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Why is there now an obsession with re-nationalisation?
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You are Mick Cash and I claim my £100k.
The amount of tax paid by people need to be viewed in the light of what you get in return from your Government.
If you pay 35% tax and get a lot of things provided that's between than paying 15% and not getting very much.
Agreed, I would much rather pay more tax than the people around me in town giving me TB (instead of being treated) and my Mum could get prompt treatment at A & E rather than dying before she got seen, and that public transport was so good that people used it rather than poisoning me with their car fumes in town. And that the people imprisoned in my name should really be inside, and that they might get re-educated there (and even housed on release) to break the cycle of reoffending...
lordbusiness
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You would be surprised how little profit is actually returned to owning groups.
Small change when you're a fat cat on £160k plus p.a.
coppercapped
Established Member
This is an urban myth.
The directors of a company have NO duty to maximise profit. The board of directors is appointed to act on behalf of the shareholders to run the day to day affairs of the business in line with the objectives of the company as defined in its Memorandum of Association.
The board of directors is directly accountable to the shareholders and it does have a duty to implement the wishes of the shareholders as recorded by motions passed at the AGM.
It's an impossible requirement anyway - how do you know that the profit is at a maximum?
Dr Hoo
Established Member
Could you be more specific, please?
In many respects consumer rights have come a long way since the 1990s. This includes things like Delay Repay, a far more professional Transport Focus than the old Consultative Committees used to be and more formal accountability of TOCs to both the DfT under franchises and the ORR in terms of licences and more general consumer and competition law.
In contrast BR often seemed to be a ‘law unto itself’, with a very ‘hands off’ MoT and no ‘regulator’. Fare rises were dramatically higher and ahead of inflation in most years, at least for season tickets and other fares that are now ‘controlled’.
Delay repay is officially better, but the number of cases on here I see with companies refusing to pay out, shenanigans with the off-peak divide, routings being changed and withdrawn at the drop of a hat to make things more difficult for the passenger etc.
Yes it's true, BR did suffer from a lack of accountability (particularly in relation to the disasterous closure programme) but this is the 21st century and I think that the odds are stacked too much in the TOC's favour.
One of the biggest problems renationalisation would cause would be the massive compensation bill to all the companies who now make money out of providing rail services and of course the unions would want their big pay increases in exchange for their cooperation so it might prove to be a very BAD deal for the taxpayer
The system is far from perfect but re nationalisation could be a very dangerous step. I think some heavy tweaking of the system might be a better option
The system is far from perfect but re nationalisation could be a very dangerous step. I think some heavy tweaking of the system might be a better option
This sort of comment crops up every so often. You do realise that people don't just spring into existence with railway experience?
The obvious comeback to that would be to demand that people should "come up through the ranks" as it were, but that isn't really practical.
Yes. They're offices. Open plan, with meeting rooms. "Palatial" when compared with the portakabins at depots, or signalboxes maybe, but not comparable to the boardrooms at the Bank of England, or committee rooms at the House of Commons.
The Box Photter
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The easiest way to increase profit is to cut costs. Directors call in consultants from one of the big four accountancy companies who have no experience in running a railway. They look at the balance sheet and see that the biggest cost on there is the payroll and pension contribution. Easy decision is taken to "slim down" the workforce and try to get those still employed to do their existing job and half of the job of someone who's just been made redundant. Result - not enough people to do the job properly and those who are doing the job are overworked & pissed off. Consultants get paid a big wedge of cash and directors reward thmseleves with big bonuses & more free shares. Balance sheet looks healthy and profits for the "group" are up so bigger dividend is paid to shareholders, keeping The City happy.
Passengers get a ****ty service and staff are demoralised, thus making the service even ****tier. But so long as The City is happy, privatisation is a roaring success.
Oh, and I'd rather be Mick Cash than the Chingford Skinhead any day of the week.
coppercapped
Established Member
I assume that you are referring to the rail sector judging by your remarks in the second paragraph. Can you give concrete examples of organisations where staff numbers have been reduced significantly as a result of the actions you describe?
I would suggest that may have been the case in the past, however the prevailing management option in business now is to try and encourage staff to improve the customer experience. As a happy customer is a loyal customer and a loyal customer is a customer who will come back, quite possibly with their friends.
It costs money to attract new customers (not as much as replacing staff who find that they are overworked and/or feel under valued, especially if you loose key staff, which may be at any level) if you can reduce those costs by offering something to your regular travelers then that's good.
It's why things like removing the East Coast Rewards and the SWT free weekend tickets for annual season tickets are likely to be costly mistakes.
In the case of the season tickets there would have been people who purchased their ticket via SWT so that they got those tickets. The commission on season tickets worth thousands of pounds would have covered most of the costs of the actual free tickets, however the costs to the company would be very little. However there's also chance that having traveled for free that those people may then opt to pay to make a similar trip at some other time.
They may not be big amounts from individual people, but over the whole company it can start to add up. It could easily be the difference between making a profit or not.
Your reward for your customers needs to be something that they feel is of value, in some cases (as hoc ticket sales by as hoc travelers) something small like nectar points can work. However that's probably not going to cut it when it comes to season ticket holders or those who use your services a lot. That's where free tickets, upgrades to first class and other rewards which as a company cost very little but benefit the customer (or at least their bank balance) in a measurable way or a perceived way (i.e. I got to travel in first class for no extra cost). As those sorts of benefits get talked about which generates more business.
As it is, we as individuals pay relatively high taxes in return for awful public services. Perhaps if some bright spark who now pretends to edit a newspaper had not, while pretending to be chancellor, cut corporation tax and laid off thousands of staff working on tax avoidance, we would be in less of a mess now
underbank
Established Member
The so-called "top" consultancy/accountancy firms use staff who have no experience of anything really, most won't even be qualified accountants. Their "consultancy" arms are well known for being pretty awful. The "real" accountants are working in tax or audit. As for increasing profit by cutting costs - that's the typical response of people who aren't properly experienced/qualified/trained in business - the lazy option. The "true" business consultants (who are very rare and expensive) are the ones who increase profits by increasing efficiency, often spending more rather than less, bringing in new revenue lines, etc. There's a massive difference in the two types.
On a tiny scale, our local village library is a classic case in point. Whilst it was "run" by the county council, it's opening hours were forever being reduced "to cut costs" - anyone wanting to use it for, say, a local group had to jump endless hurdles for permission so most just didn't bother, eventually local council closed it. It was taken over and re-opened by a local NFP group, who opened it far longer than ever before, brought in loads of new ideas to bring in revenue, including letting out it's grounds for allotments (bringing in income instead of the cost of mowing the grass), charging local residents to park in its car park evenings/weekends (otherwise empty), vending machines for snacks/drinks, small shop for local artwork, walking guide books, maps, etc., agents for tickets for local attractions, coach trips, etc. Really showed the difference between the "cost cutting" agenda as opposed to the business generation idea. Now it's viable and yes, there are employed staff running it - more hours than it was when council owned.
underbank
Established Member
Assuming you mean HMRC. It was Gordon Brown who got rid of huge numbers of HMRC staff and under whose reign, allowed tax avoidance/evasion to reach epic levels. GB presided over the disastrous merger of HMCE and IR and closure of dozens/hundreds of local tax offices, meaning lots of experienced tax inspectors took early retirement/vol redundancy instead of relocating to a handful of huge call centres hundreds of miles away. Ironically, it was Gideon who started to re-assemble the HMRC tax avoidance teams to try to tackle the enormous tax evasion/avoidance that he inherited.
DynamicSpirit
Established Member
None of that appears to be relevant to the thing you were replying to: My point that in most cases, profits are the reward for taking a risk to develop something.
As far as tax avoidance by multinational companies is concerned: Avoiding tax means you pay less tax (less than you could perhaps argue in some cases you ethically ought to pay) on your profits. It doesn't change how you got those profits in the first place, nor does it make your (pre-tax) profits any bigger. To the extent that it happens, it's an argument for doing more to tackle unethical tax avoidance - it's not an argument for nationalisation. Besides, you gave one example. That one example may be unfortunate, but it doesn't show that all companies (or even a majority of companies) are doing the same thing.
I think you are correct that one potential benefit of nationalisation is that - if done right - it can cut out layers of bureaucracy. However I don't see that cutting out financiers' involvement is necessarily an advantage, since if the money comes from the Government instead of financiers, it still comes with a cost (maybe, higher interest payments or something similar) on the part of the Government.
As to your point about taxes... What on Earth has that got to do with nationalisation? As it happens, personally I would be quite comfortable with a slightly higher rate of taxation, if it was used wisely to provide better services etc. But that doesn't seem to have anything at all to do with whether the railways would be run better nationalised or privatised.
Circular argument, since the concepts are only meaningful in the context of a system which includes the function of hosting parasites in the first place. It neither compels nor justifies the inclusion of that function.
hooverboy
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nope.the easiest way to maximise profit is to make sure you GET new customers and KEEP existing customers.
they ultimately pay the wages.
To do that you need to provide a good quality,comfortable and RELIABLE service,or people sod off and look elsewhere for other options.
there are various ways of cutting costs,some of which are more viable than others.
Driver only operation on branch lines is one(a big one),almost £100k per year per train in overheads ,on a service that is probably bringing in that TOTAL for the entire line per month, not per train)
along with stuff like vehicle efficiency,maintainance etc.that's where a loss making outfit can be made to make ends meet.
cutting frequency of service is not really a good way of keeping your customers.
you might get away with it for some backwater halt with half a dozen passengers per day( so just do 3 trains per day, one peak am/pm and one lunch)
but for decent passenger flow it needs to be regular.
hooverboy
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the precept of socialism is the needs of the collective outweigh the needs of the individual/group.
so the USSR was doing socialism right......and BR are very much a minority interest in the grand scale of the UK collective.
Basher
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John McDonald (shadow chancellor) made a statement this week that he wants the workers to have the majority share of profit made by companies. Well just by chance I was listening to ‘More or Less’ on the radio on Friday, where this was explained. The programme actually stated that the UK is an exception in Europe and actually pays more to workers than capital investors. So how can anybody believe what the Corbin Cult say?
Worth listening to.
Worth listening to.
Like whom?
Rail Gormet? Or TOCs?
I'm sure people like Rail Gormet are on contracts that will end when the franchise is over, or is on a rolling basis so can be "renewed" anyway. TOCs will simply finish at the end of their contract - no compo required.
More of a question is what will happen to things like cash collections.
Different TOCs use different companies and some aren't nation wide. Whether this means they'll lose out to bigger names I don't know.
DarloRich
Veteran Member
The big issue is that the narrative on privitasation/nationalisation is not being challenged by those with a vested interest in continuing the current system. They are allowing the only voices to be heard to be those ones demanding nationalisation. There is no coordinated response/ rebuttal plan. I am no fan of the current system but we need to have all of the information before making any choice.
It is hardly the fault of the people working there that you are ignorant of their role is it? Perhaps your railway knowledge is not as complete as you think it is. There is, after-all, a great deal of activity required to deliver a working railway, much of it posters here are blind to. Turning to the offices and in particular the one in MK. Perhaps your detailed and deep railway knowledge missed the fact that the office saved the tax payer money and, I reckon, paid back it's costs before it even opened. I would also suggest your deep railway knowledge can't have taken you to many NR sites if you think the NR offices in MK are typical!
That's odd. I have met several who have worked for both TOC's and NR. Perhaps their experience wasn't of a type you consider suitable, what with them being graduates (many years ago) and everything.
And yet, until recently at least, these companies seem happy to fight over these pennies. Why bother if the rewards are so slim?
It is hardly the fault of the people working there that you are ignorant of their role is it? Perhaps your railway knowledge is not as complete as you think it is. There is, after-all, a great deal of activity required to deliver a working railway, much of it posters here are blind to. Turning to the offices and in particular the one in MK. Perhaps your detailed and deep railway knowledge missed the fact that the office saved the tax payer money and, I reckon, paid back it's costs before it even opened. I would also suggest your deep railway knowledge can't have taken you to many NR sites if you think the NR offices in MK are typical!
That's odd. I have met several who have worked for both TOC's and NR. Perhaps their experience wasn't of a type you consider suitable, what with them being graduates (many years ago) and everything.
And yet, until recently at least, these companies seem happy to fight over these pennies. Why bother if the rewards are so slim?
1. While there are some at DfT who have worked on the railway (in some cases many, many years ago) there are rather more who never have, including the ones at the top, who make the decisions and advise the Ministers. If "a little knowledge is a dangerous thing" then DfT is very, very dangerous indeed.
2. Companies generally made money on the original franchises and it has taken them a long while to realise that the landscape has changed. Dean Finch (who is brighter than most of them) spotted it first, which is why NX are no longer in UK rail. Indeed, nationalisation may almost be thrust upon us unless the franchising model is changed.
2. Companies generally made money on the original franchises and it has taken them a long while to realise that the landscape has changed. Dean Finch (who is brighter than most of them) spotted it first, which is why NX are no longer in UK rail. Indeed, nationalisation may almost be thrust upon us unless the franchising model is changed.
DynamicSpirit
Established Member
I wonder if human optimism bias is a big factor there. The directors and managers who make the decision to bid for franchises are after all only human. And it's usually not too hard to convince yourself that there's something special about yourself and your business and that your business is going to succeed where everyone else has failed. And when reality sets in, it's too late and you already have the franchise! Not much different really from one reason why so many people set up businesses but so few new businesses succeed.
(EDIT: And perhaps worth mentioning that may also be a reason why it's so easy for people, politicians, and political parties who really have no knowledge of the railway industry to convince themselves that they know exactly how to design a brand new system to run the railways that is going to be oh-so-much better than the system we currently have that's been built up and refined over 20 years).
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Yes and yes.
quantinghome
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As the years go by this argument is harder to justify. It might have worked in 2012 but it's been over 7 years now. The government has to stop blaming the previous incumbents and take responsibility.
underbank
Established Member
And during those 7 years, an awful lot has happened. There are new laws to prevent several areas of illegal tax evasion. 1. Law to counter avoidance of VAT on platforms such as Ebay and Amazon. 2. DOTAS disclosure of tax avoidance scheme legislation. 3. IR35 applying to public sector such as BBC/NHS etc. 4. New law to charge tax on "loan" tax avoidance schemes. 4. Various "task forces" into particular high risk industries. 5. ATED - annual tax on enveloped dwellings to tax overseas entities owning UK properties. These are initiatives to counter tax avoidance/evasion that Gordon Brown could have done, but he didn't, in fact he did beggar all in his 3 terms of office to counter tax avoidance/evasion.
And a great big giveaway via the lowest rates of corporation tax in the developed world, which, combined with the lack of control on money moving in and out of the country, has encouraged brass-plating rather than useful, productive economic activity
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