Williams Review - In a few weeks...

ComUtoR · 16 Feb 2020

https://www.cityam.com/rail-franchising-model-set-to-be-scrapped-in-coming-weeks/

Boris Johnson is set to dramatically overhaul the nation’s rail network by scrapping the rail franchise model and capping profits by private providers.

Former British Airways boss Keith Williams was drafted to conduct a review of Britain’s railways last year, with the report set to be released in the coming weeks.

It’s now expected that it will recommend replacing the rail franchising model with a new system of awarding contracts, according to the Sunday Telegraph.

The new system would see franchises receive a set fee, with revenues collected by the government.

Under the current model, revenues are collected by franchisees with a cut given to the exchequer.

The overhaul is expected to be managed by a new public organisation, which will be in charge of awarding contracts and monitoring performance.

Williams’ review will also recommend changing the current ticket system to a “single leg” model, which would mean fares are based on a per-journey basis.

A Department for Transport spokesperson confirmed that the review’s findings would soon be released.

Sounds like a GTR style "Management Contract".

An interesting point is that a "new public organisation" will be created to oversee everything. Would this be an end to the DfTs involvement or another overly complicated bureaucratic waste?

RailUK Forums

ainsworth74 · 16 Feb 2020

ComUtoR said:
An interesting point is that a "new public organisation" will be created to oversee everything.

What is old is new again! Welcome back the Strategic Rail Authority!

Grumpy Git · 16 Feb 2020

Interesting that it is a former BA man doing the review. Ah, BA, such a fine example of a business putting the passenger first!

LNW-GW Joint · 16 Feb 2020

ComUtoR said:
https://www.cityam.com/rail-franchising-model-set-to-be-scrapped-in-coming-weeks/
Sounds like a GTR style "Management Contract".
An interesting point is that a "new public organisation" will be created to oversee everything. Would this be an end to the DfTs involvement or another overly complicated bureaucratic waste?

Grant Shapps hinted as much on R5 Live today.
He evidenced London Overground as the model (ie concession).
Folk don't seem to realise that the DfT already owns and manages the current system and has 100% control over what contracts are let.
The change will move revenue risk to DfT, so far from penalising private operators it will protect them from VTEC/Northern/SWR-type losses.

Gareth · 16 Feb 2020

ainsworth74 said:
Welcome back the Strategic Rail Authority!

Hope not. Liverpool's only just beginning to claw back some of the direct services it lost to the SRA last time round.

Roast Veg · 16 Feb 2020

Seems very sensible. If the government are going to have to bail out franchises anyway, why not set the price ahead of time?

gallafent · 16 Feb 2020

"The new system would see franchises receive a set fee, with revenues collected by the government." — removing the incentive for the operator to increase revenue …

… and as someone else pointed out, it also derisks the operator and puts that risk on the exchequer.

It sounds very much like a "privatise the profits, nationalise the risks" approach.

miami · 16 Feb 2020

gallafent said:
It sounds very much like a "privatise the profits, nationalise the risks" approach.

And will be claimed as a victory by Labour

SlimJim1694 · 16 Feb 2020

You can't polish a turd, but you can roll it in glitter. This all sounds very ominous to me. Time will tell but I'm not expecting any changes that improve the passenger experience. I'd like to be proven wrong but that article doesn't inspire confidence in me.

thejuggler · 16 Feb 2020

Its fair to say it will be a 'back to the future' proposal. There are only a couple of ways of doing these things and both have been used and swapped since railways were invented.

RichT54 · 16 Feb 2020

Given the government's ambitions to scrap the traditional ways of doing things, no doubt Cummings will be busy recruiting a load of "weirdos and misfits with odd skills" to run this new public organisation.

FlashingYellows · 16 Feb 2020

LNW-GW Joint said:
Grant Shapps hinted as much on R5 Live today.
He evidenced London Overground as the model (ie concession).
Folk don't seem to realise that the DfT already owns and manages the current system and has 100% control over what contracts are let.
The change will move revenue risk to DfT, so far from penalising private operators it will protect them from VTEC/Northern/SWR-type losses.

Isn't it funny that the only time they intervene is when the franchise is no longer making anyone any money...

WatcherZero · 16 Feb 2020

gallafent said:
"The new system would see franchises receive a set fee, with revenues collected by the government." — removing the incentive for the operator to increase revenue …

… and as someone else pointed out, it also derisks the operator and puts that risk on the exchequer.

It sounds very much like a "privatise the profits, nationalise the risks" approach.

its being talked about as having stringent performance targets, miss the target reliability % and dont get paid which is likely to scare away any potential operators.

And also rather than grouping they are talking about breaking them down into even smaller units, e.g the suburban routes of individual cities.

LNW-GW Joint · 16 Feb 2020

WatcherZero said:
its being talked about as having stringent performance targets, miss the target reliability % and dont get paid which is likely to scare away any potential operators.
And also rather than grouping they are talking about breaking them down into even smaller units, e.g the suburban routes of individual cities.

That's more like the German model where small numbers of routes are contracted out at a time by the local government's transport dept.
The size measure seems to be the number of "train-km" operated.
It does put complete control of fares in government hands.

StephenHunter · 16 Feb 2020

SlimJim1694 said:
You can't polish a turd, but you can roll it in glitter. This all sounds very ominous to me. Time will tell but I'm not expecting any changes that improve the passenger experience. I'd like to be proven wrong but that article doesn't inspire confidence in me.

The Mythbusters proved that faeces polishing is possible.

yorkie · 16 Feb 2020

If anyone would like to post suggestions / ideas for what should happen, please use the Williams Review: what would you like to see happen? thread.

Thanks

xotGD · 16 Feb 2020

RichT54 said:
Given the government's ambitions to scrap the traditional ways of doing things, no doubt Cummings will be busy recruiting a load of "weirdos and misfits with odd skills" to run this new public organisation.

He just needs to visit a couple of platform ends to find them

SlimJim1694 · 16 Feb 2020

StephenHunter said:
The Mythbusters proved that faeces polishing is possible.

It's not supposed to be taken literally. It's a saying, a metaphor. If someone tells you to pull your socks up and you think it literally means to pull your socks up then you might need things breaking down for you. The metaphor I used implies that sh*t is still sh*t, however you dress it up. I can't believe I'm having to explain this. Let's move back to the topic at hand.

gallafent · 17 Feb 2020

WatcherZero said:
its being talked about as having stringent performance targets, miss the target reliability % and dont get paid which is likely to scare away any potential operators.

OK, that sounds a bit less likely to end up as a free-for-all at least, but as you say, likely to reduce interest, … and also perhaps to mean that the contract payments (assuming acceptable performance) will be higher (since the applicants need some way to improve the risk/reward ratio or they'll simply walk away as you suggest!). Perhaps a better symmetry would be given by also having extra payments available for exceeding contract parameters beyond a certain point. I don't like cliff edges at all in this context really though, a continuous function would be much nicer.

WatcherZero said:
And also rather than grouping they are talking about breaking them down into even smaller units, e.g the suburban routes of individual cities.

Hmm. Need to think about whether I approve of this or not! … in a local context for me, my immediate thoughts are re the Cowley branch line in Oxford, and which approach might work well.

Pro: Oxford(shire) seem to want it to happen, and with the power devolved locally maybe it might happen more quickly if a local metro organisation were to be formed and had authority to reopen the route and operate the services.

Cons: Chiltern already have the trains and know how to run a railway, and indeed how to work to upgrade one for passenger use (with the EverGreen projects) and so it might happen more quickly with their expertise and experience directly applied (with them then running the services) than with a separate new "local metro" organisation. Where does the money and expertise come from for a local metro organisation to operate the route? How could integration with Chiltern / GWR / EastWestRail work as well as if one of those operators ran the line?

Bletchleyite · 17 Feb 2020

gallafent said:
Hmm. Need to think about whether I approve of this or not! … in a local context for me, my immediate thoughts are re the Cowley branch line in Oxford, and which approach might work well.

Pro: Oxford(shire) seem to want it to happen, and with the power devolved locally maybe it might happen more quickly if a local metro organisation were to be formed and had authority to reopen the route and operate the services.

Cons: Chiltern already have the trains and know how to run a railway, and indeed how to work to upgrade one for passenger use (with the EverGreen projects) and so it might happen more quickly with their expertise and experience directly applied (with them then running the services) than with a separate new "local metro" organisation. Where does the money and expertise come from for a local metro organisation to operate the route? How could integration with Chiltern / GWR / EastWestRail work as well as if one of those operators ran the line?

Going to reply on the speculative thread on this one as it's more suited to there.

Meerkat · 17 Feb 2020

Will Intercity TOCs still get to innovate on bids, or will we lose all that to a dubious DfT spec of ‘you will run these trains, on these routes, at these times?

ah-media · 17 Feb 2020

ComUtoR said:
Sounds like a GTR style "Management Contract".

Now you see, I read that as being the exact opposite of the GTR contract.

GTR = Collect profits - Payback to Government
New = Government collects profits - pays % to operator.

Could be wrong ...

sprunt · 17 Feb 2020

gallafent said:
"The new system would see franchises receive a set fee, with revenues collected by the government." — removing the incentive for the operator to increase revenue …

Measures to improve revenue can still be required with this kind of arrangement - the current GTR concession, for example, required them to add gates to a number of stations on Great Northern.

xotGD · 17 Feb 2020

You can incorporate gainshare / painshare in a contract to incentivise the contractor.

Bletchleyite · 17 Feb 2020

ah-media said:
Now you see, I read that as being the exact opposite of the GTR contract.

GTR = Collect profits - Payback to Government
New = Government collects profits - pays % to operator.

Could be wrong ...

I suspect they are the same thing unless they're going to be vesting ticketing in Network Rail or something.

Aictos · 17 Feb 2020

If operators will get a fee anyway to run the concession then what incentives are there to tackle fare evasion?

And if you look at the Southern model which got rolled out to Great Northern and Thameslink, it’s employing agency staff to bolster gateline staffing who don’t have the training to do anything but to let fare evaders out as they can’t PF or MG11 anyone.

Bletchleyite · 17 Feb 2020

Aictos said:
If operators will get a fee anyway to run the concession then what incentives are there to tackle fare evasion?

That, interestingly, was why the Merseyrail concession includes a revenue share of some kind. MTL/Arriva Trains Merseyside were not incentivised to prevent fare evasion, and as a result barriers were destaffed and the network became largely de-facto free unless you had the ethics to pay anyway.

And if you look at the Southern model which got rolled out to Great Northern and Thameslink, it’s employing agency staff to bolster gateline staffing who don’t have the training to do anything but to let fare evaders out as they can’t PF or MG11 anyone.

LNR do this as well, it seems to work to a fair extent because most fare evasion is casual, and so the provision of a set of barriers with someone watching them is enough to deter the vast majority of it even if that person can't do anything other than let you out. Most casual fare evaders aren't quite brazen enough to go up to the staff and say "oi mate I haven't got a ticket, what are you going to do about it", particularly if they are a burly security guard. Some will, but the majority won't.

It's not a perfect model, but it's probably better than the Northern model of poorly-trained security guards PFing and MG11ing people who have perfectly valid tickets. It might actually be, depending on how many PFs get issued and given that security guards are cheaper than properly trained RPIs, be financially better to operate this way.

Aictos · 17 Feb 2020

Bletchleyite said:
That, interestingly, was why the Merseyrail concession includes a revenue share of some kind. MTL/Arriva Trains Merseyside were not incentivised to prevent fare evasion, and as a result barriers were destaffed and the network became largely de-facto free unless you had the ethics to pay anyway.

LNR do this as well, it seems to work to a fair extent because most fare evasion is casual, and so the provision of a set of barriers with someone watching them is enough to deter the vast majority of it even if that person can't do anything other than let you out. Most casual fare evaders aren't quite brazen enough to go up to the staff and say "oi mate I haven't got a ticket, what are you going to do about it", particularly if they are a burly security guard. Some will, but the majority won't.

It's not a perfect model, but it's probably better than the Northern model of poorly-trained security guards PFing and MG11ing people who have perfectly valid tickets. It might actually be, depending on how many PFs get issued and given that security guards are cheaper than properly trained RPIs, be financially better to operate this way.

You haven’t seen the attitude of Thameslink fare evaders then? Some will go to any lengths to avoid paying their fare including crawling under a staffed gateline!

They are much more brazen in avoiding paying their fare then the odd few on the West Coast.

Meerkat · 17 Feb 2020

xotGD said:
You can incorporate gainshare / painshare in a contract to incentivise the contractor.

If you do this what is the gain over a normal franchise with cap/collar?

ComUtoR · 17 Feb 2020

ah-media said:
GTR = Collect profits - Payback to Government
New = Government collects profits - pays % to operator.

Could be wrong ...

My understanding of the GTR Management contract was that the Gov paid them a bucket load of money to run the franchise with a list of costs that they were responsible for. In return, all money from the fare box went direct to the Gov. (also could be wrong)

The TOC knows all their costs up front and has a guaranteed fee. They have almost zero risk and just bank the fee from the Gov. The Gov takes a risk with the change in revenue but as they get all the revenue, they also benefit from any rise in passenger flows. Considering what happened with the SE Franchise with the predicted increases in passenger numbers you can understand why the Williams review might lean towards removing all risk.

How it incentivizes the TOC, I'm not sure. I would assume that the contract would set various performance measures with penalty clauses if the TOC doesn't meet their targets. I think the intention is for the TOC to manage its 'costs' (ie staff) and to make savings where they can to maximize their fee. I would also assume that the DfT or whoever takes over will specify that the TOC introduces new ticketing, new rolling stock, station upgrades etc.

What I found with GTR is that because they weren't paying, they didn't care. The Government is very wasteful and tend to try and solve problems by throwing money at it. If the Government can find a way to balance revenue against the fees it will pay out then it might be a sensible way forward.

If this was based on a profit model then everyone would lose. You would need the TOC to make a profit before anyone gets paid.

Williams Review - In a few weeks...

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