Rail renationalisation- do you support it?

[matt_world2004]

Transpennine Express wanted to order 168 carriages with an option for 56 more. The DFT cut the order to 153 carriages with no options and resisted any attempt for the company to order a fourth car when overcrowding happened but still publicly lambasted the company for overcrowding.

200 diesel carriages were proposed for various operators following agreement with train operators but the government cancelled this project when electrification was announced.

The Thameslink and Intercity Express projects was fully managed start to finish by the government and both of them took a ridiculous amount of time since the government wanted to be hands on.

If you think that rolling stock procurement, replacement and age management is down to the TOCs then I have to say you are extremely naive and are falling right for the governments tactics of taking the praise for the good things and shifting the blame to the companies for the bad.

I will repeat the question again what law does the goverrnment use to prevent companies like GwR ordering more trains out of their own money. I am not talking about trains that the government are paying for or underwriting the cost of.There is no legal mechanism as far as I can see that prevents a TOC ordering their own rolling stock at market rates without goverment subsidy

 

[coppercapped]

I will repeat the question again what law does the goverrnment use to prevent companies like GwR ordering more trains out of their own money. I am not talking about trains that the government are paying for or underwriting the cost of.There is no legal mechanism as far as I can see that prevents a TOC ordering their own rolling stock at market rates without goverment subsidy

There is no 'law', as you quaintly put it, which stops a TOC ordering trains on its own account, but a series of impediments which would first have to be overcome.

Firstly, the terms of the contract between the DfT and the TOC require that any significant change proposed to the terms of the contract, which would include the size of the rolling stock fleet, requires prior agreement with the DfT.

Any extra trains ordered by the TOC would have to have no effect on the amount of any subsidy paid by the DfT. In other words, the TOC can't simply order trains, and take on the necessary extra staff, and expect the DfT to pay for them.

The opposite case, trains being ordered for a TOC paying a premium, the additional costs of the rolling stock and staff must not reduce the premium being paid.

Extra trains require extra stabling and maintenance facilities. The TOC would have to pay for these as well.

How would a TOC, with a tenure of between seven and ten years, persuade a ROSCO to fund additional trains? Under these circumstances it is highly unlikely that the DfT would give a guarantee to the ROSCO for the trains' continued use. Be aware that the trains may well have a thirty life after the demise of the TOC.

 

[matt_world2004]

There is no 'law', as you quaintly put it, which stops a TOC ordering trains on its own account, but a series of impediments which would first have to be overcome.

Firstly, there are contract terms between the DfT and the TOC which requires that any significant change proposed to the terms of the contract, which would include the size of the rolling stock fleet, requires prior agreement with the DfT.

Every franchise agreement specifies a minimum service frequeny not a maximum

Any extra trains ordered by the TOC would have to have no effect on the amount of any subsidy paid by the DfT. In other words, the TOC can't simply order trains, and take on the necessary extra staff, and expect the DfT to pay for them.

Yes because the government wont pay them to do it they wont do it despite getting ticket revenue,

The opposite case, trains being ordered for a TOC paying a premium, the additional costs of the rolling stock and staff must not reduce the premium being paid.

So there is no incentive for the private operator to improve the service beyond bare minimum

Extra trains require extra stabling and maintenance facilities. The TOC would have to pay for these as well.

Here is a radical idea, a bit pie in the sky they fund their own premises and their own trains andtheir own staffing instead of going to the government with a begging bowl as the LO improvements demonstrate increased capacity leads to increased ticket level. you know like every other private sector company.

How would a TOC, with a tenure of between seven and ten years, persuade a ROSCO to fund additional trains? Under these circumstances it is highly unlikely that the DfT would give a guarantee to the ROSCO for the trains' continued use. Be aware that the trains may well have a thirty life after the demise of the TOC.

So because of the private sector the private sector tocs cannot buy a train. the whole point of introducing the private sector into railways in the first place was so they would shoulder risk and investment, They only do the bare minimum the government tell them to do and in that case whats the difference between a TOC and british rail . You may as well have BR following the same prescribed orders at least at that point money wouldn't be wasted arguing the toss over whose responcibility it is to fix something or creaming a nice profit margin.

 

[F Great Eastern]

There is no 'law', as you quaintly put it, which stops a TOC ordering trains on its own account, but a series of impediments which would first have to be overcome.

How would a TOC, with a tenure of between seven and ten years, persuade a ROSCO to fund additional trains? Under these circumstances it is highly unlikely that the DfT would give a guarantee to the ROSCO for the trains' continued use. Be aware that the trains may well have a thirty life after the demise of the TOC.

Also the other thing is that you need to take into account the fact that the government cannot stick to what it promises with regards to infrastructure. First a line isn't going to be electrified, then it is, then it isn't.

The DFT and SRA have a lot to do with the age of rolling stock in this country because they micro-managed it for so long how it was used, ordered and replaced because they made forecasts that were flawed and wrong time and time again.

 

[matt_world2004]

Also the other thing is that you need to take into account the fact that the government cannot stick to what it promises with regards to infrastructure. First a line isn't going to be electrified, then it is, then it isn't.

The DFT and SRA have a lot to do with the age of rolling stock in this country because they micro-managed it for so long how it was used, ordered and replaced because they made forecasts that were flawed and wrong time and time again.

The government would not have much choice if the relevent TOC funded it themselves.

 

[F Great Eastern]

So because of the private sector the private sector tocs cannot buy a train. the whole point of introducing the private sector into railways in the first place was so they would shoulder risk and investment, They only do the bare minimum the government tell them to do and in that case whats the difference between a TOC and british rail . You may as well have BR following the same prescribed orders at least at that point money wouldn't be wasted arguing the toss over whose responcibility it is to fix something or creaming a nice profit margin.

How much profit margin do you think that TOCs make out of interest. Because you seem to think they are making massive profits when that simply isn't the case. The margins are low single figures in percentage terms.

The simple fact is that the SRA/DFT got their forecasts wrong and routinely take 10 years from starting a tender for rolling stock to it going into service, when time has shown that the TOCs have more often than not got their forecasts right and procured them much quicker.

Your answer is to give the DFT more control, so lead time for procuring rolling stock grows massively to what it is now for TOC procurement projects and far more overcrowding because the DFT has a track record of getting it's numbers wrong time and time again?

You can release as many soundbites as you want, but the simple fact is that the DFT have shown that they can't forecast passenger numbers and they cannot manage the procurement of rolling stock properly - whatever your complaints about private companies, nationalization will not stop these problems it will just make them worse.

 

[matt_world2004]

How much profit margin do you think that TOCs make out of interest. Because you seem to think they are making massive profits when that simply isn't the case. The margins are low single figures in percentage terms.

The simple fact is that the SRA/DFT got their forecasts wrong and routinely take 10 years from starting a tender for rolling stock to it going into service, when time has shown that the TOCs have more often than not got their forecasts right and procured them much quicker.

Your answer is to give the DFT more control, so lead time for procuring rolling stock grows massively to what it is now for TOC procurement projects and far more overcrowding because the DFT has a track record of getting it's numbers wrong time and time again?

Again , You are not making an argument for private companies here. The profit that the TOCs make would have been enough to wipe out this years fare increase. plus they waste money employing staff to pass the buck to other companies. Lets look at the argument from another perspective. What enhancements have TOCs offered over the public sector in this time.

 

[billio]

When thinking about the profit made by train operating companies, the margin of operating costs per year should be considered against the one-off investment made by a train operating company in acquiring the franchise plus any additional finance they are obliged to put into the service during the course of the franchise. As a result a 3 percent margin of a large cash-flow passing through the business can be a very rewarding profit on that investment. Also bear in mind that associated and other related companies to the franchise holder can extract cash from the business in terms of loan repayments, management services, intellectual property, marketing image etc..

 

[F Great Eastern]

Again , You are not making an argument for private companies here. The profit that the TOCs make would have been enough to wipe out this years fare increase. plus they waste money employing staff to pass the buck to other companies. Lets look at the argument from another perspective. What enhancements have TOCs offered over the public sector in this time.

I'm simply discussing the topic of the thread which is about if I would support renationlisation and why it's not going to resolve the problems in the industry because much of those problems are caused by the bits that are already under government control so giving them more control is not going to resolve the problems.

If you want to look at the argument from another perspective be my guest, but I'm simply looking at it from the perspective of what the thread title and explaining why renationlisation is not going to be the white knight that will fix all our woes like some people do.

I've worked in private companies and also in public sector monopolies and I can tell you that the profit that the private companies make as a percentage of revenue is far less than the percentage of revenue that is wasted in monopolies.

The simple fact is that renationalising the railways will not resolve the fact that the DFT have shown that they are incompetent when it comes to passenger forecasting and the provision of rolling stock in a timely manner and also are highly indecisive about infrastructure plans.

 

[gsnedders]

Again , You are not making an argument for private companies here. The profit that the TOCs make would have been enough to wipe out this years fare increase. plus they waste money employing staff to pass the buck to other companies. Lets look at the argument from another perspective. What enhancements have TOCs offered over the public sector in this time.

OK, so we've stopped a single year's fare increase. That's not really that big of a deal (given it's the cumulative effect that's the big problem). We'd still have to employ staff to pass the buck to other companies, as long as we're EU members (or at least bound by the EU regulations, if we maintain in the single market), given the infrastructure has to be operated completely separately, with open access freight operators, and open access passenger operators. What enhancements have TOCs given us is a harder question, given we haven't had any competing public sector operator (you can argue DOR is, but then VTEC has been paying larger premiums to the Treasury than DOR did, so maybe that's what enhancements the private TOCs have provided?).

 

[matt_world2004]

but then VTEC has been paying larger premiums to the Treasury than DOR did, so maybe that's what enhancements the private TOCs have provided?).

Not any more it isn't daddy branson needs a bailout.

 

[F Great Eastern]

Not any more it isn't daddy branson needs a bailout.

I think you'll find it's pretty much a Stagecoach franchise despite the name.

 

[matt_world2004]

I think you'll find it's pretty much a Stagecoach franchise despite the name.

The statement still stands VTEC needs a bailout so it is looking increasingly less likely to return more to the DFT than DOR did.

 

[fowler9]

Transpennine Express wanted to order 168 carriages with an option for 56 more. The DFT cut the order to 153 carriages with no options and resisted any attempt for the company to order a fourth car when overcrowding happened but still publicly lambasted the company for overcrowding.

200 diesel carriages were proposed for various operators following agreement with train operators but the government cancelled this project when electrification was announced.

The Thameslink and Intercity Express projects was fully managed start to finish by the government and both of them took a ridiculous amount of time since the government wanted to be hands on.

If you think that rolling stock procurement, replacement and age management is down to the TOCs then I have to say you are extremely naive and are falling right for the governments tactics of taking the praise for the good things and shifting the blame to the companies for the bad.

A lot of the rolling stock shortages are still down to the ridiculous way the railways were privatised. I'm not naive enough to blame the TOCs but it is a ridiculous set up we have.

 

[F Great Eastern]

A lot of the rolling stock shortages are still down to the ridiculous way the railways were privatised. I'm not naive enough to blame the TOCs but it is a ridiculous set up we have.

I completely agree - the current situation is far from perfect and not for one moment do I believe it is - I just don't see how going back to a fully publicly operated system will resolve these issues.

We've seen an example of what a fully government operated rolling stock procurement and design process looks like with the Thameslink fleet and the Intercity Express Fleet looks like, and quite frankly that is even worse than the debacle that the SRA/DFT stand over with other orders.

I can't see that being better for the railways - only worse.

 

[Mugby]

How much rolling stock and motive power was purchased from foreign suppliers in BR days?

 

[fowler9]

I completely agree - the current situation is far from perfect and not for one moment do I believe it is - I just don't see how going back to a fully publicly operated system will resolve these issues.

We've seen an example of what a fully government operated rolling stock procurement and design process looks like with the Thameslink fleet and the Intercity Express Fleet looks like, and quite frankly that is even worse than the debacle that the SRA/DFT stand over with other orders.

I can't see that being better for the railways - only worse.

The thing is the railways require government intervention or you would end up with services that are none profit making but socially necessary not running. If you left it all to the markets you would have people like me having to fork out a fortune to use god knows which cab company to get to work or hoping someone in my work has a car and is happy to give me a lift.

 

[F Great Eastern]

The thing is the railways require government intervention or you would end up with services that are none profit making but socially necessary not running. If you left it all to the markets you would have people like me having to fork out a fortune to use god knows which cab company to get to work or hoping someone in my work has a car and is happy to give me a lift.

Oh I don't think that we should sell everything off and remove government involvement at all- that would be a disaster for the reasons that you outline, the key is to getting the balance right and for a long time it hasn't been on the railways that is for sure.

My point more was that some of the current problems have origins in government decision making , policy and poor forecasting and inability to manage rolling stock orders - those problems will still exist and the two examples we have seen on totally government managed projects have been the worst of the lot.

 

[fowler9]

Oh I don't think that we should sell everything off and remove government involvement at all- that would be a disaster for the reasons that you outline, the key is to getting the balance right and for a long time it hasn't been on the railways that is for sure.

My point more was that some of the current problems have origins in government decision making , policy and poor forecasting and inability to manage rolling stock orders - those problems will still exist and the two examples we have seen on totally government managed projects have been the worst of the lot.

Yeah I totally agree. Do I know the answer? Not for one second and I'm glad its not down to me. Ha ha.

 

[LNW-GW Joint]

The statement still stands VTEC needs a bailout so it is looking increasingly less likely to return more to the DFT than DOR did.

BR's response to a downturn in fortunes (recession etc) was typically to reduce services by 10% and put off enhancements like buying new stock.
VTEC can't do that with a franchise promising to double passengers in 5 years (or whatever was agreed).
The IEPs will turn up in large numbers as per the DfT contract whatever the market says, and the TOC has to fund them with revenue.
Network Rail has already deferred its side of the bargain.
DOR had a flat "keep things ticking" contract, not a mega-change plan.
Even the boss of DOR doesn't think renationalisation is a good idea.

 

[Tetchytyke]

You can release as many soundbites as you want, but the simple fact is that the DFT have shown that they can't forecast passenger numbers and they cannot manage the procurement of rolling stock properly

However back in the days of BR they generally could manage the procurement. The issues arose when everything was hived off to the ROSCOs. The ROSCOs make so much money for their old rope- it's more than £100k/year to hire a pacer- that the effect is the amount procured has to be reduced. How much of it is the DfT "failing to understand", and how much is the sheer cost of new trains?

As we saw with Hitachi (well, Barclays Private Equity to be totally exact) absolutely taking the urine with the cost of the IEP (which is still massively overpriced even after the price dropped after the value for money scandal in 2010) private procurement has driven the price up not down and has driven the quality down not up.

As for profit, the TOC profits are obscene for the (complete lack of) risk they take and innovation they bring. But that's not where the real money gets wasted. It goes to the bankers behind the ROSCOs. Every single fat cat has their paws in the cream.

 

[fowler9]

BR's response to a downturn in fortunes (recession etc) was typically to reduce services by 10% and put off enhancements like buying new stock.
VTEC can't do that with a franchise promising to double passengers in 5 years (or whatever was agreed).
The IEPs will turn up in large numbers as per the DfT contract whatever the market says, and the TOC has to fund them with revenue.
Network Rail has already deferred its side of the bargain.
DOR had a flat "keep things ticking" contract, not a mega-change plan.
Even the boss of DOR doesn't think renationalisation is a good idea.

Surely BR's response was down to the level of investment from the government? They did some pretty innovative stuff such as buying Leyland National buses stuck on to high speed freight wagons so they could keep services running,

 

[matt_world2004]

BR's response to a downturn in fortunes (recession etc) was typically to reduce services by 10% and put off enhancements like buying new stock.
VTEC can't do that with a franchise promising to double passengers in 5 years (or whatever was agreed).

They bid for the franchise knowing the risks

 

[Agent_Squash]

The statement still stands VTEC needs a bailout so it is looking increasingly less likely to return more to the DFT than DOR did.

Stagecoach doesn't 'need' a bailout. They've already got the money to cover VTEC's losses - the last Stagecoach financials showed this. But the fact is that the DfT/Network Rail failed to deliver on their upgrades which were written into the contract. It's not entirely political; you can't get rid of a franchise which is still paying it's premiums, and not exactly out of cash. The DfT/Network Rail failed their side of the contract.

Obviously there are those that feel the government and its agencies should be absolved from any responsibilities, and that nationalisation would remove all of these costs. The fact is if the costs for failing to deliver go, so does the progress as NR can promise unreasonable deadlines cost free.

 

[fowler9]

Has any TOC ever gone bankrupt?

 

[matt_world2004]

Stagecoach doesn't 'need' a bailout. They've already got the money to cover VTEC's losses - the last Stagecoach financials showed this. But the fact is that the DfT/Network Rail failed to deliver on their upgrades which were written into the contract. It's not entirely political; you can't get rid of a franchise which is still paying it's premiums, and not exactly out of cash. The DfT/Network Rail failed their side of the contract.

VTEC blamed terrorism and brexit for its lower than anticipated revenue on the line

 

[HowardGWR]

Most of the delays are down to the already nationalised railway (NR). I don't see this as a nationalisation problem. I see it merely as a lack of investment and maintenance in ensuring the infrastructure is sufficiently robust. That is thus already, down to the government, and nationalising the service provision (the franchises) won't alter that one jot and indeed, arguably the DfT totally controls that as well.

 

[F Great Eastern]

However back in the days of BR they generally could manage the procurement. The issues arose when everything was hived off to the ROSCOs. The ROSCOs make so much money for their old rope- it's more than £100k/year to hire a pacer- that the effect is the amount procured has to be reduced. How much of it is the DfT "failing to understand", and how much is the sheer cost of new trains?

Of course the ROSCOS are a big problem in all of this, you won't find me being a fan of them and that is one of the biggest mistakes of the way our rail went into private hands, you have a third party owning most of the trains who are extracting money out of everyone and actually benefit from a rolling stock shortage which is largely caused by the DFT.

That still doesn't however excuse the fact that the DFT get off way too lightly as does the government for the decisions they've made in the past. They manage to push all of their mistakes on to the TOCs and the TOC ends up taking the flack for them all even whent hey are not their faults.

Quite frankly the thought of the people in the DFT taking over all responsibility when I see how they handled growth the last few years and the IEP and TL procurement fills me with dread.

 

[F Great Eastern]

VTEC blamed terrorism and brexit for its lower than anticipated revenue on the line

No TOC is going to go out full frontal and publicly blame the DFT just like they refused to blame the SRA in the past for very obvious reasons.

 

[Agent_Squash]

VTEC blamed terrorism and brexit for its lower than anticipated revenue on the line

You'll also read about the failures of NR to deliver the line upgrades on the ECML. Although Brexit is another mess caused by the Government in its own right. You say that the privatised railway nationalises the losses and privatises the gains - but you can also say that the privatised railway nationalises the successes and privatises the failures.