DfT Interference in running railways.

[HH]

Yes I can. National Audit Office chief says £8bn Govia Thameslink Railway offers “the worst performance on the network”

I don't see why "allowing" me to include the full life of a franchise should be any kind of favour, since I didn't specify a timescale but for what it's worth, that's £1.14 billion a year.

That figure looks like the revenue (which goes to DfT). It certainly is not what GTR are paid.

 

[hwl]

That figure looks like the revenue (which goes to DfT). It certainly is not what GTR are paid.

Agreed. the GTR contract confuses lots of people.

 

[Ken H]

Yes I can. National Audit Office chief says £8bn Govia Thameslink Railway offers “the worst performance on the network”

I don't see why "allowing" me to include the full life of a franchise should be any kind of favour, since I didn't specify a timescale but for what it's worth, that's £1.14 billion a year.

So if Thameslink were not paid that money, what services would run? Or would they simply raise ticket prices massively?

 

[bobbyrail]

Yes I can. National Audit Office chief says £8bn Govia Thameslink Railway offers “the worst performance on the network”

I don't see why "allowing" me to include the full life of a franchise should be any kind of favour, since I didn't specify a timescale but for what it's worth, that's £1.14 billion a year.

Hang on in the article it says
"The government’s Department for Transport (DfT) awarded the operating contract, worth £8bn over seven years, to Govia Thameslink after it scored the highest out of five bidders in 2014."

That is the value of the franchise and is not the same as the amount of subsidy GTR will receive.

 

[hwl]

Hang on in the article it says
"The government’s Department for Transport (DfT) awarded the operating contract, worth £8bn over seven years, to Govia Thameslink after it scored the highest out of five bidders in 2014."

That is the value of the franchise and is not the same as the amount of subsidy GTR will receive.

The current train leasing, track access and direct employee costs alone total ~£1.1bn a year

GTR only made £3.4m profit last year or 0.24% of the total revenue

 

[The Box Photter]

If running rail franchises generates such a small profit, why do Virgin, Stagecoach, GoVia, Serco, Abellio et al spend so much money on trying to win them in the first place?

There seems to be little fiscal sense in exposing your organisation to the brickbats & ridicule which await any train operator for such little apparent shareholder benefit, let alone the money wasted on consultants & lawyers in drafting the franchise bid in the first place. It strikes me as a very inefficient way to run a public service.

Or are we not seeing other financial benefits that the successful franchisee gets from the Government? Show me the money.

 

[bobbyrail]

The current train leasing, track access and direct employee costs alone total ~£1.1bn a year

GTR only made £3.4m profit last year or 0.24% of the total revenue

That's great, that's the costs that they paid, and the profit that they made.

But how much subsidy did they receive off the DfT?

Nowhere near the £8 Billion that you quoted

 

[LNW-GW Joint]

If running rail franchises generates such a small profit, why do Virgin, Stagecoach, GoVia, Serco, Abellio et al spend so much money on trying to win them in the first place?
Or are we not seeing other financial benefits that the successful franchisee gets from the Government? Show me the money.

Virgin have stuck with it in the hope that they can win HS2, albeit at a lower investment level than in 1997. The current VWC is decently profitable.
Stagecoach somewhat similar, but lost heavily on VTEC and these current bids. Probably rethinking their strategy, as National Express did.
Govia are in a nightmare situation with TSGN but seem to be sticking with it. Their Keolis arm now has TfW for 15 years.
Serco don't bid for regular franchises now but are making a decent profit out of the Merseyrail concession (as are partners Abellio).
Abellio and MTR are still learning there are downs as well as ups in the franchise cycle.
Arriva seem to have stalled and DB has put them up for sale - that could be interesting.
The other state railways are having to bid overseas because their home markets are under attack (Trenitalia, RENFE, SNCF etc), as the EU intended.
Brexit might drive them away, however.
All the owning groups badly want change, and are hoping the Williams review will deliver it.
Meanwhile the government seems unable to manage meaningful devolution or any transfer of power from Whitehall.
Nobody knows what Labour would do ("nationalisation" is only 10% of an answer).

 

[hwl]

That's great, that's the costs that they paid, and the profit that they made.

But how much subsidy did they receive off the DfT?

Nowhere near the £8 Billion that you quoted

I didn't quote £8bn, sprunt did...

The total subsidy for GTR operations including their proportion of the the NR direct grant was £288m of which ~£40m is include in the above.

 

[Ken H]

If running rail franchises generates such a small profit, why do Virgin, Stagecoach, GoVia, Serco, Abellio et al spend so much money on trying to win them in the first place?

There seems to be little fiscal sense in exposing your organisation to the brickbats & ridicule which await any train operator for such little apparent shareholder benefit, let alone the money wasted on consultants & lawyers in drafting the franchise bid in the first place. It strikes me as a very inefficient way to run a public service.

Or are we not seeing other financial benefits that the successful franchisee gets from the Government? Show me the money.

The costs of bidding for a franchise must be massive. And for many, thats wasted cash.
Yes, why do they do it?

And for Virgin trains, the reputational loss to the brand must be massive 'If they cant run a **** railway, their airline must be sh!t too.' point of view. Stagecoach, who own 49% on VT dont suffer in the same way -most dont know about their involvement.

Virgin trains east coast was even more weird. That was 90% stageoach, but got the virgin branding. What did Virgin get out of that, especially when they lost the franchise.

And why do german and Dutch railways get involved?

 

[bobbyrail]

I didn't quote £8bn, sprunt did...

The total subsidy for GTR operations including their proportion of the the NR direct grant was £288m of which ~£40m is include in the above.

My apologies i have confused posts

 

[Bikeman78]

Exactly - Plenty have been injured and killed fairly recently due to poor fixed seating design and many lives saved and injuries prevented by good seating design (390 derailment at Grayrigg and SWT455 vs flying cement mixer are to good recent examples of casualty reduction due to good seat design).

Good seat design includes:
Preventing injuries due to people and luggage flying down the carriage
Making trains less flammable to reduce fire deaths
Using material that don't structural degrade with time (e.g. 1970s and 80) GFRP so seat don't shatter on impact.

This reminds me of the Ladbroke Grove disaster. The press were speculating for days how many people had died in the burnt out mark 3 carriage. In the end I think they found the remains of one person in there. I don't think it was publicly stated whether or not the fire had anything to do with their demise.

 

[Bikeman78]

That sums it up nicely - and in any case , there is really an hourly EUS - Chester service which could go electric (an excellent and very well patronised service - but some of these go further west to Holyhead, and would need to be either bi-mode or 22x) , plus maybe an electric shuttle to Crewe - which is not really the realm of TfW in the North of Cardiff .....

And as for wiring the North Wales Coast - numerous studies from 1996 onwards fail to make a real case - not that there is any likelihood of European money as a "key route" to Ireland - trust me , that has been explored several times , regrettably - the further west you go , the economics tumble.

I suppose it's simply a matter of priorities. Over in Belgium almost everything is electrified now. I cannot believe that many of the branch lines stack up financially with their hourly off peak two or three car EMU carrying a few passengers.

 

[Ken H]

I suppose it's simply a matter of priorities. Over in Belgium almost everything is electrified now. I cannot believe that many of the branch lines stack up financially with their hourly off peak two or three car EMU carrying a few passengers.

but if a service runs for a long distace under the wires, then wiring the branch makes sense. So maybe Hyde North - Marple rose hill is worth wiring as most of the router already wired. Uckfield the same. but bi-modes have changed the economics...

 

[Plethora]

It's not a case of "give up". It's a case of there being real issues that are very, very difficult to address.

When you have a tunnel where the water table, the dimensions of the tunnel and the fact that a canal runs over the top of it you simply have a very difficult problem.

Out of interest (and I don't work in the field, so I won't pretent to understand all of the issues), what are the limitations on lowerin the trackbed and encasing the lower part with concrete? Appreciate that this is expensive (you'd have to adjust the track gradient over quite a distance) , but I just wonder if this is ever used, and if not what the reasons are.

 

[Mitchell Hurd]

Apparently, CrossCountry are close to securing a 6th HST. But of course they have to have the final word from the DfT . I bet if the DfT wasn't in charge of train allocations that XC would have more than likely got permission from Angel Trains for more HST stock, which also apparently XC want so that a more reliable service through Dawlish in bad weather can be run.

They also want more HST's so that they can strengthen other routes too!

 

[Meerkat]

Isn’t it DfT’s decision because they are paying for it?

 

[HH]

Isn’t it DfT’s decision because they are paying for it?

They're always paying for it, but in a DA they are painfully aware that the TOC has the upper hand in negotiations, compared to a franchise competition.

 

[The Ham]

They're always paying for it, but in a DA they are painfully aware that the TOC has the upper hand in negotiations, compared to a franchise competition.

It depends on how you calculate it. The share of the network grant appears to include the cost of enhancements as such this would appear to be a little unfair given that these enhancements are likely to be saving money/improving income over many many years.

Without including the enhancement spending XC pays it's way.

By keeping a level of confusion around the subsidy it shows the DfT to push for more of the costs to come from passengers. Although it does mean that they also run the risk of not getting more income when the likes of XC up capacity of their fleet, which could mean that more money is needed than would otherwise be the case.

 

[jayah]

They're always paying for it, but in a DA they are painfully aware that the TOC has the upper hand in negotiations, compared to a franchise competition.

The TOC are desperate for the capacity and their reputation. But as with everything the taxpayer must pay. It should be a win win now there are sidings full of redundant HSTs.

 

[The Ham]

The TOC are desperate for the capacity and their reputation. But as with everything the taxpayer must pay. It should be a win win now there are sidings full of redundant HSTs.

I'm not sure that the tax payer would see an increase in the amount of support that they would be providing to XC, or at least if they do for a year or two it would then be offset by future years of higher premiums.

If it costs XC an extra £2 million a year but provides them with an extra 250,000 seats a year. As long as they get an extra £8 per seat then it's worth doing.

If they generate an extra £20/seat then they then reduce by £3 million the amount of subsidy that they receive for the NR grant.

 

[jayah]

I'm not sure that the tax payer would see an increase in the amount of support that they would be providing to XC, or at least if they do for a year or two it would then be offset by future years of higher premiums.

If it costs XC an extra £2 million a year but provides them with an extra 250,000 seats a year. As long as they get an extra £8 per seat then it's worth doing.

If they generate an extra £20/seat then they then reduce by £3 million the amount of subsidy that they receive for the NR grant.

Sounds great, but the benefit is mainly 200,000 passenger journeys a year sitting vs standing up. I also suspect the leasing and operating costs for a HST are more than £2m a year.

 

[Deepgreen]

Privatisation/private enterprise requires two fundamental things to have even a chance of success - genuine profit (i.e. not just an operating profit) and genuine intra-industry competition. The railways offer neither. Therefore, the additional and unnecessary layer of management needed to force the 'square peg' of franchising into the 'round hole' of a joined-up rail network is a large cost that provides no real benefit (and hasn't worked anyway). With the underlying function of the railways as a national social service, with no chance (or need, for that matter) of making a real profit, then the most efficient way of running a properly integrated network is to have a single body providing the whole system without the pretence of commercial competition - in other words a directly-controlled organisation that provides a strategic management regime.

Surely no-one really believes that a nationalised railway in the UK today would bear any resemblance to, say, BR in 1980s? Of course, the problem now is that almost all of the historical embedded pride in, and generations of experience of, the UK's railways have been thrown away in the rush to bring 'fresh' ideas on board in letting, for example, bus operators run railways. In short, the good parts of the nationalised railway have gone the same way as the bad, but will be much harder to re-grow.

 

[The Ham]

Sounds great, but the benefit is mainly 200,000 passenger journeys a year sitting vs standing up. I also suspect the leasing and operating costs for a HST are more than £2m a year.

250,000 seats a year and £2 million was an example and not necessarily what XC would get/offer.

250,000 seats is 835 seats a day (based on a 300 day year to allow for maintenance) that's one return journey (~420 there and ~420 back), so hardly pushing it for a HST. Especially given that each seat could be used several times each way, with this being especially true the longer each way is.

£2 million was just so that the maths was easy, however in fairly recent history a DMU was £110k/ year/ coach to lease with that being 1/3 of all costs, £2 million would be an 6 coach unit. Which, as you point out, is probably a bit low compared to a HST.