Rail renationalisation- do you support it?

[najaB]

Do you think there should be a choice of emergency services to come to your aid in the event of an emergency?

OT, I know, but the standard 999 greeting is something like "Fire, Police or Ambulance - which service please?" so you *do* get a choice.

 

[macka]

But there are different companies out there - you just have to find them on the Internet and contact them to send your parcel. As to sending letters and other written communications - we have email, text etc - all a lot cheaper than sending a letter.

I like competition and choice. I would like to see multi operator franchises on a line trying to offer different rates to tempt me to choose. What we have now is a state run railway setting fares and franchises and little incentive for the operators to compete unlike say with supermarkets.

Except there is only a limited number of paths on every line.

How do you decide which operator gets to take those paths? What if another operator enters the market on the line and wants a slice? If you have multiple operators, each is going to need its own fleet of trains, a depot to hold them, employ a number of staff to man the trains and the stations.

And here's the paradox: if you have more than one operator on a line the choices you have actually decreases, because each operator will be running a less frequent service. Either you're stuck with the operator of the next train you want to catch, or you're stuck with a poor frequency if you want to stick with an operator. In addition, the duplication of staff and infrastructure for each operator pushes up their costs and therefore the tickets you buy will actually be more expensive despite the competition.

There is plenty of antecodal evidence to suggest that competition between TOCs do lead to more competitive pricing, but that's more the exception, and only because these TOCs happen to share the same destinations and trying to to have one TOC cover all of those destinations would lead to unnecessary agglomeration (think what a combined LM/VT/Chiltern TOC would look like). For the network as a whole there is usually only one possible railway route between any two destinations, and the problems I outlined above will come into play.

 

[matt_world2004]

That is true. However Amtrak is run on a commercial basis with very limited public subsidy (in most years it is the bare minimum that is required by law). They don't own or operate the majority of infrastructure, which means that their schedules are quite literally at the whim of the private freight railways. The US network has to be one of the few railways where passenger services routinely have to wait on freight services. While it may be owned by the government, it definitely isn't run for its public service utility.

I didn't know we were including subway systems - I don't imagine there are any private subways anywhere any more. Certainly they will be the exception rather than the rule. It would take more Wiki-surfing to find out the status of metro systems, but you have the complication of where does a metro system become a regional railway?

Subway systems are railways and the fact is that nationalised industries can be run on a commercial basis without a subsidy, the fact is in the UK we have given a public service , complete with public service requirements to private companies, which outside of broadcasting is hideously inefficient. Most metro railway systems in America with probably the exception of the New York metro spend a good proportion on what would be considered mainline railways, Certainly I know sunrail in Orlando is one such example, or the Long Island railroad is another.

 

[najaB]

Subway systems are railways and the fact is that nationalised industries can be run on a commercial basis without a subsidy...

Nationalised industries yes, but can railways? Genuine question: which nationalised railway operates without any subsidy?

 

[Lankyline]

On the subject of parcel freight, anyone remember Red Star ?, highly profitable, sold off to Lynx and shutdown.
There is now a new company called Intercity railfreight which uses the spare space in the guards "van" to transport time critical items from seafood to blood samples.
In addition Network rail have trialled a station parcel collection shop, similar concept to the old Red Star

 

[matt_world2004]

Nationalised industries yes, but can railways? Genuine question: which nationalised railway operates without any subsidy?

I believe, I could be wrong now; that London Underground has been subsidising the surface transport division of TfL for a good while now (Fares income of pays for 93% of LUL's revenues with advertising covering more than the remaining 7%). MTR also makes 86% profit on running the hong kong metro. Infact it seems almost all chinese metro transit operators do not only make a profit but are state operated.

 

[Harbornite]

On the subject of parcel freight, anyone remember Red Star ?, highly profitable, sold off to Lynx and shutdown.

Lynx became part of UPS.

 

[jimbo99]

Do you think there should be a choice of emergency services to come to your aid in the event of an emergency?

If this could be arranged, please. My mother is paralysed now because of a two hour wait for an ambulance following 3 999 calls. It seems they wrongly triaged the first call and the second two were simply not listened to on account of the same person repeating the same story. When she arrived the hospital "messed up" and there was a further delay though by then it was probably too late.

A one-off? She suffered a similar fate about two years later. This time, the ambulance told us they were parked nearby and the call had only just been put through to them. Again we waited two hours and she almost died this time. She did ask not to be taken to the same hospital as before (we are on a borough boundary and the neighbouring hospital is probably closer). "Sorry you don't get a choice. If we'd picked you up 100 yards in the other direction, then we could take you there."

Apologies to go off topic. In my view, anything that puts choice into the hands of the public can only be a good thing. When you are in the hands of a monopoly service provider, you have no power. You take what you are given and are grateful. Whatever substitutes are put in place, be it complaints processes, inquiries, league tables, etc etc., it's not as powerful as being a consumer holding the folding in a market place where there is competition.

It maybe difficult to achieve for some services (999 etc), but I'm in favour of anything that gets as close to a market model as possible.

Oh and despite what you said in an earlier post, my view is that the railways are an effective monopoly. The problem is you can always say something is or is not a monopoly by redefining your markets. Domestic and European courts have had a field day deciding competition cases because of this problem. For many, buying a train ticket is a distress purchase. They do not have a viable alternative. They are young, old, or commuting on routes where driving would impractical because of congestion. This is a good test of a monopoly (and is used sometimes in law) - that of substitution. If the product/service was taken away, would the buyer buy something else instead? My guess is that for many (by all means not all) rail users, the answer would be no.

 

[najaB]

I believe, I could be wrong now; that London Underground has been subsidising the surface transport division of TfL for a good while now (Fares income of pays for 93% of LUL's revenues with advertising covering more than the remaining 7%). MTR also makes 86% profit on running the hong kong metro. Infact it seems almost all chinese metro transit operators do not only make a profit but are state operated.

LU makes a day to day operating profit, but do they finance their stock and infrastructure upgrades or does that come from TfL (and by extension the rate/tax payers)? Again a genuine question.

 

[matt_world2004]

LU makes a day to day operating profit, but do they finance their stock and infrastructure upgrades or does that come from TfL (and by extension the rate/tax payers)? Again a genuine question.

#

I can only find 2013/2014 figures but the expenditure and revenues for London Underground (excluding non freedom pass grants) looked something like this

Revenue 2,490.7*
Expenditure (2,474.9)

The four business units listed in the report seperately are London Underground , Surface transport (Road, buses and bikes) Corporate and London rail. London rail, corporate and surface transport all make quite substantial losses however when the expenditure of business units are split this way it would seem to indicate that even with infrastructure upgrades, rolling stock renewal London Underground still makes a profit.

 

[Railsigns]

Oh and despite what you said in an earlier post, my view is that the railways are an effective monopoly. The problem is you can always say something is or is not a monopoly by redefining your markets.

Well, yes. Should we refer Apple to the Competition and Markets Authority on the grounds that nobody else makes an iPhone? Or shall we be sensible and acknowledge that other smartphones are available? If I announce plans to introduce a hovercraft service across the Irish Sea, will you shout "monopoly!" on the grounds that no-one else is operating hovercrafts on that route, or will you be sensible and recognise that there are other ways to cross the Irish Sea?

It's the same with railways. There's almost always an alternative way to travel. The alternatives may be less convenient or less desirable for other reasons, but they almost always exist. Therefore, the railways are not a monopoly.

 

[gsnedders]

Except there is only a limited number of paths on every line.

There's only a limited number of runway slots, so should we have a publicly funded airline to operate from airports that are near/at-capacity?

There's only a limited capacity on each motorway, so should we nationalise everything that runs on them, especially those that are always at a standstill at peak times?

Nobody makes these arguments, it's only for rail that people argue that what runs on the infrastructure should be nationalised because the infrastructure has a finite capacity (like, well, everything… because we all infrastructure is inherently finite!).

 

[AlterEgo]

Well, yes. Should we refer Apple to the Competition and Markets Authority on the grounds that nobody else makes an iPhone? Or shall we be sensible and acknowledge that other smartphones are available? If I announce plans to introduce a hovercraft service across the Irish Sea, will you shout "monopoly!" on the grounds that no-one else is operating hovercrafts on that route, or will you be sensible and recognise that there are other ways to cross the Irish Sea?

It's the same with railways. There's almost always an alternative way to travel. The alternatives may be less convenient or less desirable for other reasons, but they almost always exist. Therefore, the railways are not a monopoly.

Could you give examples of what you do consider to be monopolies then? I take it BT wasn't a monopoly as you could have used a letter or carrier pigeon to communicate.

 

[Railsigns]

Could you give examples of what you do consider to be monopolies then?

The royal family is the ultimate state monopoly. Uniquely though, in this one instance the government narrative is to insist that they give the public "excellent value for money". How can we be sure when they aren't subject to any form of competition? There are probably other families willing to wave and cut ribbons for less.

 

[najaB]

The royal family is the ultimate state monopoly.

Nice. :neutral: Now could we have a serious example?

 

[coppercapped]

I didn't consider the needs of FOCs - I can see how the market is more competitive for them.
I'll counter that with the ever popular 'economies of scale' - it gets thrown around a lot, but in this case I think it's a valid point. There are benefits to being able to make larger purchases further in advance and having a common pool of components. And there's nothing to say that being larger *has* to result in a drift towards mediocrity.

Again, I agree with the premise, but I am not sure how well it applies to the ROSCOs.

Apologies in advance - the answer will be a bit long as I'm not sure how to shorten it without it becoming a series of platitudes!

Firstly, 'advantages of scale' are not linear. In manufacturing - at least in the high tech industries in which I have spent my working life - there is a point where the reduction in cost per item with increased volumes tapers off for any given manufacturing technology. So increasing weekly/monthly/annual volumes from, say, 10,000 to 100,000 will bring a significant reduction in cost as the Non-Recurring Engineering costs can be written off over a larger volume and materials can be purchased at a better rate. Increasing the volumes by another factor of 10 will not result in an equivalent drop in manufacturing costs. Such an increase may well reduce the manufacturing cost of the item to close to its material costs but there will almost certainly be a large investment in more appropriate manufacturing technology - more automation for example - to cope with the larger volumes.

Because of the small number of railway vehicles and the low production rates compared to, for example, the automotive industry these volume increases will be hard to achieve. The railway industry is characterised by the long life of its vehicles which means spares will still be needed for 40 year old designs. In principle building standardised trains would get over the volume issue, but would 40 year old standards still be appropriate today? There is always tension between the desire to standardise and the need to change to cope with new requirements. It is a finely balanced management decision to decide when to break with the past.

Economy of scale is mostly noticeable in items bought in large numbers. Conversely these tend to be low value items such as lamps, seat coverings, brake pads and so on. The high value items, coach bodies, bogies, braking equipment, power control and transmission equipment and so on tend to last at least until a mid-life update or even to last the life of the vehicle. Even in some of these things there is not a great deal of variety - most EMU and DMU bogies used under BR/BREL and Bombardier built trains are based on the BR bogie first used under the Class 313s built in 1976 - in the 40 years since then thousands have been built. Most coach bodies are either based on BR's Mk 3, or on the aluminium Networker body and Bombardier's Electrostar and Turbostar developments, Alstom's design or that of Siemens. The components within each of these families will be similar - and there are hundreds if not thousands of each family on the rails at the moment.

I suggest that savings made by having a common interior for all trains of a type would be marginal as the items are, in the great scheme of things, low value in relation to the rest of the vehicle. In any event it would have to be updated every 8 or 10 years anyway - so the savings are moot.

Your last point is of course correct. If all the activities carried out by the separate firms were maintained there would be no case to argue. But, experience shows that if there is no competition it is very easy for an organisation to cut costs by reducing staffing so that not so many different projects can be worked on at once. After a while this degrades to 'this is what is possible' (being the simplest solution) and the customer has nowhere else to go for a second opinion. This is the start of the slippery slope leading to mediocrity.

 

[ninja-lewis]

Do you really want to choose which hospital to go to or which school to send your children to? Wouldn't it be better all round if everyone would just use whichever facility is closest to them, confident that they'll get a reasonable level of service? There should be more effort put into ensuring that all public services meet a specified standard and intervening when they don't, instead of this fallacy that burdening people with more 'choice' is the answer. Choice is good when it comes to buying goods; not essential services.

No, it isn't better all round if everyone just used whichever hospital is closest to them because not all hospitals are the same
. The days of the District General Hospital being a jack of all trades and master of none are over. Today we have Major Trauma Centres, Hyper Acute Stroke Units and Heart Attack Centres to name a few types.

Studies have repeatedly shown that it is better to bypass closer non-specialist centres and go straight to the specialist centre because it reduces the overall time to definitive care. The non-specialist centre would have to transfer the patient once stabilised to the specialist centre anyway but only after far more time has elapsed vs a slightly longer direct journey. This change is one of the major drivers for better trauma, stroke and heart attack outcomes across the country.

It isn't just a case of it being unaffordable to turn every hospital into a major trauma centre; the staff need a minimum caseload and scale to keep their skills sharp. Rarer conditions can only support a handful of specialist centres around the country. So you can't just apply the same standard to every hospital around the country.

So choices about which hospital to go to are made every day - by paramedics, GPs and other experts. This shouldn't really be surprising given medial triage is all about allocating limited resources to the unlimited demands placed upon them - including in dire times, making the decision about who receives help and who cannot be saved.

As for schools, one of the most important determinants of school performance is the background of pupils in terms of supportive vs non-supportive parents. Any system based on sending children to their local school is self-selecting - instead of exams or fees, it is house prices in the catchment area. The only way to remove this influence would be to randomly allocate children to any school in the area and even then you'd still have families moving local authorities to avoid the worst schools. A handful of schools have attempted such a system already with predictable parental outrage at children going to schools on the other side of town.

 

[Lankyline]

Getting back to the topic in question, when you consider the pain that the original privatisation/franchising policy went through and the way that it has evolved into todays system, overall (apart from maybe BR in the 80's) compared to the nationalised railways it has to be considered a huge improvement.

As we all know from the 1950's onwards the railways were losing huge amounts of money, the governments of the time both, Tory and Labour, have always sought to find ways of drastically reducing the amount of money spent on the railways.

History has taught us that when government pays the bills for a national service, then it is completely subject to political whim, especially in the case of the railways, when it was (and still is to a certain extent) faced with a pro-road policy, which successive governments since Marples days have always adopted, funding was either minimal or virtually non-existent.

Privatisation has not only helped reverse that trend but has opened up massive investment in the railways, from maintenance to infrastructure, new rolling stock, re-openings and increased passenger numbers, its not perfect, but how would re-nationalising the railways improve on what we have already have and what is to come ?

To my mind, the only supporters of this would be those who are wedded to the principles of the socialist left and anti-free market economics, now reaching for the body armour !

 

[Muttley]

Where is this "massive investment in the railways" coming from ? It's not coming from private companies taking a commercial risk, it's government spending wrapped up in PFI deals. No wonder the privatisation lovers think it's a winner, it's the illusion they've already been fooled by...govt spending but not on the books, appearing to bring in outside money, and costing much more in the long run.

 

[najaB]

...it's government spending wrapped up in PFI deals.

Is there much in the way of PFI on the railway?

 

[Lankyline]

Where is this "massive investment in the railways" coming from ? It's not coming from private companies taking a commercial risk, it's government spending wrapped up in PFI deals. No wonder the privatisation lovers think it's a winner, it's the illusion they've already been fooled by...govt spending but not on the books, appearing to bring in outside money, and costing much more in the long run.

Actually that is what the TOC's are doing, investing, they are taking a calculated commercial risk based on the length of the franchise, theirinvestment needed for new rolling stock, station improvements, services/paths required both current & future, track access charges, franchise payments to govt, all weighed against the revenue received.

There are no pfi deals, if there were they would be ppfi contracts, public private finance initiatives. Also I would like to see your justification for your last part of your statement, "govt spending but not on the books.......and costing much more in the long run" where is that from ? If you look at the info below you will see it's quite clearly in the open and is not costing more in the long run.

The government financially supports Network Rail to the tune of £4.2 billion and has removed any financial support to TOC's

"GB rail industry financial information for 2014-15 presents ORR’s analysis of the latest financial data from train operators, Network Rail and governments".

Key findings include:
1.In 2014-15, the rail industry had income of £13.5 billion. Most of this was from passengers (71%), with governments providing 26% of funding. Other sources of income, such as property, provided 3%. After adjusting for payments within the industry, the overall cost of running Great Britain’s railways was £13.6 billion, with 54% of these costs incurred on train operations and 46% on rail infrastructure.
2.Industry income from passenger fares has increased by £0.4 billion (5%), to £8.8 billion. This is primarily because the number of passenger journeys increased by 4% and partly because of fare increases of 1% in real terms. Most of the increase in journeys has been in London and the South East. Of the total fare income, 62% was from unregulated fares and 38% from regulated fares.
3.Governments’ funding of the rail industry as a whole has reduced by 9%, from £3.9 billion to £3.5 billion. This includes funding from all government sources, including devolved administrations and passenger transport executives. After adjusting for the finance costs paid by Network Rail to the Department for Transport, government funding to the rail industry has reduced by 14%, to £3.1 billion.

 

[ComUtoR]

Nice. :neutral: Now could we have a serious example?

BT ? Virgin have their own infrastructure so are direct competition but aren't most, if not all the other providers using BT just repackaged and rebranded.

BBC ? Slightly different but I despise paying for the TV license. I'm aware that many countries have government funded TV channels but the BBC is a commercial enterprise who sells their products worldwide.

 

[Railsigns]

government funding to the rail industry has reduced by 14%, to £3.1 billion.

... but is still significantly higher than when it was nationalised.

 

[najaB]

BT ? Virgin have their own infrastructure so are direct competition but aren't most, if not all the other providers using BT just repackaged and rebranded.

Sorry, but that is factually incorrect. Most major suppliers use Openreach's network but that's it. And increasingly they are getting access to the ducts and can run their own fibre.

As to the services they provide, they have their own equipment at the exchange and little (if anything) passes over the BT network.

And if they want to bypass Openreach entirely, there is nothing stopping them from doing so - apart from the eye-wateringly high cost of so doing.

 

[ComUtoR]

Sorry, but that is factually incorrect. Most major suppliers use Openreach's network but that's it. And increasingly they are getting access to the ducts and can run their own fibre.

As to the services they provide, they have their own equipment at the exchange and little (if anything) passes over the BT network.

And if they want to bypass Openreach entirely, there is nothing stopping them from doing so - apart from the eye-wateringly high cost of so doing.

Cheers for the correction

 

[Domh245]

... but is still significantly higher than when it was nationalised.

And how much of that is due to the TOCs skimming ~3p for every £1 of fare for profit, and how much is due to the 129.8% increase in passenger numbers?

 

[Railsigns]

And how much of that is due to the TOCs skimming ~3p for every £1 of fare for profit, and how much is due to the 129.8% increase in passenger numbers?

And how much of it is due to the inherent inefficiencies of a fragmented not-fit-for-purpose industry structure?

 

[Lankyline]

And how much of it is due to the inherent inefficiencies of a fragmented not-fit-for-purpose industry structure?

Sorry what ?? If by fragmented do you mean the range of toc's and foc's, I'd hardly call that fragmented since it is a regulated system and where are the inherent inefficiencies ?
If you want an example of a "not fit for purpose" industry with inherent inefficiencies I give you the nationalised railway, complete with obstructive trade unions and particularly Aslef NUR and T&GWU plus successive govts inc Labour, just as much as the Torys, who set out to destroy the network

 

[Gareth Marston]

Getting back to the topic in question, when you consider the pain that the original privatisation/franchising policy went through and the way that it has evolved into todays system, overall (apart from maybe BR in the 80's) compared to the nationalised railways it has to be considered a huge improvement.

As we all know from the 1950's onwards the railways were losing huge amounts of money, the governments of the time both, Tory and Labour, have always sought to find ways of drastically reducing the amount of money spent on the railways.

History has taught us that when government pays the bills for a national service, then it is completely subject to political whim, especially in the case of the railways, when it was (and still is to a certain extent) faced with a pro-road policy, which successive governments since Marples days have always adopted, funding was either minimal or virtually non-existent.

Privatisation has not only helped reverse that trend but has opened up massive investment in the railways, from maintenance to infrastructure, new rolling stock, re-openings and increased passenger numbers, its not perfect, but how would re-nationalising the railways improve on what we have already have and what is to come ?

To my mind, the only supporters of this would be those who are wedded to the principles of the socialist left and anti-free market economics, now reaching for the body armour !

The same external factors that have lead to growth in rail use and demand would have been there with or without privatisation. The underlying reasons for growth in passenger numbers has nothing to do with ownership models. The railway doesn't live in a little bubble immune from the wider world.

 

[Lankyline]

... but is still significantly higher than when it was nationalised.

No its not adjust the losses for inflation and it considerably exceeds that figure