time a franchise comes up for renewal just to provide a “benchmark” bid?

Maybe I’d be more convinced of the need for a “DOR” bid if there weren’t many qualified organisations bidding (where an “in house” bid might keep the others honest), but since we don’t have that experience we might have to pay top dollar to recruit such qualified staff to the public sector on a “just in case” basis. Nice in theory. (the other problem is the sentimentality that this argument can attract about “Proper Railwaymen” etc)

I find it amusing how many people across the UK have the attitude that railways are far better run in Europe and Japan, with a better quality of services and punctuality.

However, the same people also dislike that the railway companies from Europe coming to run our railways and taking the 'profits'.....

We should be proud and excited that we are attracting the best railway talent from across the world who are investing time, resources and money into running a better railway in the UK.

I agree.

Companies who have experience of running thousands of trains for many years in well run railways are eager to operate our services – I think this is A Good Thing. It’d be a lot worse if we couldn’t attract that talent.

Better that we get the experience of DB/ Abellio etc than uninterested private equity firms etc, surely?

If I had a pound for every time I’d read how perfect the Germans/ Swiss/ Dutch are on this Forum … yet people don’t want them involved in UK rail?

It would be fine if they actually did invest anything in our railways. Don't kid yourself - they're only here to hoover up subsidies and make an easy profit.

Is that different to the "UK" bidders for franchises (Stagecoach etc)?

Why was it seemingly okay in some people's eyes for Arriva to bid for franchises but not now they are part of DB?

 

[najaB]

Of all the investment that goes into our railways, only 1% comes from the private sector. That's pretty pathetic.

Up until recently, significantly more than that came from the private sector - in the form of Network Rail bonds.

 

[Deepgreen]

So long as it works properly, I couldn't care less

Helpful input indeed!

 

[coppercapped]

The assumption behind the question

Full foreign ownership of franchises allowed,...

is incorrect.

Train operating franchises are not owned by anybody. They are in the gift of the DfT which may vary the terms, the geographical area and the services to be operated when a new franchise is offered.

A franchise is awarded to a franchisee by the DfT. If the conditions of the contract are not met by the franchisee then the DfT may withdrawn the franchise.

If the poll is to have any significance this question has to be rephrased.

 

[najaB]

If the poll is to have any significance this question has to be rephrased.

Modified as suggested.

 

[LNW-GW Joint]

Of all the investment that goes into our railways, only 1% comes from the private sector. That's pretty pathetic.

It does include all the rolling stock, and the freight business.
And most of the Network Rail debt.
And open access.

 

[ABB125]

Foreign state companies subsidising their own operations differs from private companies making a profit how?

I'm mostly happy with the setup, but think (a la DB) the UK state company should be allowed to bid for franchises, if it makes sense.

I think the solution would be a wholly (correct spelling?) government owned company, that is run commercially, as if there are shareholders to pay. The only difference is that all profit can then be reinvested, either into the franchise from whence it came, or into the railway network as a whole.

 

[cjmillsnun]

That can't happen while the UK is still part of the EU, and to be honest I don't think that vertical integration would really make that much difference. One infrastructure operator and one train service operator would work out pretty much the same.

Actually it can. They can be owned by companies that are owned by the same holding company.

Vertical integration may well work as it should be easier to get possessions to carry out repairs and renewal quickly, thus preventing damage to stock from poor track and further damage to infrastructure from the damaged stock.

 

[yorksrob]

There appear to be two issues about the current set up that trouble me.

The first is the running sore of the way in which our own world class railway was dismembered and flogged off for no reason other than the bare faced lies perpetuated by John Major that it was somehow "hopelessly inefficient". This of course, means that we are not operating on a level playing field in that whereas other countries can use the clout and economies of scale of their own countries to competitive advantage whereas we can't.

The other issue is part of a much wider ranging economic problem as outlined by Mark Carney (one of those experts) regarding our woeful current account deficit. This goes along with problems such as multinational corporations hiking the price of products such as marmite because they denominate it in a foreign currency, even though it is produced and consumed in the UK, the countries most important tech company being flogged off (could you imagine France allowing such a move) and the upcoming sale of the stock exchange itself to its competitor. Incidentally, when such a move was proposed for the Canadian stock exchange, the Government refused it (decision here pending by the BoE).

With the trains, it probably wouldn't be so annoying if we had a similar proportion of investments elsewhere, but the free market brigade saw to it that we didn't.
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I guess I imagined Project Evergreen and the new rolling stock coming in to the Northern and GA franchises (among others)?

It would be much better if such investment was coming from the UK, so that any profit could remain in the UK. Perhaps something like the industrial development bank (that the coalition bottled out of starting) could have funded such improvements. Or, if you prefer private investment, the stock exchange - that is supposed to be its raison d'etre afterall !

 

[Moonshot]

Of all the investment that goes into our railways, only 1% comes from the private sector. That's pretty pathetic.

In that case, why not just sell off Network Rail to the private sector, or float it in its own right. ?

 

[meridian2]

I'm not ideologically wedded to wholesale nationalisation, but I believe essential utilities and transport infrastructure are vital for the nation and should be in public ownership. I'd let franchises lapse and take the associated network back at renewal time.

There are signs that rail use is increasing on a scale not seen in most peoples' lifetime, and the coordination to answer that demand requires joined up thinking, not short termism.

 

[Moonshot]

I'm not ideologically wedded to wholesale nationalisation, but I believe essential utilities and transport infrastructure are vital for the nation and should be in public ownership. I'd let franchises lapse and take the associated network back at renewal time.

There are signs that rail use is increasing on a scale not seen in most peoples' lifetime, and the coordination to answer that demand requires joined up thinking, not short termism.

Would you include Air Travel as part of the transport infrastructure ? Should airports be like rail stations ?

 

[LLivery]

We should be proud and excited that we are attracting the best railway talent from across the world who are investing time, resources and money into running a better railway in the UK.

That sounds like something the government would say to try and convince to public that privitisation is doing the public a favour. We already had talented people who knew and loved the job they were doing. Most of the "best railway talent from across the world" invest their time to make money. NS, DB and SNCF don't bid for franchises to help the railways here, they do it to make money. HSBC, Angel and Porterbook own the rolling stock to make money. Thats it. Most of the people who really care about making a better railway would of been there regardless.

 

[Bantamzen]

Personally I would much prefer to see the railways re-nationalised and cut out all the shareholders, investors etc all looking for a profit on their returns so that these profits be put directly back into the system.

However being a realist I know this is very unlikely under any government, no matter what any politician says. So whilst there is any element of privatisation in the system, we may as well attract industry experts from wherever they may be.

 

[Robertj21a]

If there was to ever be 'Full Nationalisation' it would need to be in conjunction with making the railways an 'Essential service', so that all-out strikes designed to cripple the country would be outlawed.

 

[meridian2]

Would you include Air Travel as part of the transport infrastructure ? Should airports be like rail stations ?

I don't know what the number of domestic air commuters is, but I'd imagine it's tiny compared to rail. So on the basis that interior UK air flights are not essential for the normal running of the country, I have no strong opinions either way. How about you?

 

[Deepgreen]

In that case, why not just sell off Network Rail to the private sector, or float it in its own right. ?

Fundamentally because comprehensive public transport as a whole cannot make a genuine profit. Therefore why would the private sector be interested unless they are propped up hugely by the public purse?
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If there was to ever be 'Full Nationalisation' it would need to be in conjunction with making the railways an 'Essential service', so that all-out strikes designed to cripple the country would be outlawed.

Strikes are not designed to "cripple the country"; they are designed to achieve the particular goal(s) specific to each dispute. Striking is not undertaken as lightly as some may think, not least because money is lost by the participants.