Were we lied to about Privitisation?

[Andrew Nelson]

Yes, they are, as stated above by subsidies.

But if re-nationalised, in your plan, why would the taxpayer then become eligible for a share of profit? If we are, then can we have the profits of everything else we subsidise as well?

When one says taxpayer, in this case You I'm sure accept I don't mean paying back an individual person.

No more than British Railways did in 1949, when I believe they were still making a profit.

 

[Darandio]

When one says taxpayer, in this case You I'm sure accept I don't mean paying back an individual person.

No more than British Railways did in 1949, when I believe they were still making a profit.

So the profits go back to the government? Isn't that what would happen anyway?

 

[Andrew Nelson]

So the profits go back to the government? Isn't that what would happen anyway?

The opposite of what happens now?

 

[Darandio]

Well yes, obviously, but the railway isn't nationalised is it, which is what you are referring to.

 

[Andrew Nelson]

Well yes, obviously, but the railway isn't nationalised is it, which is what you are referring to.

So, do you want to try answering the Question?

 

[Darandio]

Answering what question?

 

[route:oxford]

Surely in order to fully analyse if "we" were lied to about privitisation, then some form of analysis must be undertaken to consider whether or not "we" were lied to about nationalisation back in 1947/1948?

Despite the railways being exhausted by the war, they were still turning a profit as a whole as BR until the mid 50s

Who knows?

The GWR may well have been building their own coal-fired power stations in the 50s to power new electric trains between Bristol & London...

 

[Andrew Nelson]

Surely in order to fully analyse if "we" were lied to about privitisation, then some form of analysis must be undertaken to consider whether or not "we" were lied to about nationalisation back in 1947/1948?

Despite the railways being exhausted by the war, they were still turning a profit as a whole as BR until the mid 50s

Who knows?

The GWR may well have been building their own coal-fired power stations in the 50s to power new electric trains between Bristol & London...

Yes, quite possibly true, why not start another thread about that then?
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Answering what question?

This one:

"So, why not go the whole hog, re-nationalise it, and keep the profits for the tax payer, rather than the shareholders?"

 

[starrymarkb]

Are there many profits in rail? Margins were very low even in good times. Now FGW is losing money hand over fist. Several other operators are clinging on despite mounting losses

 

[Andrew Nelson]

Are there many profits in rail? Margins were very low even in good times. Now FGW is losing money hand over fist. Several other operators are clinging on despite mounting losses

Yes, but when the Franchise was Re-let, many commentators said they had promised far too high a pay-back to the DfT. I think the larger part of their problems is there own making.

 

[Lampshade]

Are there many profits in rail? Margins were very low even in good times. Now FGW is losing money hand over fist. Several other operators are clinging on despite mounting losses

I read a few months back SWT make £15m a week in profit. Last year I believe Grand Central's Sunderland route turned a profit, Northern must be in profit as a whole as they PAID BACK subsidy hock:

 

[tbtc]

Agreed. However I understand that the current clauses expire shortly and will not be replaced. The legality of them is highly dubious. It's a shame for WSMR as that must clearly be one of the factors that worked against them.

As I see it, if you want long franchises (where TOCs have time to invest and see a return on their money, where a long term view is taken, like Chiltern) then there needs to be *some* protection on the key flows.

Moderation of Competition is (in my eyes) a "necessary evil" if you want the stability of longer franchises. Who'd sign up for a carefully costed long term franchise only to find another TOC is allowed paths on a key route (like London - York) which eat up your share of the "cake"?

As for WSMR, the rules were in place from the start.
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I read a few months back SWT make £15m a week in profit. Last year I believe Grand Central's Sunderland route turned a profit, Northern must be in profit as a whole as they PAID BACK subsidy hock:

IIRC Northern are on some element of "cap and collar"?

The idea of "profit" can be manipulated - clearly there are some elements on the railways which are profitable, but it depends on your definitions

 

[Ze Random One]

Why should be the tax-payer be eligible for any profit? If anything, I would say use a share of profit for railway related pension funds, thats where its more deserving.

It depends what you are talking about making profit. If it's a nationalised operating company (e.g. East Coast), then yes, the profits of the operator should be ploughed back into the exchequer, to offset the subsidy paid to Network Rail and other loss making routes. Employers contributions to the pension schemes should be skimmed off prior to any profits going back though.
When you talk about taxpayers profiting from a single bit of government activity, that really means paying lower taxes overall, because it helps the books to balance.

 

[Zoe]

Yes, but when the Franchise was Re-let, many commentators said they had promised far too high a pay-back to the DfT. I think the larger part of their problems is there own making.

If you don't overbid though you risk not winning the franchise.

 

[WatcherZero]

Put it this way, government incomes (amongst others)

VAT
Fuel Duty (especielly on diesel routes)
NI from employees/employers
Corporate taxation
Franchise payments
Infrastructure/capital spending commitments

Outgoings:
Subsidy
Administration (which it would be doing anyway)
Regulation

Under privatisation BR was forced to make a small profit which it paid to the Treasury and to self finance its own investment by proving return from lower operating costs and because of this investment was lower than required for maintenence, renewals and new investment so lines were closed, services cut back, shortcuts taken on rolling stock. From rail workers being in the private rather than public sector alone the government saves billions in better state pensions and wages.

Anyone who think we were better off under BR should go watch that old Equinox documentry posted recently.

 

[LNW-GW Joint]

Do We really have competition?

We were told Privatisation would bring competition, is there much?

Competition for passenger services is at the franchise bid level. Anybody (well, not anybody) can bid for a franchise. The DfT sets the framework, judges the competitors and takes the financial outcome.

Open access at the operating level was an aspiration but it's dead in the water with highly-specified franchises.

The proposed franchise structure changes don't really alter the framework, but franchisees may well get more scope to change services in exchange for tighter performance targets.

The biggest passenger service competition since initial privatisation is now in progress (ICWC), but don't expect anything other than the lowest cost bid (to the taxpayer) to win.

There's plenty of competition in freight.

ORR holds the ring between all the players to ensure as far as possible that there is a level playing field.

Just my 2p.

 

[rail-britain]

I have to agree that the DfT has changed the goalposts for Open Access Operators
Hence why the latest applications for services along the WCML have all been declined
The "new" criteria is that income to the franchise operator (or proposed future franchise operator) must not be affected

Therefore this leaves Open Access Operators with the other routes (such as WSMR were operating)
If this was financially possible then I would have expected to have seen just as many new operators across the entire network, not just to/from London

Nextly was "increase in competiton"
However, towards the end of BR this was already in place
As an example, the ECML services had been extended to Glasgow (competing Glasgow - London and Glasgow - Edinburgh)
Cross Country was competing with West Coast, between Carlisle and Crewe
However, both franchises passed to the same rail franchise operator, and when this ended the franchises were changed such that competition was reduced to just Glasgow / Edinburgh - Birmingham

Unless there is a radical change at the DfT, I cannot see any new Open Access Operators, plus with the proposed "super franchises" competition will be reduced further
On the plus side, higher fares with service improvements (albeit lagging behind)

 

[90019]

Do you have evidence to support that claim?

Yes.

Can we see this evidence?

 

[tbtc]

I have to agree that the DfT has changed the goalposts for Open Access Operators
Hence why the latest applications for services along the WCML have all been declined

Just because the abstractive proposals were rejected (creaming off flows like London - Preston) doesn't mean Open Access is dead, just that *poor* Open Access applications won't automatically get paths, which is how it should be.

Whilst I'm generally against OA, there's a clear argument for cities like Hull and Sunderland having *some* service, the case for towns like Blackpool is a lot weaker.

 

[junglejames]

The restriction on competition rules existed where the operator was making significant private investment and the government agreed the need to ensure they were not wiped out by a competitor undercutting them because they were not making that investment themselves but benefitting from it. As has been said these deals will cease to exist with WCML franchise change.

Simply put competition exists because the fare box revenue is divided between the operators of the service, you have six operators running trains on a certain route and the money is divided between them by the number of seats they provide and likelihood that they are filled by the customers. The companies are competing to offer as many of these seats as possible at the cheapest cost to make the most profit. If a company cant compete with the unit cost of a competitor they will lose money on the route and/ord go bankrupt as has been seen.

Open access operators can come in and create an entirlely new route which if the path is available and would create new customers they can do. However if they are just competing to provide seats and not attracting new customers they are making a route less sustainable, probably requiring more subsidy due to the pot being shared by more ToC's than is sustainable and could lead to problems. If you want to see what happens look to the Bus Wars, total chaos and financial ruin. Therefore the open access operators are asked to pass an abstraction test to show they are actually offering a new service.

So basically saying privatisation was stupid. Competition couldnt work, for reasons given, so what was the point in any of this privatisation business.

At the end of the day, privatisation was meant to lead to the government providing less of a subsidy to the railways. The end result is actually they have always had to provide more of a subsidy to the railways. So privatisation has been a failure on that count.
It was supposed to provide competition, and thus better service and cheaper fares. In fact all we have seen is virtually every operator putting fares up astronomically (so the only little bit of competition is deciding which stupidly expensive ticket to buy), and increasing restrictions on virtually all tickets.

When we do get a really decent bit of competition on the West Coast, which really gave us a good service, the DFT tried their best to kill it off. Oh, and they succeeded. Lets just hope Chiltern can really expand and show a bit of competition. Right now they are hampered by speed.

But basically, competition hasnt happened, fares havent gone down, and services havent improved.
A disastrously flawed system which hasnt provided any of the benefits it was meant to (excpet for Chiltern, and a brief period with GNER), and which, because of how flawed it is, means competition has to be regulated.

Full privatisation would be a disaster because too many companies cannot be trusted, and are, obviously, only in it for themselves, and could leave the railways in a dire mess. The micro managed system we have doesnt work because all it means is TOCs want extra money for the least little thing, and arent willing to do anything without it.
So what are we left with as the answer? Well, what we had before privatisation.

 

[All Line Rover]

They're only cheap because the Pendolinos would be empty otherwise, most 'full' Pendos out of Piccadilly are people on VT-only tickets heading to Crewe/Wilmslow/Macclesfield.

True, but it works both ways. VT get full(ish) trains between Manchester and Crewe/Stoke, and us lot who live near those stations get cheap fares (including First Class fares). VT have the cheapest tickets, the nicest trains, and the shortest journey times, so you can't complain!

They even manage to squeeze in a "Light Bites" sandwich with crisps (which are truly delicious - I had a crayfish one a few days ago), a piece of cake, and even alcohol (!) if you travel First Class between Manchester and Crewe (I can't speak for the Stoke service).

I'd mention at this point that a First Class Manchester to Crewe child single costs £5.65. For that you get to use both First Class lounges (Manchester and Crewe) with an unlimited supply of drinks and snacks, and on the train you get served a nice crayfish sandwich (which would cost £3+ at Sainsbury's), crisps, cake, more drinks, and alcohol if you're an adult! The free food/drink costs more than the ticket!

Plus, you can get a First Class yearly season ticket for £2200, which amazingly is still much cheaper than three years ago, before VT introduced the VT only fares!

So I give Virgin a thumbs up.
--- old post above --- --- new post below ---

Put it this way, government incomes (amongst others)

VAT
Fuel Duty (especielly on diesel routes)
NI from employees/employers
Corporate taxation
Franchise payments
Infrastructure/capital spending commitments

Outgoings:
Subsidy
Administration (which it would be doing anyway)
Regulation

Under privatisation BR was forced to make a small profit which it paid to the Treasury and to self finance its own investment by proving return from lower operating costs and because of this investment was lower than required for maintenence, renewals and new investment so lines were closed, services cut back, shortcuts taken on rolling stock. From rail workers being in the private rather than public sector alone the government saves billions in better state pensions and wages.

Anyone who think we were better off under BR should go watch that old Equinox documentry posted recently.

In my opinion, is wasn't BR who were to blame, but the stupid government who weren't prepared to invest in the long term future of the railways. France, Germany, Japan and even China are much better at doing so.
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There are some VT only in the West Midlands between WVH-BHM-BHI which are about £1 cheaper than any permitted (usually not worth it IMO since LM are far more frequent and Pendos get hot)

I was too young to understand privatisation but I got the impression that if you are able to plan your journey in advance with plenty of time to spare then it's cheaper (read advance fares) although it has got more expensive to walk up and go which is a shame. I admit I'm lucky in the fact I usually go from Birmingham to London and I have 3 TOCs to choose from and competition is decent.

Wolverhampton to Coventry VT Only FIRST CLASS Anytime Return - £9.20

Wolverhampton to Coventry Any Permitted STANDARD CLASS Anytime Return - £9.60 (it's more expensive! )

What would you rather travel in - Standard Class on a class 350 (or worse!) or First Class on a class 390, and keep 40p in your pocket?! I think I know the answer! (even junglejames might agree with me on this one!)

OK, I appreciate that you only get an hourly service, but at least you get to use the First Class lounges at Wolverhampton and Coventry!

Another thumbs up to Virgin Trains!

PS. Despite the frequent criticism of Virgin Trains (which in my opinion is completely unfounded), I believe that they are THE BEST TOC (in terms of customer service and how much they pay their staff ), and I do hope they get to keep the franchise.

 

[yorkie]

Now FGW is losing money hand over fist.

Do we have any figures on that?

But if re-nationalised, in your plan, why would the taxpayer then become eligible for a share of profit? If we are, then can we have the profits of everything else we subsidise as well?

I think there is a major misunderstanding here. Train Operating Companies receive income in the form of subsidies, and they make a 'profit', in that their losses are less than the income. That does not mean that 'the railway' makes a profit in any meaningful sense. The company does. If any TOC starts making a loss, it is highly likely they would give up the franchise (with some exceptions, such as if they believed that the situation was reversible, or the franchise was making only a small loss and they had other franchises that would be put at risk if they withdrew).

If East Coast makes a 'profit', then that money is not lost to a private company. I don't think anyone is suggesting that the money would instead be handed out to individual taxpayers or anything daft like that.

The margins are very small, and this so-called 'profit' isn't really a profit in a true, meaningful sense of the word.

However if TOCs did not have to pay track access charges (like buses don't have to pay road access charges) then there probably would be a genuine profit for some TOCs. But, like roads, railways don't make profits. Unlike roads, the users of railways have to pay access charges.

I don't claim to be an expert in this subject, but there are some fairly basic concepts that seem to be confused in this thread.

 

[Zoe]

Unlike roads, the users of railways have to pay access charges.

Users of motor vehicles do have to pay to use the roads though in fuel tax.

 

[imagination]

Users of motor vehicles do have to pay to use the roads though in fuel tax.

Railways pay fuel tax too.

 

[yorkie]

Users of motor vehicles do have to pay to use the roads though in fuel tax.

But they don't pay access charges.

 

[All Line Rover]

But they don't pay access charges.

But what about the road tax disc you must buy each year?

 

[Zoe]

But they don't pay access charges.

Not directly but they they do pay for access to the public highways through fuel duty.

 

[yorkie]

But what about the road tax disc you must buy each year?

You mean VED, as road tax does not exist. You tell me, how much does it cost in track access charges to run a 4-car pacer between Leeds and Manchester every day for a year? Then tell me how much it costs to pay VED for 4 buses of a similar capacity.

It's not a 'level playing field', or anywhere near.

 

[Simon11]

I see alot of people saying well done for Virgin Trains for offering cheaper fares on routes like Manchester-Stoke. People seem to suggest here that Virgin offer these fares because of competition. VT do not offer these cheap tickets because of competition or to fill seats, but more to increase the revenue from each passenger.

Virgin Trains has quite a few routes which offer cheaper tickets than other services, at least 12+.

Lets look at this simple example:-
The price of a single anytime from Stoke to Manchester costs £10

There are two operators Virgin Trains and another TOC.

Anytime fares for the above route would be split between the two TOC for the anytime fare depending on the frequency of service, speed of service, times of service, number of seats offered ect. The system is called ORCATS.

Let assume that VT and the other TOC both run two services an hour using the same type of train, same speed.

Therefore if a passenger purcahses an anytime fare purchased of £10, this results in £5 going to Virgin Trains and £5 going to the other TOC. It doesn’t matter if a passenger travelled on VT, the revenue is split 50%.

However if Virgin Trains wants to increase the revenue per passenger, that can offer a cheaper £8 dedicated ticket which passengers can only travel on Virgin Trains services. This results in £8 going to VT and £0 to the other TOC. Therefore Virgin Trains has increased the amount of revenue from the passenger from £5 to £8

VT isn’t the only one to use this tactic. Dedicated tickets are generally only offered on routes by TOC’s which aren’t the main provider on that route.

Sneaky ey?

 

[Zoe]

Would you prefer track access charges to be scrapped then (I believe doing so would be against EU policy) and diesel for trains to be taxed at a similar level to road vehicles?