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Delay repay: how do TOCs recover the cost?

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bb21

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No is your answer. It is considered for part of the financial case. There is no offsetting.
 

MikeWh

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No is not usually an appropriate answer to a question which starts with the word how.
 

800002

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As I've said above how is the cost actually recovered (I do have my theories).
Do you mean:
How do TOC's recover the cost incurred, from delays they have caused?
Or
How do TOC's recover the cost incurred, by them, when they have been affected by a third party causing the delay?
 

Deerfold

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Yes, well spotted. I missed the word "how" somehow and read the question as "is the cost...".

If the fault is their own, they don't. If the problem has been caused by someone else they have whole teams dedicated to recovering the cost (and showing the fault wasn't theirs).
 

Traintripper

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I understood that the toc claimed from network rail and then it was up to you to claim the delay repay, thus whatever wasn’t claimed turned into a nice little earner for the toc?
Is this correct?
 

AlterEgo

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I understood that the toc claimed from network rail and then it was up to you to claim the delay repay, thus whatever wasn’t claimed turned into a nice little earner for the toc?
Is this correct?

Not quite, the Schedule 8 payments for non-TOC delays are paid by NR to the TOC anyway and have nothing to do with delay repay.
 

Dr Hoo

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As has already been stated, Delay Repay is NOT related to Schedule 8 performance regimes, which are about FUTURE revenue effect.

Without getting into tedious detail, ‘Delay’ is measured for individual trains between ‘reporting points’, ‘Lateness’ is not the same and is measured at (not between) a smaller set of ‘monitoring points’ and Delay Repay is something that is related to the experience of individual passengers (not trains), possibly across a multi-leg journey and possibly concluding at a station that is neither a reporting point nor a monitoring point. It does not actually lend itself to piggybacking on other performance measurement and management systems.
 

tom73

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I thought this might be of interest. Perhaps Admin can let us know if the article is accurate.
https://www.theguardian.com/money/blog/2016/dec/31/train-companies-pocket-millions-delays
...train operators receive a “schedule 8” payment from Network Rail when something goes wrong with the infrastructure, such as a points failure. It is designed to compensate them for the impact of poor performance on their revenue. It is estimated that last year train operators picked up £107m from Network Rail for delays. But how much was paid out to the customers who were the victims of these problems? Just £26m. It means the train operating companies profited by some £81m because something went wrong....
 
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AlterEgo

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Bertie the bus

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As has already been stated, Delay Repay is NOT related to Schedule 8 performance regimes, which are about FUTURE revenue effect.
No it isn't. That might be the theory behind it and the way the industry likes to sell it but, as someone has already stated, the reality is delays can be a nice little earner for TOCs and some have based their bids on getting a big wad from Network Rail.
 

AlterEgo

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No it isn't. That might be the theory behind it and the way the industry likes to sell it but, as someone has already stated, the reality is delays can be a nice little earner for TOCs and some have based their bids on getting a big wad from Network Rail.

That logic is akin to saying that Delay Repay is a nice little earner for people's inconvenience and the effect on their working lives. It isn't. Compensation is not the same as earnings.
 

Haywain

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No it isn't. That might be the theory behind it and the way the industry likes to sell it but, as someone has already stated, the reality is delays can be a nice little earner for TOCs and some have based their bids on getting a big wad from Network Rail.
As much as that may be the case, it is still nothing to do with Delay Repay.
 

Ken H

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Didnt an ECML operator (National express I think but may well be wrong) base their franchise bid on an expectation of section 8 payments from network rail, which didnt happen as NR got their act together, contributing to them giving the keys back?
 

najaB

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Didnt an ECML operator (National express I think but may well be wrong) base their franchise bid on an expectation of section 8 payments from network rail, which didnt happen as NR got their act together, contributing to them giving the keys back?
I believe it was National Express. Wouldn't be the first poor bit of business planning on their part. Dare say it won't be the last either.
 

yorkie

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I have split the debate about whether or not Delay Repay should exist into a new thread: https://www.railforums.co.uk/threads/my-arguments-against-delay-repay.190417/

To be clear, Delay Repay payments are - as @bb21 said - part of the financial case for a franchise.

It is also true that Network Rail pays TOCs a lot of money for delays which is part of a separate compensation scheme with no direct link to Delay Repay, though the article linked to above does have some flaws...
I thought this might be of interest. Perhaps Admin can let us know if the article is accurate.
https://www.theguardian.com/money/blog/2016/dec/31/train-companies-pocket-millions-delays
...it's misleading; the difference is considered by the author to be "pocketed" by TOCs, but the author does not appear to be considering that delays cannot simply be "pocketed" as there may be additional costs to an operator, including (but not limited to):
  • providing rail replacement alternatives, such as taxis, especially if last trains are missed
  • overtime costs for both on-board and platform staff
  • additional admin costs for staff who have to deal with complaints
 

anme

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My posts to this thread were moved. No doubt this was a wise decision, but for the record I would like to respectfully answer the question in the thread title about how TOCs recover the cost of delay repay.

Financial outgoings of the railways, including delay repay and other compensation, are (obviously) paid from the income of the railways. The largest sources of income for passenger railways are the fares paid by passengers and the subsidy paid by taxpayers. This is the where the money used to pay delay repay compensation comes from.
 

najaB

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Financial outgoings of the railways, including delay repay and other compensation, are (obviously) paid from the income of the railways. The largest sources of income for passenger railways are the fares paid by passengers and the subsidy paid by taxpayers. This is the where the money used to pay delay repay compensation comes from.
That's where pretty much all income comes from, but it doesn't answer the specific question - how is the debit on the TOC's balance sheet balanced out. The answer that you've been given several times now is: it isn't.
 

anme

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That's where pretty much all income comes from, but it doesn't answer the specific question - how is the debit on the TOC's balance sheet balanced out. The answer that you've been given several times now is: it isn't.

With respect, how can it be balanced out except against income? Delay repay is a cost, just like buying fuel or paying staff salaries. Am I missing something here?
 

najaB

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With respect, how can it be balanced out except against income? Delay repay is a cost, just like buying fuel or paying staff salaries. Am I missing something here?
Yes.

Not all costs are balanced out. Sometimes they are just a cost.
 

anme

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Yes.

Not all costs are balanced out. Sometimes they are just a cost.

Delay repay is a somewhat predictable cost. TOCs will be aware of it when bidding for franchises and will presumably take it into account in their financial planning - budgeting, setting fares, etc. The scheme has been running for a while and TOCs will have a good idea how much it will cost them in, say, a given year or over the life of a franchise.

They may also put in place measures to mitigate delay repay, such as having staff and trains on standby to step in and minimise delays when there are problems (which is also an extra cost to be paid for, but might save money overall if it reduces compensation paid out), or padding timetables to reduce the compensation paid (which is probably free).

So I would expect delay repay to have an effect on the subsidy a TOC asks for, and the fares they set. Would anyone here not expect that?

We could have a more informed discussion if we knew how much money TOCs paid out in compensation every year. Does anyone have any relevant figures?
 

najaB

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They may also put in place measures to mitigate delay repay, such as having staff and trains on standby to step in and minimise delays when there are problems (which is also an extra cost to be paid for, but might save money overall if it reduces compensation paid out), or padding timetables to reduce the compensation paid (which is probably free).
It is next to impossible to run extra trains at short notice so that's a non-starter. Where MUs involved and the routes allow it, it may be possible to run longer trains than originally planned. And timetable padding isn't easy either if there are any key junctions involved. An extra minute's worth of padding can be the difference between getting or not getting a path, so it's a fight between TOCs (who would love as much as they can get) and NR (who want it kept to a minimum).
So I would expect delay repay to have an effect on the subsidy a TOC asks for, and the fares they set. Would anyone here not expect that?
Nobody is denying it has an effect. We're just trying to point out that the effect isn't that great in the scheme of things - the amounts involved in delay repay pale into insignificance compared to the Schedule 8 payments to/from NR.
We could have a more informed discussion if we knew how much money TOCs paid out in compensation every year. Does anyone have any relevant figures?
At least one (and I think two) contributors to this thread do have access to that kind of information and have probably already told you as much as they can if they want to keep their jobs.

Employers in just about any industry wouldn't take kindly to employees sharing details of the organisation's finances on an Internet forum in an uncontrolled manner.
 

anme

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It is next to impossible to run extra trains at short notice so that's a non-starter. Where MUs involved and the routes allow it, it may be possible to run longer trains than originally planned. And timetable padding isn't easy either if there are any key junctions involved. An extra minute's worth of padding can be the difference between getting or not getting a path, so it's a fight between TOCs (who would love as much as they can get) and NR (who want it kept to a minimum).

These were examples to explain a concept. Please disregard them.

Nobody is denying it has an effect.

With respect, many posts in this thread and the one that was split from it were denying exactly that. But I'm glad we now agree that delay repay and other compensation has an effect - how large or small we can't say without some numbers.

We're just trying to point out that the effect isn't that great in the scheme of things - the amounts involved in delay repay pale into insignificance compared to the Schedule 8 payments to/from NR.

And where do Schedule 8 payments from NR come from? That's obviously a rhetorical question - we all know they ultimately come from passengers' fares (via the TOCs, so in scope for this thread) and subsidy from taxpayers. Do we have figures for Schedule 8 payments to/from NR? Being a public company, they may be more readily available.

At least one (and I think two) contributors to this thread do have access to that kind of information and have probably already told you as much as they can if they want to keep their jobs.

Employers in just about any industry wouldn't take kindly to employees sharing details of the organisation's finances on an Internet forum in an uncontrolled manner.

Of course. You may be surprised to hear that I am actually aware of that already. Nevertheless, I think it was a reasonable question.

Anyway, it seems we are actually all in agreement.
 
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najaB

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With respect, many posts in this thread and the one that was split from it were denying exactly that. But I'm glad we now agree that delay repay and other compensation has an effect - how large or small we can't say without some numbers.
It has an effect on the TOC's bottom line. It has no quantifiable effect on fares or subsidy. As you've been told several times, they don't balance off delay repay against anything, it is just an operating expense.
And where do Schedule 8 payments from NR come from? That's obviously a rhetorical question - we all know they ultimately come from passengers' fares (via the TOCs, so in scope for this thread) and subsidy from taxpayers.
Schedule 8 payments basically result in money being moved around the industry, it's not (in most cases) new money. So again, has very little to no impact on fares or subsidy.

If I have £10 in one pocket and £20 in the other, I've got £30. I still have £30 if I swap the pockets, and I still have £30 if I put it all in my wallet.
 
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anme

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It has an effect on the TOC's bottom line. It has no quantifiable effect on fares or subsidy. As you've been told several times, they don't balance off delay repay against anything, it is just an operating expense.

Could you explain why you think a ToC will *not* account for delay repay in its financial planning, as you appear to be arguing when you say "As you've been told several times, they don't balance off delay repay against anything, it is just an operating expense."?

I am personally involved in setting budgets for a business. When a business is doing financial planning, its staff will try to balance its income and its operating expenses. Delay repay is no different from diesel to run the trains or uniforms for the staff to wear or other operating expenses. The money has to come from somewhere. To argue that it has no effect on fares or subsidy is bizarre. Where DO you think the money comes from?

Schedule 8 payments basically result in money being moved around the industry, it's not (in most cases) new money. So again, has very little to no impact on fares or subsidy.

You argued in post 27 that "the amounts involved in delay repay pale into insignificance compared to the Schedule 8 payments to/from NR." I assume you are saying the schedule 8 payments cover some proportion of delay repay. I assume that is true. But in that case schedule 8 payments are not just money being moved around the industry. Delay repay is money *leaving* the industry. It has to come from somewhere.

If I have £10 in one pocket and £20 in the other, I've got £30. I still have £30 if I swap the pockets, and I still have £30 if I put it all in my wallet.

And if you pay 10 pounds out as delay repay compensation you have 20 pounds. It doesn't matter which pocket it is in.

I am not trying to be argumentative for the sake of it. I just cannot understand this apparent belief that money paid out as delay repay either comes from a magic money tree or is just ignored by TOCs. That is obviously not true. I might have misunderstood your argument but we've been around this several times so that seems increasingly unlikely.

The only possible explanation I can think of comes from your statement "It [delay repay] has no *quantifiable* effect on fares or subsidy." Note that word "quantifiable". Now this is obviously not true if you know how much money a ToC pays out as delay repay, how much it earns from fares, subsidy, schedule 8, etc. The effect of delay repay is then absolutely quantifiable, and a ToC will know the numbers and use them when setting fares, asking for subsidy, etc. However, we don't know those numbers, so we can't quantify it. Is that what you're saying - i.e. yes of course delay repay has a quantifiable effect, but we can't quantify it ourselves? If that is what you're saying, then I agree.
 
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