Benefits of nationalisation

[Dave1987]

The TOCS are making good profits. It is simply hidden in financial planning within the group companies.

Sorry but do you know that for a fact? A lot of services that some TOC run are actually loss making!

 

[Buttsy]

Sorry but do you know that for a fact? A lot of services that some TOC run are actually loss making!

And those services are propped up by subsidies from the government, not by cross subsidisation within the TOC or parent company.

 

[Dave1987]

And those services are propped up by subsidies from the government, not by cross subsidisation within the TOC or parent company.

I believe that the only profitable lines are the ECML and Northern. I do not believe TOC's are "creaming massive profits" from passengers. All we have is rhetoric from people like Bob Crow (who lives in a council house even though he earns hundreds of 000's a year, the hypocrite!) who seem to think nationalisation is the be all and end all of the railways.

 

[Greenback]

I believe that the only profitable lines are the ECML and Northern. I do not believe TOC's are "creaming massive profits" from passengers. All we have is rhetoric from people like Bob Crow (who lives in a council house even though he earns hundreds of 000's a year, the hypocrite!) who seem to think nationalisation is the be all and end all of the railways.

You can believe that, but it does not alter the fact that there is a valid argument that the money leaving the industry in the form of profts and bonus payments to senior executives and shareholder dividends, would be better spent on the railway itself.

There is also a valid argument that there is no risk for the private companies involved in the railway system. They can, usually without any great penalty, simply walk away if they don't like how things pan out, and they also have the option of government bail outs in the form of revenue support should revenue not meet expectations by a set amount.

 

[Dave1987]

You can believe that, but it does not alter the fact that there is a valid argument that the money leaving the industry in the form of profts and bonus payments to senior executives and shareholder dividends, would be better spent on the railway itself.

There is also a valid argument that there is no risk for the private companies involved in the railway system. They can, usually without any great penalty, simply walk away if they don't like how things pan out, and they also have the option of government bail outs in the form of revenue support should revenue not meet expectations by a set amount.

I dont believe NX handed back the ECML without incurring penalties. I will take the roads as another example. The curent state of the roads is appalling, with massive pot holes everywhere even though Road Tax/Vehicle Excise Duty/Road fund license whatever you want to call it has gone up progressively. The govt does not put all that money into maintaining the roads. The same will happen with the railways. Its just too bigger pot of money for the treasury to not wanna dip into it and then cut back on maintenance or put off upgrading part of the network for a few years. But if you all want that then fine.

 

[Buttsy]

You can believe that, but it does not alter the fact that there is a valid argument that the money leaving the industry in the form of profts and bonus payments to senior executives and shareholder dividends, would be better spent on the railway itself.

There is also a valid argument that there is no risk for the private companies involved in the railway system. They can, usually without any great penalty, simply walk away if they don't like how things pan out, and they also have the option of government bail outs in the form of revenue support should revenue not meet expectations by a set amount.

Allied to the number of lawyers who are paid to write up contracts, penalty payments by Network Rail (government owned whatever they say) for over-runs paid to TOCs and the payments to TOCs for not being able to run trains while improvements are being made for the TOCs benefit... The latter reminding of print unions prior to Wapping...

The railways, in my view, would be better off with one owner (preferably the state, again in my view) for infrastructure and the majority of passenger services. Open access rules would allow them to charge freight companies and operators like West Coast and Grand Central for running trains.

 

[jon0844]

And those services are propped up by subsidies from the government, not by cross subsidisation within the TOC or parent company.

Chiltern has stated it has been running at a loss while investing in major upgrades. Are you saying they've been taking subsidies during this time?

Their claim is that they hope to recoup the money invested, which they can do with a longer franchise period. That's the hope for other franchises being awarded for a longer period.

 

[Buttsy]

Chiltern has stated it has been running at a loss while investing in major upgrades. Are you saying they've been taking subsidies during this time?

Their claim is that they hope to recoup the money invested, which they can do with a longer franchise period. That's the hope for other franchises being awarded for a longer period.

I can't answer that question without knowing the full terms of their franchise, however, First are not operating their franchises out of the good of their hearts, they are making money out of those in some small way.

If a franchise was allowed not to run a service because it wasn't profitable, do you think they would?

 

[DarloRich]

Chiltern has stated it has been running at a loss while investing in major upgrades. Are you saying they've been taking subsidies during this time?

Their claim is that they hope to recoup the money invested, which they can do with a longer franchise period. That's the hope for other franchises being awarded for a longer period.

They are in a slightly different position being mandated to invest over the course of their longer franchise. In any event their track works had to be bailed out and delivered on time by the hopeless Network Rail

 

[jon0844]

I can't answer that question without knowing the full terms of their franchise, however, First are not operating their franchises out of the good of their hearts, they are making money out of those in some small way.

Well, yes, as you'd expect. Otherwise nobody would bid to run a service. The question is whether the service is better than it otherwise might have been, from nicer looking stations, train interiors, extra rolling stock secured to provide more than the basic timetable etc.

If that happens then any operator should be expected to earn a profit and if you have shareholders that include pension funds and other investments that rely on a profit being made, the greater economy benefits.

It doesn't appear to me that the profits are excessive, but I am not privy to all the information or any tricks that might be employed to reduce the appearance of profit.

If a franchise was allowed not to run a service because it wasn't profitable, do you think they would?

Of course not. Why would they. Why would anyone? That's why, hopefully, such a thing would never be part of a franchise!

 

[Greenback]

I dont believe NX handed back the ECML without incurring penalties.

I did say 'great penalty'. And what about GNER?

It is in the governments interest to encourage these companies to enter into the competition for franchises - they are not going to want to penalise companies so much that they will not enter the industry in the first place. It would be naive to think otherwise. If there were not an icnentive to participate (in the form of government guarantees and revenue support) then there would be no franchises, and the government could not pretend that this system is working!

I will take the roads as another example.

Please don't! It is acknowledged that a negative of state control is that budgets will be cut, and that this can happen for political reasons (1980's) as well as financial reasons.

This discussion should focus on how the negatives and positives of a nationalised industry would match up to the negatives and positives of what we have now. For sure, both methods have their good and bad points!

 

[Railsigns]

The BR I remember as a child, even with the fancy NSE branding, was mostly that of an old and dirty network of stations and trains. Old slam door trains,

I grow weary of reading these suggestions that BR's trains were all old and dirty. It's a bit of a cheap shot and quite untrue. Depending on what line you happened to be travelling on and in what year, you may well have found yourself on board a shiny new train. In that respect the situation is no different today.

Yes, many new trains have entered service since privatisation - on certain routes. My present daily commute entails being squashed into a crappy old 1970s unit, so where are my new trains?

Had GB's railways continued under state ownership, there's nothing to suggest procurement of new trains would have ceased, as some seem to want to imply. Just look at the new fleet of trains in Northern Ireland and the Republic of Ireland, where the railways are publicly owned.

I would also say that, in my opinion, the most comfortable trains still running on the GB network are the ex-BR Mark 3s.

 

[W230]

Had GB's railways continued under state ownership, there's nothing to suggest procurement of new trains would have ceased, as some seem to want to imply.

I wasn't implying that it would have ceased (and I don't believe jonmorris0844 is either).

I'm saying how I remember the network at the time - a network that had been under invested in for a long time and was becoming more and more run down as a result. We'll never know how it would have turned out had BR stayed on from the mid 90's when investment finally started to come back in. All i'm saying is that many now look back at BR with fondness but that things weren't necessarily all that great under them at that time (not helped by said lack of investment).

 

[jon0844]

I grow weary of reading these suggestions that BR's trains were all old and dirty. It's a bit of a cheap shot and quite untrue. Depending on what line you happened to be travelling on and in what year, you may well have found yourself on board a shiny new train. In that respect the situation is no different today.

That was my opinion and I am sure, as you've admitted yourself, other people might think the same depending on where they were.

I use 1970s trains all the time; the class 313. It has been refreshed and looks pretty modern (and Southern have shown how you can make them not just look modern but almost brand new). There are other old trains still in use, but most have been made to look a lot nicer than they were even when new, or fairly new.

And the main issue was the old slam door stock, and I already said that I looked at things differently when the 317s arrived.

So, why are you growing weary of these comments? Are you saying I was wrong to think that, or that anyone else might have had the same view of trains then that they do with buses still today?

Perhaps BR could have done all of the same as the private operators have but, let's be frank, why would they have wanted to? They'd be providing a service and it wouldn't have been a priority to make things nice and shiny. I can't see any Government, even in good times, throwing money at the sort of branding that has made the railway arguably more enticing to a lot of people.

If it's money well spent, sure, that can be debated!

 

[Greenback]

Part of the problem under BR was that refurbishment and cleaning of trains was dependent on money being available to do it.

My memory of the Mark I compartment stock I travelled in during the early 1980's from South Wales to the Marches and the South Coast is that they were gloomy, dirty and old. In contrast, the HST's I travelled in to and from London were bright, clean and modern!

One of the things that BR did was to prioritise spending on particular routes and services, often to the detriment of secondary services. But then they often had little choice in the matter.

 

[Railsigns]

So, why are you growing weary of these comments?

Because it's a sweeping generalisation made by some to paint a picture of neglect under state ownership. Yes, I have travelled on old and dirty BR trains, but I've also been on some clean new ones (and some clean old ones). What's more, I have travelled on old and dirty trains since privatisation.

 

[Pugwash]

Quite often members on these forums touch on re-nationalisation of the UK railway system. This has set me thinking of what would be the benefits, and obviously the downsides if this were to happen.

I'm not interested in discussion over political dogma about state run or privatised companies. I'm thinking from the point of view of railway staff and passengers and whether we'd get a better system under public ownership or not.

Bob Crow is very keen on public ownership but I suspect many passengers think that's because it will make it easier for Him to shut the whole network in one go.

Given that in the 200 years or so since Richard Trevithick operated the first passenger carrying railway ( he's the chap on the left by the way) the railways, which were mainly built by private capital, have only been in public hands for less than 50 years.

Or maybe the answer is a mixture of the two. Is that what we have now?

Massively reduced insurance costs which could be passed on.

 

[jon0844]

Because it's a sweeping generalisation made by some to paint a picture of neglect under state ownership.

It wasn't to paint a picture of neglect under state ownership, but rather give an opinion of what I saw at the time. It wouldn't have mattered who owned it.

And I didn't just travel on my local line. With a railcard, I travelled all over the UK.

 

[Gwenllian2001]

I grow weary of reading these suggestions that BR's trains were all old and dirty. It's a bit of a cheap shot and quite untrue. Depending on what line you happened to be travelling on and in what year, you may well have found yourself on board a shiny new train. In that respect the situation is no different today.

Yes, many new trains have entered service since privatisation - on certain routes. My present daily commute entails being squashed into a crappy old 1970s unit, so where are my new trains?

Had GB's railways continued under state ownership, there's nothing to suggest procurement of new trains would have ceased, as some seem to want to imply. Just look at the new fleet of trains in Northern Ireland and the Republic of Ireland, where the railways are publicly owned.

I would also say that, in my opinion, the most comfortable trains still running on the GB network are the ex-BR Mark 3s.

Spot on.

 

[ChiefPlanner]

Spot on.

Yes another "Daily Mail" reader living in retirement in Antibes or the Dordogne judging BR by anecdote or maybe one bad experience.


Sick of hearing about "dirty trains" - cue the programme last night about ATW staff at Canton and what they do to put out presentable trains. Last weeks incident when a young woman gave birth on a "packed" commuter train - West Malling at 2000 hrs !!!! - had some typical DM reader saying how horrible an experience on a dirty train.

Rant over ...

 

[jon0844]

I am a Daily Mail reader simply because my experience of the railway wasn't great until we started to get station upgrades and new trains?

Sorry for daring to have an opinion. My experience of BR in the late 80s and early 90s wasn't a great one overall.

I've never suggested BR couldn't have got to us to exactly the same place today as a private railway has. Just that rail travel now is generally enjoyable and something I gladly choose to do.

 

[Greenback]

If BR had had access to 80% of the amount of money going into the system now, I am convinced that we would be at a similar place to where we are! It's possible we would be in a much better place than we are now, but none of this is proveable!

 

[Dave1987]

If BR had had access to 80% of the amount of money going into the system now, I am convinced that we would be at a similar place to where we are! It's possible we would be in a much better place than we are now, but none of this is proveable!

Sorry Greenback but I don't agree. If the treasury held the purse strings I am sure the income from tickets would not have all been spent on the railway. Like I said before it is too bigger pot of cash and it is easy to find efficiency savings and postpone projects on the railways. Just look at how long it took to get Cross rail through and how long its going to take to get HS2 built! Privatisation has its downsides but at least you have companies who are bound by a franchise agreement and if they don't perform well enough they can lose the franchise.

 

[Greenback]

Sorry Greenback but I don't agree. If the treasury held the purse strings I am sure the income from tickets would not have all been spent on the railway. Like I said before it is too bigger pot of cash and it is easy to find efficiency savings and postpone projects on the railways. Just look at how long it took to get Cross rail through and how long its going to take to get HS2 built! Privatisation has its downsides but at least you have companies who are bound by a franchise agreement and if they don't perform well enough they can lose the franchise.

I am not saying anything apart from the fact that there was not the same amount of money available to BR as there is now going into the franchised system. You aren't actually disagreeing!

This thread is not about franchises, it is about whether there any benefits to having a nationalised system, and if so, what they are.

This has been sidetracked a little by debates about dirty trains under BR, but the position as I see it is that BR was hamstrung by a lack of cash as you say; we know this, it is a matter of historical record!

If we had the same form of nationalisation as was the case with BR, I am pretty sure that the same thing would happen again. But, just as there are various models of a privatised railway, so there are different models of public ownership. I'd like to have a discussion about those forms of ownership, for example a not for profit company, a co-operative, an independent government agency and so on.

We all (including myself) need to try and keep the debate on topic, and discuss what benefits there may be from having a nationalised railway. This is not really the place for a debate over what we had under BR and what we have now!

 

[tbtc]

If BR had had access to 80% of the amount of money going into the system now, I am convinced that we would be at a similar place to where we are! It's possible we would be in a much better place than we are now, but none of this is proveable!

I agree with you.

What I find frustrating in these debates is the way that we focus on some fairly trivial costs (like rebranding station signs when a franchise changes hands) and ignore the much bigger costs.

BR are a bit like the last Labour Government in that they suddenly seemed to take the railway very seriously and enthusiastically in their final days - if BR had continued with the progress made in its final decade then we'd have had a world class railway (but then if Lord Adonis had started his focus on railways in 1997 we'd have seen a similar boom).

 

[Gwenllian2001]

I am not saying anything apart from the fact that there was not the same amount of money available to BR as there is now going into the franchised system. You aren't actually disagreeing!

This thread is not about franchises, it is about whether there any benefits to having a nationalised system, and if so, what they are.

This has been sidetracked a little by debates about dirty trains under BR, but the position as I see it is that BR was hamstrung by a lack of cash as you say; we know this, it is a matter of historical record!

If we had the same form of nationalisation as was the case with BR, I am pretty sure that the same thing would happen again. But, just as there are various models of a privatised railway, so there are different models of public ownership. I'd like to have a discussion about those forms of ownership, for example a not for profit company, a co-operative, an independent government agency and so on.

We all (including myself) need to try and keep the debate on topic, and discuss what benefits there may be from having a nationalised railway. This is not really the place for a debate over what we had under BR and what we have now!

Some excellent points there. The first thing that we should consider is whether we see the railways as a 'service' or just an opportunity to make money. I would suggest that things such as Public Transport; Power and Water are services because we all need them. The Thatcher government sold off state assets, or as Harold MacMillan termed them; The Family Silver, for purely idealogical reasons and short term gain, These assets have now been sold on, often to overseas concerns. Thatcher, however, baulked at the prospect of putting British Rail into the private sector and it was left to Major to make his mark on history. The result was a complete fragmentation of the unitary railway, a pattern that had persisted from the early days of the industry.

We all know that the 'profitable railway' largely disappeared after the First World War but that has not stopped people making money out it. Every part of the industry is now sucking in money that could be better spent on the railway itself. The Roscos; the TOCs; the sub contractors for Railtrack and so on, all have boards of directors to pay; along with legal advisors; accountants; shareholders and so on. None of that money actually benefits the railway directly.

It is obvious that the present set up is not good value for money; so what can be done? The most interesting proposal, that I have come across, has been postulated in Wales. The idea is that the railway should be run as a non profit making company on the lines of Dwr Cymru/Welsh Water. Welsh Water is an example of a state asset that was sold off but is now run as a service on a 'not for profit' basis. It works well and there is no reason, that I can think of, why it should not work elsewhere.

Such a company could be state sponsored, as long as it is clear that it would not become a political football; it should be given a task to do and left to get on with it. Of course it would need subsidy but, under the present system, we have that now in spades.

 

[tbtc]

Such a company could be state sponsored, as long as it is clear that it would not become a political football; it should be given a task to do and left to get on with it. Of course it would need subsidy but, under the present system, we have that now in spades.

This is a real problem - I'm a great believer in Government (as a means of achieving ends), but certainly not of every actual Government!

Look at how politicians use things as political footballs. For example, in my job, I've worked a fair bit with what we now call the Department For Education. Under Labour it was the Department for Children, Schools and Families (the name gave an idea of the "nanny state" approach that the previous Government took, using education as a way of forwarding Labour attitudes)...

...now it's the Department for Education (gone back to an "old school" approach where we've stopped building new schools because Mr Gove thinks that it's more important to be taught Latin in a portacabin than to be taught "Citizenship" in an expensive new school).

Just one example (and I apologise for going off-topic here), but this shows how tempting it is for Governments to use departments of state to further their aims. I'm therefore nervous about nationalisation - it'd be too tempting for some politicians to get involved...

 

[Buttsy]

This is a real problem - I'm a great believer in Government (as a means of achieving ends), but certainly not of every actual Government!

Look at how politicians use things as political footballs. For example, in my job, I've worked a fair bit with what we now call the Department For Education. Under Labour it was the Department for Children, Schools and Families (the name gave an idea of the "nanny state" approach that the previous Government took, using education as a way of forwarding Labour attitudes)...

...now it's the Department for Education (gone back to an "old school" approach where we've stopped building new schools because Mr Gove thinks that it's more important to be taught Latin in a portacabin than to be taught "Citizenship" in an expensive new school).

Just one example (and I apologise for going off-topic here), but this shows how tempting it is for Governments to use departments of state to further their aims. I'm therefore nervous about nationalisation - it'd be too tempting for some politicians to get involved...

Are they not involved already????

Back in the days of BR, the government effectively gave the BR board a budget to work to (PSO grant) and anything above that had to be negotiated with the minister and approved by the Treasury. It was an arms-length relationship and there was not the interference from the DfT that we now see.

 

[tbtc]

Are they not involved already????

Back in the days of BR, the government effectively gave the BR board a budget to work to (PSO grant) and anything above that had to be negotiated with the minister and approved by the Treasury. It was an arms-length relationship and there was not the interference from the DfT that we now see.

They are involved at the moment, yes, but I think that they'd be a lot more involved if they owned it (instead of just writing the cheques).

At the moment politicians can blame the TOC/ ROSCO/ Network Rail etc when things go wrong. With great power comes great responsibility, and I think we'd see more "involvement", which worries me.

(I know how much of a hypocrite I sound, wanting Government subsidies in investment etc but being scared of Government involvement!)

 

[Greenback]

One advantage, as I see it, of a publicly owned network would be that the government could agree funding for a set length of time (as with Network Rail Control Periods) and then let the organisation get on with running the railway. There would be no distractions on such things as franchise bids or interfaces with other railway organisations, which you would imagine might be more efficient.

Of course, there is still the risk that funding could end up as a political football whenever the budget needs to be set for the following period.