Were we lied to about Privitisation?

[yorkie]

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

Can you provide more information about that? I did a quick search and it certainly seems that a significant amount of the fuel duty is actually refunded.

Are you saying that the fuel in buses is taxed at a higher rate than the fuel in trains? I cannot confirm nor deny whether this is true or not, as I don't know, but I am asking if that is the point you are making?

 

[4SRKT]

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 taxes at a similar level to road vehicles?

I can't see why it should be an either/or situation. Why should the scrapping of track access be followed by the imposition of fuel duty? I'm genuinely confused by this logic.

 

[Zoe]

I can't see why it should be an either/or situation. Why should the scrapping of track access be followed by the imposition of fuel duty? I'm genuinely confused by this logic.

If you don't charge for use of infrastructure either directly or through a fuel tax then how is the maintainance going to be paid for?

 

[All Line Rover]

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?

I am well aware of that, and I don't blame VT for doing so. Why would you blame them? Virgin aren't going to suddenly start offering 50% cheaper fares, as they would be earning exactly the same revenue as before!

These "TOC only" fares are caused by competition, because they only exist on flows where there are at least two competing operators. They are good for the passenger (because their ticket costs less) and are good for the TOC (because the earn more revenue). It's a win win situation!

I say "well done Virgin Trains" because they actually bother to introduce such fares! Not all TOC's do (which is odd).

I also disagree with your comment that "VT do not offer these cheap tickets ...to fill seats." Pendolinos can be very quiet during Off-Peak times between Crewe and Manchester (and perhaps Stoke). Virgin do offer these fares to increase their revenue, but filling seats is another reason for offering these fares - they take bums off Northern seats and put them on Virgin seats!

 

[Zoe]

Are you saying that the fuel in buses is taxed at a higher rate than the fuel in trains? I cannot confirm nor deny whether this is true or not, as I don't know, but I am asking if that is the point you are making?

Sorry, I didn't realize you were talking about buses and not road vehicles in general.

 

[4SRKT]

In the haulage industry we pay duty on fuel but VAT is refundable. Therefore fuel is more expensive per litre for road freight vehicles than for railway operators. Whether or not this is cancelled out by track access charges I don't know.

 

[yorkie]

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.

I'd call that 'competition'!

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 etc. 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 purchases 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?

Isn't that exactly what we were promised when the railways were privatised?

If TOC-specific fares didn't exist, then I think people would have rightly said that the promises of passengers being given a 'choice' and there being 'competition' were ludicrous. As it happens, it only applies on certain routes, we all know that. But it occurs on enough to justify (in the minds of some people) that we do have 'competition'.

Someone who lives in Brighton and visits London often would certainly see the 'benefits' of genuine 'competition'. Someone who does a journey like York to Doncaster, where there are 2 operators but only inter-available fares (that are hugely expensive) would not.
--- old post above --- --- new post below ---

Sorry, I didn't realize you were talking about buses and not road vehicles in general.

That example was about buses (I would be really interested if someone can come up with figures comparing a DMU like a Pacer with equivalent buses offering the same capacity) but in 4SRKT's example he details that the rules are different for freight. An expert tells me that buses "basically avoid the equivalent of access charges. In haulage, it's different - they don't get the same tax breaks as buses"

While I don't claim to have the figures to hand or be an expert, I know enough to know that it's not a level playing field.

 

[Zoe]

I doubt buses account for the majority of traffic on the road though and so the mainainance of roads can be paid for by the tax from the use of other vehicles. Without track access charges either direct or indirect, how is the mainainance going to be paid for?

 

[junglejames]

[/QUOTE]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!)[/QUOTE]

Ha ha. Very good. Well thats a no brainer. Read my posts and you will see I dont criticise first class on the pendys. I only criticise the train itself, and standard class. I also hate all desiros as they are so uncomfortable its rediculous. So yes, its a no brainer.
--- old post above --- --- new post below ---

Do we have any figures on that?


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.

Oh your totally right there Yorkie.
As far as the operation of the trains goes, a profit can be made, and probably should be made on a lot of routes. I think Intercity and NSE were profitable back in their day. I may be wrong there though.
However its the maintenance of the actual railway which causes a problem, and something that, in all honesty, you cant expect to make money on. Perhaps just break even if charging access charges like with the system we have now, but not actually make money. But as soon as you start to really invest in the railway, and keep improving it, then you definitely start losing money. Its always going to happen. Just like with roads. The road tax may be enough to cover routine maintenance, but as soon as it comes to large road projects, you cant expect to recover that initial outlay.

 

[All Line Rover]

Someone who lives in Brighton and visits London often would certainly see the 'benefits' of genuine 'competition'. Someone who does a journey like York to Doncaster, where there are 2 operators but only inter-available fares (that are hugely expensive) would not.

Ah yes but someone who does a journey from York (or some station around York) to Doncaster (or some station around Doncaster) who knows about a lot of good routes in the Routing Guide can still get a very cheap ticket!

 

[yorksrob]

I think to say that we were "lied" to would mistakenly imply that the powers that be actually had a clue what they were doing in the first place !

 

[Andrew Nelson]

I think to say that we were "lied" to would mistakenly imply that the powers that be actually had a clue what they were doing in the first place !

You may have a point there.

 

[HYPODERMIC]

I'm glad someone has finally raised the issue of privatisation, a topic that has never truly been discussed before at any point in the history of these forums.

Further to the alarming questions promptly raised by the OP, I would like to add my own concerns, which have similarly never been discussed or worn thin:

1. British Rail gave us the HST.

2. Privatisation gave us Voyagers.

Sorry to bring such a swift end to the discussion, but I simply couldn't stand to watch privatisation's defenders carry forward such a bitter crusade. Surrender your weapons, gentlemen! You have been betrayed.

 

[Andrew Nelson]

I'm glad someone has finally raised the issue of privatisation, a topic that has never truly been discussed before at any point in the history of these forums.

Further to the alarming questions promptly raised by the OP, I would like to add my own concerns, which have similarly never been discussed or worn thin:

1. British Rail gave us the HST.

2. Privatisation gave us Voyagers.

Sorry to bring such a swift end to the discussion, but I simply couldn't stand to watch privatisation's defenders carry forward such a bitter crusade. Surrender your weapons, gentlemen! You have been betrayed.

Ha ha, couldn't put it better myself.

 

[yorkie]

One of the OPs points was that for each flow, a specific operator sets the (inter-available) fare.

It was a ludicrous idea that this system would 'work' well under a privatised system.

The idea was that GNER could decide on their own conditions, in order to maximise revenue, fill empty seats, and deter overcrowding on their ECML route, while Virgin could do the same on the WCML, MML would also be doing their own thing on their much shorter line to Sheffield and so on...

But what no-one seemed to consider is that these lines are (surprise, surprise!) not in any way segregated. It's not like Ireland, or other countries, where you'll have a trunk route and lines radiating out.

There are lines that connect the MML and the ECML, or connect the MML and the WCML, or further north, directly connect the WCML and ECML.

Of course, that's an over-simplification as it's even more complex than that.

But just consider, I do York to Sheffield, or York to Retford, and they are priced by different operators. But there is a line that connects them! So, at some point, the fare has to change from one to the other.

I do York to Newark, or York to Nottingham, again they are connected, and at some point the fares have to jump.

While Manchester to Carlisle will have WCML pricing, Huddersfield to Newcastle will have ECML pricing, what about the in between stations?

When you start looking, things get 'interesting', and you soon find out how much some people are being ripped off! and how, if you are clever, you can save yourself a fortune (and still be valid).

Then there's the Routeing Guide. No longer are we restricted to what a guard may deem "reasonable"; we have that - and more!

So, while the method used for privatisation was an absolute farce, and a joke, we should at least be grateful for the integrated ticketing (even if it is a mess) and enjoy the anomalies.

However that does not mean I am in favour of privatisation - far from it. Indeed, many of the anomalies are to be had by figuring out which fares are the ones that have risen massively (in some cases possibly by a factor of around ten!) since privatisation, and avoid them like the plague, and work out which ones you can get instead to avoid privatisation ripping you off and effectively stealing from you in all but name.

I hear of TOCs prosecuting people for depriving them of 10p. Yet they deprive us of far more - with impunity! I'd like to see some pricing managers be prosecuted, along with the people whose idea privatisation was in the first place, sadly they are allowed to get away with ripping us all off.

 

[tbtc]

I'm glad someone has finally raised the issue of privatisation, a topic that has never truly been discussed before at any point in the history of these forums

We had a "Grand Central" thread which combined all discussion on GC, ran to hundreds of pages, but all information was in the one place.

In my humble opinion, we could have one for "Privatisation", one for "Pacers", one for "HS2" and one for "Voyagers" (etc), since the same things seem to come up time and time again.

 

[IanXC]

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 taxes at a similar level to road vehicles?

This would certainly result in the case for widespread electrification improving markedly :P

 

[Lincoln]

Do We really have competition?

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

Franchises don't do any more than change Train Colours and Uniforms of Staff. Dft tells them levels of services, stock etc.

One company sets the fares for all travel between two points. (Purchased for walk-up fares).

The only private parts are the Open Access services, and the Dft seems to do its best to scupper those.

Love the way spell-check keeps wanting to change DfT to daft.

I was under the impression that the major element of "competition" was during the bidding stages during franchise tendering? However for most people this isn't considered as they don't really know or indeed care what goes on behind the scenes.

Granted once the franchises are up and running, companies whose services might be running along the same route such as Peterborough - London might advertise the various benefits of travelling with their services over the other (price/comfort etc) in an effort to maximise various revenues.

Open Access have to prove that they create new journey opportunities without abstracting revenue from existing services, i.e. generate new revenue. So whilst they are in competition with general franchised services in one aspect, in the other they in theory wouldn't be granted a license to operate if all they did was leach from the existing pot.

 

[Class41]

The question 'were we lied to?'

As a railway man of 42 years, I was concerned enough about the effect on safety to write to my MP in the run up to privatisation in a letter with the local press.
Needless to say, my concerns of profits before safety were answered with glib party statements sneering at any idea that safety would be compromised.

Unfortunately, the facts turned out somewhat differently - In my opinion, the Southall, Ladbroke Grove, Hatfield and Potters Bar accidents would not have happened prior to the changes that came about post privatisation.

I've personally witnessed incidents with contractors on the tracks who were absolutely clueless as to the danger they were in.

Matters may have improved somewhat now, since the replacement of Railtrack, the reclaiming of work in house by Network Rail, and the re-establishment of the RAIB. However, it was recently commented to me by another old timer in a T&RS maintenance depot environment that he sees as many incidents in a month as we used to see in a year in BR days - mainly due to trying to do more with less staff.

So from the safety aspect, we were lied to.:roll:

 

[4SRKT]

If you don't charge for use of infrastructure either directly or through a fuel tax then how is the maintainance going to be paid for?

Well, since a fuel tax goes directly to the Treasury I can't see how that could be assumed to be ringfenced for railway maintenance. Especially as the govt itself isn't supposed to be funding the railway (ha!). The answer, of course, is vertical ingegration, where the maintenance is carried out by the TOCs who would own the infrastructure. Or *TOC* singular as would be more sensible since so-called 'privatisation' hasn't really yielded a network of private railways as anyone rational would understand it. If anything there is more government involvement now than under BR.

Having a separate maintenance company in the shape of Network Rail just adds bureaucracy and complexity. The maintenance should be paid for out of the railways' revenue budget, with larger infrastructure projects funded by government. This is so much simpler than the current mess that it's hard to believe that people who've grown up knowing nothing else still can't see it.

The EU argument is a red herring. You could perfectly easily configure some small department (even just on paper) as a separate maintenance company or division with a separate line in the P&L, and transfer the wooden dollars through this mechanism.

 

[ainsworth74]

The EU argument is a red herring. You could perfectly easily configure some small department (even just on paper) as a separate maintenance company or division with a separate line in the P&L, and transfer the wooden dollars through this mechanism.

Isn't that the way that the French pretty much do it with SNCF (state owned) running the trains, doing maintenance, owning stations and in charge of train control whilst RFF (also state owned) actually own the infrastructure. Therefore wheel and rail are nominal separate, but lets be honest they really aren't.

 

[Zoe]

Isn't that the way that the French pretty much do it with SNCF (state owned) running the trains, doing maintenance, owning stations and in charge of train control whilst RFF (also state owned) actually own the infrastructure. Therefore wheel and rail are nominal separate, but lets be honest they really aren't.

RFF would still have to charge SNCF for track access though.

 

[TomBoyRacer]

I think the only proper and definative way to answer this is to examine the political manifestos and speech transcripts and then compare them to subsequent events then discount what could not be delivered due to circumstance. No doubt they can be downloaded from somewhere. I don't have time to do this myself.

Personally I feel that some promises where not kept. The conservatives had a somewhat anti rail policy (Labour didn't exactly cover themselves with glory either) and certain influential opinions where only voiced because of constant government meddling through previous decades since nationalisation.

I'm not against privatisation per se but it was poorly executed.

No political bias intended.

 

[Zoe]

I don't believe the Tories actually said what method of privatization would be used in their 1992 manifesto. John Major wanted a return to the big four but was convinced by the treasury to go for the franchise system.

 

[90019]

1. British Rail gave us the HST.

2. Privatisation gave us Voyagers.

Privatisation has also given us Meridians, Coradias and Desiros.

And BR gave us Pacers

 

[deltabravo]

I don't believe the Tories actually said what method of privatization would be used in their 1992 manifesto. John Major wanted a return to the big four but was convinced by the treasury to go for the franchise system.

From http://www.conservativemanifesto.com/1992/1992-conservative-manifesto.shtml#brighter

THE RAILWAYS

We believe that the railways can play a bigger part in responding to Britain's growing transport needs, and are investing accordingly Next year alone, British Rail's external finance will top £2,000 million. The new Passenger's Charter will help to raise the quality of service. For the first time ever performance targets will be set, widely published and rigorously monitored; fare levels will reflect the standards set; and discounts will be paid to regular travellers where performance targets are not met.

We believe that the best way to produce profound and lasting improvements on the railways is to end BR's state monopoly We want to restore the pride and local commitment that died with nationalisation. We want to give the private sector the opportunity to operate existing rail services and introduce new ones, for both passengers and freight.

A significant number of companies have already said that they want to introduce new railway services as soon as the monopoly is ended. We will give them that chance.

Our plans for the railways are designed to bring better services for all passengers as rapidly as possible. We believe that franchising provides the best way of achieving that. Long term, as performance improves and services become more commercially attractive as a result of bringing in private sector disciplines, it will make sense to consider whether some services can be sold outright.

In the next Parliament:

By franchising, we will give the private sector the fullest opportunity to operate existing passenger railway services.
Required standards of punctuality, reliability and quality of service will be specified by franchises; subsidy will continue to be provided where necessary; arrangements to sustain the current national network of services will be maintained; and through-ticketing will be required.
A new Rail Regulator - who will ensure that all companies have fair access to the track - will award the franchises and make sure that the franchisees honour the terms of the contract.
BR's accounting systems and internal structures will be reorganised. One part of BR will continue to be responsible for all track and infrastructure. The operating side of BR will continue to provide passenger services until they are franchised out to the private sector.
The franchise areas will be decided only after technical discussions with BR. But our aim will be to franchise out services in such a way as to reflect regional and local identity and make operating sense. We want to recover a sense of pride in our railways and to recapture the spirit of the old regional companies.
We will sell BR's freight operations outright. We will also sell its parcels business.
We will be prepared to sell stations - which we want to be centres of activity - either to franchisees or independent companies.
The Railway Inspectorate will be given full powers to ensure the highest standards of safety.

 

[Zoe]

Interesting, in that case it was very clear what the Tories were going to do if they had won the election. Don't blame them for doing exactly what they said they were going to do, t was the people that voted them in.

 

[asylumxl]

Interesting, in that case it was very clear what the Tories were going to do if they had won the election. Don't blame them for doing exactly what they said they were going to do, it was the people that voted them in.

As people always seem to. If they voted based on policy rather than just voting for "someone else", we'd probably be a million times better off.

 

[4SRKT]

RFF would still have to charge SNCF for track access though.

But it's not a real charge. It's an accountant moving sums from one line in the P&L to another, affecting the true bottom line of nobody. It's Transfer Pricing rather than a commercial relationship.

 

[Zoe]

It would have to be a a clear charge though as under the EU Directive any other company should also be able to pay RFF the same charge for track access.