TOC contract expiry dates

[ollyexe2808]

Interesting article yesterday in the Daily Telegraph along the lines of Hendy admits nationalising the railway will 'probably' add around 15bn to the national debt.

I am sceptical of any articles from partisan papers (left and right) on the cost and benefits of nationalisation....

The reality is probably filled with much more nuance. The TOCs being brought under a single operator makes absolute sense to make a coherent network. Will nationalisation solve all the railways problems? Probably not....but then public assets and investments are not just costs and adding to national debt, they are long term investments for the social and economic benefits of a society.

I will be interested to see how the termination of TOC contracts unfolds.

 

[Richardr]

Interesting article yesterday in the Daily Telegraph along the lines of Hendy admits nationalising the railway will 'probably' add around 15bn to the national debt.

It's not an increase in real debt is it, it is just the absurd way the government's accounts are produced and how they are discussed.

The £15bn is the:

liabilities, including the cost of leasing engines and carriages as well as staff pensions, shifted onto the national debt pile.

The £15bn debt exists today, isn't new expenditure, and is just transferred to government debt as a paper transaction, assuming that GBR is classified as a central government body.

 

[HerneHill]

The £15bn debt exists today, isn't new expenditure, and is just transferred to government debt as a paper transaction

Exactly right - it’s the very same debt that the govt has always underwritten for the TOCs under the sham-privatisation model anyway, but just recognised as a different line item on the books now that makes it fall within the definition of “official” central govt debt.

Accounting wizardry like this is the biggest bugbear of mine in the whole privatisation debate - a more serious related (but not exactly the same) issue is how the massive subsidies the govt pays to NR is used to fund discounted Track Access Charges that provide the illusion of TOC operational profitability. Utter partisan nonsense.

 

[Nicholas Lewis]

It's not an increase in real debt is it, it is just the absurd way the government's accounts are produced and how they are discussed.

The £15bn is the:



The £15bn debt exists today, isn't new expenditure, and is just transferred to government debt as a paper transaction, assuming that GBR is classified as a central government body.

Most of it is leasing liabilities the TOCs dont have borrowings like NR did just working capital and im pretty sure the DfT would have been on the hook already anyhow.

 

[Richardr]

Most of it is leasing liabilities the TOCs dont have borrowings like NR did just working capital and im pretty sure the DfT would have been on the hook already anyhow.

Correct - as I say it is down to the absurd way the government's accounts are produced. It is currently "off balance sheet", the article suggests it may have to be moved on balance sheet. No doubt the accounting will be manipulated again to keep it off.

 

[HerneHill]

I love that Lords’ Amendment no.2 was deemed to invoke Commons Financial Privilege by the (non-partisan) Parliamentary clerks - which makes sense, given that preventing the govt from terminating NRCs asap would come at a financial cost to the govt!

This means that the Lords have no right to disagree to the Commons’ disagreement to their proposed amendment. Full steam ahead to Royal Assent!

 

[LNW-GW Joint]

The government did accept the Lords amendment to strengthen the disabled provisions across the industry.
Now the ping-pong with the Lords starts, hopefully short-lived.
DfT clearly expect the fees they won't have to pay to the private operators will fund the huge reorganisation now in prospect.
"Not back to BR, and not Network Rail 2.0".

 

[Nicholas Lewis]

The government did accept the Lords amendment to strengthen the disabled provisions across the industry.
Now the ping-pong with the Lords starts, hopefully short-lived.
DfT clearly expect the fees they won't have to pay to the private operators will fund the huge reorganisation now in prospect.
"Not back to BR, and not Network Rail 2.0".

The base fees aren't that high but its never been clear how much is being awarded on the performance fees.

 

[HerneHill]

The government did accept the Lords amendment to strengthen the disabled provisions across the industry.
Now the ping-pong with the Lords starts, hopefully short-lived.
DfT clearly expect the fees they won't have to pay to the private operators will fund the huge reorganisation now in prospect.
"Not back to BR, and not Network Rail 2.0".

Ping-pong on Amendment 1 (the “purpose” one), Commons gets default final say in rejecting Amendment 2 (the nationalise by order of poor performance first one) based on Financial Privilege, accept Amendment 3 so nothing to argue about.

Amendment 1 is a total joke anyway - as the SoS says, improving performance cannot be the only stated purpose of nationalisation, as the best way to improve performance is to cut number of services. So cannot imagine the Lords pushing that to double rejection just to fail the bill…

 

[Clarence Yard]

The base fees aren't that high but its never been clear how much is being awarded on the performance fees.

Up to roughly 2.5 times the base fee if you get 100%, which you won’t get.

 

[TheLastMinute]

If my understanding of parliamentary procedure is correct, the Lords have voted to not insist on their amendments 1 and 2. This means that the bill will proceed to royal assent without those amendments and it becomes law. Following this, Louise Haigh should reveal which TOCs are the first to be nationalised under the Act.

 

[Lee898]

Financial Privilege needs to be kicked to dust if such a process or the threat thereof , is the basis to nationalise oncemore on Haighs Terms. Moreover, needs to be the whole of Great Britain, not England, only !

 

[HerneHill]

If my understanding of parliamentary procedure is correct, the Lords have voted to not insist on their amendments 1 and 2. This means that the bill will proceed to royal assent without those amendments and it becomes law. Following this, Louise Haigh should reveal which TOCs are the first to be nationalised under the Act.

Yes correct - Amendment A was tight (not insist 213 vs insist 210) but we got there!

 

[JetTheWolf]

If my understanding of parliamentary procedure is correct, the Lords have voted to not insist on their amendments 1 and 2. This means that the bill will proceed to royal assent without those amendments and it becomes law. Following this, Louise Haigh should reveal which TOCs are the first to be nationalised under the Act.

The TOCs currently under the DFT's Operator of Last Resort will surely be first no?

 

[vuzzeho]

If my understanding of parliamentary procedure is correct, the Lords have voted to not insist on their amendments 1 and 2. This means that the bill will proceed to royal assent without those amendments and it becomes law. Following this, Louise Haigh should reveal which TOCs are the first to be nationalised under the Act.

Exciting! When do we think it will go through to Royal Assent?

 

[43066]

The TOCs currently under the DFT's Operator of Last Resort will surely be first no?

They’ve already been nationalised.

 

[1D54]

Exciting! When do we think it will go through to Royal Assent?

I'm far from exited about any of this and anyone who thinks that this is the golden bullet that will turn the network around may very well end up disappointed . Hope I'm wrong but i just don't trust Haigh or this government to deliver anything that they have promised. Time will tell.

 

[LNW-GW Joint]

Exciting! When do we think it will go through to Royal Assent?

It can happen very quickly once the Bill text is agreed in parliament - where royal assent is announced.
It also depends where the King is!
The DfT may want to wait a bit until it is ready to implement the new powers it will have.
There are also likely to be management/terms of reference changes in the SGBR team to start the process, and the present DOHL/OLR function will be renamed.

 

[TheLastMinute]

It can happen very quickly once the Bill text is agreed in parliament - where royal assent is announced.
It also depends where the King is!
The DfT may want to wait a bit until it is ready to implement the new powers it will have.
There are also likely to be management/terms of reference changes in the SGBR team to start the process, and the present DOHL/OLR function will be renamed.

Indeed, there is no set timescale for royal assent to be given. It could be made to happen tomorrow if there was a will for it to happen quickly.

I'm expecting to hear something from DfT quite quickly. During last week's Transport Committee evidence session, Louise Haigh gave the impression that initial plans are ready to be announced. I've also heard that plans are well underway for DOHL to double (or more) the number of staff it has to enable it to take on all the incoming TOCs and provide "owning group"-type functions.

We will announce at Royal Assent which operator will be the first to be served with its three-month notice and brought into public ownership, but we expect all services currently operated by private operators to be brought into public operation over the next three years.

 

[Djgr]

I'm far from exited about any of this and anyone who thinks that this is the golden bullet that will turn the network around may very well end up disappointed . Hope I'm wrong but i just don't trust Haigh or this government to deliver anything that they have promised. Time will tell.

It's only a first step...but a very necessary one.

And a time for celebration. Many people have been waiting for this day for thirty years.

 

[HerneHill]

Exciting! When do we think it will go through to Royal Assent?

Rumour mill says probably next week…!

I've also heard that plans are well underway for DOHL to double (or more) the number of staff it has to enable it to take on all the incoming TOCs and provide "owning group"-type functions.

Based on job postings I’ve been seeing on LinkedIn, they’ve been advertising posts for exactly these - legal, GDPR, procurement, the likes - since the past 2 or so months.

 

[185]

Re - Baron Moylan. This chap is not some random politician, he had almost a decade running TfL (under his mate Boris), and must have known the implications of bringing that (failed) amendment. With one operator (allegedly) lobbying politicians, is there anything to suggest that Moylan has (allegedly) made representations on behalf of one of the private operators?

I get that many would like to see Avanti gone immediately, but that probably costs money.

 

[The Planner]

It's only a first step...but a very necessary one.

And a time for celebration. Many people have been waiting for this day for thirty years.

Its not going to be the rose tinted panacea people are wistfully wanting.

 

[ollyexe2808]

Its not going to be the rose tinted panacea people are wistfully wanting.

Absolutely agree, but I am also optimistic that it will at least allow a reset and stock take. The current system (whether we are talking about franchising or direct awards) has been fragmented and, as travel habits have changed, has not kept pace with it.

I don't think nationalisation per se is going to fix things, but having a dedicated publicly owned organisation running and overseeing the network such as GBR is exciting. Which is why the Passenger Railways (Public Ownership) Bill is not necessarily the bit that is significant for me. It will be the formation of GBR that will be of interest to me.

 

[coppercapped]

Absolutely agree, but I am also optimistic that it will at least allow a reset and stock take. The current system (whether we are talking about franchising or direct awards) has been fragmented and, as travel habits have changed, has not kept pace with it.

I don't think nationalisation per se is going to fix things, but having a dedicated publicly owned organisation running and overseeing the network such as GBR is exciting. Which is why the Passenger Railways (Public Ownership) Bill is not necessarily the bit that is significant for me. It will be the formation of GBR that will be of interest to me.

This is missing the point by a country mile.

The major critical issues for GBR will be:

1. Funding. It is clear that the system as a whole will need to be subsidised. Will the subsidy be fixed annually or cover longer terms, say five or seven years? It's the difference between day-to-day planning or being able to commit to things over a longer period. It is hugely important.
2. Charges. Will it be free to set its own fares and access charges? Limiting or delaying charge increases while still demanding a defined performance in the face of changing costs is a major reason for the poor financial performance of not only 'The Big Four' but also British Railways. The bigger the subsidy the more say over the way you run your business has the person supplying the cash. 'He who pays the piper...'
3. Freedom from micromanagement from the DfT / Treasury. See point 2 above.

There are others but forming GBR will, by itself, make no difference at all if the rest of the interface to Government remains essentially unchanged.

 

[LNW-GW Joint]

Louise Haigh herself, in the Commons this week, pointed to GBR having an "arm's length" relationship with government.
But it remains to be seen what that means.
The NR side already has its 5-year CP7 settlement 2024-29, so that's a fixed part of the GBR funding pot.
The regulatory access charge regime is also staying, to provide a level playing field for freight/open access/non-GBR operations.

 

[HerneHill]

Re - Baron Moylan. This chap is not some random politician, he had almost a decade running TfL (under his mate Boris), and must have known the implications of bringing that (failed) amendment. With one operator (allegedly) lobbying politicians, is there anything to suggest that Moylan has (allegedly) made representations on behalf of one of the private operators?

Nothing alleged about the lobbying - Transport UK was specifically called out during one of the HoL debates (Second Reading, if I recall correctly...) as having submitted a briefing document to all the Lords detailing their views. This was followed by the umpteen puff-pieces written under Dom Booth's name in the weeks following, plus a half-dozen more LinkedIn posts etc.

However, I wouldn't go as far as saying The Noble Lord Moylan was specifically making representations on TUK's behalf... everything is circumstantial at best, so let's not put forward anything libellous!

There are others but forming GBR will, by itself, make no difference at all if the rest of the interface to Government remains essentially unchanged.

I have it on good authority from the highest levels of government that the operational model being designed for GBR is one that will retain the agility of localised decision-making. Nobody wants to see a lumbering bureaucratic behemoth where all decisions are overcentralised - not even the Treasury, as it wouldn't be cost-efficient!

 

[TheLastMinute]

I don't think anyone within the rail industry, the civil service or government thinks this alone will significantly alter outcomes for passengers. I see it as laying the groundwork for future change to be slightly less complex when GBR comes into existence.

For example, this legislation will allow DOHL to start properly integrating their TOCs and should (in theory) allow each TOC to work much closer together and with Shadow GBR, breaking down existing organisational barriers between them. Such change wasn't possible previously as each DOHL-owned operator was required by law to be returned to the private sector, thus any significant coordination would have been contra to this requirement.

Nothing alleged about the lobbying - Transport UK was specifically called out during one of the HoL debates (Second Reading, if I recall correctly...) as having submitted a briefing document to all the Lords detailing their views. This was followed by the umpteen puff-pieces written under Dom Booth's name in the weeks following, plus a half-dozen more LinkedIn posts etc.

However, I wouldn't go as far as saying The Noble Lord Moylan was specifically making representations on TUK's behalf... everything is circumstantial at best, so let's not put forward anything libellous!

Indeed, I think the Tory amendment was actually intended to be a wrecking one rather than any conspiracy. The way the amendment was written made it completely impractical and I suspect would have forced contract renewals with incumbents at unknown expense.

I have it on good authority from the highest levels of government that the operational model being designed for GBR is one that will retain the agility of localised decision-making. Nobody wants to see a lumbering bureaucratic behemoth where all decisions are overcentralised - not even the Treasury, as it wouldn't be cost-efficient!

This is positive news and is a good example of the reorganisation work that can be started by DOHL now before GBR comes into existence and would have been all but impossible without the soon-to-be Passenger Railway Services (Public Ownership) Act 2024.

Perhaps we could the local decision-making organisations "Regions"? Maybe something like Southern Region or Western Region?

 

[norbitonflyer]

Perhaps we could the local decision-making organisations "Regions"? Maybe something like Southern Region or Western Region?

Network Rail seems, at some point in the recent past, to have been divided into regions. But for some reason they are called Routes, despite the fact that they each cover a number of separate lines.

 

[LNW-GW Joint]

Network Rail seems, at some point in the recent past, to have been divided into regions. But for some reason they are called Routes, despite the fact that they each cover a number of separate lines.

Network Rail has Regions, each of which consists of several Routes (except Scotland, which is unitary).

Our regions - Network Rail

Our five regions Eastern, North West, Scotland’s Railway, Southern and Wales & Western aim to bringing our people and the community we serve closer.

www.networkrail.co.uk

The original Williams/Shapps/Tory plan was to align GBR's TOCs with NR's Regions.
So far Labour has not said anything about GBR organisation.
The last BR organisation was into business Sectors, having abandoned its Regional structure progressively in the 1980s.