Should Network Rail be disbanded and the infrastructure given over to the Toc's

[HSTEd]

ROSCOs have massive political and economic muscle.

 

[ole man]

My point exactly they are not going to be made to give up Billions worth of rolling stock at what would be a cut down price or if any price at all, it's laughable, in fact giving any TOC total control over there infrastructure would be better than any joke I've ever heard.

 

[LE Greys]

The current model is pretty laughable as well. It was foisted on us by a combination of the E.U. and a report by some economic think-tank that had clearly not thought it through (can't remember which one). Certain Conservatives were all for recreating the Big Four - the model I would have gone for if given the choice - but they were overridden by Major and whoever his Chancellor was then. BR's entire rolling stock fleet was sold, also for a song, to the various ROSCOs that were in existance then. What I'm proposing is an attempt to undo the damage by defragmenting the industry (although it would still be divided, the divisions would be by route rather than sector). It really started earlier than that when BREL was split off from BR, not to mention sectorisation, but the privatisation process was a disaster.

The important point is that TOCs would no longer exist. Railway companies are a completely different species. They would be closer to airlines, or even shipping lines, than the current car dealership model. As owner-operators, they would have to invest in their own stock. If they did not, then they would be likely to lose out to their competitors and the business would fail. No company wants to be static. If the independent South Western Railway decides to dual its entire route to Exeter and risk ordering some 125 mph stock to run it, what is to stop it doing so? (Apart from the cost.) That might prod the GWR-equivalent into buying some tilting stock to work the Berks & Hants, because the SWR was beating its times and carrying more passengers. That's how competition is supposed to work, but it is stymied because of fragmentation. If today's SWT want to do the same, they have to go to Network Rail and the DfT, plus persuade someone to order the stock for them. Why not have a system where they could just have a board meeting and make a decision?

There are faults with this, quite clearly. It would be a disaster if a company did collapse, but that is recoverable if it either gets bought out (which Monopolies and Mergers ought to prevent) or it gets nationalised on a temporary basis. However, nationalisation had its faults as well. BR was used as a political football and quite often starved of cash, not to mention being micro-managed by politicians on many occasions. Thing is, currently we have the worst of both worlds. Not enough investment, micro-management by politicians, no freedom to make changes, a lack of cash in crucial places, high costs in others, the possibility of a company going bust (such as GNER) and the risk of an asset-stripper getting hold of a company. If something goes wrong today, who is ultimately responsible? The Transport Secretary? The TOC? Network Rail? If we had one company, only one chairman would have the responisbility. It's impossible to have the best of both worlds. If we have to have a privatised railway, better one with more advantages and fewer disadvantages. In other words, the sort of railway we had before 1947 and the Americans have to this day.

Or just nationalise it. It works for the Germans.

 

[Old Timer]

The current model is pretty laughable as well. It was foisted on us by a combination of the E.U. and a report by some economic think-tank that had clearly not thought it through (can't remember which one). Certain Conservatives were all for recreating the Big Four - the model I would have gone for if given the choice - but they were overridden by Major and whoever his Chancellor was then..

Actually Major and Clarke were all in favour of a recreation of the Big 4 however as always policy is prepared by the Civil SErvice and it was they and the Treasury who were insistent upon the current arrangement.

They argued that the Big 4 would not be acceptable to the EU as there was no separation between trains and infrastructure, and the Treasury wanted the current system as it would create a whole series of Companies who in theory would be paying taxes into central government.

The issue that no-one really understands, even the EU today is that you cannot separate the railway at the wheel/rail interface.

ole man
You continually disparage privately operated vertically integrated systems even though there are numerous examples world-wide where this system works extremely well in comparison to what we have now.

You think that it would be "laughable" for a TOC to be competent to take on vertical integration yet you only have to look at Network Rail's own performance to be worried about the Infrastructure.

In post 26 you said

Can you really see any TOC investing there own money in the infrastructure, because i can't.

Well the thingh is that GNER WERE pushing towards a policy of vertical integration of the ECML as I did some work on this. It was a very practical proposition and I have absolutely no doubt that had GNER not been removed for Political reasons (this had something to do with it) then we would have soon been seeing a much better ECML.

People continually harp on about the reasons it could not be done is because of ticketing - well how is it done now ? - and because of train regulation - how is it done now that would be any different ? and because of the perceived culture that the TOCs put profit over safety, something I think people should seriously reconsider before posting, yet we see demonstartion after demonstration and RAIB Report after RAIB Report which clearly demonstrates that NR is not up to managing itself.

If private vertical operation was SO bad then why do we not read of major accidents in Hong Kong, Singapore, Bangkok, the USA, Santiago, Sao Paulo, Rio de Janeiro, Buenos Aires, Cairo, etc, etc

 

[neilmc]

"It works for the Germans"

Surely nobody's considering adopting a European model which works .. what heresy.

No, the way forward is to privatise all loss-making activities, and the Post Office should be next.

Then, if I want to send my son in London a birthday card, it may well cost £5 "at the Post Office counter" but, as I know when his birthday is well in advance, I may be able to buy advance stamps for only 75p.

And a forum will spring up to tell me that, if I send the card on to a friend in Stafford who has a friend in Lichfield who has a friend in Milton Keynes who can send it on to him, I can do it for only 55p with a series of local providers but it will take three weeks.

Or, if I give it to my other son who works for Easyjet, he can take it with him and post it in Dubrovnik airport for even less!

 

[ole man]

It wouldn't work in this country, TOC's in this country have a track record for only being in it for the money and when things go wrong bail out.
Where would they get the money from to upgrade the railway? the government which would erm be like today!!.
We would see more RAIB reports if any TOC got hold of any infrastructure.
In my opinion Network Rail do a good job, yes things go wrong, thats the nature of the railway, and has i stated in another post, the railway in this country will NEVER BE totally safe regardless of who runs it.

 

[telstarbox]

TOC's

TOCs.

 

[Old Timer]

It wouldn't work in this country, TOC's in this country have a track record for only being in it for the money and when things go wrong bail out.
Where would they get the money from to upgrade the railway? the government which would erm be like today!!.
We would see more RAIB reports if any TOC got hold of any infrastructure.
In my opinion Network Rail do a good job, yes things go wrong, thats the nature of the railway, and has i stated in another post, the railway in this country will NEVER BE totally safe regardless of who runs it.

Your mind is obviously closed then.

 

[ainsworth74]

TOC's in this country have a track record for only being in it for the money and when things go wrong bail out.

Well if you're only going to give them 7 year franchises what do you expect them to do? Any investment they make will never have a chance to pay off so why should they invest? The one long term franchise we've had has invested in it's infrastructure to great effect.

As for bailing out the only TOC I can think of that's really bailed out is NXEC and that was due to their own stupidity of massively overbidding for the franchise more than anything else. They also seem to have paid the price for that (no NX for the GA interim franchise).

I don't buy this argument that the private TOCs are only in it for the money no matter what. We can't really know that as we've hardly ever seen TOCs that have had the opportunity to really invest as they see fit. If we start giving 15+ year franchises I would be very surprised if we didn't see more TOC led investment.

 

[LE Greys]

It wouldn't work in this country, TOC's in this country have a track record for only being in it for the money and when things go wrong bail out.
Where would they get the money from to upgrade the railway? the government which would erm be like today!!.
We would see more RAIB reports if any TOC got hold of any infrastructure.
In my opinion Network Rail do a good job, yes things go wrong, thats the nature of the railway, and has i stated in another post, the railway in this country will NEVER BE totally safe regardless of who runs it.

What gives you that impression? The Safety Directorate of the ORR (which used to be HMRI) would still exist, and their remit is to prevent such problems. Would private companies be keen on being fined because of failings found by the Safety Directorate? Did the CAA find more problems when BA was privatised? Every accident leads to lawsuits, and that is costly to companies. Cutting costs on safety would ultimately prove very expensive to a company, especially when there is a clear chain of responsibility to a particular company (the owner and operator).

Although your last point it clearly accurate. You can never be completely safe, even if you are sitting in a dark room surrounded by ten feet of solid concrete. What if a meteorite lands on your head?
--- old post above --- --- new post below ---

Actually Major and Clarke were all in favour of a recreation of the Big 4 however as always policy is prepared by the Civil SErvice and it was they and the Treasury who were insistent upon the current arrangement.

They argued that the Big 4 would not be acceptable to the EU as there was no separation between trains and infrastructure, and the Treasury wanted the current system as it would create a whole series of Companies who in theory would be paying taxes into central government.

The issue that no-one really understands, even the EU today is that you cannot separate the railway at the wheel/rail interface.

ole man
You continually disparage privately operated vertically integrated systems even though there are numerous examples world-wide where this system works extremely well in comparison to what we have now.

You think that it would be "laughable" for a TOC to be competent to take on vertical integration yet you only have to look at Network Rail's own performance to be worried about the Infrastructure.

In post 26 you said Well the thingh is that GNER WERE pushing towards a policy of vertical integration of the ECML as I did some work on this. It was a very practical proposition and I have absolutely no doubt that had GNER not been removed for Political reasons (this had something to do with it) then we would have soon been seeing a much better ECML.

People continually harp on about the reasons it could not be done is because of ticketing - well how is it done now ? - and because of train regulation - how is it done now that would be any different ? and because of the perceived culture that the TOCs put profit over safety, something I think people should seriously reconsider before posting, yet we see demonstartion after demonstration and RAIB Report after RAIB Report which clearly demonstrates that NR is not up to managing itself.

If private vertical operation was SO bad then why do we not read of major accidents in Hong Kong, Singapore, Bangkok, the USA, Santiago, Sao Paulo, Rio de Janeiro, Buenos Aires, Cairo, etc, etc

I quite agree with you, and thanks for the correction.

 

[QJ]

If private vertical operation was SO bad then why do we not read of major accidents in Hong Kong, Singapore, Bangkok, the USA, Santiago, Sao Paulo, Rio de Janeiro, Buenos Aires, Cairo, etc, etc

Perhaps because our Press aren't interested in reporting them. If you trawl the internet you can find a fair number of incidents involving trains to question the statement above.

 

[ole man]

Answer me these questions?

1) Who pays for the renewals?
2) Who decides and pays for upgrades?
3) What happens if these TOCS go bust?
4) Who has control over these TOCS
5) Rolling stock will be owned by?


Yes at the moment my mind is made up, and until i see how it would happen, and what safety nets would be in place i won't change my mind.

 

[Aictos]

The only place I can see this being a success is the Merseyrail area.

 

[LE Greys]

Answer me these questions?

1) Who pays for the renewals?
2) Who decides and pays for upgrades?
3) What happens if these TOCS go bust?
4) Who has control over these TOCS
5) Rolling stock will be owned by?


Yes at the moment my mind is made up, and until i see how it would happen, and what safety nets would be in place i won't change my mind.

1 - The railway company
2 - The railway company with some DfT input
3 - Handled by the government, exact arrangement to be decided later. The idea is that they effectively put the company into receivership, with keeping services running top priority (I'm a scientist, not a civil servant, so someone else will have to fleash this out).
4 - The Railway Company's board of directors, but the ORR would act as regulator. Any closures would require government permission.
5 - The railway company

The real question is how to maintain subsidy at current levels (something not mentioned up the page). Technically, it's illegal state aid, but some services require subsidy. However, the plan is to use profitable sections (mainly freight and express passenger) to cross-subsidise local passenger operations, which connect with the expresses. The ORR would have to make sure that they provide a useful service on unprofitable lines. Community rail partnerships and local pressure groups would be considered as well. The ORR needs serious teeth to manage this properly, so give them some.

 

[Trog]

When suggesting a TOC be put in charge of infrastructure the big question to my mind is the miss match between the length of the TOCs contract and how long a track or asset renewal will last.

For example a new rail installed on a minor branch line might take 400 years to use up its fatigue life. Although corrosion may become a problem before then.

Even in more general cases there is still track out there installed by the pre-grouping companys, before the First World War, and structures dating back to the dawn of the railway age. If you know your company is likely to lose its franchise in five or six years time what is the temptation to hold off on a renewal that will last for sixty or a hundred years and cost accordingly.

Even if you have a regime that mandates a set amount of work is to be done each year, it will become perverse. With those work types that give the best statistical return being favoured over those which are needed but do not count towards the totals.

The current system is not working, we need a change either to a reborn and possibly private BR or to three or four private companies that own, maintain and run their own geographical areas. For reasons of ecconomy of scale a single unit is probably best.

Unlike Old Timer I do not think contractors are the answer, as I have seen too much poor work and too many fraudulent claims for work that was never done. As for other industries not having any problems working with contractors. I was just reading today about how well BP and Halliburton are getting on.

 

[ole man]

If you don't use contractors who will do the work?.
Why do you think Network Rail use? them because they havent got the staff or the skills to do these renewals.
Even if TOCS do get control of there own infrastructure they will still need contractors

 

[LE Greys]

When suggesting a TOC be put in charge of infrastructure the big question to my mind is the miss match between the length of the TOCs contract and how long a track or asset renewal will last.

For example a new rail installed on a minor branch line might take 400 years to use up its fatigue life. Although corrosion may become a problem before then.

Even in more general cases there is still track out there installed by the pre-grouping companys, before the First World War, and structures dating back to the dawn of the railway age. If you know your company is likely to lose its franchise in five or six years time what is the temptation to hold off on a renewal that will last for sixty or a hundred years and cost accordingly.

Even if you have a regime that mandates a set amount of work is to be done each year, it will become perverse. With those work types that give the best statistical return being favoured over those which are needed but do not count towards the totals.

The current system is not working, we need a change either to a reborn and possibly private BR or to three or four private companies that own, maintain and run their own geographical areas. For reasons of ecconomy of scale a single unit is probably best.

Unlike Old Timer I do not think contractors are the answer, as I have seen too much poor work and too many fraudulent claims for work that was never done. As for other industries not having any problems working with contractors. I was just reading today about how well BP and Halliburton are getting on.

Which is precisely why I want to sell off the infrastructure. If I, as the managing director of LNER PLC, owner and operator of a railway system stretching from King's Cross to Aberdeen and Cleethorpes to Carlisle, want to electrify the lines around Leeds (to do away with the ex-BR Pacers that are an embarrassment to the company), I can go to the board and propose it, and planning can start immediately. In fact, I would expect the Permanent Way Department to have a fully-costed plan by the next board meeting and the Locomotive Superintendent (I like old-fashioned titles) to have a list of potential replacement stock. Once that's decided, we can get on with it - expected completion date 2015. The investment might not pay off for a decade or two, but the company will still be around then and will still own the network (I might still be MD as well). This cuts out several lenghty planning stages and gives a greater incentive to invest in your own property.

You don't build an extension to a rented house, and the landlord tends not to do so either. Owner-occupiers are far more likely to invest in their own home.

 

[ole man]

Have you as Managing Director got a big garden.

Where all your money grows on trees

 

[LE Greys]

Have you as Managing Director got a big garden.

Where all your money grows on trees

With that kind of thinking, BA would still be flying De Havilland Comets. This is a PLC. We can make share issues. We can also take out loans. In fact, there is a good chance that we could get a good deal on a government/EU loan to cover the initial costs. I'm a scientist, not a businessman, but if a large joint-stock company cannot raise money to improve the quality of its assets, then I would be very surprised Besides, it's an investment, and I fully expect a return on it. If we get that return, then we can pay back the loaned money and dividends to our shareholders.

To add to that, the LNER had the extremely lucrative ECML as its main revenue-generator and no longer needs to pay a premium to operate the route. Nor does it need to pay access charges to itself or have three route directors for the same line (which I believe is the case now, and they work for three different companies). Economies of scale along with defragmentation would save a lot on overheads.

 

[ole man]

It will not work.
No company be it BR, Network Rail, Railtrack has ever solved the railway.
You could put brand spanking new infrastructure in and it will still fail, you'd have to have very generous share holders who wouldn't want any return.

You cannot use BA as a case, because once they got there brand new planes that was it.
The sky the planes fly in dont suffer from pionts failure, the clouds don't fall down, people dont chuck themselves in front of planes.

The list could go on and on, that is why Solving the railway with TOCS running them will still not work

 

[Nym]

It will not work.
No company be it BR, Network Rail, Railtrack has ever solved the railway.
You could put brand spanking new infrastructure in and it will still fail, you'd have to have very generous share holders who wouldn't want any return.

You cannot use BA as a case, because once they got there brand new planes that was it.
The sky the planes fly in dont suffer from pionts failure, the clouds don't fall down, people dont chuck themselves in front of planes.

The list could go on and on, that is why Solving the railway with TOCS running them will still not work

But the sky does get saturated with contaminants causing engine failiure, runways have ILS failiures, etc.

 

[ole man]

What as much as the railway??.

You prove to me that the aircraft industry suffers the same delays as the UK railway

 

[Nym]

Runway Shutdowns, Terminal Evacuations, Luggage Issues, Engineering problems with aircraft, Emergency Situations, Passengers not turning up, Crew drunk, no crew, crew over hours due to delay, airline going bankrupt to airport authority parks a tracktor infront of their aircraft to they cannot move or take off until their landing fees and fuel costs are paid.

(I have personally witnessed all of these)

Including, very large plane blocking the only available part of taxiway thanks to a short term substitution.

 

[LE Greys]

From Ole Man's point of view, we are running a failing industry. I believe that we can get a commercial return. Intercity made a profit, NSE broke even, Freightliner and DBS are healthy companies, GNER only failed because of the large premiums it had to pay (it would have been very profitable otherwise). The big problems are the regional operations, and even that is solveable with the right kind of investment and sufficient linkage to other parts of the company. Better connections to expresses would be a top priority, for instance, even if it means rearranging freight timetables (see what you can do when you control a route).

And trains don't suffer from bird strikes, or FOD, or get grounded because of volcanic ash clouds... :?

 

[HSTEd]

And trains don't suffer from bird strikes

Wasnt there a picture somewhere with a Cl350 badly damaged by a birdstrike that cracked the windscreen rather badly?

The problem is the dominant school of business, in the Anglophone world atleast, these days is the so called "Harvard School" that does everything it can to maximise the share price, even at the expense of long term R&D.
This can be seen to be largely a result of the fact that top business jobs tend to act like a game of musical chairs and they wont be around to take the flak when the company suffers for its short sightedness.

There are many routes on the railway that will never be profitable but are considered socially neccesary as loss leaders, these routes may be neccesary but are unlikely to recieve the neccesary investment to keep them maintained to a high standard, with the maintennace being the absolute minimum neccesary to keep the line open.

This will result in reduced punctuality and increased travel times due to decreased maintenance work and the subsequent reduced track speeds.

If government permission is required to cease passenger service over a particular route all that will happen is teh service on unprofitable lines will be cut back to the absolute minimum required by the regulation, (most likely that would eb the one train a week rule because otherwise you undermine the whole point of the exercise - to establish soft touch regulation). The company would then be able to extort additional money from local authorities to run a useful service to the station.

Fragmenting the maintenance of the network further is jsut going to increase maintenance costs and likely result in additional closures and/or singlings to reduce the maintenance bill on secondary routes.

The railway has to be a unitary body, and since it contains a large number of secondary routes that will have to be massively subsidised either way, the entire network should be retained in the public sector for the simple reason that this is the only mechanism that allows the InterCity and other profitable lines to cross subsidise the others.

EDIT:

To the idea that the railway company would see its Pacers as an "embarassment" and seek to replace them by any means neccesary is ridiculous, infact we would be likely to see additional product of four wheel passenger vehicles.
The simplicity of the design ensures low maintenance costs and the relatively low power of the design makes them economical.

 

[Oswyntail]

The issue that no-one really understands, even the EU today is that you cannot separate the railway at the wheel/rail interface.

So it is said, but no one really ever explains why, other than with a mixture of nostalgia and dissatisfaction with present arrangements. The fact is that any business model can work - you could make track the responsibility of local primary schools if you wanted - so long as the responsibilities, relationships, regulations and interfaces are clearly defined and legally implemented. The current system has holes because this was done in a rush, was not clearly defined and was implemented shoddily. The case has yet to be made strongly for vertical integration, and there is a strong logical and economic argument against combining the disparate businesses of infrastructure maintenance and service provision (much like hiving off the business IT department to Siemens) . As has also been pointed out above, the investment profiles are also different, ranging from the ultra-long term investment in low-use track, through long-term investment in stock to short term investment in customer interfaces and the like. There is no need for TOCs to worry about long-term "investment", as that is what the ROSCOs and NR have been set up to do.
There is little wrong with the current system that clarity in the legal framework wouldn't sort out. Get NR and the ROSCOs operating effectively and we would be in a better place.

 

[HSTEd]

A ROSCO's only purpose is to make money, it won't cut rates simply out of the goodness of its heart, if I was a shareholder in one I would crucify them for doing it.

 

[Nym]

They joys of a rolling stock shortage and micro managment of stock allocation, they can charge what they want, and no-one is prepared to try and undercut since the DfT won't allow commercial forces to dictate stock allocation (eg. if Porterbrook ordered loads of new 172s and went to undercut one of the others using 185s or something) the DfT would block it.

 

[Oswyntail]

They joys of a rolling stock shortage and micro managment of stock allocation, they can charge what they want, and no-one is prepared to try and undercut since the DfT won't allow commercial forces to dictate stock allocation (eg. if Porterbrook ordered loads of new 172s and went to undercut one of the others using 185s or something) the DfT would block it.

That would be interesting, as I suspect the ROSCO could challenge DfT in the courts. But that side of things is the biggest problem IMHO - the ROSCOs seem incapable for whatever reason of maintaining a proper programme of upgrading and replacing stock (the sort of thing that would keep Derby in business).
To keep this on topic, it is this confusion about who should be investing in what that leads the argument about vertical integration.

 

[Nym]

So if a derby company ordered say 70 Class 172 units from another derby company and offered these to TPE and Northern, at a reduced price compared to sprinters. I wonder what the DfT would have to say about this.