2024 Budget impact on Rail

[43066]

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.

Ok so you have nothing to actually back up opinion why the railway is poor value for money - it’s just a baseless impression.

Why the endless obsession with “The railway isn’t as important as X”. It isn’t a competition. The railway is just as “essential” for different reasons in certain parts of the country; I’ve (along with many millions of others) been commuting by train into central London for a couple of decades and earning money, paying taxes, but have never had to call the fire service. That doesn’t mean I don’t think the fire service should be properly funded, and the staff decently rewarded, but the railway has been “essential” to my ability to earn a living.

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.

Again, it isn’t clear what any of this is based on, coming from someone without knowledge of said Ts and Cs other than what they’ve read in the press which as someone on the inside I can assure you is generally inaccurately reported. It’s difficult to find exact comparators, but I’ve already pointed out that Ts and Cs are roughly analogous to those of airlines, for example. Some aspects better or worse, certainly, but not significantly more generous.

but I do not accept airy fairy 'essential' arguments to pour ever increasing taxpayer's money into them to prop up nostalgia and inefficiency.

The railway “earns its keep” by the action of transport people to stimulate economic activity. That’s why it is provided and subsidised in the first place.

The above quote is just the same dogma being repeated - “nostalgia and inefficiency” is once again an assumption you’re making that doesn’t reflect the reality, again based on my own experience actually working in the industry.

 

[yorksrob]

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.

Not true. Most people don't have access to a car some of the time, and buses are impractical for many longer journeys.

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).

The railway needs an organisational review looking at the fat. It does not need someone hovering over the passenger service with an axe.

You can just see it now. All the corporate and financial vested interests are too difficult to change, so they go for the easy option of cutting services.

 

[WAO]

Having watched a number of on-line clips from visitors to the UK I am struck by the high opinion they have of our Public Transport(ation as they call it!). Our buses and trains are in world terms really rather good even if we do see room for improvement. Credit where credit is due.

The alternative to leasing is amortisation - writing down the capital cost over n years (in BR's case n = 10). You could even borrow the money from a merchant bank and pay back the 10% with interest each year, to save Govt borrowing. The advantage of this is that after 10 years you own the stock outright and can use it free until it's not quite good enough for first line service; then you can cascade it to less profitable services, perhaps with some adaptation, for whom there are then no stock capital charges. The leasing model means continuing to pay capital charges for ever, or crippling the Leaseco by placing newish stock off-lease.

WAO

 

[Magdalia]

The alternative to leasing is amortisation - writing down the capital cost over n years (in BR's case n = 10).

It would be very expensive to amortise an asset with a 30-40 year life over such a short period. The cost to revenue in the first 10 years would be 3-4 times higher, money that the railway or the government do not have.

You could even borrow the money from a merchant bank and pay back the 10% with interest each year, to save Govt borrowing.

That is still government borrowing, just from a different source, and with a higher interest rate. It does not save a penny of government borrowing.

The leasing model means continuing to pay capital charges for ever

No just for the life of the asset, the same as amortisation over its full life, or less if applying a break clause to hand back the asset.

crippling the Leaseco by placing newish stock off-lease.

Taking up break clauses in the lease does not cripple the lessor. The assets will be a small proportion of their total portfolio and they will have priced the risk into the deal.

 

[12LDA28C]

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).

Bit in bold - I've mentioned the NHS before which swallows up enough money every single year to build HS2 in full, every twelve months. I assume you are calling for a wholesale review of NHS waste and inefficiency too, yes? Or do you reserve your ire solely for the railway and happily endorse profligacy and outdated working practices in other organisations funded by public money? Should the NHS not 'earn its keep' too by providing value for money?

 

[Rail_Midlands]

I would compare the NHS with other healthcare systems in Europe or elsewhere to see how wasteful they are. There is definitely scope for improvement in the system. But if we compare the same on Railways it will be apparently clear how backward we're and how convoluted the system is. There is a need to do zero based budgetting in the railways and it should bring out all the inefficiencies and outdated practices and what's good for the long term sustainability of this system.

 

[Bald Rick]

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.

It’s an interesting point. Other western european countries have similarly not been increasing fuel duty in line with inflation - eg petrol prices in France are more or less the same as they are here.

However, had fuel duty risen in line with inflation on an annual basis, which would have had a minimal direct impact on CPI* the government would be government an extra £12bn or so revenue annually, and government finances would be in the region of £80bn better off cumulatively, not allowing for any reduced birrowing costs that would result from that.

* Of course there would be indirect inflation effects, which would have been noticeable.

Everything always lasts longer than its design life.

Hymeks and Westerns say hello!

 

[JamesT]

Bit in bold - I've mentioned the NHS before which swallows up enough money every single year to build HS2 in full, every twelve months. I assume you are calling for a wholesale review of NHS waste and inefficiency too, yes? Or do you reserve your ire solely for the railway and happily endorse profligacy and outdated working practices in other organisations funded by public money? Should the NHS not 'earn its keep' too by providing value for money?

The Prime Minister claimed there would be no extra money for the NHS without reform. Though apparently we have to wait for Spring to find out what that reform looks like.

 

[miami]

NHS is extremely efficient (half the administration costs of the Netherlands for example), is used by practically everyone throughout their lives, and treats far more patients with far fewer resources than comparable countries.

The railway meanwhile is used by a tiny minority of the country, is completely unaffordable for groups who have access to cars or planes, criminalises its users, denies travel to people with valid tickets, and serves (within say a 1 mile reasonable walk from a station) well under 10% of the country.

You could get a train to Windermere. But then what? It's fine for city centre to city centre journeys, or for many suburbs to major cities for commuting, but on it's own?

I'm going away over Christmas to a rented cottage which is large enough to have 3 households from the family. Now we could all drive to our local stations and get a train, then somehow get the final 14 miles. Assuming there's no engineering work on December 26th to stop this.

We could spend £550 on tickets between us. Plus parking at the stations which would add another £60 (assuming it's "off peak" over christmas, otherwise more like £100). Taxis at the far end (with a dog?) would add another £50-100. That's more than the cost of the cottage.

Or we could drive and spend £100 in petrol, and be able to travel when we got there.

Arguing that "there's other costs" on cars is fine and dandy of course, but given we could hire cars instead and still be saving £300+ on the cost of the train shows how wide the gulf is.

The cost of fuel is far lower than it should be and that should be more like £150-200 in petrol, but even if we were paying £4 a litre it would still be cheaper to drive, let alone the time savings. If fuel was charged at a more reasonable price like £1.80 a litre now we'd likely be using an electric car.

The railways has it's uses, but it's of limited use - especially for groups and non-city travel.

How much subsidy the railway should receive from the taxpayer is a matter for debate, but the larger question is how do we measure the public good of a railway.

 

[43066]

Assuming there's no engineering work on December 26th to stop this.

On Boxing Day? There are virtually no trains running across the network, so have you factored that in?

An early kick off to the annual “no trains on Xmas day and Boxing Day threads”….

 

[12LDA28C]

NHS is extremely efficient

It's really not, and that's the opinion of many people who work in it.

Nowhere near enough of the huge budget gets to where it's most needed - patient care.

 

[Krokodil]

Having watched a number of on-line clips from visitors to the UK I am struck by the high opinion they have of our Public Transport(ation as they call it!). Our buses and trains are in world terms really rather good even if we do see room for improvement. Credit where credit is due.

If they're American then their bar for "good public transport" is pretty low. So long as they can tick off "it exists" and "it's not full of druggies" then it's better than what they've got at home.

The railway meanwhile is used by a tiny minority of the country,

Care to quantify that? The research I'm looking at says that 14% of the population (so "tiny" is already questionable) use the railway at least once a week, 28% use it at least once a month, 52% use it at least twice a year and 79% use it at least once a year. That's on top of everyone who benefits from freight being delivered by rail (try moving 3,840 tonnes of stone out of Westbury in 128 lorries instead of one train). Years ago BR produced a graphic with an illustration of what London might look like if it wasn't for the railways. Think Houston or LA but with a big clock tower.

 

[Magdalia]

NHS is extremely efficient (half the administration costs of the Netherlands for example)

Actually that's the wrong way round. The NHS is inefficient because it does not spend enough on good administration.

A few more skilled administrators would free up front line staff from administrative tasks to do what they do best, which is caring for people.

The Prime Minister claimed there would be no extra money for the NHS without reform. Though apparently we have to wait for Spring to find out what that reform looks like.

It is very sensible to take a bit of time to work out what that reform should be, and to do the stakeholder engagement needed to drive it through

 

[RT4038]

You can just see it now. All the staff, corporate and financial vested interests are too difficult to change, so they go for the easy option of cutting services.

Adding a bit.... You and I don't agree on much, but your prophesy could well be right. But that will probably happen, with a greater certainty if there is no review, but at least a review could highlight all the issues and propose remedies other than wholesale cuts. It could even have some terms of reference in that regard, however it cannot be expected that the network and services should be preserved in aspic either. There are also new lines and services to be considered too.

Care to quantify that? The research I'm looking at says that 14% of the population (so "tiny" is already questionable) use the railway at least once a week, 28% use it at least once a month, 52% use it at least twice a year and 79% use it at least once a year. That's on top of everyone who benefits from freight being delivered by rail (try moving 3,840 tonnes of stone out of Westbury in 128 lorries instead of one train). Years ago BR produced a graphic with an illustration of what London might look like if it wasn't for the railways. Think Houston or LA but with a big clock tower.

I suspect it would be better expressed as a tiny minority of journeys are made by rail. Only a small percentage of the rail network is used to move any volume of freight , and those lines would have a very different cost structure if that was all they carried.

Ok so you have nothing to actually back up opinion why the railway is poor value for money - it’s just a baseless impression.

Why the endless obsession with “The railway isn’t as important as X”. It isn’t a competition. The railway is just as “essential” for different reasons in certain parts of the country; I’ve (along with many millions of others) been commuting by train into central London for a couple of decades and earning money, paying taxes, but have never had to call the fire service. That doesn’t mean I don’t think the fire service should be properly funded, and the staff decently rewarded, but the railway has been “essential” to my ability to earn a living.

I think it was you who either brought up or commented upon the 'essential' word to describe the railways, as if that were some kind of justification for the level of subsidy to be poured in. That is not my opinion of the railway.

Again, it isn’t clear what any of this is based on, coming from someone without knowledge of said Ts and Cs other than what they’ve read in the press which as someone on the inside I can assure you is generally inaccurately reported. It’s difficult to find exact comparators, but I’ve already pointed out that Ts and Cs are roughly analogous to those of airlines, for example. Some aspects better or worse, certainly, but not significantly more generous.

Frankly you have no idea what I know and don't know. I know you work for the railway, and I would expect as such that you would want to discredit any suggestion that the current costs and working arrangements of railway staff are anything but what is efficient, deserved, if not insufficient. I understand this, but I do not share your view. Be handsomely rewarded by all means, but that should be in exchange for a productivity, flexibility and reliability which is often not currently there.

The above quote is just the same dogma being repeated - “nostalgia and inefficiency” is once again an assumption you’re making that doesn’t reflect the reality, again based on my own experience actually working in the industry.

Maybe when you work there, you take the practices for granted and don't see the wood for the trees? (and this is not intended as a personal attack - I suspect many of us could be accused of this at some point in our lives?)

 

[WAO]

It would be very expensive to amortise an asset with a 30-40 year life over such a short period. The cost to revenue in the first 10 years would be 3-4 times higher, money that the railway or the government do not have.


That is still government borrowing, just from a different source, and with a higher interest rate. It does not save a penny of government borrowing.


No just for the life of the asset, the same as amortisation over its full life, or less if applying a break clause to hand back the asset.


Taking up break clauses in the lease does not cripple the lessor. The assets will be a small proportion of their total portfolio and they will have priced the risk into the deal.

I think we may reflect on the profits made by the original purchasers of Porterbrook, Eversholt and Angel, the eagerness of investment banks to buy them out and the subsequent bonfire of public assets and cash flow. This is no criticism of the excellent staff who work in the present Leaseco's, only of DfT and the Treasury who framed the contracts and made privatisation (a good idea) fail.

One does have to write down an asset well before its actual end of life.

Other posters have questioned NHS performance. An Australian friend recently bitterly explained her country's superior health service; it just discourages people from being treated! Perhaps it is us users of the NHS that need reform.

WAO

 

[Krokodil]

I suspect it would be better expressed as a tiny minority of journeys are made by rail. Only a small percentage of the rail network is used to move any volume of freight , and those lines would have a very different cost structure if that was all they carried.

So? If you start stripping out railways then you quickly end up with gridlock. The school run accounts for a small proportion of journeys but it makes a massive difference to the amount of congestion.

 

[RT4038]

So? If you start stripping out railways then you quickly end up with gridlock. The school run accounts for a small proportion of journeys but it makes a massive difference to the amount of congestion.

Does rather depend on which railways you strip out?

 

[Mikey C]

So? If you start stripping out railways then you quickly end up with gridlock. The school run accounts for a small proportion of journeys but it makes a massive difference to the amount of congestion.

Solving the school run issues requires better buses rather than better trains anyway.

 

[Krokodil]

Solving the school run issues requires better buses rather than better trains anyway.

It was an illustration of how a small increase in journeys results in a disproportionate increase in congestion. I wasn't suggesting building tramways to the school gates!

 

[Mikey C]

It was an illustration of how a small increase in journeys results in a disproportionate increase in congestion. I wasn't suggesting building tramways to the school gates!

The railway lines that would be at risk from any "Beeching" style cuts, in reality make little difference to road congestion.

 

[Krokodil]

The railway lines that would be at risk from any "Beeching" style cuts, in reality make little difference to road congestion.

Places like Pilning which are only served by a Parliamentary service would not be missed.

The tippexistas on here have a much longer list in mind, including many places with narrow streets and plenty of tourist traffic. On one thread (not sure if this one or another) someone even suggested that closing all non-electrified lines would be a good idea. Quite apart from the fact that removing branches threatens the viability of the trunk. Of course instead of congestion, the result might simply be that people don't go to those places any more. Which I'm sure will be much appreciated by local businesses...

 

[WelshBluebird]

Places like Pilning which are only served by a Parliamentary service would not be missed.

Except places like Pilning, which are on the edges of busy urban areas but which lack good public transport and so are heavily car dependent to the detriment of the local area, are ripe for getting a good service to actually improve the area! If anything examples like that which would be incredibly easy to give a good service to based on existing non stopping services should be the quick wins that we tick off as they won't actually cost much to improve and wouldn't actually save any money if they were to close.

 

[Yew]

Seeing as I'm paying 60p a litre less than I was two years ago, I reckon I can afford to absorb a reasonable increase in fuel duty. There's no justification for the continued freeze whatsoever yet successive Chancellors seem to have been scared of motorists and don't want to upset them, whilst the Government simultaneously approves increases in regulated train fares every year. Does that seem fair to you?

I don't think it's reasonable to make a comparison to abnormally high levels of cost, without at least mentioning that fact.

 

[Krokodil]

Except places like Pilning, which are on the edges of busy urban areas but which lack good public transport and so are heavily car dependent to the detriment of the local area, are ripe for getting a good service to actually improve the area! If anything examples like that which would be incredibly easy to give a good service to based on existing non stopping services should be the quick wins that we tick off as they won't actually cost much to improve and wouldn't actually save any money if they were to close.

For years they talked about housing development near the station (like many it's too far from the village with which it shares its name) but nothing seems to be happening there. Housing may prove the renaissance of Ardwick.

Many on here will decry the Parly service between Helsby and Ellesmere Port. But of course it will attract few passengers when it is only booked to run twice a day and gets cancelled more often than it runs. If the proposed battery extension of Merseyrail services ever happens then the line becomes a useful link, with little extra cost compared with dragging a 150 and crew out twice a day.

 

[12LDA28C]

I don't think it's reasonable to make a comparison to abnormally high levels of cost, without at least mentioning that fact.

Whether those prices were abnormally high or not, doesn't make my point any less valid. I'd happily pay another 5p or 10p per litre of fuel if the revenue raised was spent on funding infrastructure projects that would benefit people, whether it's road improvements, rail or whatever.

 

[Harpo]

I don’t see anything in the budget which will influence rail use or its economics.

Far more influential will be the railways structure and funding under GBR. Eliminating internal man marking through DfT, ORR’s financial regulation, contractual Chinese walls (track access agreements, delay attribution, schedule 4 & 8 payments etc., etc.,) RDG and more plus all of their associated legal/lawyer costs offer big savings.

If the Chancellor want’s the railway included in her growth aspirations, giving it autonomy, agility and responsiveness, plus a simpler long term financing model will help hugely. But I didn’t expect it in the budget anyway.

 

[Lurcheroo]

Solving the school run issues requires better buses rather than better trains anyway.

I suppose that all depends, the Cambrian coast has multiple school run trains a day with the vast majority of kids that live outside of the towns with Schools in, I.e Harlech and Tywyn, get there by train. It’s a recognised thing with all the kids having passes and even teachers on board.

It all depends on the logistics of the school and where people need to get to.

 

[MPW]

As I've said before, I don't live in London and the South East. Where I live, most people I know would not consider the railway as 'essential' (a nice to have, certainly), and most of their and my journeys made do not involve the railway.

I just came back from visiting friends and family in california. Most people there have the same view as you do, even those that live in cities, because the rail service is far less comprehensive than here. I completely understand the perspective.

However I also see the impact of being so reliant on cars. When asking how long a journey might take you always get quoted one time "if there's no traffic " and another with traffic which is 2-3x longer. On longer journeis like a return trip trying to cross a multi-polar Metropolitan area, like from The Valley to Orange County, it's almost impossible to avoid traffic. The built environment also ends up being not very nice, even away from motorways the stroads can be 3 to 4 lanes in each direction. You just end up driving from one car park to another. Very isolating feeling.

That is what I personally picture as the alternative to proper public transport, and it's enough to make me move from the california sunshine to the English drizzle.

 

[Magdalia]

I think we may reflect on the profits made by the original purchasers of Porterbrook, Eversholt and Angel, the eagerness of investment banks to buy them out and the subsequent bonfire of public assets and cash flow.

We can reflect as much as we like but the only advantage of that is to learn from past mistakes. The institutions that invest in ROSCOs now are interested in the future, not what happened 30 years ago.

There is a far more egregious example of this in the water industry, where previous owners hollowed out the privatised water companies and failed to deliver new reservoirs or functioning sewage disposal. ROSCOs did deliver new trains, and, in the period when long term interest rates were very low, lots of them.

 

[LNW-GW Joint]

I don’t see anything in the budget which will influence rail use or its economics.
Far more influential will be the railways structure and funding under GBR. Eliminating internal man marking through DfT, ORR’s financial regulation, contractual Chinese walls (track access agreements, delay attribution, schedule 4 & 8 payments etc., etc.,) RDG and more plus all of their associated legal/lawyer costs offer big savings.
If the Chancellor want’s the railway included in her growth aspirations, giving it autonomy, agility and responsiveness, plus a simpler long term financing model will help hugely. But I didn’t expect it in the budget anyway.

We'll have to wait until the GBR legislation is published, to find out how the new funding model works and how much autonomy GBR will have.
How the railway gets from multiple independent TOCs and devolved NR Regions/Routes to something more efficient will be key.
I suspect there won't be a single layer. Even BR ended up with several sectors, effectively separate businesses.
Much of the existing regulatory setup will have to be retained for open access (including freight).