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2024 Budget impact on Rail

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JamesT

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Agreed. The cost of fuel is the same as four years ago. Since then I think it has been down to one pound per litre and up to two pounds per litre. In that context, a few pence extra tax would hardly be noticeable.
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.
 
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deltic

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Fuel duty increases also affect the hauliers that move the vast majority of the goods that we all buy in shops, including food stuffs. Those duty increases end up being passed on to consumers and are therefore inflationary over and above just the cost of the fuel. It's a much more nuanced calculation than many are trying to make it.
The impact of a 5p increase in fuel duty on inflation is trivial, around 0.05% even under the most pessimistic assumptions.
 

yorksrob

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But UK government finances then were not like UK government finances now. There wasn't already a debt mountain as big as one year of GDP.

Looking at the budget on Tuesday, what are you proposing that the government doesn't do in order to use its limited borrowing envelope to finance new trains instead?

And pre-ROSCO financing didn't suffice perfectly well in the past. Look at the 1970s and early 1980s where all new rolling stock had to be HM Treasury approved, and, as a result there was very little new rolling stock.

Look at the mid to late 1980's where there was a consistent stream of new rolling stock. The 1970's and early 1980's weren't exactly barren either. Off the top of my head we had HST's, loco hauled mk3's, VEP's, PEP's, 455's, 150's etc (I'm sure there were more that I can't think of).

This idea that there was "very little" rolling stock coming through, seems to be a bit of an urban myth to my mind.
 

43066

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Actually I live within sight (back bedroom can see the platforms) of a major junction station, 20 minutes walk away. I have a wide range of people that I interact with in the town, and really I do not think the railway is seen as 'essential'. A nice to have, an inconvenience at some times if it is not there, but nothing like the Health service or the Fire Brigade or the Supermarket. Not that I am suggesting that the railway at this location should be closed, but I certainly do not believe it is providing value for money for the subsidy it is getting. I accept that there is a corner of the country where the railway is more entwined in the life of lots of people and would cause much more inconvenience if it wasn't there. Even in that area, once the dense suburbs have been passed through, there is plenty of reliance on private transport for most journeys.

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

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

As in 1963, the railways are desperately in need of modernisation. There are difficult decisions to be made for the sunlit uplands of the future. There are new lines required. There is electrification and other modernisation required to reduce costs, carbon footprint, improve productivity and reliability.

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

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

Cutting off peak services is such a common fallacy though. Once you have a working passenger railway, the actual cost savings of not running those off peak trains are actually pretty small in the grand scheme of things. And paying to run buses is going to eat into that tiny amount of savings pretty quickly, and will potentially push people away from railways too (given the likely slower less comfortable journeys), leading to the same death spiral we often see for bus routes when their off peak services start to get cut.

It sounds suspiciously like running the service down to make it less usable, and then using that as an excuse to dispense with it altogether.

If someone wanted to do something about costs, they would stop it costing stupid amounts of money to lease out clapped out rolling stock. The ROSCO system should be dismantled.

Yes, when that side of things is conspicuously ignored, it’s revealing of the ideology behind an opinion. Probably also true that it’s difficult to reverse the current arrangements other than a great expense, or by passing legislation to force the ROSCOs to take a huge haircut on their investments. Neither is likely to be viewed as acceptable for various reasons - the great pity is how the system was arranged in the first place, which of course was a deliberate choice by the politicians running the show.

Whereas others would say - before you sort out leasing costs, look at all these trains running with less than a bus load of passengers, with two members of staff plus others on railway terms and conditions...... etc etc. All trying to preserve nostalgia/ employment etc

“Railway Ts and Cs” again, and the vision painted above is well out of step with the reality. You’ll find trains running with less than a bus load of passengers are relatively few and far between on the network today, and the same crew and unit will then invariably undertake other journeys with several bus loads. The far bigger issue is crowding!
 
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Krokodil

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However, I am not necessarily advocating off peak type train services being cut, merely converted to buses (not necessarily middle of the day, but could be early morning or evening) The saving in fuel costs and crewing costs, plus staffing of any signal boxes could be significant.
Scrap an early morning train (bustitution amounts to the same thing) and the return journey home the passenger would have made on a busier one is lost. That busier one is no longer busy and starts losing money. If you try and cut yourself out of losses without making any effort to grow revenue you will cut yourself out of business.

Fairly common practice in continental Europe of course.
Usually the parts of continental Europe I'd not look to if the question is "how to run a railway".

Mileage may not be a representative measure, depending on the speed of lines / trains operated under the new diagramming compared to old. However, your post doesn't surprise me in the slightest!
True, but Liverpool TPE drivers haven't suddenly exchanged their express services for stoppers. For the best comparison (including between TOCs) you'd measure "time in charge of a train" which includes both driving and any duties such as prep and babysitting a running unit on a turnaround. The latter isn't truly productive, but that's best dealt with by looking at the unit diagrams.

Whereas others would say - before you sort out leasing costs, look at all these trains running with less than a bus load of passengers, with two members of staff plus others on railway terms and conditions...... etc etc. All trying to preserve nostalgia/ employment etc

I suggest a review of all of these things.
Those quiet trains may be feeder services to busier ones, they may be positioning moves for busy trains in the other direction, or they allow the railway to advertise a regular interval service which is more attractive to passengers.

== Doublepost prevention - post automatically merged: ==

I assume from many of the comments that people would rather that fuel duty at least kept in step with inflation. The rate was 57.95p in 2011 when it was frozen. According to the BoE inflation calculator that would now be 83.26p. Plus the 20% VAT on top.
I would expect bumping up petrol costs by over 30p/litre would get some very strong reactions.
I wouldn't mind if they just reverted it to 2011 in nominal terms (wasn't it 58.95p?). Better than the 6p cut we're now at.
 
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Magdalia

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Look at the mid to late 1980's where there was a consistent stream of new rolling stock. The 1970's and early 1980's weren't exactly barren either. Off the top of my head we had HST's, loco hauled mk3's, VEP's, PEP's, 455's, 150's etc (I'm sure there were more that I can't think of).

This idea that there was "very little" rolling stock coming through, seems to be a bit of an urban myth to my mind.
I have read the BR Board papers from the 1970s and early 1980s: they were consistently being kicked back on proposals for new trains and rolling stock. BR got nowhere near as many HSTs or class 56s as they wanted. The Midland Main Line HST order was turned down and it only got HSTs by nicking them from other routes. Perhaps the best examples are the class 38 and the class 210, which never happened at all, with BR having to refurbish old locos and DMUs instead.

Yes, there were lots of new trains in the late 1980s, but that's when the UK government finances were boosted by strong economic growth, especially in financial services, and could afford the borrowing. That was an investment with a quick return because the City of London was growing so rapidly that it needed increased commuting capacity that couldn't be met with existing resources. It is not like that now.
 

yorksrob

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I have read the BR Board papers from the 1970s and early 1980s: they were consistently being kicked back on proposals for new trains and rolling stock. BR got nowhere near as many HSTs or class 56s as they wanted. The Midland Main Line HST order was turned down and it only got HSTs by nicking them from other routes. Perhaps the best examples are the class 38 and the class 210, which never happened at all, with BR having to refurbish old locos and DMUs instead.

Yes, there were lots of new trains in the late 1980s, but that's when the UK government finances were boosted by strong economic growth, especially in financial services, and could afford the borrowing. It is not like that now.

I'm not saying everything was rosy, however there was a steady stream of rolling stock - a lot of it still there until a couple of years ago.

And it would be inaccurate to say that everything is rosy with the current system. We'd have liked more 3 carriage 180's and doubtless the new MML trains will be too short. The splurge of whole TOC replacements was fairly brief and seems to have died, and we're back to occasional rolling stock orders as and when DfT agrees. What would be helpful would be if the railway didn't have to pay leasing costs once the cost had been paid down.
 

The exile

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Whereas others would say - before you sort out leasing costs, look at all these trains running with less than a bus load of passengers, with two members of staff plus others on railway terms and conditions...... etc etc. All trying to preserve nostalgia/ employment etc

I suggest a review of all of these things.
Would argue that many of those are either a) busy going the other way, b) deemed socially /politically necessary or c) “parliamentary” services.
 

Magdalia

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I'm not saying everything was rosy, however there was a steady stream of rolling stock - a lot of it still there until a couple of years ago.
No that's your rosy interpretation. Until the mid 1980s new rolling stock was an intermittent trickle.
The splurge of whole TOC replacements was fairly brief and seems to have died, and we're back to occasional rolling stock orders as and when DfT agrees.
That's because the financial circumstances have changed. The splurge of whole TOC replacements was opportunism to take advantage of the low long term borrowing costs that existed through most of the 2010s, making new trains cheaper than old trains. It has died because long term finance is now much more expensive, and that's what's needed to finance assets that last for 30-40 years.
What would be helpful would be if the railway didn't have to pay leasing costs once the cost had been paid down.
No it wouldn't be helpful because the government would be paying much more as interest payments on the debt raised to extinguish the leasing deals and take on ownership of the trains.
 

43066

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No it wouldn't be helpful because the government would be paying much more as interest payments on the debt raised to extinguish the leasing deals and take on ownership of the trains.

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

I do recognise that’s highly unlikely, though.
 

Magdalia

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

I do recognise that’s highly unlikely, though.
And what do you think that would do to the UK's credibility with international financial investors? Would any of them ever again invest in the UK, and at what price?
 

43066

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And what do you think that would do to the UK's credibility with international financial investors? Would any of them ever again invest in the UK, and at what price?

Yes that’s a fair point, of course, hence why I said it’s unlikely :). But possible nonetheless, and not entirely without precedent.

What they could have done during the “covid emergency”, when the normal rules seemingly no longer applied, is force a renegotiation of the leases, or variation of the payment schedules. The fact that this seemingly wasn’t even considered is surprising.
 
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yorksrob

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No that's your rosy interpretation. Until the mid 1980s new rolling stock was an intermittent trickle.

That's not a "rosy interpretation", that's reality. The rolling stock was built and used, even if it doesn't fit in with some political agendas.

That's because the financial circumstances have changed. The splurge of whole TOC replacements was opportunism to take advantage of the low long term borrowing costs that existed through most of the 2010s, making new trains cheaper than old trains. It has died because long term finance is now much more expensive, and that's what's needed to finance assets that last for 30-40 years..

Plus ca change.

Economic circumstances always change. At the height of privatisations pomp, TPE were denied 4 carriage 185's and got 3 carriage ones instead.

No it wouldn't be helpful because the government would be paying much more as interest payments on the debt raised to extinguish the leasing deals and take on ownership of the trains.

If they can't change the model for current stock, change it going forward.
 

brad465

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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.
In a classic frog in a boiling pot situation, there certainly would be a strong reaction if a 30p/l increase was imposed at once. However if duty increased with inflation going forward, but no retrospective action was taken, the public reaction would be much lesser. The freeze though definitely opened a Pandora's box on the whole issue regarding revenue and management of the policy area, make much harder by the 5p cut.
 

Magdalia

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That's not a "rosy interpretation", that's reality.
The reality is the rolling stock that wasn't built because the Treasury turned it down, and the rolling stock that BR didn't even ask for because it knew it would be wasting its breath. All of the rolling stock that had to have life extensions did so because there were no new replacements. That's the reality not your rosy interpretation that, just because there were a few new trains, it was all wonderful.

Economic circumstances always change.
Indeed, and now they are worse than they have been for a long time, with UK government debt at a year's worth of GDP.
If they can't change the model for current stock, change it going forward.
And not get as much new rolling stock as the railway would like because the Treasury says no.
 

yorksrob

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The reality is the rolling stock that wasn't built because the Treasury turned it down, and the rolling stock that BR didn't even ask for because it knew it would be wasting its breath. All of the rolling stock that had to have life extensions did so because there were no new replacements. That's the reality not your rosy interpretation that, just because there were a few new trains, it was all wonderful.


Indeed, and now they are worse than they have been for a long time, with UK government debt at a year's worth of GDP.

And not get as much new rolling stock as the railway would like because the Treasury says no.

Like the fourth carriage on the 185's.
 

Krokodil

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All of the rolling stock that had to have life extensions did so because there were no new replacements.
How old were they at the time? Some 150s are now 40 years old with no signs of imminent replacement.

And not get as much new rolling stock as the railway would like because the Treasury says no.
Just like they've been saying no to longer trains on XC for the last 20 years?
 

Cesarcollie

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We would then also need to press for a fuel duty rebate for rail ( and inland waterway freight though this does already exist within ports and hinterland) to try and level the playing field. Duty is only about 10p/ litre for gas oil but every little helps.

Rail already gets duty-free fuel…….
 

yorksrob

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All of the rolling stock that had to have life extensions did so because there were no new replacements. That's the reality not your rosy interpretation that, just because there were a few new trains, it was all wonderful.

Apologies, I missed this point earlier.

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

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

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

Nicholas Lewis

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The problem the DfT has in trying to manage the railways is a huge amount of annual cost isn't within their control as ORR determine how much NR needs. Then when the Treasury squeeze them on total spending they end up pushing back on the operators to balance the books as the only controllable cost they have. For all the faults of the Thatcher years BR was just given an annual funding limit it had to work within and was left to get on with managing the whole network. Of course that was far from perfect but BR worked out how to live within it and I would say bought BR upto the best it had been since nationalisation.
So what DfT needs to put in place with GBR is something akin to that and agree a system wide 5yr plan that balances infrastructure and passenger needs equally.
 

Magdalia

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How old were they at the time? Some 150s are now 40 years old with no signs of imminent replacement.

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

It's notable that on our privatised network, the HST's lasted 40+ years, and the 158's probably will too. That is what a railway, run sensibly for taxpayer and farepayer looks like, although passengers shouldn't be coughing up leasing costs after forty years.
The Modernisation Plan kit was mainly expected to last 20-25 years, hence the perceived need for lots of replacements in the early 1980s.

There is a strong argument that rolling stock was sold off too cheaply in the original privatisations, but the people who profited from that are the original purchasers at privatisation who then sold out, not the institutions that own the ROSCOs now.

I'm not very familiar with class 150 history but the HSTs had an extensive life extension, including new MTU power units. The leasing charges will have included the financing of that life extension, which has to be paid for somehow.
 

yorksrob

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So what DfT needs to put in place with GBR is something akin to that and agree a system wide 5yr plan that balances infrastructure and passenger needs equally.

Spot on.

I'd also say that if I were the government, I'd slip something in popular for passengers like a national railcard.

The arms length organisation would have various historical things it would have to maintain - why not add another.
 

Mikey C

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That's because the financial circumstances have changed. The splurge of whole TOC replacements was opportunism to take advantage of the low long term borrowing costs that existed through most of the 2010s, making new trains cheaper than old trains. It has died because long term finance is now much more expensive, and that's what's needed to finance assets that last for 30-40 years.
ins.
And the result of that (and Covid) is some operators having a glut of new stock (e.g. the 701s and 720s when fully in service) with perfectly decent stock being stuck without an operator or prematurely withdrawn.
 

Nicholas Lewis

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And the result of that (and Covid) is some operators having a glut of new stock (e.g. the 701s and 720s when fully in service) with perfectly decent stock being stuck without an operator or prematurely withdrawn.
indeed another task for SBR to build a national rolling stock strategy
 

Magdalia

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And the result of that (and Covid) is some operators having a glut of new stock (e.g. the 701s and 720s when fully in service) with perfectly decent stock being stuck without an operator or prematurely withdrawn.
This should be a good thing for taxpayers, If supply exceeds demand then that should exert downward pressure on prices of off lease rolling stock.
 

yorksrob

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The Modernisation Plan kit was mainly expected to last 20-25 years, hence the perceived need for lots of replacements in the early 1980s.

Everything always lasts longer than its design life. Modernisation plan DMU's probably had a shorter potential life than EMU's, hence why there was a lot of emphasis on new DMU's in the early 1980's.

That doesn't mean to say that all rolling stock should be replaced after 25-30 years..[/QUOTE]

There is a strong argument that rolling stock was sold off too cheaply in the original privatisations, but the people who profited from that are the original purchasers at privatisation who then sold out, not the institutions that own the ROSCOs now..

Fair point, but why should the farepayer/taxpayer be stuck with those consequences.

Let the markets keep their windfall, but future rolling stock procurement should be on the basis of the railway owning the trains.

I'm not very familiar with class 150 history but the HSTs had an extensive life extension, including new MTU power units. The leasing charges will have included the financing of that life extension, which has to be paid for somehow.

Lots of trains need extensive life extension.

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

43066

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This should be a good thing for taxpayers, If supply exceeds demand then that should exert downward pressure on prices of off lease rolling stock.

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

It was a bad set up to begin with.
 

LAX54

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You fail to mention however that fuel is also considerably cheaper than the UK - I was in the US last week and paying less than $3 (£2.30) for a gallon of fuel which works out at around 60p per litre. Public transport would have to be pretty cheap to entice people out of their cars.
Depends where you go of course , its about $4.70 in California $3.10 in Maine £3.90 Nevada, still cheaper than the UK, but they do use a lot, not sure anyone drives a car under 2L
 

yorksrob

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I think that if I were to bump into Ms Reeves on the Clapham omnibus, I would say:

You did a good job given the dire circumstances. Just please look out for small businesses, especially pubs and be prepared to adjust if need be.

And bring in off-peak Fridays.
 

AndrewE

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

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