Was privatisation supposed to bring competition?

Facing Back · 29 Dec 2019

hooverboy said:
not really a fair comparison though,is it?

back in those days there was a limited amount of bandwidth,general public didn't have access to any of it,and the data rates were abominable.
these days the equipment has matured to the extent of joe public having access to a fairly substantial amount,outside the "licenced" broadcasters.
you can say the same for ISP's and Telco's.
this is still work in progress as the amount of data per user is still increasing exponentially.hence the need for innovation from basic sms/email to the streaming apps we see today.
It's still very much work in progress with cloud/server based computing(next is streaming games in HD/High FPS), and real time data apps like active traffic management.
the standard modem you have and the typical 1gb/s LAN gear on your PC motherboard is going to be faster by the order of 10* in the next 5 years or so.
This is even before we get to really safety critial gear like autonomous vehicle detection.
the railway will eventually follow suit, first with in cab signalling, and then real time positioning/maintainance.

from a railway perspective, the real kick in the pants was done in the 1960's/1970's with the advent of widespread motor ownership.
It gave people the "right here,right now" option to go where they pleased,when they pleased.Something that the train could not provide.

The railway still has the option of "but we can get you there faster", but at the moment certainly not noticeably so, and is more expensive for sure.

the best bang for the buck will be to get the signalling systems up to date nationwide.this is NR's remit rather than any specific ToC.

Probably a stupid question but what benefits do we get by bringing the signalling systems up to date which make it the "best bang for the buck"?

RailUK Forums

hooverboy · 29 Dec 2019

Facing Back said:
Probably a stupid question but what benefits do we get by bringing the signalling systems up to date which make it the "best bang for the buck"?

the ability to know exactly what stock is exactly where(within 1 or 2 metres rather than to the nearest 1/4 mile), and at what speed,reducing delay times and human error on both high capacity and rural routes.
the ability to run more stock at shorter intervals as a consequence.
the ability to path diagrams to better match what is on the route ahead,so you can wait a few seconds for a train ahead, rather than a few minutes for the train in question to clear an entire block.

might not seem much, but each incident of 15-20 seconds improvement in response time all adds up to 5 or 10 minutes saved on a typical journey of 2 hours or so.

Facing Back · 29 Dec 2019

OK many thanks

LNW-GW Joint · 29 Dec 2019

yorksrob said:
Of course, as I've said before, what I'd really like to see is something equivalent to the £33 super-off peak return fare from Crewe to London, on the ECML. If on track competition were really working to passengers benefit, something like this would be available.

The question really is whether fares like the £33 return fare from Crewe are economically sustainable, which I don't believe they are, except for filling empty seats off-peak.
The DfT (all shades) have tried to maximise the revenue from rail (or at least minimise the subsidies), at least since the 70s (value pricing, loading cost onto the farepayer rather than taxpayer, RPI+x etc).
The railway is still a fantastically expensive system to maintain and develop.
Halving the fares might be "reasonable" but won't pay for all of NR's and the TOCs' costs in delivering the service.

Locally, there is no equivalent to Birmingham on/near the ECML, which is what brings a second/third operator and multiple routes to the WCML.
Having said that, the MML could be a more attractive alternative route from Yorkshire given the right investment.

Andrew1395 · 29 Dec 2019

Purple Orange said:
From an outsider to the rail industry, it appears that privatisation of rail services has been to achieve the some of the same effect as it has in the NHS, energy companies and prison services. The biggest cost to the government for all these industries has been people and part of that was the pension schemes.

The UK government had never financed railway pensions. Fully funded by employee and employer only. The only government contribution were the tax and national insurance benefits to employees and employer available in all private or public pension contributions. In fact in the mid 1980s the Thatcher government threatened to steal the surplus in the BR schemes. BRB took legal advice that confirmed the government had no right to take the surplus. However the threat of legislation led the BRB to reduce the surplus by reducing employee contributions, subsidising AVCs through the BRASS2 scheme, and taking its own two year contribution holiday. At privatisation the Railway pension scheme was deemed by actuaries to be in (a small) surplus, with no deficit or liability.

At privatisation 31 March 1994 with the legal separation of Raiktrack from BR. The combined work forces of both were less than the total employees today in Network Rail and the businesses that the BR vendor unit disposed of.

Whatever the purpose of privatisation, (and I suspect it was John Major basically wanting to show his right wing he was capable of achieving change that Thatcher baulked at), it had no effect on saving the UK government any money. And certainty it is factually incorrect to say it got the cost of employee work pensions off the government books.

yorksrob · 29 Dec 2019

LNW-GW Joint said:
The question really is whether fares like the £33 return fare from Crewe are economically sustainable, which I don't believe they are, except for filling empty seats off-peak.
The DfT (all shades) have tried to maximise the revenue from rail (or at least minimise the subsidies), at least since the 70s (value pricing, loading cost onto the farepayer rather than taxpayer, RPI+x etc).
The railway is still a fantastically expensive system to maintain and develop.
Halving the fares might be "reasonable" but won't pay for all of NR's and the TOCs' costs in delivering the service.

Locally, there is no equivalent to Birmingham on/near the ECML, which is what brings a second/third operator and multiple routes to the WCML.
Having said that, the MML could be a more attractive alternative route from Yorkshire given the right investment.

Shouldn't the whole point of off-peak fares be to fill empty seats off-peak ?

Clearly the £118 off-peak single isn't doing this, otherwise there wouldn't be such a reliance on advance purchase fares. One wonders exactly what market such off-peak fares are supposed to serve. Or do they exist primarily to shoehorn people into specific trains through AP, in which case £30 - £40 each way might be nearer to the actual cost of providing a seat.

I'm remended of TOC's who, when confronted with some exhorbitant fare say "well we wouldn't expect most people to buy that ticket anyway" to which the follow on question must be "well why do you have it then ?".

As you say, the thrust of the commercialisation of the railway since the 1970's seems to have been primarily inspired by the desire of the Government to reduce subsidy, rather than provide an affordable service to the public.

I'm not sure what effect the presence of a city the size of Birmingham necessarily has on things. There are at least six passenger operations on the ECML, so it seems a shame one of them can't provide affordable walk up travel.

Glenn1969 · 29 Dec 2019

Privatisation could bring competition but the Not Particularly Abstractive test that protects DfT franchises from Open Access Competition on profitable routes makes it less likely to than it should do

Shaw S Hunter · 29 Dec 2019

yorksrob said:
As you say, the thrust of the commercialisation of the railway since the 1970's seems to have been primarily inspired by the desire of the Government to reduce subsidy, rather than provide an affordable service to the public.

Governments are elected by us, the electorate, and like it or not people seem relatively happy with the idea of direct public financial support, aka subsidy, for the NHS or the state schools system, but rather less keen on doing the same for the railways, or other forms of public transport come to that. Ultimately we are getting the railways we "deserve" in response to our electoral decisions. That's how democracy works.

yorksrob · 29 Dec 2019

Shaw S Hunter said:
Governments are elected by us, the electorate, and like it or not people seem relatively happy with the idea of direct public financial support, aka subsidy, for the NHS or the state schools system, but rather less keen on doing the same for the railways, or other forms of public transport come to that. Ultimately we are getting the railways we "deserve" in response to our electoral decisions. That's how democracy works.

Unfortunately, our brand of electoral system doesn't really work very well in terms of transport decisions.

We are typically presented with a choice between two bundles of policies, the public transport elements of which have had barely the width of a cigarette paper's difference between them for most of the past forty years. Then we have Whitehall, which in terms of transport has generally followed its own agenda for several decades.

Don't confuse the election of a Government, with widespread endorsement of the Establishment's public transport policy.

Purple Orange · 29 Dec 2019

Andrew1395 said:
The UK government had never financed railway pensions. Fully funded by employee and employer only. The only government contribution were the tax and national insurance benefits to employees and employer available in all private or public pension contributions. In fact in the mid 1980s the Thatcher government threatened to steal the surplus in the BR schemes. BRB took legal advice that confirmed the government had no right to take the surplus. However the threat of legislation led the BRB to reduce the surplus by reducing employee contributions, subsidising AVCs through the BRASS2 scheme, and taking its own two year contribution holiday. At privatisation the Railway pension scheme was deemed by actuaries to be in (a small) surplus, with no deficit or liability.

At privatisation 31 March 1994 with the legal separation of Raiktrack from BR. The combined work forces of both were less than the total employees today in Network Rail and the businesses that the BR vendor unit disposed of.

Whatever the purpose of privatisation, (and I suspect it was John Major basically wanting to show his right wing he was capable of achieving change that Thatcher baulked at), it had no effect on saving the UK government any money. And certainty it is factually incorrect to say it got the cost of employee work pensions off the government books.

The employer being British Rail. If the schemes in those days were final salary schemes, then BR (or U.K. taxpayer) would hold the liability to ensure that they were being funded properly.

Shaw S Hunter · 29 Dec 2019

yorksrob said:
Unfortunately, our brand of electoral system doesn't really work very well in terms of transport decisions.

We are typically presented with a choice between two bundles of policies, the public transport elements of which have had barely the width of a cigarette paper's difference between them for most of the past forty years. Then we have Whitehall, which in terms of transport has generally followed its own agenda for several decades.

Don't confuse the election of a Government, with widespread endorsement of the Establishment's public transport policy.

No confusion on my part, I'm merely highlighting the fact that while most of us here are pro-rail advocates we are but a tiny minority amongst the wider population. There are plenty of people who never use trains with absolutely no desire ever to do so and there are also those who object to the use of any tax revenue to support the railways. How many forum members belong to a transport pressure group? Or as members of a political party are actively campaigning for that party to adopt pro-rail policies? Not so many I suspect...

yorksrob · 29 Dec 2019

Shaw S Hunter said:
No confusion on my part, I'm merely highlighting the fact that while most of us here are pro-rail advocates we are but a tiny minority amongst the wider population. There are plenty of people who never use trains with absolutely no desire ever to do so and there are also those who object to the use of any tax revenue to support the railways. How many forum members belong to a transport pressure group? Or as members of a political party are actively campaigning for that party to adopt pro-rail policies? Not so many I suspect...

I don't think I need to remind you that those of us here (along with other pro-rail advocates) are but a tiny proportion of the general public who use the railway. When surveyed, the majority of these people cite reliability, capacity and value for money as their main concerns about the railway. It's a shame that the political parties either don't take notice of this or forget about it when they get into power. Perhaps if the electoral system forced parties to cooperate more.....

Oxfordblues · 29 Dec 2019

There were stories in the 1970s and 80s of BR freight salesmen visiting customers to advise them of yet another increase in rates, sometimes with a reduction of service, in a desperate effort to stem losses. Waiting outside the Transport Manager's office would be a road haulier keen to undercut the railway and win the traffic. There was no room for negotiation: the BR man would insist "take it or leave it". All too often the customer would decide to leave it and vast swathes of rail traffic were gradually lost to the unrestrained hauliers taking full advantage of the new toll-free motorways.

Following Privatisation the tables were finally turned. Now the customer has a choice. Today if DB Cargo wants to raise its charges there'll be GBRf, Colas, DRS and Freightliner "waiting outside the office" and equally keen to win the traffic. I'd love to have been present when MendipRail renegotiated their contract and what Freightliner had to offer that DB Cargo didn't!

xotGD · 29 Dec 2019

Oxfordblues said:
There were stories in the 1970s and 80s of BR freight salesmen visiting customers to advise them of yet another increase in rates, sometimes with a reduction of service, in a desperate effort to stem losses. Waiting outside the Transport Manager's office would be a road haulier keen to undercut the railway and win the traffic. There was no room for negotiation: the BR man would insist "take it or leave it". All too often the customer would decide to leave it and vast swathes of rail traffic were gradually lost to the unrestrained hauliers taking full advantage of the new toll-free motorways.

Following Privatisation the tables were finally turned. Now the customer has a choice. Today if DB Cargo wants to raise its charges there'll be GBRf, Colas, DRS and Freightliner "waiting outside the office" and equally keen to win the traffic. I'd love to have been present when MendipRail renegotiated their contract and what Freightliner had to offer that DB Cargo didn't!

However, a bunch of rail freight operators squabbling over existing traffic flows isn't going to switch freight from road to rail. It is the road haulage industry they need to be competing against in order to grow the pie.

Dr Hoo · 29 Dec 2019

xotGD said:
However, a bunch of rail freight operators squabbling over existing traffic flows isn't going to switch freight from road to rail. It is the road haulage industry they need to be competing against in order to grow the pie.

There is no doubt that rail freight has been winning a growing share of the Construction sector. Despite relatively sluggish actual building activity in recent years rail volumes are at record levels with (purely as one example) several new loading terminals opening in Wales and the West of England to handle relatively modest amounts of traffic from various sources brought in by road for a rail trunk movement to the South East, replacing throughout road haulage. This being in addition to more traditional major rail flows from the Mendips, Leicestershire and the Peak District.

Shaw S Hunter · 29 Dec 2019

yorksrob said:
I don't think I need to remind you that those of us here (along with other pro-rail advocates) are but a tiny proportion of the general public who use the railway. When surveyed, the majority of these people cite reliability, capacity and value for money as their main concerns about the railway. It's a shame that the political parties either don't take notice of this or forget about it when they get into power. Perhaps if the electoral system forced parties to cooperate more.....

It's too bad that those concerns pale into insignificance in most people's minds when they reach the voting booth. Hence the politicians have no real need to take much notice as rail policy is clearly not a vote winner. As such we will just have to make the best of whatever bizarre scheme the latest bunch of free-marketeers come up with.

yorksrob · 29 Dec 2019

Shaw S Hunter said:
It's too bad that those concerns pale into insignificance in most people's minds when they reach the voting booth. Hence the politicians have no real need to take much notice as rail policy is clearly not a vote winner. As such we will just have to make the best of whatever bizarre scheme the latest bunch of free-marketeers come up with.

This is true - when National Government is left in charge.

Where there is an effective layer of sub-national government with genuine power (the devolved nations now and some of the metropolitan counties in the past), public transport is very much on peoples minds and can be a vote winner.

Shaw S Hunter · 29 Dec 2019

yorksrob said:
This is true - when National Government is left in charge.

Where there is an effective layer of sub-national government with genuine power (the devolved nations now and some of the metropolitan counties in the past), public transport is very much on peoples minds and can be a vote winner.

And what happened to the Metro counties: abolished by a Tory government with a big majority. So now we have another very similar looking government: what chance of any meaningful English devolution? I'm not holding my breath!

johnnychips · 30 Dec 2019

^ Didn’t the people of Greater Manchester vote against a congestion charge, the proceeds of which would have been spent on public transport? As others have pointed out, rail users are a minority and car users will have a greater electoral influence.

yorksrob · 30 Dec 2019

Shaw S Hunter said:
And what happened to the Metro counties: abolished by a Tory government with a big majority. So now we have another very similar looking government: what chance of any meaningful English devolution? I'm not holding my breath!

Sadly I agree with you.

But that doesn't negate the point that public transport can be an active and fruitful area of policy when freed from the Westminster/Whitehall straightjacket.

Mikey C · 30 Dec 2019

hooverboy said:
not really a fair comparison though,is it?

back in those days there was a limited amount of bandwidth,general public didn't have access to any of it,and the data rates were abominable.
these days the equipment has matured to the extent of joe public having access to a fairly substantial amount,outside the "licenced" broadcasters.
you can say the same for ISP's and Telco's.
this is still work in progress as the amount of data per user is still increasing exponentially.hence the need for innovation from basic sms/email to the streaming apps we see today.
It's still very much work in progress with cloud/server based computing(next is streaming games in HD/High FPS), and real time data apps like active traffic management.
the standard modem you have and the typical 1gb/s LAN gear on your PC motherboard is going to be faster by the order of 10* in the next 5 years or so.
This is even before we get to really safety critial gear like autonomous vehicle detection.
the railway will eventually follow suit, first with in cab signalling, and then real time positioning/maintainance.

from a railway perspective, the real kick in the pants was done in the 1960's/1970's with the advent of widespread motor ownership.
It gave people the "right here,right now" option to go where they pleased,when they pleased.Something that the train could not provide.

The railway still has the option of "but we can get you there faster", but at the moment certainly not noticeably so, and is more expensive for sure.

the best bang for the buck will be to get the signalling systems up to date nationwide.this is NR's remit rather than any specific ToC.

I think you've rather misunderstood my point, which was nothing to do with technology, and was about franchising and monopolies

For a period of time, ITV was the only commercial TV channel available in the UK, and was made up from a number of regional franchises. Companies would bid for these - e.g. Thames having the London weekday franchise - knowing that they would have a complete monopoly on TV advertising in the area, which was very lucrative.

Now however we have 100s/1000s of viewing options - i.e. competition - so the government no longer has this franchise auction, and ITV has effectively just become another TV channel

If I was bidding for a lucrative rail franchise (say West Coast), it would be worth a certain sum of money as a monopoly franchise. If however the government allowed lots of competition (assuming for the argument that paths etc existed) picking off passengers on the most popular routes, then without a monopoly the franchise would be worth a lot less.

Thus the more competition there is, the less money the government/industry can make through the franchise system. Indeed franchises might become unsalable if too much competition exists

xotGD · 30 Dec 2019

Dr Hoo said:
There is no doubt that rail freight has been winning a growing share of the Construction sector. Despite relatively sluggish actual building activity in recent years rail volumes are at record levels with (purely as one example) several new loading terminals opening in Wales and the West of England to handle relatively modest amounts of traffic from various sources brought in by road for a rail trunk movement to the South East, replacing throughout road haulage. This being in addition to more traditional major rail flows from the Mendips, Leicestershire and the Peak District.

That is good to hear. However the question is whether the rail sector is winning the work or is it the customer looking to green-up their operation and turning to rail? I can see the latter being more and more important going forward, and the rail freight sector needs to be responsive to meet the needs of new customers knocking on their doors.

underbank · 30 Dec 2019

yorksrob said:
I'm remended of TOC's who, when confronted with some exhorbitant fare say "well we wouldn't expect most people to buy that ticket anyway" to which the follow on question must be "well why do you have it then ?".

Unfortunately, there's a lot of "fake" pricing these days. Hotels, airlines and shops do it all the time. They artificially inflate the "official" price for two main reasons. Firstly to "catch" the mugs who don't care what they pay (i.e. on expense accounts or just stupidly rich, or just stupid), and secondly to give the illusion of it being a bargain when they offer a discount/reduction (which in reality brings it down to what they want to charge anyway).

underbank · 30 Dec 2019

johnnychips said:
^ Didn’t the people of Greater Manchester vote against a congestion charge, the proceeds of which would have been spent on public transport? As others have pointed out, rail users are a minority and car users will have a greater electoral influence.

I suspect most of the objection was lack of a decent public transport alternative. Give Manchester the kind of public transport system enjoyed by London and I suspect the vote would be very different! Believe me, people don't drive around Manchester for the fun of it - they do so because the public transport is pathetic.

underbank · 30 Dec 2019

Andrew1395 said:
At privatisation the Railway pension scheme was deemed by actuaries to be in (a small) surplus, with no deficit or liability.

Back then, most pension schemes were in surplus. That's why many employers took contribution "holidays" as the regulations didn't permit surpluses. Then, of course, along came Gordon Brown who changed the tax laws which ruined many pension schemes.

Purple Orange · 30 Dec 2019

underbank said:
I suspect most of the objection was lack of a decent public transport alternative. Give Manchester the kind of public transport system enjoyed by London and I suspect the vote would be very different! Believe me, people don't drive around Manchester for the fun of it - they do so because the public transport is pathetic.

Looking back, it was right that the congestion charge was rejected. Once the foot was in the door, there would have been precedence for expanding the charging zones further or making them more prohibitive to local residents. Furthermore, the transport proposals that were offered have been delivered and s more adequate funding model was established.

yorksrob · 30 Dec 2019

underbank said:
Unfortunately, there's a lot of "fake" pricing these days. Hotels, airlines and shops do it all the time. They artificially inflate the "official" price for two main reasons. Firstly to "catch" the mugs who don't care what they pay (i.e. on expense accounts or just stupidly rich, or just stupid), and secondly to give the illusion of it being a bargain when they offer a discount/reduction (which in reality brings it down to what they want to charge anyway).

This, I suspect is true. Which is why I believe that some sort of operation offering affordable walk-on fares wouldn't be impossible.

Mogz · 31 Dec 2019

There is competition on some routes.

London to Birmingham has:

Virgin (now Avanti) Euston- New Street = best for speed

LNWR Euston-New Street = best priced advance fare

Chiltern Marylebone-Snow Hill = best for comfort

GWR + XC (change at Reading) Paddington- New Street = a fourth valid route.

Meerkat · 31 Dec 2019

Mikey C said:
Thus the more competition there is, the less money the government/industry can make through the franchise system. Indeed franchises might become unsalable if too much competition exists

Which implies that the government are colluding in a scheme to overcharge passengers.....
On the other hand the taxpayer, as owner of the track, doesn’t get to share the profits if open access only pay cost price for train paths.
I wonder whether, on the viable main lines, there should be an auction of path packages, probably with one bigger package which gets the prime slots in return for providing the early/late etc services

Deepgreen · 31 Dec 2019

Privatisation requires two fundamental things to be in place to have any chance of success - genuine profit and genuine competition. Neither exists on the railways, nor in so many other forced privatisations. There are a very few routes where any form of competition between TOCs exists, but the vast majority of routes have one operator. It could never be any other way - providing genuine, high street-style service competition is only possible where the operators have their own infrastructure (separate track, etc.) in the same way that shops have their own premises.

The amount of skill, knowledge and network cohesion that has been lost through the failed current system is incalculable, never mind the vast, hidden costs to the public purse.

Was privatisation supposed to bring competition?

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