Why is there now an obsession with re-nationalisation?

[PeterC]

No, the skewed comparison comes in a previous poster saying that "nationalisation won't touch the sides of innovation" when experience tells us this isn't necessarily the case.

Yes, the franchises are in a financial straightjacket and that doesn't allow innovation in track and maintenance. There has also been precious little innovation in ticketing in the past twenty years, with only one and a bit railcards introduced, areas which the passenger facing part of the industry should lead.

A truely innovative industry could have introduced a bahncard across the board, rail miles schemes across the board, carnet travel across the railway, slicker business offers across the railway as an example. We've seen none of these from this "innovative" private sector.

None of that innovation could come with the present franchise model.

 

[AndrewE]

You must have missed the bit where I was talking about the last twenty years and a globalised market.

Seeing as our Pendolinos were built 2001-04 I reckon that is within the last 20 years.

In any event, the concept of tilting trains can be traced back to the late 1930s. Just because BR did *some* interesting work in this area decades ago doesn’t give make the public sector its only father.

Is anybody seriously suggesting that a reincarnated BR would once more design and build its own rolling stock?

Maybe not, but I bet the loss of in-house overhaul and modification capability is regretted by a lot of fleet engineers... I wonder if the CMEE of Scotrail (if he existed) would be cursing whoever put his HST coach upgrades out to tender?

 

[yorksrob]

None of that innovation could come with the present franchise model.

My point exactly.

Surely if private ownership were so integral to innovation, as some privatisation cheerleaders suggest, pretty much any private model would be more innovative than the old nationalised railway.

And surely one of the Governments of the past twenty years will have chosen a model that does enable an element of innovation.

 

[B&I]

There's also the consideration that if a TOC or ROSCO wants to carry out capital investment, it picks up the phone to its' bankers (or parent company) and arranges the finance it needs.

If British Rail Mark II wants to carry out capital investment, it has to go to the Treasury. If government finance is available, it's at a much better interest rate than commercial finance. But it's much more likely to be unavailable, because government borrowing is limited for political reasons.

How many examples can you provide of capital investment by any TOC, exvept Chiltern ?

It's all very well talking about the wonderful things the private sector could do in theory. The practical reality is that most private actors involved with rail do what far too many private actors do in Britain in general - take up a franchise to run a public service and do little to improve it, knowing that in most cases the government will subsidise them should anything go wrong

 

[B&I]

But if you don't pay dividends, the people who own the company don't make a living (unless they are also employees being paid a wage, in which case their tax rate is income tax + NI).

I have my own business which is run as a limited company. At the end of the tax year, I pay corporation tax on whatever profits I/the company has made. But what's left from the profits after corporation tax still belongs to the company - even though it's my company, it's not my money: It's the company's money, and it can't legally be used for anything other than running and investing in the company. If I want to actually earn a living from the company, then I have to get those profits paid to myself: I can't just say, it's my company, therefore it's my money - that would be illegal. So instead, I have to have the company formally pay me the money as a dividend - at which point I pay dividend tax. And it's not a separate pot of money: The money I'm paying dividend tax on is the same money that my company has already paid corporation tax on. That's why you need to add tho two taxes to get an idea of the actual tax paid on the profits.

There is a world of difference between what I assume (with no intended disrespect) is a fairly small business like yours, and a very large limited company paying salaries to large numbers of staff and with a lot more discretion about what dividend to pay

 

[RLBH]

How many examples can you provide of capital investment by any TOC, exvept Chiltern ?

TOCs, not so much.

ROSCOs and FOCs, quite a bit.

 

[DynamicSpirit]

My point exactly.

Surely if private ownership were so integral to innovation, as some privatisation cheerleaders suggest, pretty much any private model would be more innovative than the old nationalised railway.

And surely one of the Governments of the past twenty years will have chosen a model that does enable an element of innovation.

I think what innovation depends on is that either an industry is open to new people or companies coming in to try out their new ideas, or that the existing organisations are very open to new ideas emerging from their staff. In theory, privatisation does enable the former (and may or may not help with the latter, depending on the internal structure and culture of existing companies). In practice of course, the financial barriers to entering the rail industry are huge, which is perhaps why privatisation doesn't seem to have helped that much with innovation. What ought to help is that, instead of one BR, there are lots of TOCs, any one of which may have and seek to develop a new idea. However, in practice, I'm guessing the restrictions of the franchising model tend to work against that, which is perhaps why we haven't seen much more innovation recently than we did under BR.

 

[DynamicSpirit]

There is a world of difference between what I assume (eith no intended disrespect) is a fairly small business like yours, and a very large limited company paying salaries to large numbers of staff and with a lot more discretion about ehat dividend to pay

Yes there are many differences between a small and a large business (and don't worry, no disrespect assumed. My business is indeed a very small, one-person, affair). However, I don't think any of the differences are relevant to dividends.

Look at it this way: If you are an employee, you get your salary, and you pay income tax and NI on it. Once you've paid those, the money you've earned is yours to do whatever you like with. End of story.

For a company, the company makes profits and pays corporation tax on those profits. But that's not the end of the story because, until those profits get paid to a living human being, then no living human being can enjoy those profits. As long as those profits are owned by the company, then nothing can be done with those profits except re-invest them in the company. The only way to get those profits into the hands of a human being is to pay them out as dividends. And you can't pay dividends without the recipient paying dividend tax (well, at least in the UK and I believe that's generally true of all industrialised countries. Maybe things are a bit more lax in places like Somalia ). That's just as true for a big multi-billion multinational company as it is for a small one-person business like mine.

Things start to look a bit more complicated for larger companies, and companies that have their shares traded, because you have things like companies owning other companies, and investment companies hoping to make a profit by trading shares and so on. But none of that changes the key principle that no individual can actually get their hands on those profits until they are paid out as dividends (and therefore attract dividend tax).

 

[yorksrob]

I think what innovation depends on is that either an industry is open to new people or companies coming in to try out their new ideas, or that the existing organisations are very open to new ideas emerging from their staff. In theory, privatisation does enable the former (and may or may not help with the latter, depending on the internal structure and culture of existing companies). In practice of course, the financial barriers to entering the rail industry are huge, which is perhaps why privatisation doesn't seem to have helped that much with innovation. What ought to help is that, instead of one BR, there are lots of TOCs, any one of which may have and seek to develop a new idea. However, in practice, I'm guessing the restrictions of the franchising model tend to work against that, which is perhaps why we haven't seen much more innovation recently than we did under BR.

I think also the issue with franchising is that even if one TOC did have an innovative idea, it would be very difficult for it to be adopted network wide.

 

[Dr Hoo]

Continuing with the ‘innovation’ theme, it isn’t always easy to distinguish between services and facilities just ‘getting better’ and more obvious ‘nobody has done it before’ innovation.
Something like increased frequencies might hardly be seen as innovative in the same way as tilting trains but can still have the effect of significantly reducing journey times for many passengers.

Also many new features are seen as simply keeping up with wider society or other modes. E.g. a typical modern car may have air conditioning, the ability to charge a mobile phone, a smart sat nav that can make sensible estimates of journey time allowing for congestion, more convenient luggage space than older models and so forth. Purchase of tickets on line, linking to mobile devices, etc. is another field. Arguably the franchises and ROSCOs have been quite progressive in these areas. We simply don’t know what a current nationalised BR would have done.

Going back to my own career, which included over 20 years with BR, it did frustrate me how long both attitudes and actual services took to change. InterCity was undoubtedly a great concept but it took so long to fully exploit it. Consider that the Railways were nationalised in 1948 with no really overarching vision. For a long time the regions seemed to persist with a ‘flagship train’ approach such as The Elizabethan and the Atlantic Coast Express. It took 15 years and the arrival of Dr Beeching from the private sector to really start articulating the concept of long distance, high speed as a market segment that railways were good at. Despite a good start with things like Mark 2 coaches, the corporate identity, the Deltics and Euston-Manchester/Liverpool electrification it still took ages to really capitalise on the idea. In fact the next 15 years saw the currency increasingly debased. It is amazing to look back at the cover of the 1978 National Rail Timetable and see an HST alongside a refurbished Class 101 DMU. The irony being that an ‘inter city’ passenger might well end up on either train. The map of inter city services included routes like the Arun Valley, lines round the Thanet Coast, the Hope Valley, the Durham Coast and Aberdeen-Inverness. It wasn’t really until the late 1980s, no less than 40 years after nationalisation, that InterCity could be recognised for offering a genuinely consistent product.

 

[underbank]

Surely if private ownership were so integral to innovation, as some privatisation cheerleaders suggest, pretty much any private model would be more innovative than the old nationalised railway.

Innovation needs freedom and creativity. When the TOCS are hog-tied by their short term franchise agreement, i.e. restricted in their fares, restricted in timetables, restricted as to routes, restricted as to which stations to stop at, restricted as to the model of income generation (fare apportionment rules), and restrictions even as to which trains to run, there's no freedom to innovate. The whole system is wrong simply because it's not proper privatisation - it's pseudo privatised but remains mostly state controlled.

Compare with heritage lines, many of whom do special events, combined tickets with other attractions & public transport - that's what freedom can achieve to facilitate innovation and creative thinking.

 

[yorksrob]

Continuing with the ‘innovation’ theme, it isn’t always easy to distinguish between services and facilities just ‘getting better’ and more obvious ‘nobody has done it before’ innovation.
Something like increased frequencies might hardly be seen as innovative in the same way as tilting trains but can still have the effect of significantly reducing journey times for many passengers.

Also many new features are seen as simply keeping up with wider society or other modes. E.g. a typical modern car may have air conditioning, the ability to charge a mobile phone, a smart sat nav that can make sensible estimates of journey time allowing for congestion, more convenient luggage space than older models and so forth. Purchase of tickets on line, linking to mobile devices, etc. is another field. Arguably the franchises and ROSCOs have been quite progressive in these areas. We simply don’t know what a current nationalised BR would have done.

Going back to my own career, which included over 20 years with BR, it did frustrate me how long both attitudes and actual services took to change. InterCity was undoubtedly a great concept but it took so long to fully exploit it. Consider that the Railways were nationalised in 1948 with no really overarching vision. For a long time the regions seemed to persist with a ‘flagship train’ approach such as The Elizabethan and the Atlantic Coast Express. It took 15 years and the arrival of Dr Beeching from the private sector to really start articulating the concept of long distance, high speed as a market segment that railways were good at. Despite a good start with things like Mark 2 coaches, the corporate identity, the Deltics and Euston-Manchester/Liverpool electrification it still took ages to really capitalise on the idea. In fact the next 15 years saw the currency increasingly debased. It is amazing to look back at the cover of the 1978 National Rail Timetable and see an HST alongside a refurbished Class 101 DMU. The irony being that an ‘inter city’ passenger might well end up on either train. The map of inter city services included routes like the Arun Valley, lines round the Thanet Coast, the Hope Valley, the Durham Coast and Aberdeen-Inverness. It wasn’t really until the late 1980s, no less than 40 years after nationalisation, that InterCity could be recognised for offering a genuinely consistent product.

And now after twenty years, there's no consistency in the InterCity product, with poorer quality in terms of passenger comfort in many cases. Progress ?

 

[yorksrob]

Innovation needs freedom and creativity. When the TOCS are hog-tied by their short term franchise agreement, i.e. restricted in their fares, restricted in timetables, restricted as to routes, restricted as to which stations to stop at, restricted as to the model of income generation (fare apportionment rules), and restrictions even as to which trains to run, there's no freedom to innovate. The whole system is wrong simply because it's not proper privatisation - it's pseudo privatised but remains mostly state controlled.

Compare with heritage lines, many of whom do special events, combined tickets with other attractions & public transport - that's what freedom can achieve to facilitate innovation and creative thinking.

Heritage lines have the freedom not to pay their volunteers, which changes things somewhat.

 

[paul1609]

And now after twenty years, there's no consistency in the InterCity product, with poorer quality in terms of passenger comfort in many cases. Progress ?

There never was a consistency Inter City was a selection of routes cherry picked for political reasons by BR era managers and the government. There was absolutely no consistency in including an 18 mile airport shuttle but excluding stuff like London to Bournemouth. Whats happened since is that routes such as London to Bristol have become commuter routes where the commuters want a seat and are not bothered about catering. Once London to Bristol became commuter it undermined the other GWR routes. If you were carrying out a BR sectorisation today London to Cardiff would probably be Network South East.

 

[RLBH]

If you were carrying out a BR sectorisation today London to Cardiff would probably be Network South East.

Once HS2 comes in, London to Manchester will probably come under 'Network SouthEast'.

 

[Bookd]

How many examples can you provide of capital investment by any TOC, exvept Chiltern ?

It's all very well talking about the wonderful things the private sector could do in theory. Tje practical reality is that most private actors involved with rail do what far too many private actors do in Britain in general - take up a franchise to run a public service and do little to improve it, knowing that in most cases the government will subsidise them should anything go wrong

Chiltern, although they have their critics, have invested a lot of their own money in development from a run down service under threat of closure to a very good operation. This is because they were given a long term franchise so that they had enough time to repay their investment.
When John Prescott had control he did not allow any more such franchises and so thereafter there was no benefit in franchisees investing money in a job that might be taken away from them before they had their money back.
Prescott's political view of the railway was exemplified after the Paddington disaster when, before the dust had cleared he was on TV blaming it on privatisation when the track layout and signalling had been installed by BR before privatisation took place.

 

[underbank]

Prescott's political view of the railway was exemplified after the Paddington disaster when, before the dust had cleared he was on TV blaming it on privatisation when the track layout and signalling had been installed by BR before privatisation took place.

A bit like Grenfell Tower with various people the same day blaming privatisation or austerity, or both, before they had any knowledge of the actual facts.

 

[quantinghome]

Chiltern, although they have their critics, have invested a lot of their own money in development from a run down service under threat of closure to a very good operation. This is because they were given a long term franchise so that they had enough time to repay their investment.

Chiltern could do it because they had a largely isolated network where the capacity improvements were pretty obvious and relatively easy to undertake, on an underutilised route that was ripe for generating large volumes of commuter traffic. They were also building on the work already started during BR days. I doubt this model would have worked elsewhere on the network. In fact it was the attempt to undertake this on a larger scale with the WCML upgrade that killed Railtrack.

The basic fact is that passenger railways do not present viable commercial investments - it will always be the taxpayer who pays, one way or the other.

 

[yorksrob]

There never was a consistency Inter City was a selection of routes cherry picked for political reasons by BR era managers and the government. There was absolutely no consistency in including an 18 mile airport shuttle but excluding stuff like London to Bournemouth. Whats happened since is that routes such as London to Bristol have become commuter routes where the commuters want a seat and are not bothered about catering. Once London to Bristol became commuter it undermined the other GWR routes. If you were carrying out a BR sectorisation today London to Cardiff would probably be Network South East.

London to Bristol will always be an InterCity route because of the way in which it links two major economic centres. Yes it has commuters, however so does the Yorkshire Pullman from Leeds to London. That doesn't stop it being InterCity

With the exception perhaps of the Gatwick express, which always seemed a bit of a marketing led anomoly, BR InterCity did pretty well at demarcating the mainlines linking main economic centres.

 

[tbtc]

London to Bristol will always be an InterCity route because of the way in which it links two major economic centres. Yes it has commuters, however so does the Yorkshire Pullman from Leeds to London. That doesn't stop it being InterCity

With the exception perhaps of the Gatwick express, which always seemed a bit of a marketing led anomoly, BR InterCity did pretty well at demarcating the mainlines linking main economic centres.

In which case Edinburgh and Glasgow aren't a pair of major economic centres?

Or Leeds and Manchester?

Bristol to Cardiff?

Leicester and Birmingham?

(just because BR did something in a particular way in the '80s doesn't make it appropriate for the twenty first century)

 

[DynamicSpirit]

Innovation needs freedom and creativity. When the TOCS are hog-tied by their short term franchise agreement, i.e. restricted in their fares, restricted in timetables, restricted as to routes, restricted as to which stations to stop at, restricted as to the model of income generation (fare apportionment rules), and restrictions even as to which trains to run, there's no freedom to innovate. The whole system is wrong simply because it's not proper privatisation - it's pseudo privatised but remains mostly state controlled.

Those restrictions mean that TOCs have less freedom to innovate than they would have done in the absence of those restrictions. They don't mean that TOCs have no freedom to innovate. If you want, you can still innovate, for example, by introducing advance fares or your-TOC-only fares, or introducing a Southern Daysave ticket, or by looking at other ways to sell tickets, or by changing the timetable within the franchise restrictions, or by providing extra services where the franchise allows it, or by providing different services on trains, or by making stations that are under your control nicer and so on.

 

[Dr Hoo]

Surely many

Those restrictions mean that TOCs have less freedom to innovate than they would have done in the absence of those restrictions. They don't mean that TOCs have no freedom to innovate. If you want, you can still innovate, for example, by introducing advance fares or your-TOC-only fares, or introducing a Southern Daysave ticket, or by looking at other ways to sell tickets, or by changing the timetable within the franchise restrictions, or by providing extra services where the franchise allows it, or by providing different services on trains, or by making stations that are under your control nicer and so on.

Surely many successive franchises (and the limited number of open access operators) have done just that, which at least partially explains why passenger numbers have doubled.
But some people can still only see the last 20 or so years through a prism of ‘price gouging’, ‘ironing board seats’, ‘yield management’, ‘scorched earth station staffing’ or whatever.

 

[LNW-GW Joint]

And then people complain there's no consistency across the network, or that the fares system is "too complex"!
I remember when all trains were the same shade of blue.

 

[yorksrob]

In which case Edinburgh and Glasgow aren't a pair of major economic centres?

Or Leeds and Manchester?

Bristol to Cardiff?

Leicester and Birmingham?

(just because BR did something in a particular way in the '80s doesn't make it appropriate for the twenty first century)

Edinburgh - Glasgow was/is an InterCity service, in terms of GNER/XC.

You could make an argument for them, but they're all comparatively short or slow. There's a bit of overlap with some services that could potentially be described as "regional express" services, but with the exception of Gatwick Express, I don't think you can reasonably argue that any of the main routes of the InterCity sector aren't long distance passenger main lines, deserving of a certain standard of speed and comfort.

 

[Gareth Marston]

Surely many

Surely many successive franchises (and the limited number of open access operators) have done just that, which at least partially explains why passenger numbers have doubled.
But some people can still only see the last 20 or so years through a prism of ‘price gouging’, ‘ironing board seats’, ‘yield management’, ‘scorched earth station staffing’ or whatever.

The growth of passenger numbers can also be seen on many regional lines that had little or no change from what BR provided. Take the "no growth" Wales and Border franchise increasing numbers from 18 million to 30 million. All rather suggests external factors are at play.

 

[underbank]

The growth of passenger numbers can also be seen on many regional lines that had little or no change from what BR provided. Take the "no growth" Wales and Border franchise increasing numbers from 18 million to 30 million. All rather suggests external factors are at play.

Population growth, traffic congestion, embargo on new roads/improvements, other "anti car" policies.

 

[paul1609]

London to Bristol will always be an InterCity route because of the way in which it links two major economic centres. Yes it has commuters, however so does the Yorkshire Pullman from Leeds to London. That doesn't stop it being InterCity

With the exception perhaps of the Gatwick express, which always seemed a bit of a marketing led anomoly, BR InterCity did pretty well at demarcating the mainlines linking main economic centres.

The problem is that Bristol is no longer the big earner on London Bristol services. It would be interesting to look back to BR days and calculate what percentage of the income was generated by Bristol to London and compare it to now. Id guess that with all trains now stopping at reading and Swindon and many at Didcot Parkway it would be a massive fall. Thats why Great Western is now a commuter railway with services extended to South Wales etc. rather than a classic inter city line.

 

[The Ham]

The problem is that Bristol is no longer the big earner on London Bristol services. It would be interesting to look back to BR days and calculate what percentage of the income was generated by Bristol to London and compare it to now. Id guess that with all trains now stopping at reading and Swindon and many at Didcot Parkway it would be a massive fall. Thats why Great Western is now a commuter railway with services extended to South Wales etc. rather than a classic inter city line.

The question is, why is Bristol no longera big Earner?

It's our because passenger numbers have fallen from Bristol or is it because passenger numbers have grown faster elsewhere than they have from Bristol?

If it is the former then things need to change back. However if it is the latter then it's good that it has changed as it is catering for the suppressed demand that existed before.

If there is going to bea resurgence of the InterCity brand it would be better to look forward to new High Speed rail lines to provide it rather than looking back to view of how it was in the past with train services being marginally quicker (sometimes) but at the expense of frequency (and therefore capacity).

Yes there are problems with the current model, likewise there were problems with the old model and going backwards may not be as helpful as people think. That's not an argument for things starting as they are though, it's an argument for making changes which aim to bring the benefits of both without needing or risking a very disruptive change

 

[yorksrob]

The problem is that Bristol is no longer the big earner on London Bristol services. It would be interesting to look back to BR days and calculate what percentage of the income was generated by Bristol to London and compare it to now. Id guess that with all trains now stopping at reading and Swindon and many at Didcot Parkway it would be a massive fall. Thats why Great Western is now a commuter railway with services extended to South Wales etc. rather than a classic inter city line.

Reading is the fly in the ointment which distorts what should be an IC service, but Crossrail may help to reduce the pressure on IC services from there to an extent. As far as Swindon is concerned, I don't see why it is any less "InterCity" than Grantham or Peterborough.

 

[paul1609]

Reading is the fly in the ointment which distorts what should be an IC service, but Crossrail may help to reduce the pressure on IC services from there to an extent. As far as Swindon is concerned, I don't see why it is any less "InterCity" than Grantham or Peterborough.

I can't see the ECML south of Doncaster remaining Intercity post HS2.