Andy Burnham in pledge to renationalise railway network

[Railsigns]

Realistically, what will nationalisation achieve?

Massive savings for the taxpayer, amounting to billions of pounds annually.

This is a quote from the then Transport Secretary, George Young, from 1996:

I anticipate the level of subsidy will be about the same. It’ll then fall, because we’re getting better value for money from the people who bid for the franchises than we got from British Rail, so the taxpayer will eventually save money, not lose money.

And this is the reality (official ORR figures):

http://dataportal.orr.gov.uk/displayreport/report/html/0913a84d-b740-4111-b6f8-bf6470e2d7b7

 

[Dave1987]

Massive savings for the taxpayer, amounting to billions of pounds annually.

This is a quote from the then Transport Secretary, George Young, from 1996:



And this is the reality (official ORR figures):

http://dataportal.orr.gov.uk/displayreport/report/html/0913a84d-b740-4111-b6f8-bf6470e2d7b7

Billions of £'s of savings? Pull the other one..... You really have a rose tinted view of nationalisation.

 

[Railsigns]

Billions of £'s of savings? Pull the other one..... You really have a rose tinted view of nationalisation.

The official figures read the same irrespective of tint.

The railways under public ownership cost taxpayers billions of pounds less each year than the privatised mess does today - a privatised mess which has added more than £35 billion to the national debt.

Go on sticking your head in the sand but that's the reality of the situation.

 

[Barn]

Billions of £'s of savings? Pull the other one..... You really have a rose tinted view of nationalisation.

The official figures read the same irrespective of tint.

The railways under public ownership cost taxpayers billions of pounds less each year than the privatised mess does today - a privatised mess which has added more than £35 billion to the national debt.

Go on sticking your head in the sand but that's the reality of the situation.

I think you need to do more than quote raw headline figures to make that point.

How much of the increase is profit margin and systemic inefficiencies caused by fragmentation and how much is inflation, running more services, renewing stock, carrying out major improvement projects, complying with new regulations, paying operational staff more, etc?

 

[HH]

I think you need to do more than quote raw headline figures to make that point.

How much of the increase is profit margin and systemic inefficiencies caused by fragmentation and how much is inflation, running more services, renewing stock, carrying out major improvement projects, complying with new regulations, paying operational staff more, etc?

Exactly. You can't compare apples to pineapples. Well, unless you're severely lacking in the common sense department.

The profit margin is actually quite small - NR accounts for the vast majority of expenditure and is non-profit making. The average TOC makes a 3% margin and, being in a position to know, I'd say it's saved considerably more than that in efficiencies since BR days. What BR might have done is of course unknown, but when I see the general state of public procurement (and that includes NR) then I wouldn't hold out any hope of nationalisation saving money.

Of course, like happened in BR days, money might be saved by not spending it; it's much easier for governments to cut spending when they directly control the purse strings. Be careful what you wish for...

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See other threads about the cost of the railway. The only truly profitable parts of the railway are Thameslink and SWT, the latter only just.

Except that this depends on how you attribute infrastructure costs. The current method is somewhat arbitrary. It's also distorted by the huge amount of NR borrowing. Why distorted? Money was just given to BR - they weren't charged interest on it.

 

[Aldaniti]

People will queue up to tell you that TOC's only make 3% profit. The 3% (its actually very slightly higher than that, nearer to 4%) but what they never say is it is NET profit, not GROSS profit. Net profit is effectively shareholder funds that usually goes straight in the back sack, and is calculated AFTER all those inflated management salaries, bonuses and duplicated costs have been paid. Trebles all round.

 

[yorksrob]

BR still had to pay bond holders. And the treasury generally gave smaller amounts of money in a way that was less efficient for planning (annual grants rather than five year plans etc)

This is a criticism of poor Government policy rather than the railway at the time.

 

[HSTEd]

A future government would buy duplicate fleets of trains to avoid using the Rosco's existing stock? That'd be a real money saver...

Considering a large fraction of the ROSCOs rolling stock is nearly worthless life expired junk that isn't a major problem.

You wouldn't buy anything pre privatisation for example.
Also note that unless the ROSCOs seriously lower leasing charges on the old trains, reducing their fair value for compulsory purchase purposes, they would certainly lose out when the economics make direct ordering new changes cheaper than continuing to lease the old ones.

And Andy Burnham is saying he would simply not issue more franchises - luckily for him that I doubt there will be many franchises expiring between 2020-2025.
--- old post above --- --- new post below ---

The profit margin is actually quite small - NR accounts for the vast majority of expenditure and is non-profit making. The average TOC makes a 3% margin and, being in a position to know, I'd say it's saved considerably more than that in efficiencies since BR days.

And yet real terms cost per passenger mile has not fallen despite the obvious economies of scale in carrying more passengers on the same amount of railway track.
Any 'efficiencies' compared to BR working methods (like what really?) have more than been wiped out by madness like the Delay Attributation board, who debate such salient points as whether a bird is large or small.

Additionally the TOCs have an interest in reducing their apparent returns, both for political and practical reasons - so I don't trust their margin figures.
They will likely include big payments for things like brand licensing fees like all large corporate operators.

What BR might have done is of course unknown, but when I see the general state of public procurement (and that includes NR) then I wouldn't hold out any hope of nationalisation saving money.
.

That depends - if you systematically go through and dismantle the vast majority of the bureaucracy you could save lots of money.
But dismantling such things is almost impossible once they are in place.

 

[PermitToTravel]

Can you imagine for example if a new British Rail were only allowed to order British-built locomotives?

That would not be permitted by the EU. http://europa.eu/youreurope/business/public-tenders/rules-procedures/index_en.htm

 

[HSTEd]

Anyone proposing renationalisation clearly has no understanding of the current rail freight business.

After Privatisation the customer can pick and choose the optimal railfreight operator for their business. They can play one off against another to get the best price and/or performance delivery. No longer are potentially-profitable but inconvenient flows priced-out of rail haulage.

There are virtually no potentially-profitable haulage routes in railfreight in Britain apart from things like MGR block trains and the like.
Which is one of the sectors of the BR railfreight business that didn't lose huge amounts of business to road haulage.

The railfreight sector has only survived because of giant subsidies by the Government directly and indirectly through Network Rail.

As a result rail freight has steadily increased in volume and value. Renationalisation would almost certainly reverse that trend. Can you imagine for example if a new British Rail were only allowed to order British-built locomotives?

And subsidies of railfreight operations have increased even faster.
Railfreight at any price is not a reasonable policy objective.

 

[Bodiddly]

Not to risk opening another nationalisation argument, we simply don't know how BR would have coped with the increase in passenger numbers. My thoughts are that BR would have had to have moved with the times but as with all government run entities it would have been starved of the vital funds that have been created by the private companies. It would have seen investment up to a point but we may not have seen the same amount of new rolling stock that has been commissioned up to now. Privatisation was a necessary evil to inject the cash into a massive industry but it's certainly hasn't been perfect.
I am for a nationalised rail system as I absolutely believe the current fragmentation does not work for the good of the travelling public but fear it has been set up so tightly in favour of the privateers, it would be far too expensive too return it to the public sector. That's not to say it wouldn't be possible.

 

[Barn]

I'm potentially in favour of public (or even staff mutual) challenger bids for franchises.

However, for me, the key advantage of the franchise system, and the hitherto quasi-independence of NR, is that they require the government to think ahead in terms of several years.

Were BR simply another government department, it would probably receive annual budgets, be under austerity pressure to deliver savings each year just like all other departments, and we'd constantly be wondering which services would be reduced next year as a result. It doesn't have to be a logical consequence of nationalisation, but in practical terms it would be.

 

[talldave]

The official figures read the same irrespective of tint.

The railways under public ownership cost taxpayers billions of pounds less each year than the privatised mess does today - a privatised mess which has added more than £35 billion to the national debt.

Go on sticking your head in the sand but that's the reality of the situation.

So quite cheap then, compared to the rest of the damage President Blair and Gormless Brown did trying to bankrupt the UK whilst in power?

 

[absolutelymilk]

And this is the reality (official ORR figures):

http://dataportal.orr.gov.uk/display...8-bf6470e2d7b7

So £1.6 billion in 1993 (before privatisation started) is £3billion in todays money. Consider the fact that passenger numbers have more than doubled since then (and it is more difficult to run services on a cramped network) and the £5.7billion we now spend is in fact a reduction in subsidy per passenger.

That's not even mentioning the fact that the railways are now much safer, and that compared to wage growth, the subsidy has dramatically fallen.

(using http://www.thisismoney.co.uk/money/...tion-calculator-value-money-changed-1900.html for inflation calculation)

 

[Greenback]

That would not be permitted by the EU. http://europa.eu/youreurope/business/public-tenders/rules-procedures/index_en.htm

The answer to that would be to leave the EU!

 

[Domeyhead]

All Andy has said is he would allow public sector operators to bid, which was exactly Labour policy at the last General Election....

Which "Public Sector Operators" would they be - the NHS? DVLA? DEFRA? The Army? ..............

 

[misterredmist]

I think anybody trying to compare expenditure, government subsidy and public purse costs from over 20 years ago until now is wasting everybody's time.

Yes,one of the ideas of privatisation was that there would be less public expenditure and that has clearly not been the case.

However, the railway, the demands upon it, the users of it and the whole costs of our infrastructure are totally alien to what would have been projected all those years ago.

Bearing in mind that the infrastructure is still a "national asset" ( some may say laibility ? ) the railway is STILL nationalised to some extent....

 

[matt_world2004]

Anyone proposing renationalisation clearly has no understanding of the current rail freight business.

Before Privatisation, when a freight contract came up for renewal the British Rail sales representative would visit the customer and offer a revised rate for the traffic, usually an increase to take account of inflation. The client then had the option of accepting the increase or transferring the traffic to (usually cheaper) road haulage. BR was the monopoly supplier of rail freight service. It was a "take-it-or-leave-it" approach and countless customers chose to leave it.

After Privatisation the customer can pick and choose the optimal railfreight operator for their business. They can play one off against another to get the best price and/or performance delivery. No longer are potentially-profitable but inconvenient flows priced-out of rail haulage.

As a result rail freight has steadily increased in volume and value. Renationalisation would almost certainly reverse that trend. Can you imagine for example if a new British Rail were only allowed to order British-built locomotives?

Why even under nationalisation would European open access rights end? it would still allow operators to rent track space if they wanted Infact Eurostar ran under such an arrangement before BR was privatised.
--- old post above --- --- new post below ---

Which "Public Sector Operators" would they be - the NHS? DVLA? DEFRA? The Army? ..............

I presume he means regional public transport regulators like tfl and tfGM etc etc heck even local councils could get in on the act London Borough of Ealing was a bus operator for a while.

 

[Metrailway]

Presumably DOR as well

 

[CdBrux]

Imagine the reaction if DOR spent money on making a bid and then lost...

 

[Minstral25]

Thameslink (TSGN) is basically a nationalised railway anyway.

Runs on tracks provided by a Government Owned Company (Network Rail) that also provide the stations, operates under Government dictate of a management contract by government appointee "GTR", rolling stock purchased by the government and provided under a massive government funding deal (Cl 700's) and all the fares go to the government.

Is that not what a Nationalised Railway would look like in today's political and financial environments.

 

[jon0844]

Sounds like it.

I do wonder if NSE was making money near the end, was it down to the (from my personal memory) lack of investment on station upgrades, running very old rolling stock and other things that kept costs under VERY tight control.

At some point, things would have collapsed and a large amount of money would have been required.

I personally feel that we would see things being run for as long as possible (not necessarily anything wrong with that) and without a proper long term plan on what happens when a number of expensive bills arrive at once.

 

[Metrailway]

A large number of station upgrades were undertaken by NSE in the late 80s early 90s. Many stations which were upgraded at this time still have the NSE plaque commemorating the upgrade. NSE had a rolling programme of station refurbs and improvements for all stations in their area.

Plenty of new trains came along in the 90s including the Turbos and Networkers.

NSE's operational profit was £71 million in y/e March '94 and £5 million in y/e March '93.

EDIT: I should state that after 1991, NSE was responsible for the cost of all track maintenance in its area which makes its operational profit even more impressive.

 

[route:oxford]

We only had to wait 6 months in 1971. Sure you really waited 15 years? Did you live in the middle of nowhere? By the time BT was privatised, there was hardly any waiting lists

Nope, in the central belt of Scotland.

It's easy to forget how awful things were in the 70s

 

[matt_world2004]

Sounds like it.

I do wonder if NSE was making money near the end, was it down to the (from my personal memory) lack of investment on station upgrades, running very old rolling stock and other things that kept costs under VERY tight control.

At some point, things would have collapsed and a large amount of money would have been required.

I personally feel that we would see things being run for as long as possible (not necessarily anything wrong with that) and without a proper long term plan on what happens when a number of expensive bills arrive at once.

Well considering many stations still have network south east colour schemes, many tocs are using network south east rolling stock the same accusations at the very least could be lavelled on the tocs who have no reason to invest in a network they might not be running in a few years. The maintenance issues discovered when MTR crossrail took over the shenfield metro was terrible.

 

[Agent_c]

Yes, we finally got a phone in 1984 - after my parents joined the waiting list for a line in 1969.

10 years? With Openreach running the network, 10 years for a brand new line (not a reconnection) is quick...

 

[yorksrob]

A large number of station upgrades were undertaken by NSE in the late 80s early 90s. Many stations which were upgraded at this time still have the NSE plaque commemorating the upgrade. NSE had a rolling programme of station refurbs and improvements for all stations in their area.

Plenty of new trains came along in the 90s including the Turbos and Networkers.

NSE's operational profit was £71 million in y/e March '94 and £5 million in y/e March '93.

EDIT: I should state that after 1991, NSE was responsible for the cost of all track maintenance in its area which makes its operational profit even more impressive.

Indeed. The total route modernisation of Kent Link and Chiltern for example saw the refurbishment of stations track and signalling at the same time as the introduction of new trains to generate a step change in service. Of course, they couldn't do the whole network at the same time!

 

[zuriblue]

Indeed. The total route modernisation of Kent Link and Chiltern for example saw the refurbishment of stations track and signalling at the same time as the introduction of new trains to generate a step change in service. Of course, they couldn't do the whole network at the same time!

Plus the introduction of the Networkers on Kent Link meant a great deal of engineering works as they were too big to fit through Blackheath and Penge tunnels. That was not cheap.

 

[Railsigns]

I think you need to do more than quote raw headline figures to make that point.

How much of the increase is profit margin and systemic inefficiencies caused by fragmentation and how much is inflation, running more services, renewing stock, carrying out major improvement projects, complying with new regulations, paying operational staff more, etc?

Regardless of the reasons why they got it so badly wrong, the fact remains that the Tory government promised rail privatisation would reduce taxpayer subsidies when in fact those subsidies rose by several hundred per cent. There are only two possible conclusions:

Either they failed to take into account the many and various factors that have demanded increased public funding since privatisation, which smacks of gross incompetence on their part,

Or, they knew all along that subsidies would have to increase, making them liars. The fact that privatisations create opportunities for the Tories' friends and donors in the private sector to profit at taxpayers' expense is entirely coincidental of course.

So quite cheap then, compared to the rest of the damage President Blair and Gormless Brown did trying to bankrupt the UK whilst in power?

Too fatuous a question to warrant a full response.

 

[Domh245]

Either they failed to take into account the many and various factors that have demanded increased public funding since privatisation, which smacks of gross incompetence on their part,

I don't think anyone at all predicted the huge surge in passenger numbers that was going to happen.