2024 Budget impact on Rail

[12LDA28C]

Fuel duty increases also affect the hauliers that move the vast majority of the goods that we all buy in shops, including food stuffs. Those duty increases end up being passed on to consumers and are therefore inflationary over and above just the cost of the fuel. It's a much more nuanced calculation than many are trying to make it.

And yet we are paying just over 2/3 of the cost per litre of fuel than we were two years ago. Can't say I've noticed those savings having been passed on to us in terms of produce being that much cheaper on the shelves. Presumably you have?

 

[LNW-GW Joint]

Merseyrail leases the class 777 fleet from Merseytravel, who made financial arrangements to purchase the fleet.
The fleet is also maintained by Stadler who operate the relevant depots on a long-term contract.
It's not quite publicly owned and operated.
Merseyrail is also operated by Serco/UK Transport until 2028.

 

[12LDA28C]

Depends where you go of course , its about $4.70 in California $3.10 in Maine £3.90 Nevada, still cheaper than the UK, but they do use a lot, not sure anyone drives a car under 2L

Indeed, I paid $2.85 in New Hampshire.

== Doublepost prevention - post automatically merged: 1 Nov 2024 ==

Not necessarily. The UK rolling stock market is much too route specific and bespoke to allow a true market to operate, unlike the market for airliners, for example, which can be reused almost anywhere around the world. Hence you can end up with electric fleets being scrapped prematurely while old diesel stock continues to be paid handsomely for.

It was a bad set up to begin with.

Indeed however you can understand why this arrangement was put in place - none of the privatised TOCs wanted to spend a fortune buying brand new trains that they could not recoup the cost of over the course of a relatively short franchise. That's just as true today as the Government will not want to borrow money to finance a large order for brand new trains, especially as trains seem to cost around £2M per vehicle now.

 

[Magdalia]

I don't think it would be a problem. Any informed potential UK bond-buyer / investor will be well aware that the ROSCOs got hold of a load of stuff (almost all our rolling stock) which gave them a strangle-hold over British railway TOCs at a bargain price, and astonishingly have continued to hold the country to ransome for the use of (mostly) the same old stuff ever since! Merseyrail buying its own trains showed them the way things were going to go from now on...

The right-wing press will scream about it, but "the markets" will recognise that they have had an unbelievably easy and lucrative ride for a few decades, shrug their shoulders and move on to some new opportunity.

You might think it won't but a problem, but I disagree. 30 years on, the pre-privatisation fleet is a small proportion of the total, and the ROSCOs are not holding the "country to ransom", they are keeping to contracts freely entered into on both sides. Most of the current fleet is new stock on agreements struck when long term interest rates were low.

The institutions that currently own the ROSCOs are not the people who "got a load of stuff at a bargain price". Those institutions don't just own the ROSCOs, they have other UK investments too, and the government wants them to invest more. They are not interested in the past, only the future.

If the UK acted in the way you suggest, then the new opportunities for them to move into would not be in the UK, they would take their money elsewhere.

The UK rolling stock market is much too route specific and bespoke to allow a true market to operate, unlike the market for airliners, for example, which can be reused almost anywhere around the world.

You are right that the market for airliners is much more liquid, but the UK rail market being "bespoke" doesn't mean that leasing can't work, for new stock there is still competition between suppliers. If the UK government was in a better position to borrow, then that would be an option too.

Hence you can end up with electric fleets being scrapped prematurely while old diesel stock continues to be paid handsomely for.

The problem there isn't leasing. New diesel trains couldn't have been financed in the 2010s, in the same way as electric fleets, because the move towards net zero meant that they would not have had a 30-40 year long life.

I don't think passengers did badly out of the HST life extension at all.

A life extension under lease.

why should the farepayer/taxpayer be stuck with those consequences.

It was and will be forever thus. We all have to live with the consequences of government decisions, sometimes for a long time after they are made. One of the lessons from 2 years ago!

 

[Krokodil]

I would argue that BR did a much better job of managing the small amount of funding it had than the privatised railway has done with its much larger wedge.

 

[yorksrob]

A life extension under lease.


It was and will be forever thus. We all have to live with the consequences of government decisions, sometimes for a long time after they are made. One of the lessons from 2 years ago!

A life extension under lease - only because of the half-baked privatisation model.

To assume that the HST's would have been more poorly looked after under BR is speculative (and laughably so).

== Doublepost prevention - post automatically merged: 1 Nov 2024 ==

It was and will be forever thus. We all have to live with the consequences of government decisions, sometimes for a long time after they are made. One of the lessons from 2 years ago!

Well don't we.

We've been living with the failed privatisation for decades.

 

[Magdalia]

To assume that the HST's would have been more poorly looked after under BR is speculative (and laughably so).

I wasn't assuming anything of the kind, merely pointing out that leasing did not prevent the trains from getting a high quality life extension, BR did not have a monopoly on that.

only because of the half-baked privatisation model.

We've been living with the failed privatisation for decades

I agree that privatisation was half baked, and that lots of assets, not just trains, were sold too cheaply.

But the huge investment by TOCs in new leased rolling stock during the 2010s is one of privatisation's successes, a fleet renewal far more extensive than could have been achieved under public ownership.

 

[JonathanH]

I would argue that BR did a much better job of managing the small amount of funding it had than the privatised railway has done with its much larger wedge.

Isn't that difficult to measure as quite a lot of renewal was put off in those days, which is being made up for now?

 

[yorksrob]

I wasn't assuming anything of the kind, merely pointing out that leasing did not prevent the trains from getting a high quality life extension, BR did not have a monopoly on that.




I agree that privatisation was half baked, and that lots of assets, not just trains, were sold too cheaply.

But the huge investment by TOCs in new leased rolling stock during the 2010s is one of privatisation's successes, a fleet renewal far more extensive than could have been achieved under public ownership.

And how do you know that the HST's wouldn't have got a high quality life extension under BR ?

BR were good at life extensions. I never said that they had a monopoly (please tell where I said that ?)

There was a massive replacement of rolling stock in the 1970's to 1980's. You say "no, no, no there weren't any replacement of rolling stock" but realistically we have HST's, VEP's, PEP,s. Etc

 

[Parham Wood]

Roads are equally expensive. The M74 extension cost over £135million per mile and that was years back when everything was much cheaper. Unfortunately land is expensive, multi-decade projects are subject to changing political whims, public procurement contracts are poorly run due the way the civil service operates, NIMBYS are rampant and eliminating risk is paramount. All push up costs of any procurement.

There are no easy solutions to this conundrum other than to pay up and push ahead. This is why the UK achieves very few major large scale, geographically spread infrastructure projects these days. Viewed in this context, HS2 London to Birmingham is an amazing achievement.

Surely it would be better to focus on the reasons why the UK fails financially on these projects and correct these. The savings could be substantial. I know this will not happen as it is beyond the understanding of our politicians and the civil service mandarins have other agendas to play in my opinion.

 

[Midland Man]

Rail already gets duty-free fuel…….

The railway uses gas oil which has a duty of around 10p / litre.

== Doublepost prevention - post automatically merged: 1 Nov 2024 ==

The railway uses gas oil which has a duty of around 10p / litre.

10.18p / litre actually.

 

[Parham Wood]

I wouldn't mind if they just reverted it to 2011 in nominal terms (wasn't it 58.95p?). Better than the 6p cut we're now at.

RAC say current tax on petrol (duty and VAT ) is 52.325%. In 2016 it reached 73.484% and in 2012 it was around 60% for a time. These are crazy levels of taxation. Even now you are paying more in tax than the product is worth. The motorist always has been an easy target to raise cash. Of course money has to be raised somewhere............

 

[Krokodil]

But the huge investment by TOCs in new leased rolling stock during the 2010s is one of privatisation's successes, a fleet renewal far more extensive than could have been achieved under public ownership.

You could also argue that it was one of privatisation's failings. EMUs with plenty of life left being placed off-lease. Sometimes brand new or recently refurbished (so the ROSCO hasn't had a chance to recoup the outlay) units being returned, which results in the ROSCO charging more in future to protect itself. It's as wasteful as the Modernisation Plan was regarding locomotives. The BR Standard programme was supposed to be a stopgap pending electrification, the standards should have been cascaded from one line to another as the wires spread before finally retiring 20-30 years later. Instead they were hastily scrapped and replaced by a menagerie of diesels from the pilot scheme which were rushed into production without proper testing, many ending up with short lives themselves.

Isn't that difficult to measure as quite a lot of renewal was put off in those days, which is being made up for now?

And now we're putting off maintenance again (points failures feel much more common now, often simple stuff like lack of lubrication, are there any statistics published on points failures?).

== Doublepost prevention - post automatically merged: 1 Nov 2024 ==

RAC say current tax on petrol (duty and VAT ) is 52.325%. In 2016 it reached 73.484% and in 2012 it was around 60% for a time. These are crazy levels of taxation. Even now you are paying more in tax than the product is worth. The motorist always has been an easy target to raise cash. Of course money has to be raised somewhere............

I have no qualms about fleecing polluters.

 

[Magdalia]

And how do you know that the HST's wouldn't have got a high quality life extension under BR ?

You say "no, no, no there weren't any replacement of rolling stock"

I didn't say either of those things.

Both BR and leasing companies can do high quality life extensions, who owns the asset is not a determinant.

There was some replacement of rolling stock in the 1970s and early 1980s, but it was much less than what BR wanted. I've read the BR Board papers from the period, have you?

 

[squizzler]

These are crazy levels of taxation. Even now you are paying more in tax than the product is worth.

If a motorist, smoker and drinker walked into a bar.. I think the motorist would probably not be the worst done by.

Like tobacco and alcohol, motoring has *always* been heavily taxed and most people will have by now internalised it as a fact of life when making lifestyle decisions.

 

[RT4038]

Again, you’re entitled to your opinion, but it’s not clear what you’re using as the basis for your oft stated view that the railway isn’t providing value for money (to whom, tax payer or fare payer, and by what measure?)

No surprise there’s a heavy reliance on private transport when swathes of the country outside of London and the South East have poor public transport options, due to politicians historically tending to close railway lines and withdrawing subsidy for buses. Hence it’s a little disingenuous to use that as a reason to suggest that it must too expensive or unimportant where it is provided.

No other form of transport requires this level of subsidy. For such a poor level of service.

Now, I've never said that the railway is unimportant to everyone. Clearly that is not the case. To an even fewer subset it may well be essential. However it is not universally, or even to a majority, 'essential' in the same way as the Fire Service or the Police or the Health Service is.

Modernisation can be achieved, but I suspect, like the last government, you really just mean cost cutting with no long term strategy or interest in growing the railway, and attacking Ts and Cs of a unionised workforce for ideological reasons (which incidentally - based on direct experience of myself and friends elsewhere - are by no means conspicuously out of step with those in other industries such as airlines)

Where modernisation is required that can and will be achieved on the railway by a process of negotiation, but I seem to recall you favoured the last government’s belligerent approach which modernised precisely nothing, despite costing the wider economy and taxpayer dearly. As a taxpayer that doesn’t seem remotely sensible to me. The new government have at least begun that process of moving the industry forward, partly with the reset of industrial relations, and then continuing with this budget.

I don't think whether a workforce is unionised or not has got anything to do with it. I am not sure that I have ever said that I favoured the cack-handed, ill prepared approach of the last Government to the issue. Not much sensible there. I don't think there has been a reset of Industrial Relations, merely a buying off. I have little faith that sufficient modernisation of working practices / ts & cs is going to be achieved on the railway, at a sensible price, by negotiation. I may well be surprised of course, but not holding my breath.

As a taxpayer, I absolutely want there to be a sensible balance between new build and refurbishment.

It was absolutely right and sensible that rolling stock with life in it was refurbished, rather than scrapped. NSE did an excellent job of refurbishing its rolling stock, and as a result lots of it lasted forty years, whilst providing good value to the taxpayer. Of this, I heartily approve.

It's notable that on our privatised network, the HST's lasted 40+ years, and the 158's probably will too. That is what a railway, run sensibly for taxpayer and farepayer looks like, although passengers shouldn't be coughing up leasing costs after forty years.

That depends who is paying for the refurbishment (s). If it is the leasing company (most likely) then this cost will be reflected in the ongoing leasing costs.

 

[Magdalia]

EMUs with plenty of life left being placed off-lease. Sometimes brand new or recently refurbished (so the ROSCO hasn't had a chance to recoup the outlay) units being returned, which results in the ROSCO charging more in future to protect itself.

Most of the new trains were new capacity, such as Thameslink and Crossrail, or replacements for life expired trains such as classes 313/315/317/319/321.

The EMUs with plenty of residual life are a small minority. As already said, a pool of off lease trains depresses prices, not the other way round.

It's as wasteful as the Modernisation Plan was regarding locomotives.

That's an exaggeration, and not a like for like comparison. A small number of small EMU classes temporarily in surplus is very different from happened in the British Transport Commission era.

 

[Krokodil]

Most of the new trains were new capacity, such as Thameslink and Crossrail, or replacements for life expired trains such as classes 313/315/317/319/321.

And there were also all of those 365s parked up awaiting scrapping, complete with their brand new ETCS kit (paid for by whom?). How long did the 707s last in service before they found themselves displaced by even newer units? As it happened a home was found for them, but there was no guarantee of that.

As already said, a pool of off lease trains depresses prices, not the other way round.

Until they're scrapped and the ROSCO will be looking to recover its losses somehow. They may offer a discount to get some work for some unemployed classes but the house always wins in the end.

That's an exaggeration, and not a like for like comparison. A small number of small EMU classes temporarily in surplus is very different from happened in the British Transport Commission era.

Different in scale, but there was still waste. On top of everything else mentioned, the IEP programme was basically an opportunity for Agility to print money. So as far as I am concerned, the present situation is no better than it would have been for BR if it had lasted into the 2010s. Imagine what BR could have done with the funds splurged on the privatised railway.

 

[Magdalia]

And there were also all of those 365s parked up awaiting scrapping

I wouldn't make a judgement on the basis of what happened to a fleet of 40 trains with very restricted use, a limited future, and in need of a major life extension.

As it happened a home was found for them, but there was no guarantee of that.

One of the points of leasing is that it transfers that risk to the lessor.

They may offer a discount to get some work for some unemployed classes but the house always wins in the end.

There is no "house", that would only be the case with a global monopoly lessor.

Different in scale

Very different.

 

[coppercapped]

They could pass legislation to simply cancel the leases and “buy back” the rolling stock for an amount set by the government, in a manner analogous to shareholders being “bought out” by the government when the railway was originally nationalised post WW2.

I do recognise that’s highly unlikely, though.

The railway, canal or inland navigation undertakings which were nationalised ('vested in the BTC') were those bodies which were already under the control of the Minister of Transport by virtue of an order made under Regulation sixty-nine of the Defence (General) Regulations, 1939. So the shareholders in these companies held shares in undertakings which had already been essentially nationalised for 8 years. They were paid in Government stock ('Transport Bonds') paying 3% per annum (roughly what the railways had been paying, maybe a bit more) and this amount was to be generated by the BTC as a result of its activities; there was to be no cost to the taxpayers nor were the shareholders to be financially disadvantaged. They were, after all, also voters... After 1952 the BTC could no longer pay the dividend.

So an equivalent process today would mean that the Government would exchange shares in the ROSCOs for Government bonds paying an equivalent amount as the ROSCO's dividend.

How would that be cheaper for the taxpayer in the long run?

 

[Krokodil]

One of the points of leasing is that it transfers that risk to the lessor.

Who will price that in to the leasing fees across their inventory.

There is no "house", that would only be the case with a global monopoly lessor.

They still make sure that they win.

 

[nwales58]

Who will price that in to the leasing fees across their inventory.

So the (small but useful) gain is from transferring risks that the leasing people have the expertise to manage better than you can. E.g. maintaining many fleets rather than just your small one, or not building crap because the maintenance costs are factored into the price.

The disaster is transferring risks that they cannot manage better than you because you are paying for somewhere up to the 90% upper bound rather than the expected(mean) cost of the risk.

It infuriates me that HMG is still getting this wrong in transport after 30 years due to a 'get the risk off my budget' mentality rather than minimising long-term cost.

 

[Magdalia]

Who will price that in to the leasing fees across their inventory.

Agreed, risk transfer isn't free, but it is like an insurance policy. It costs a little bit all of the time but saves a lot when risks materialise. When the pandemic hit, demand fell, and the railway needed fewer trains, they weren't stuck with paying expensive leasing charges on trains stored in sidings. As a result there were trains going off lease and a saving on leasing costs, probably bigger than the risk premium on the leasing contracts.

 

[yorksrob]

I didn't say either of those things.

Both BR and leasing companies can do high quality life extensions, who owns the asset is not a determinant.

There was some replacement of rolling stock in the 1970s and early 1980s, but it was much less than what BR wanted. I've read the BR Board papers from the period, have you?

I'm not denying that, however in the current system the Government has the last say.

Remember the missing fourth carriage for the 185's ?

Remember Patrick McLaughlin having to override his officials to replace pacers ?

No other form of transport requires this level of subsidy. For such a poor level of service.

Now, I've never said that the railway is unimportant to everyone. Clearly that is not the case. To an even fewer subset it may well be essential. However it is not universally, or even to a majority, 'essential' in the same way as the Fire Service or the Police or the Health Service is.


I don't think whether a workforce is unionised or not has got anything to do with it. I am not sure that I have ever said that I favoured the cack-handed, ill prepared approach of the last Government to the issue. Not much sensible there. I don't think there has been a reset of Industrial Relations, merely a buying off. I have little faith that sufficient modernisation of working practices / ts & cs is going to be achieved on the railway, at a sensible price, by negotiation. I may well be surprised of course, but not holding my breath.



That depends who is paying for the refurbishment (s). If it is the leasing company (most likely) then this cost will be reflected in the ongoing leasing costs.

I think a great many people use the railway more often than the police or the fire service.

In terms of leasing costs, this is precisely why the leasing system needs to be wound down.

 

[A0]

We pay tax on almost everything, it is needed for our public services. Targetting it wisely supports government policy.

Taxing fuel is progressive; 50% of all fuel is used by the richest 10%, and road traffic brings environmental and social costs far exceeding tax and fuel price added together, because "externalities" are funded from general taxation. So even right wing economists generally support "polluter pays" taxation to achieve the most efficient outcome.

Yet the road lobby's stranglehold on government since they blockaded roads more than a decade ago has seen tax on fuel drop around 50% in real terms.

Bit in bold - the rail unions have never blockaded their network and prevented people getting to work or freight from moving ?

 

[A0]

I'm not denying that, however in the current system the Government has the last say.

Remember the missing fourth carriage for the 185's ?

Remember Patrick McLaughlin having to override his officials to replace pacers ?



I think a great many people use the railway more often than the police or the fire service.

In terms of leasing costs, this is precisely why the leasing system needs to be wound down.

Bit in bold - that's a non sequitur.

People might have cause to call the fire brigade once, maybe twice in their life. Whereas they might use a train once a year to visit a big city.

However they would *want* the fire brigade to be there because if their house caught fire, or they were involved in a serious road accident to help in addressing that. Whereas if the train wasn't there they would drive or us a bus.

 

[Bikeman78]

I assume from many of the comments that people would rather that fuel duty at least kept in step with inflation. The rate was 57.95p in 2011 when it was frozen. According to the BoE inflation calculator that would now be 83.26p. Plus the 20% VAT on top.
I would expect bumping up petrol costs by over 30p/litre would get some very strong reactions.

I'm certainly not advocating a 30p/litre rise but I think 5, or even 10p, would be fine. That would be no different to the price a few months ago. The current pump price is the same as three years ago, according to the petrol and diesel prices thread on the forum.

 

[RT4038]

I think a great many people use the railway more often than the police or the fire service.

Everybody uses the Police every day, even if only passively ( their very existence protects from the incidence of robbery, violence, anti-social behaviour etc to some degree or another).

A great many people use coffee shops or Sky TV more often than use the Fire service - however that doesn't make coffee shops 'essential' and the Fire service not. Railways are important to some degree, more important in some areas of activity than others, but not 'essential' in the grand scheme of things (even if they seem like that to some individuals).

 

[yorksrob]

Everybody uses the Police every day, even if only passively ( their very existence protects from the incidence of robbery, violence, anti-social behaviour etc to some degree or another).

A great many people use coffee shops or Sky TV more often than use the Fire service - however that doesn't make coffee shops 'essential' and the Fire service not. Railways are important to some degree, more important in some areas of activity than others, but not 'essential' in the grand scheme of things (even if they seem like that to some individuals).

Everybody uses the railway one way or another - it might be as a passenger, as someone buying goods delivered by rail, or even passively through reduced congestion.

Just because the railway doesn't directly save lives, it doesn't make it not essential to the wellbeing of the country.

 

[RT4038]

Everybody uses the railway one way or another - it might be as a passenger, as someone buying goods delivered by rail, or even passively through reduced congestion.

It is not in the same league as the Police - goods by rail is minimal (apart from certain applications) and the costs of maintaining and operating the railway in some areas may well be better diverted to improving the road network. The railway should earn its keep, not necessarily strictly by fares covering costs, but I do not accept airy fairy 'essential' arguments to pour ever increasing taxpayer's money into them to prop up nostalgia and inefficiency. A serious review is required, and as suggested by another poster, including other forms of public transport too (but that may just be a step too far, and move the focus away from the organisational issues that need to be addressed within the railways itself).