Why is there now an obsession with re-nationalisation?

[quantinghome]

So you’re saying that they can never make money?

Short answer: Yes, with the odd exception.

The whole franchising edifice in the UK is held in place by huge injections of taxpayers' cash. Most of the franchises that generate a premium only do so because they don't pay all the network costs attributable to their operations. If this was done, only SWT and LNER would show a net profit. This ties in with previous research on the UK network. From the 1960s to the early 80s BR tried to identify a profitable core passenger network (this was of course the aim of Beeching). The conclusion was the Serpell report which, had it been implemented, would have seen a colossal closure programme, and even then the profits wouldn't have been sufficient to attract commercial lending rates.

The same is true worldwide, which is why nearly every country that has a passenger railway has a nationalised one. The USA has the world's largest rail network; it's almost entirely freight lines. It used to have an extensive passenger network prior to the plane and car. If it was profitable to run a passenger network you can be sure that someone in the USA would be doing so (yes, there are some plans to build new lines privately, but their long gestation indicates they're not such a hot investment). The exception is Japan, where the population density is such that it generates a profit - but even then it's not clear cut.

 

[quantinghome]

The one major reason I cannot support renationalisation is the risk of route cuts in times of economic downturn.

The franchise system is not perfect, but has been a godsend for rural routes which are often bundled in with more lucrative services. Even then, these lines often rely on local council subsidy to make their ticket prices affordable. Through franchise commitments, a lot have also seen improvements to station and frequency provisions, if not necessarily better stock.

There are a number of lines in places like East Anglia, Lincolnshire, Cumbria and the north of England which would be under real threat of service reduction and closure under a nationalised system if you had the wrong mix of incumbent government and economic conditions. It's all well and good when Corbyn and his ilk sweep in, reduce ticket prices and buy shiny new trains for every line at great expense, but what happens the next time the Tories get in, especially if the country is in an economic mess at the time?

The pattern is there from the very start to the very end of British Rail - economically marginal or loss-making routes are always under threat in a nationalised system, but are protected by franchising.

I disagree. Rural routes have been left open because of the political pressure to do so and the consequent legislation which makes them very difficult to shut. The government continues to subsidise them indirectly via the franchises. It chooses to do so due to political pressure and because the cost savings of closure would be meagre - a lesson learned from Beeching.

The wider point is that it's not just rural routes which are marginal or loss-making; almost the whole passenger network is. The reason closures were seen during BR was because that happened to be the time when freight shifted from rail to road and the network shifted from overall profit to loss. This point was unfortunately grasped only after large scale closures of loss making but useful passenger lines. Had the franchising system or the pre-BR Big Four been in place from the 40s to the 90s we would have seen the same or greater closures unless the government had decided to step in and provide financial support.

 

[sprunt]

And then people complain there's no consistency across the network, or that the fares system is "too complex"!

There's a whole sub-forum on this site (two if you count the disputes sub-forum) that pretty strongly supports that contention.

 

[The Ham]

Short answer: Yes, with the odd exception.

The whole franchising edifice in the UK is held in place by huge injections of taxpayers' cash. Most of the franchises that generate a premium only do so because they don't pay all the network costs attributable to their operations. If this was done, only SWT and LNER would show a net profit. This ties in with previous research on the UK network. From the 1960s to the early 80s BR tried to identify a profitable core passenger network (this was of course the aim of Beeching). The conclusion was the Serpell report which, had it been implemented, would have seen a colossal closure programme, and even then the profits wouldn't have been sufficient to attract commercial lending rates.

The same is true worldwide, which is why nearly every country that has a passenger railway has a nationalised one. The USA has the world's largest rail network; it's almost entirely freight lines. It used to have an extensive passenger network prior to the plane and car. If it was profitable to run a passenger network you can be sure that someone in the USA would be doing so (yes, there are some plans to build new lines privately, but their long gestation indicates they're not such a hot investment). The exception is Japan, where the population density is such that it generates a profit - but even then it's not clear cut.

However the costs to the UK are £4bn. However NR are spending £3.5bn in improvements and HS2 are spending £0.8bn on that.

Therefore (in simple terms) the railways are only loss making because of improvements to the infrastructure.

 

[quantinghome]

However the costs to the UK are £4bn. However NR are spending £3.5bn in improvements and HS2 are spending £0.8bn on that.

Therefore (in simple terms) the railways are only loss making because of improvements to the infrastructure.

I'm not sure it's as simple as that.

The latest release from ORR and NR accounts are here:
http://orr.gov.uk/__data/assets/pdf_file/0006/39381/rail-finance-statistical-release-2017-18.pdf
https://cdn.networkrail.co.uk/wp-content/uploads/2018/07/NRL-2018-ARA-Full.pdf

Direct support is £4.2bn (excluding HS2) according to ORR, £4.5bn according to NR accounts.
Excluding the grant, NR income is £2.1bn.
Its operational expenditure is £3.2bn. With depreciation and amortisation it's £4.7bn.
Finance costs are £2.2bn.

NR was also loaned £5.9bn by government. Could someone with more knowledge than I confirm whether that is separate to the grant?

 

[Taunton]

Surely the railways are fully nationalised already.

Network Rail is wholly owned by the government.

The various mainstream TOCs are all on limited duration franchise contracts, which are as agreed with the government on their terms, and periodically expire and put out to tender again by the government.

Some new rolling stock, such as the 800s, has been specifically ordered by the government and the franchise holder is told to use it.

Other rolling stock is as agreed as part of the franchise, that is as agreed with the government.

 

[HH]

Short answer: Yes, with the odd exception.

The whole franchising edifice in the UK is held in place by huge injections of taxpayers' cash. Most of the franchises that generate a premium only do so because they don't pay all the network costs attributable to their operations. If this was done, only SWT and LNER would show a net profit. This ties in with previous research on the UK network. From the 1960s to the early 80s BR tried to identify a profitable core passenger network (this was of course the aim of Beeching). The conclusion was the Serpell report which, had it been implemented, would have seen a colossal closure programme, and even then the profits wouldn't have been sufficient to attract commercial lending rates.

The same is true worldwide, which is why nearly every country that has a passenger railway has a nationalised one. The USA has the world's largest rail network; it's almost entirely freight lines. It used to have an extensive passenger network prior to the plane and car. If it was profitable to run a passenger network you can be sure that someone in the USA would be doing so (yes, there are some plans to build new lines privately, but their long gestation indicates they're not such a hot investment). The exception is Japan, where the population density is such that it generates a profit - but even then it's not clear cut.

This completely ignores the economic benefits of rail, which is where the obsession with a "profitable core network" breaks down. Even DfT understand this.

There are many profitable routes; it's just that the franchising system bundles non-profit making sections or routes in with them.

The US is completely different, e.g. because over their huge distances air has a significant advantage.

 

[quantinghome]

This completely ignores the economic benefits of rail, which is where the obsession with a "profitable core network" breaks down. Even DfT understand this.

There are many profitable routes; it's just that the franchising system bundles non-profit making sections or routes in with them.

The US is completely different, e.g. because over their huge distances air has a significant advantage.

I completely agree that there are wider economic benefits. The railways are critical national infrastructure and essential to the functioning of the economy. However, they require continuous support from government because the fare income is insufficient to generate a commercial return on investment, at least for a large proportion of th r network. As a result the rail network can never be truly privatised, at least not without massive contraction.

Yes, the US is different and air travel would dominate journeys of more than a few hundred miles. However if passenger rail networks were commercially viable you might expect a series of regional networks to have formed.

 

[Char1979lie]

We lost vital services that proved very useful like the red star parcel service and rail freight speedlink. Useful long haul Inter City routes like the Eastbourne to Edinburgh service was still in use by many businessman and tourists ... Then it all went with privatisation... How is that progress.....

 

[433N]

"Why is there now an obsession with re-nationalisation?

This is a strange question IMHO. We could re-frame the question, "Why is there not an obsession with privatising the road network".

At the end of the day, a country needs a transport system for carrying people and goods. Even with massive investment, the road network is creaking and unable to transfer goods where they need to be and people to work in a timely manner.

A mix of road and rail is essential for a population density such as we have now and the idea that one is privatised and one is not makes no sense whatsoever. If the rail system works well then it relieves congestion on roads. If it doesn't, then congestion on roads will increase. It should be common sense that there is a benefit in transporting 300 people from Edinburgh to London in one vehicle rather than 300 vehicles and it is probably cheaper to invest in a railway than build another 14 carriageways on the A1.

 

[JamesT]

We lost vital services that proved very useful like the red star parcel service and rail freight speedlink. Useful long haul Inter City routes like the Eastbourne to Edinburgh service was still in use by many businessman and tourists ... Then it all went with privatisation... How is that progress.....

Surely if they were that vital, they would have made commercial sense to continue? Progress is the paths used by those trains are available for other services, which are clearly well used given the way passenger numbers on the railways have increased over the last 25 years.

 

[Char1979lie]

Sorry I don't agree, there are some politicians who are hell bent on recklessly destroying a good nationalised railway that could of worked even better if looked after and ran properly. Those services I mentioned where a success the politicians of the time who had the axe didn't care... That's the answer...

 

[Char1979lie]

Surely if they were that vital, they would have made commercial sense to continue? Progress is the paths used by those trains are available for other services, which are clearly well used given the way passenger numbers on the railways have increased over the last 25 years.

Sorry I don't agree, there are some politicians who are hell bent on recklessly destroying a good nationalised railway that could of worked even better if looked after and ran properly. Those services I mentioned where a success the politicians of the time who had the axe didn't care... That's the answer...

 

[JamesT]

Sorry I don't agree, there are some politicians who are hell bent on recklessly destroying a good nationalised railway that could of worked even better if looked after and ran properly. Those services I mentioned where a success the politicians of the time who had the axe didn't care... That's the answer...

A success? Speedlink was losing £30m a year on revenue of £45m a year at the end. Red Star took several goes to sell off and they still had to abandon rail.
Surely if their downfall was politicians, then getting them out from under the thumb of the government is going to be better.

 

[Esker-pades]

We lost vital services that proved very useful like the red star parcel service and rail freight speedlink. Useful long haul Inter City routes like the Eastbourne to Edinburgh service was still in used by many businessman and tourists ... Then it all went with privatisation... How is that progress.....

Eastbourne to Edinburgh would have gone as passenger numbers went up and routes became more and more congested, privatisation or not. There are simply not the paths to run that sort of service anymore. Keeping a clockface timetable is how one gets the maximum capacity out of a route like the East Coast Main Line or the Brighton Main Line.

 

[R G NOW.]

After all this?. What is the best way to run a railway, So that the exchequer would get some back in return. Would have to cut out a lot of the waste.

I had always wondered why sealink and red star went, I was told at the time we had them, that they provided a non profit making service and covered their costs. This back when I was in my 20,s.

 

[Char1979lie]

After all this?. What is the best way to run a railway, So that the exchequer would get some back in return. Would have to cut out a lot of the waste.

I had always wondered why sealink and red star went, I was told at the time we had them, that they provided a non profit making service and covered their costs. This back when I was in my 20,s.

I believe cost

A success? Speedlink was losing £30m a year on revenue of £45m a year at the end. Red Star took several goes to sell off and they still had to abandon rail.
Surely if their downfall was politicians, then getting them out from under the thumb of the government is going to be better.

What if they got su

A success? Speedlink was losing £30m a year on revenue of £45m a year at the end. Red Star took several goes to sell off and they still had to abandon rail.
Surely if their downfall was politicians, then getting them out from under the thumb of the government is going to be better.

Now look at it... I Think it's worse under companies wanting profit and nothing else .. I would much rather it was for the people ran properly under nationalisation... Im sure it can be done..it cant go on like this...

 

[Char1979lie]

Eastbourne to Edinburgh would have gone as passenger numbers went up and routes became more and more congested, privatisation or not. There are simply not the paths to run that sort of service anymore. Keeping a clockface timetable is how one gets the maximum capacity out of a route like the East Coast Main Line or the Brighton Main Line.

it's a shame, at least we have the memories and photos. I will always remember the run up to Scotland with my dad from Eastbourne on the loco hauled Inter City. And train spotting the 47s when they went through Hampden Park....

 

[Esker-pades]

it's a shame, at least we have the memories and photos. I will always remember the run up to Scotland with my dad from Eastbourne on the loco hauled Inter City. And train spotting the 47s when they went through Hampden Park....

It sounds wonderful, but the current situation means it is simply not possible anymore.

 

[Char1979lie]

It sounds wonderful, but the current situation means it is simply not possible anymore.

I was being nostalgic.....But yes I can understand that now. .. Cheers.... We should all keep pushing for line reopenings... Keep signing the petitions... All of us... Then maybe we can make a difference and a real positive change....

 

[LNW-GW Joint]

Eastbourne to Edinburgh would have gone as passenger numbers went up and routes became more and more congested, privatisation or not. There are simply not the paths to run that sort of service anymore. Keeping a clockface timetable is how one gets the maximum capacity out of a route like the East Coast Main Line or the Brighton Main Line.

Those odd XC services were pretty empty east of Reading, which is why they went.
I miss them too, but they were hopelessly uneconomic.
It was inevitable they would concentrate on the core.
XC made a huge loss at privatisation, and the operators (VT and later Arriva) have managed to eliminate those losses, but it has taken 20 years.

I had always wondered why sealink and red star went, I was told at the time we had them, that they provided a non profit making service and covered their costs. This back when I was in my 20,s.

Sealink and BREL were sold off to prop up the rest of BR, and to sink or swim with the specialist industry majors.
Ferries in general are now in the private sector (I know there are exceptions, but most EU ferry routes are now in the hands of specialist operators like P&O and Stena).
BREL/Bombardier now competes head to head with Alstom, Siemens and Hitachi and others.
Within BR they would never have had the scope or market to develop a full range of modern trains.
I can't think of any other EU operator, even the nationalised ones, with in-house manufacturing.
Red Star depended on cheap space on passenger trains, and BR's sectorisation eliminated that option on most trains.
Mail and sleepers/motorail also then had to have dedicated resources and found it difficult to operate economically.
Much of the legacy mode of operation was scrapped in the run-up to privatisation.
The franchise specs did not include these services (with exceptions, like Cal/GW sleepers).

 

[coppercapped]

I completely agree that there are wider economic benefits. The railways are critical national infrastructure and essential to the functioning of the economy. However, they require continuous support from government because the fare income is insufficient to generate a commercial return on investment, at least for a large proportion of th r network. As a result the rail network can never be truly privatised, at least not without massive contraction.

Yes, the US is different and air travel would dominate journeys of more than a few hundred miles. However if passenger rail networks were commercially viable you might expect a series of regional networks to have formed.

Quite so - but the population spread and the arrangement of the city centres in the USA makes it difficult to find an effective solution. Apart from the older, more closely packed parts of the East Coast, the population is very spread out both around and within the towns and cities. There are no, or very few, cities with a sufficiently dense core that makes a railway a viable form of feeding them. A group of them within a couple of hours travel of each other would be ideal for rail links.
The road system is based on a grid and development follows the grid so both the cores and the suburbs are low density - in fact it is sometimes difficult to tell where 'downtown' stops and the suburbs start! This is not fertile ground for a railway which thrives on concentration.

Nevertheless, the cities and areas which are sufficiently dense are making the first faltering steps to create rail corridors, but they are few and far between. Sections of the east coast of Florida, around some large cities in the mid-West, the Los Angeles conurbation and the Bay Area - and that's about it!

Of course - if the Americans could be persuaded to modify their rules and regulations to permit lighter and faster vehicles there may well be more routes!

 

[yorksrob]

Surely if they were that vital, they would have made commercial sense to continue? Progress is the paths used by those trains are available for other services, which are clearly well used given the way passenger numbers on the railways have increased over the last 25 years.

As Quantinghome points out up thread, a large proportion of the passenger network doesn't "make sense" in purely commercial terms i.e. in terms of making a profit (including some very busy ones). That doesn't mean to say they don't make sense as a transport service.

 

[yorksrob]

A success? Speedlink was losing £30m a year on revenue of £45m a year at the end. Red Star took several goes to sell off and they still had to abandon rail.
Surely if their downfall was politicians, then getting them out from under the thumb of the government is going to be better.

You'd have thought so wouldn't you !

But no, privatisation was a poorly thought out fiasco borne of ideological obsession.

 

[JohnB57]

This is a strange question IMHO. We could re-frame the question, "Why is there not an obsession with privatising the road network".

Because 100% of the population rely on the road network?

 

[yorksrob]

Because 100% of the population rely on the road network?

But surely if privatisation is such a beneficial way of operating infrastructure, the fact that 100% of the population use it should be irrelevant. Infact, it should make even more sense to privatise the road network, as the efficiencies and marketing improvements thus brought about, would benefit even more people and provide a much greater benefit to the nation as a whole !

 

[Meerkat]

Suggest a model for privatised roads. I think you will find that there isn’t one that works here

 

[AndrewE]

Suggest a model for privatised roads. I think you will find that there isn’t one that works here

a bit like rail then...

 

[yorksrob]

Suggest a model for privatised roads. I think you will find that there isn’t one that works here

Some might say it's questionable that there is one that works for rail.

Anyway, what studies have been done to suggest there isn't a model for privatised roads to work ? One could bundle all roads up into regional groups and run them as private monopolies, paid for by all local residents. Such a system has been used for water distribution for decades.

Alternatively, one could introduce road charging for said local monopolies with potential franchisees competing to the DfT on the basis of which gives better value to the taxpayer.

Alternatively, you could have one company owning the roads, with private companies competing to purchase road space and selling it to road users, who would pay road fees to the company of their choice. Such a system would be analogous to the gas and electricity utilities.

There are many potential options that could bring private enterprise to the roads.

 

[JohnB57]

But surely if privatisation is such a beneficial way of operating infrastructure, the fact that 100% of the population use it should be irrelevant. Infact, it should make even more sense to privatise the road network, as the efficiencies and marketing improvements thus brought about, would benefit even more people and provide a much greater benefit to the nation as a whole !

Well we don’t really know how beneficial it is, do we Rob? It’s quite a few years since the rails were in private hands.

I do like the way your Rhubarb Triangle accent sounds with your tongue in your cheek though...