Great British Railways: Is this an admission that rail privatisation was a failure?

[Irascible]

But was it in that manifesto? I went to check and the problem is it wasn't - I too had thought it was but just checked and it says (cut and pasted extract from 97 Manifesto):

Interesting. 1997 is some time ago now & I was both overworking and going to vote Labour anyway, but I was sure there was a little more commitment than just whatever was said in 1995. I don't think I want to plough through every campaign speech & interview though! so I'll take it as is. It's also possible we're *both* remembering him being misquoted in a news piece somewhere. You and I and I know some other people who remembered it that way so perhaps we were had. ( Or it's a rather wierd form of Mandela effect... ).

The word “mythology” is all important - as becomes evident whenever anyone challenges the perfection of the NHS.

Practically every family I knew growing up worked in the NHS ( including one of my parents ) - they'll be the first to complain to you. Mostly about "decades of good ideas".

 

[WesternLancer]

Interesting. 1997 is some time ago now & I was both overworking and going to vote Labour anyway, but I was sure there was a little more commitment than just whatever was said in 1995. I don't think I want to plough through every campaign speech & interview though! so I'll take it as is. It's also possible we're *both* remembering him being misquoted in a news piece somewhere. You and I and I know some other people who remembered it that way so perhaps we were had. ( Or it's a rather wierd form of Mandela effect... ).



Practically every family I knew growing up worked in the NHS ( including one of my parents ) - they'll be the first to complain to you. Mostly about "decades of good ideas".

Yes, and I agree with you that plenty of people do think it was promised - but likely that emphasis was placed on something that wasn't actually a commitment - for example I suspect John Prescott, then both deputy leader and the Minister responsible after 97 IIRC, would I suspect, have been more predisposed to nationalising than Blair or Brown at the Treasury would have been. It's perhaps possible that he played up the prospects of nationalisation in speeches ahead of '97? Thus re-enforcing the idea in our minds. But to be fair to Prescott I have not looked through speeches to check so I share your point there!

Interestingly I recall a Christian Wolmar article where he comments that in John Major's memoirs Wolmar reports that rail privatization barely rates much mention - yet even for those uninterested in transport it must rank as one of the key 'reforms' delivered in his period of office, at least in domestic policy sphere. Maybe he knew full well it had been a duff initiative and hoped people might think it happened when someone else was in charge?

 

[High Dyke]

To what does this statement refer?

As I understand it, where we've seen operators hand back franchises early, the burden of paying for their lack of profiteering falls on the taxpayer to shoulder the burden. How do other countries where a similar system of control, to that being proposed, support service provision when the incumbent operator cannot continue to provide the required train service?

 

[Mcr Warrior]

Do franchisees (not necessarily ToCs) ever have to provide a bond / indemnity underwritten by a bank or insurer, which is then forfeited / claimed upon if the franchisee fails to fulfil its contractual obligations?

 

[WesternLancer]

Do franchisees (not necessarily ToCs) ever have to provide a bond / indemnity underwritten by a bank or insurer, which is then forfeited / claimed upon if the franchisee fails to fulfil its contractual obligations?

I seem to recall that if they wanted to 'hand back the keys' to the franchise, they would lose a sum (bond type payment) to the DfT, and that this indeed has happened in certain cases - National Express East Coast comes to mind. Others may be able to clarify better.

 

[JamesT]

I seem to recall that if they wanted to 'hand back the keys' to the franchise, they would lose a sum (bond type payment) to the DfT, and that this indeed has happened in certain cases - National Express East Coast comes to mind. Others may be able to clarify better.

https://www.investegate.co.uk/article.aspx?id=20200921070100P942A has some details for the commitments FirstGroup have made regarding their franchises. If the franchise starts losing money, the parent is on the hook for the amount listed before they can think about handing it back to the government. https://questions-statements.parliament.uk/written-questions/detail/2017-11-30/HL3779 is a parliamentary answer stating that these payments would need to be made for the end of VTEC.
I think Stagecoach allegedly lost about £200m on Virgin Trains East Coast.
Abellio were losing money on Scotrail which would have had to come from their Dutch parent. Though they clearly thought there was future potential for profits to make back those losses because it was Transport Scotland's decision to end the franchise at the breakpoint rather than Abellio.

 

[WesternLancer]

https://www.investegate.co.uk/article.aspx?id=20200921070100P942A has some details for the commitments FirstGroup have made regarding their franchises. If the franchise starts losing money, the parent is on the hook for the amount listed before they can think about handing it back to the government. https://questions-statements.parliament.uk/written-questions/detail/2017-11-30/HL3779 is a parliamentary answer stating that these payments would need to be made for the end of VTEC.
I think Stagecoach allegedly lost about £200m on Virgin Trains East Coast.
Abellio were losing money on Scotrail which would have had to come from their Dutch parent. Though they clearly thought there was future potential for profits to make back those losses because it was Transport Scotland's decision to end the franchise at the breakpoint rather than Abellio.

Thanks for checking! All those cases ring bells in my memory.

 

[takno]

I seem to recall that if they wanted to 'hand back the keys' to the franchise, they would lose a sum (bond type payment) to the DfT, and that this indeed has happened in certain cases - National Express East Coast comes to mind. Others may be able to clarify better.

National Express I think pre-dated the bond process, but in order to give up East Coast they had to give up Anglia as well and leave the franchise market entirely. In terms of squeezing money out of the franchises it's been a learning process, and arguably it's something the government has got slightly too good at.

 

[35B]

As I understand it, where we've seen operators hand back franchises early, the burden of paying for their lack of profiteering falls on the taxpayer to shoulder the burden. How do other countries where a similar system of control, to that being proposed, support service provision when the incumbent operator cannot continue to provide the required train service?

Your use of the word “profiteering” is interesting, as it assumes that the franchisee has handed back because they’ve not made a profit. In the case of all the ECML handbacks, the franchise was making a reasonable operating profit, but not one that could sustain the premiums extracted by government.

The government chose to let franchises having encouraged bidders to offer very aggressive premium profiles, and then assessed them as “deliverable” despite there being evidence (especially by the time of VTEC) that the assumptions about passenger and revenue growth were fantastical.

To the extent that there’s been any profiteering, I’d suggest it has been on the part of government and their desire to asset strip certain franchises while fleecing the punters.

 

[coppercapped]

As I understand it, where we've seen operators hand back franchises early, the burden of paying for their lack of profiteering falls on the taxpayer to shoulder the burden. How do other countries where a similar system of control, to that being proposed, support service provision when the incumbent operator cannot continue to provide the required train service?

As others have written after my post, there is a system of performance bonds in place - and has been since the very first franchises. These are set at a level intended to cover the DfT's costs of running and evaluating a franchise competition to identify a replacement operator so the taxpayer does not have to pay for costs resulting from a default.

Partially as a result of the franchise contracts becoming more detailed since the days of the Strategic Rail Authority the DfT's costs have also risen so the size of the performance bonds has also increased now reaching several tens of millions of pounds. The bond money is put up by the parent company behind the TOC - often this money is borrowed and the interest on this some has also to be paid.

There are also season ticket sales bonds so if the incumbent goes belly up the season ticket holders do not lose out. Depending on the franchise these can also be eyewateringly large.

The concession type of contract used on the German railways - the only continental one about which I have sufficient information - certainly requires a deposit or bond from the TOC but as the contracts are much simpler - essentially they simply require the provision of so many train-kilometres over a period of time - they are nothing like the size of the bonds in the UK.

 

[Ken H]

Those are points well made I think.
Unions of course were critical at the time that there was no significant management change post nationalisation, and the industrial relations in the industries concerned would seem to have remained conflictual over the course of the history since the 1945 era in the industries concerned. Not that I think it is right to focus on that alone when looking at the overall question.

I've not studied them carefully enough but it seems like the pre war state ownership models were a bit different perhaps? I'm thinking LPTB, BBC.

I suspect that for many commentators the 1945 Attlee govt's socialist status rests on the creation of the NHS, but even there I suspect a strong dose of mythology has been overlaid. Medical services prior to 1948 being a patchwork of provision but with much local authority (ie state) involvement by 1939, but probably with considerable differences by area. Then with elements of insurance based schemes on top - that people to this day erroneously believe are connected to the current National Insurance system and a non existent relationship with the NHS.

But as I think you mean, I agree the 1945 model of nationalisation has certainly influenced thinking on the left ever since with regard to the industries concerned or the services they provide. So perhaps that has prevented debate about better models for the provision of services in the areas concerned.

Way off topic here, but The NHS/welfare state started with the workhouse/poor law system in the 1830's. The workhouse unions did outdoor relief (cash benefits), childrens homes and infirmaries. Later (Post 1900) National Assistance came in to replace outdoor relief, state pensions for men, and the involvement of county councils in hospital provision. 1948 joined up hospital provision under central government, brought in more benefits incl pensions for women, and the big one was free GP services. But even today, GP's are contractors, not employed by the NHS.

(Mods- if this is too off topic, please delete)

 

[JamesT]

Way off topic here, but The NHS/welfare state started with the workhouse/poor law system in the 1830's. The workhouse unions did outdoor relief (cash benefits), childrens homes and infirmaries. Later (Post 1900) National Assistance came in to replace outdoor relief, state pensions for men, and the involvement of county councils in hospital provision. 1948 joined up hospital provision under central government, brought in more benefits incl pensions for women, and the big one was free GP services. But even today, GP's are contractors, not employed by the NHS.

(Mods- if this is too off topic, please delete)

My understanding of the differing viewpoints over the creation of the NHS between Labour and Tories is that they were centred on the ownership of the hospitals. Both were offering free at the point of use, but Labour took over the hospitals whereas the Conservatives would have left the hospitals independent like the GPs and contracted services from them. In many ways that feels similar to the health systems in much of Europe.

The Conservative 1945 manifesto on transport isn't particularly detailed:

Transport over land and over sea will have to remain under wartime control for a time. We have still to work out detailed plans to meet the new needs of peace. Road and rail, canals and coast-wise shipping, will be encouraged and helped to bring to a successful conclusion plans already under discussion for a transport system of the highest efficiency, in which each method would play its appropriate part, with freedom for the public to choose which one to use, and with protection against any risk of monopoly charges.

Other parts of the manifesto are very much against monopolies and consider nationalisation to impose a state-controlled monopoly, so in an alternate 1948 the railways wouldn't have been nationalised but returned to the pre-War Big 4?

 

[Irascible]

Other parts of the manifesto are very much against monopolies and consider nationalisation to impose a state-controlled monopoly, so in an alternate 1948 the railways wouldn't have been nationalised but returned to the pre-War Big 4?

One thing I've never been sure of is how much control the govt exerted on the railways between the wars - I'm starting to understand it may have been more than a little? ( aside from the obvious forced grouping in the first place ).

 

[WesternLancer]

Way off topic here, but The NHS/welfare state started with the workhouse/poor law system in the 1830's. The workhouse unions did outdoor relief (cash benefits), childrens homes and infirmaries. Later (Post 1900) National Assistance came in to replace outdoor relief, state pensions for men, and the involvement of county councils in hospital provision. 1948 joined up hospital provision under central government, brought in more benefits incl pensions for women, and the big one was free GP services. But even today, GP's are contractors, not employed by the NHS.

(Mods- if this is too off topic, please delete)

Indeed points well made - albeit looking at its more recent modern history of course , as mention should really be given to the 1601 Poor Relief Act and the 1597 Act for the Relief of the Poor, creating certain duties on Parishes to 'assist' those in poverty, but I suspect little in the way of a health care element, but certainly an element of welfare intervention from the state.

 

[35B]

Indeed points well made - albeit looking at it's more recent modern history of course , as mention should really be given to the 1601 Poor Relief Act and the 1597 Act for the Relief of the Poor, creating certain duties on Parishes to 'assist' those in poverty, but I suspect little in the way of a health care element, but certainly an element of welfare intervention from the state.

Legislation which, through all the pre WWII incarnations was perhaps less oriented towards the welfare of those helped, and more about dealing with the vagrancy that tended to accompany extreme poverty.

 

[Mikey C]

My understanding of the differing viewpoints over the creation of the NHS between Labour and Tories is that they were centred on the ownership of the hospitals. Both were offering free at the point of use, but Labour took over the hospitals whereas the Conservatives would have left the hospitals independent like the GPs and contracted services from them. In many ways that feels similar to the health systems in much of Europe.

The Conservative 1945 manifesto on transport isn't particularly detailed:

Other parts of the manifesto are very much against monopolies and consider nationalisation to impose a state-controlled monopoly, so in an alternate 1948 the railways wouldn't have been nationalised but returned to the pre-War Big 4?

Though of course, for most of the country there would have been a local monopoly, whether you have British Rail or the Big 4!

 

[Annetts key]

Though of course, for most of the country there would have been a local monopoly, whether you have British Rail or the Big 4!

Or the original railway company when the line first opened...
Or a current day TOC...

 

[Ken H]

Indeed points well made - albeit looking at its more recent modern history of course , as mention should really be given to the 1601 Poor Relief Act and the 1597 Act for the Relief of the Poor, creating certain duties on Parishes to 'assist' those in poverty, but I suspect little in the way of a health care element, but certainly an element of welfare intervention from the state.

Sorry. I have only read up on the poor laws since the 1837 acts.

Legislation which, through all the pre WWII incarnations was perhaps less oriented towards the welfare of those helped, and more about dealing with the vagrancy that tended to accompany extreme poverty.

there was a division between the 'deserving' and 'undeserving poor'. there was also savage means testing.

 

[35B]

Sorry. I have only read up on the poor laws since the 1837 acts.


there was a division between the 'deserving' and 'undeserving poor'. there was also savage means testing.

Agreed on both counts

 

[WesternLancer]

Sorry. I have only read up on the poor laws since the 1837 acts.


there was a division between the 'deserving' and 'undeserving poor'. there was also savage means testing.

Yes, and indeed divisions that remain to this day albeit with modern equivalents (pension age means tested benefits are generally more generous than working age means tested benefits for example). And homelessness legislation maintains the 'local connections' criteria albeit by local council) that can trace its roots back to needing a connection with the parish before assistance (which had the consequence of different regimes for vagrants / tramps).
All off topic of course
This site is very informative both in overview and detail

The history of the workhouse by Peter Higginbotham

www.workhouses.org.uk

Arguably the growth of cities facilitated by railways and their role in the industrial revolution, placed the earlier locally administered poor law system under strains it could not cope with.

 

[nw1]

Another comment worth making perhaps on privatisation is the *sheer number* of the franchises. Why so many? Why could they not just have done the 'Big Four' or similar? Even now, there still seem to be rather too many.

In particular, carving up the 'Southern' area (ex Southern Region, ex SR) into South Eastern, South Central and South West Trains meant that we ended up with:

- incompatible types of EMU across the Southern network when they were replaced. Under BR we had the compatible CIGs, VEPs, CEPs, HAPs and EPBs, all of which could operate in multiple, and under either a single Southern Region franchise or continued BR, we could have had an eventual standard Networker type act as the eventual replacement for the slam doors, with variations (e.g. 471 express, 472 buffet, 473 high-density, 474 two-car, 475 standard-only, 476 standard-only two-car).

- different operators on arguably the same network which leads (I presume) to things like competition for paths etc. With one operator an integrated, co-operative timetable for the Southern could have been produced.

With one operator and compatible units, it would have also allowed units from different depots (Fratton, Brighton etc) to rescue each other if there was a failure, thinking particularly on shared track sections such as the St Denys to Havant section.

 

[35B]

Another comment worth making perhaps on privatisation is the *sheer number* of the franchises. Why so many? Why could they not just have done the 'Big Four' or similar? Even now, there still seem to be rather too many.

In particular, carving up the 'Southern' area (ex Southern Region, ex SR) into South Eastern, South Central and South West Trains meant that we ended up with:

- incompatible types of EMU across the Southern network when they were replaced. Under BR we had the compatible CIGs, VEPs, CEPs, HAPs and EPBs, all of which could operate in multiple, and under either a single Southern Region franchise or continued BR, we could have had an eventual standard Networker type act as the eventual replacement for the slam doors, with variations (e.g. 471 express, 472 buffet, 473 high-density, 474 two-car, 475 standard-only, 476 standard-only two-car).

- different operators on arguably the same network which leads (I presume) to things like competition for paths etc. With one operator an integrated, co-operative timetable for the Southern could have been produced.

With one operator and compatible units, it would have also allowed units from different depots (Fratton, Brighton etc) to rescue each other if there was a failure, thinking particularly on shared track sections such as the St Denys to Havant section.

Three observations:

1. BR had plenty of form for introducing incompatible rolling stock and inhibiting co-operation (think the 159s, 158s with couplers amended to prevent multiple working with RR units, or running mixed fleets of BSI and buckeye fitted units on the SR, e.g. 319s with VEPs and CIGs on the Brighton line)
2. The benefits you describe are perfectly achievable across multiple organisations, using common standards and co-operative behaviour
3. As we're seeing with the 80x fleet, all the same can have drawbacks as well as advantages.

 

[JamesT]

Another comment worth making perhaps on privatisation is the *sheer number* of the franchises. Why so many? Why could they not just have done the 'Big Four' or similar? Even now, there still seem to be rather too many.

In particular, carving up the 'Southern' area (ex Southern Region, ex SR) into South Eastern, South Central and South West Trains meant that we ended up with:

- incompatible types of EMU across the Southern network when they were replaced. Under BR we had the compatible CIGs, VEPs, CEPs, HAPs and EPBs, all of which could operate in multiple, and under either a single Southern Region franchise or continued BR, we could have had an eventual standard Networker type act as the eventual replacement for the slam doors, with variations (e.g. 471 express, 472 buffet, 473 high-density, 474 two-car, 475 standard-only, 476 standard-only two-car).

- different operators on arguably the same network which leads (I presume) to things like competition for paths etc. With one operator an integrated, co-operative timetable for the Southern could have been produced.

With one operator and compatible units, it would have also allowed units from different depots (Fratton, Brighton etc) to rescue each other if there was a failure, thinking particularly on shared track sections such as the St Denys to Havant section.

My understanding is that the Southern Region was already split into those three divisions for operational purposes anyway. The franchises were merely a reflection of reality as it was.

There is always a trade-off in size of organisation. Too small and you don't get the efficiencies of scale, but too large and the organisation finds it hard to adapt to local conditions as direction is only at the top level.

 

[yorksrob]

My understanding is that the Southern Region was already split into those three divisions for operational purposes anyway. The franchises were merely a reflection of reality as it was.

There is always a trade-off in size of organisation. Too small and you don't get the efficiencies of scale, but too large and the organisation finds it hard to adapt to local conditions as direction is only at the top level.

Yes, with a few adjustments, the divisions go back to the old SE&CR, LB&SCR and L&SWR of yore.