How would you change the franchise system...?

[Moonshot]

Am I assuming here that the body awarding the franchise is independent?

 

[muz379]

Am I assuming here that the body awarding the franchise is independent?

Yeah assuming it is indeendant

 

[Moonshot]

So if we remove entirely the influence of the state on the railways and we have an independant franchising authority, we would have a situation where the industry itself was deciding the priorities for investment and how the service was run every day.

That would seem ideal to me, but we are miles away from that, and the reason we are miles away is that the state is currently supplying the investment capital, and has a heavy say due to it being the largest stakeholder in the industry. Having that investment capital supplied by the private sector and removing the need for taxpayers funds to be used as investment capital would mean Network Rail being privatised. You have to wonder if that is the ultimate intention of the state now that from September, the entire debt of Network rail will sit on the States books.

 

[DarloRich]

So if we remove entirely the influence of the state on the railways and we have an independant franchising authority, we would have a situation where the industry itself was deciding the priorities for investment and how the service was run every day.

That would seem ideal to me, but we are miles away from that, and the reason we are miles away is that the state is currently supplying the investment capital, and has a heavy say due to it being the largest stakeholder in the industry. Having that investment capital supplied by the private sector and removing the need for taxpayers funds to be used as investment capital would mean Network Rail being privatised. You have to wonder if that is the ultimate intention of the state now that from September, the entire debt of Network rail will sit on the States books.

You are obsessed with privatisation! Railway privatisation has not worked well for the majority ( nor, for that matter does the Gas/Electric privatisations seem to have achieved the benefits promised to the customer!)

I would suggest that private sector decision making on infrastructure investment would be a disaster and would be based entirely on providing a short term shareholder return rather than address network needs.

 

[Moonshot]

You are obsessed with privatisation! Railway privatisation has not worked well for the majority ( nor, for that matter does the Gas/Electric privatisations seem to have achieved the benefits promised to the customer!)

I would suggest that private sector decision making on infrastructure investment would be a disaster and would be based entirely on providing a short term shareholder return rather than address network needs.

Really ?? With a regulator in place ? Surely private sector investment is dicated by the needs of the customer?

 

[DarloRich]

Really ?? With a regulator in place ? Surely private sector investment is dicated by the needs of the customer?

As you well know the regulators for almost all privatised industries are seemingly (purposely?) almost toothless. The have almost no real power to restrain the actions of the companies they purport to oversee.

Look at OFGEM and their inability to restrain energy company price rises or their inability to “persuade” these companies to allocate adequate funding to network enhancement.

 

[Dave1987]

You are obsessed with privatisation! Railway privatisation has not worked well for the majority ( nor, for that matter does the Gas/Electric privatisations seem to have achieved the benefits promised to the customer!)

I would suggest that private sector decision making on infrastructure investment would be a disaster and would be based entirely on providing a short term shareholder return rather than address network needs.

I would suggest that public ownership is a time where everything on the railway was cut back on to save a much money as possible as their is no franchise to lose there is no repercussions to cutting back and not meeting punctuality targets.

 

[DarloRich]

I would suggest that public ownership is a time where everything on the railway was cut back on to save a much money as possible as their is no franchise to lose there is no repercussions to cutting back and not meeting punctuality targets.

There are few repercussions for a franchisee to who fails to meet punctuality targets! The tax payer carries most of the risk!

 

[Moonshot]

As you well know the regulators for almost all privatised industries are seemingly (purposely?) almost toothless. The have almost no real power to restrain the actions of the companies they purport to oversee.

Look at OFGEM and their inability to restrain energy company price rises or their inability to “persuade” these companies to allocate adequate funding to network enhancement.

I m under the impression that energy prices for the customer react to the wholesale price for said supplies. Of course I do have a choice in what energy supplier I use in the first place !!
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There are few repercussions for a franchisee to who fails to meet punctuality targets! The tax payer carries most of the risk!

My understanding is that franchisees pay penalties if they miss targets....it costs Northern Rail £70/minute for every minute of delay.

 

[DarloRich]

I m under the impression that energy prices for the customer react to the wholesale price for said supplies. Of course I do have a choice in what energy supplier I use in the first place !!

Disingenuous as you well know. The argument many have is that the energy companies make excessive profits on the backs of owning an essential service dressed up as merely passing on the rise in price of the raw material. The regulator seems powerless to prevent, what are seen by many, as abuses by the companies concerned.

Lest we forget one of the main selling points of privatisation to the masse was that prices would be cheaper. That measurable benefit does not seem to have been delivered.

Whilst you can change supplier now at will you do not receive any real benefit. All prices are somewhat similar!

My understanding is that franchisees pay penalties if they miss targets....it costs Northern Rail £70/minute for every minute of delay.

Only if they cant recover the cost from another source

 

[Moonshot]

Disingenuous as you well know. The argument many have is that the energy companies make excessive profits on the backs of owning an essential service dressed up as merely passing on the rise in price of the raw material. The regulator seems powerless to prevent, what are seen by many, as abuses by the companies concerned.

Lest we forget one of the main selling points of privatisation to the masse was that prices would be cheaper. That measurable benefit does not seem to have been delivered.

Whilst you can change supplier now at will you do not receive any real benefit. All prices are somewhat similar!




Only if they cant recover the cost from another source

By all means feel free to demonstrate just how much energy prices would be today if the state was the sole supplier of service. Back it up with some hard tangible evidence though, and not just your opinion.

 

[LNW-GW Joint]

Tell me for Chiltern was their franchise awarded as a long length from the very beginning , or has it been extended in the same way northern and VT has because of direct awards ? . Also how much say have the DFT had in specifying how they invest ?

Chiltern was the one that got away.
The Shadow Strategic Rail Authority under Alistair Morton wanted long franchises around 2000, and kicked off competitions for Chiltern and SWT on that basis.
He let Chiltern on a 20-year franchise, with a lot of autonomy, and it is still in operation.
But before he could let SWT on a similar basis the (Labour) Treasury demanded that franchises were no more than 7 years and had to be tightly specified - so SWT was cut back and its major investment plans canned.
That began the SRA phase of short, micro-managed franchises.
We are now in the phase of reletting those short franchises, while Chiltern sails on under its long contract.
However, all is not rosy at Chiltern, and it has performed poorly in financial terms for Arriva/DB.
It is not necessarily a franchise model that works for everybody.

The other original long franchises of 15 years were West Coast, South Eastern, Cross Country and LTS (c2c/Essex Thameside).
These were largely because of large-scale infrastructure upgrades and new train fleets planned over this period.
Cross Country was brought back to a short franchise, and South Eastern failed (Connex) and was relet on a short basis.
But West Coast and ET went the full 15 years and ET has just been relet for another 15 years to the same operator (National Express).
Wales & Borders (ATW) was let for 15 years by the SRA but on a tight rein of no-growth and no-investment, plus micro-management.

 

[DarloRich]

By all means feel free to demonstrate just how much energy prices would be today if the state was the sole supplier of service. Back it up with some hard tangible evidence though, and not just your opinion.

By the same token please provide documentary evidence showing how much better off we all are with a privatised energy supply system. Without the ability to enter a parallel dimension we can but speculate. It is a straw man argument.

I am not some kind of awful commie demanding forced renationalisation and the compulsory destruction of all private capital - I simply want a better deal for the majority

 

[Moonshot]

By the same token please provide documentary evidence showing how much better off we all are with a privatised energy supply system. Without the ability to enter a parallel dimension we can but speculate. It is a straw man argument.

I am not some kind of awful commie demanding forced renationalisation and the compulsory destruction of all private capital - I simply want a better deal for the majority

Not a straw man arguement at all.....your just asking me to do the same I asked of you, so feel free to find out the difference in costs etc.....

make it a bit easier for you......go and find out what the average yearly leccy bill was for an average household back in the days when the state ran things. Once you have that figure, scale it up to todays average by using the rate of inflation over that same timescale.

have you considered investing in solar panels on your roof if you dont like paying the current electric bill ?

 

[DarloRich]

Not a straw man arguement at all.....your just asking me to do the same I asked of you, so feel free to find out the difference in costs etc.....

make it a bit easier for you......go and find out what the average yearly leccy bill was for an average household back in the days when the state ran things. Once you have that figure, scale it up to todays average by using the rate of inflation over that same timescale.

have you considered investing in solar panels on your roof if you dont like paying the current electric bill ?

https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/295974/qep221.xls

that might help - it is a little old but worth inspecting

 

[swt_passenger]

Chiltern was the one that got away.
The Shadow Strategic Rail Authority under Alistair Morton wanted long franchises around 2000, and kicked off competitions for Chiltern and SWT on that basis.
He let Chiltern on a 20-year franchise, with a lot of autonomy, and it is still in operation.

Like I wrote the other day in another thread about SWT. It is impossible to use Chiltern as a precedent for what people think other TOCs should do in terms of infrastructure investment - no one else has ever had to do anything significant (outside of a few station repairs), nor will they in the future as far as I can make out from recent announcements.

Lets not get carried away by 'alliancing' in the way of SWT/NR either. It still doesn't make SWT financially involved in capital projects.

 

[muz379]

Really ?? With a regulator in place ? Surely private sector investment is dicated by the needs of the customer?

I dont necessarilly agree with this , the sole aim of private sector investment is to make the investor a return on their money , this is their sole aim . If it does benefit the customer that is lucky but if IT doesn't benefit the customer but still makes loads of money - Like the massive amount it was recently announced TOC's have kept in fines because passengers have not claimed them , they aren't going to widely advertise how passengers who have suffered delays can go about claiming this money

But lets say for a minute I actually agree with you , that yeah because private sector investment wants to make the most money and so will have to cater for the needs of the passengers - there is some mileage in that argument I agree it just isn't always correct to assert

The private sector investment will perhaps cater for the needs of the majority of customers , but some minority customers have different needs that it is costly to cater for . Think along the lines of keeping lines open or bus routes open not because they are increadibly profitable but because they provide essential transport links to people .

what about carrying disabled passengers , that is a costly endeavor , the delay minutes and the employing of staff to assist and supplying of ramps and station lifts etc . But we all fully accept that in the 21st century we should cater for as much as we can disabled people hence why we have legislation like the DDA . Now if we applied a raw model of capitalism to running what is an essential service like you seem quite fond of would disabled people be a priority given that looking after them is not a profitable business . I would suspect that the answer is we should still have regulation to protect the rights of disabled passengers on the railway. Sometimes just letting private investors decide what they want to do because that benefits passengers is not a good idea because it only benefits the majority .

 

[Moonshot]

I dont necessarilly agree with this , the sole aim of private sector investment is to make the investor a return on their money , this is their sole aim . If it does benefit the customer that is lucky but if IT doesn't benefit the customer but still makes loads of money - Like the massive amount it was recently announced TOC's have kept in fines because passengers have not claimed them , they aren't going to widely advertise how passengers who have suffered delays can go about claiming this money

But lets say for a minute I actually agree with you , that yeah because private sector investment wants to make the most money and so will have to cater for the needs of the passengers - there is some mileage in that argument I agree it just isn't always correct to assert

The private sector investment will perhaps cater for the needs of the majority of customers , but some minority customers have different needs that it is costly to cater for . Think along the lines of keeping lines open or bus routes open not because they are increadibly profitable but because they provide essential transport links to people .

what about carrying disabled passengers , that is a costly endeavor , the delay minutes and the employing of staff to assist and supplying of ramps and station lifts etc . But we all fully accept that in the 21st century we should cater for as much as we can disabled people hence why we have legislation like the DDA . Now if we applied a raw model of capitalism to running what is an essential service like you seem quite fond of would disabled people be a priority given that looking after them is not a profitable business . I would suspect that the answer is we should still have regulation to protect the rights of disabled passengers on the railway. Sometimes just letting private investors decide what they want to do because that benefits passengers is not a good idea because it only benefits the majority .

Which is pretty much a basic definition of the social railway, so if we accept the fact that the social railway will continue to exist , the only question to be answered then is how efficiently can the state provide that bearing in mind there are cash limits ( in common with other competing state entities such as welfare and NHS spending ) on state spending - public sector employees will certainly vouch for this as they are subject to a 3 year pay freeze.

 

[muz379]

Which is pretty much a basic definition of the social railway, so if we accept the fact that the social railway will continue to exist , the only question to be answered then is how efficiently can the state provide that bearing in mind there are cash limits ( in common with other competing state entities such as welfare and NHS spending ) on state spending - public sector employees will certainly vouch for this as they are subject to a 3 year pay freeze.

The state is pretty much providing it now through subsidies , and if the current system continues I see no signs of subsidies falling ,

I was thinking about this public vs private thing earlier and one proposition that I would like to see your view on is that if as you claim that the privatized model of the railway works because we can secure private sector investment as investors are willing to risk their money as they will see a return on it , and even though the private sector is making a profit running the TOC they are also investing heavily in things like more carriages and station facilities that benefit the passengers and in a wider sense the state because the railways are integral to the economic prosperity of the country .

If the state had the cash to invest in the same way that the private sector would , then would state ownership be a better model because the state could invest in the same way the private sector could , but the state would also reap the financial rewards of that investment as well as any profit that the TOC currently takes


I mean was the plan for HS2 not costed in a way so that the whole thing could be funded by the state ,what do you think about that ?

And what do you think about the fact that DOR the operators of the east coast franchise are actually making a profit for the taxpayer ?

 

[Moonshot]

The state is pretty much providing it now through subsidies , and if the current system continues I see no signs of subsidies falling ,

I was thinking about this public vs private thing earlier and one proposition that I would like to see your view on is that if as you claim that the privatized model of the railway works because we can secure private sector investment as investors are willing to risk their money as they will see a return on it , and even though the private sector is making a profit running the TOC they are also investing heavily in things like more carriages and station facilities that benefit the passengers and in a wider sense the state because the railways are integral to the economic prosperity of the country .

If the state had the cash to invest in the same way that the private sector would , then would state ownership be a better model because the state could invest in the same way the private sector could , but the state would also reap the financial rewards of that investment as well as any profit that the TOC currently takes


I mean was the plan for HS2 not costed in a way so that the whole thing could be funded by the state ,what do you think about that ?

And what do you think about the fact that DOR the operators of the east coast franchise are actually making a profit for the taxpayer ?

Indeed HS2 is funded by the state, and in fact if it had been left to the private sector to decide in its entirety, it would never get built. Of course, there are those who argue ( with some justification I might add ) that it shouldnt be getting built at all by the state anyway.....

Indeed DOR are making a profit for the taxpayer, but then so are Virgin and First Capital Connect to name but 2. So then it just goes back to the same question on how efficiently and effectively the capex supplied by the state is being used. If we accept the fact that rightly or wrongly, there is a franchise competiton for East Coast, then i ll just repeat what I said earlier....." I see no reason why the incumbent staff and management of East Coast cannot launch a bid in their own right and run it as , say , a co operative.

 

[muz379]

Indeed HS2 is funded by the state, and in fact if it had been left to the private sector to decide in its entirety, it would never get built. Of course, there are those who argue ( with some justification I might add ) that it shouldnt be getting built at all by the state anyway.....

Indeed DOR are making a profit for the taxpayer, but then so are Virgin and First Capital Connect to name but 2. So then it just goes back to the same question on how efficiently and effectively the capex supplied by the state is being used. If we accept the fact that rightly or wrongly, there is a franchise competiton for East Coast, then i ll just repeat what I said earlier....." I see no reason why the incumbent staff and management of East Coast cannot launch a bid in their own right and run it as , say , a co operative.

So let me get this clear , you have no problem with the state running the railway as long as it can be shown to do it more efficiently than the private sector ?

 

[Manchester77]

a co operative.

I'm shocked you'd suggest something so socialist!
I'd imagine the reason why you don't see people doing that is because, especially for a franchise like ICEC, you need a lot of money to pay the DfT premiums as well as lease the stock, maintain stations, pay track access charges, employ staff etc. which I doubt they all have and it seems very unlikely a bank would lend enough money for all that! However if you were going to privatise the railway I'd have liked to have seen it done as a cooperative instead of this weird fragmented system we got!

 

[Moonshot]

So let me get this clear , you have no problem with the state running the railway as long as it can be shown to do it more efficiently than the private sector ?

Sure why not.....but i dont see the evidence. And as I pointed out to you , having the state run the railway ( which it still does and is likely to until if or when Network Rail is privatised ) will run the risk of having its funding tap turned off. How many rail employees would vote for a 3 year pay freeze if they were employed in the public sector?
--- old post above --- --- new post below ---

I'm shocked you'd suggest something so socialist!
I'd imagine the reason why you don't see people doing that is because, especially for a franchise like ICEC, you need a lot of money to pay the DfT premiums as well as lease the stock, maintain stations, pay track access charges, employ staff etc. which I doubt they all have and it seems very unlikely a bank would lend enough money for all that! However if you were going to privatise the railway I'd have liked to have seen it done as a cooperative instead of this weird fragmented system we got!

I rather think that the money to pay for all the above comes from the farebox and not banks !!

 

[muz379]

Sure why not.....but i dont see the evidence. And as I pointed out to you , having the state run the railway ( which it still does and is likely to until if or when Network Rail is privatised ) will run the risk of having its funding tap turned off. How many rail employees would vote for a 3 year pay freeze if they were employed in the public sector?
--- old post above --- --- new post below ---



I rather think that the money to pay for all the above comes from the farebox and not banks !!

Im not suggesting there is evidence ,I am very much on the fence when it comes to the state v private operated railway .

I dont think network rail is going to get privatized , they might do things to try and attract more and more private investment into network rails areas but I dont think they would fully privatise it . Look at some of the rail disasters atributed to railtrack and its poor maintenance , I dont think politicians would politically want to go back down those lines again even if it was economically and operationally proven to be a sound plan that wouldn't compromise safety .


I thought they couldn't nationalist it under EU rules anyway and this was part of the reason why they have shifted the debt onto the treasuries books . Altough I might be mistaken I am not the biggest fan of EU politics .


As for the money coming from the farebox and not the banks ,ironically the money is going to the banks not from the banks , who has a hand in the ownership of all 3 rolling stock leasing companies


In terms of the state running the railway , what do you make of the followiing phrase that I have seen on this forum before
" The railways are under more state control now than they ever where under BR "

 

[Moonshot]

Im not suggesting there is evidence ,I am very much on the fence when it comes to the state v private operated railway .

I dont think network rail is going to get privatized , they might do things to try and attract more and more private investment into network rails areas but I dont think they would fully privatise it . Look at some of the rail disasters atributed to railtrack and its poor maintenance , I dont think politicians would politically want to go back down those lines again even if it was economically and operationally proven to be a sound plan that wouldnt compromise safety .

I thought they couldnt nationalise it under EU rules anyway and this was part of the reason why they have shifted the debt onto the treasuries books . Altough I might be mistaken I am not the biggest fan of EU politics .

In terms of the state running the railway , what do you make of the followiing phrase that I have seen on this forum before
" The railways are under more state control now than they ever where under BR "

Which is probably my quote you ve seen !!

 

[muz379]

Which is probably my quote you ve seen !!

ive seen more than one member state the above , so what do you think about that , is it right or wrong then that the railways are under more state control now than they where under BR ?

 

[LNW-GW Joint]

ive seen more than one member state the above , so what do you think about that , is it right or wrong then that the railways are under more state control now than they where under BR ?

It's wrong, but it's largely the railways' own fault that that is the case.
BR was an arms-length body and did most things without central government (DfT) interference.
Except when it wanted money, and then it had to battle with the DfT and Treasury and generally failed.

Privatisation was supposed to free the railway from government control, and briefly it looked like that had happened.
But Railtrack, the most important component, imploded in 2000, and its successor Network Rail is essentially a creature of government (though with agreed 5-year plans).
The franchises also went through a cycle of freedom (until 2002) and then tight control (by the SRA which was transferred directly into DfT).
So DfT is now in more direct day-to-day control than ever it was when BR existed.
There's no British Railways Board to act as a punchbag for railway issues - they all end up on the Minister's desk.
DfT are trying to free things up again with longer franchises, intending to stop micro-managing timetables and rolling stock, but they find it hard to row back.

If Labour got in, you can be sure they would opt for more state control (ie interference), even if the franchise system remained unchanged.
Local devolution might well change this, but you can be sure the local bodies will want to exert a new level of interference and control, just as happens in Scotland and Wales at the moment.

 

[Haydn1971]

Whilst I can see the benefits of private sector involvement, I'm pretty much of the opinion that the state should own both the infrastructure and the rolling stock leaving operations to the private sector.

Firstly we would lose this silly process of TOC branding, not just decals on the outside but interiors that are franchise specific. I'd still have TOC franchises running various parts of the network, but would get rid of the farce where sometimes the DfT procure, sometimes a local transport authority interferes and sometimes where the TOC decides...

There should be a long term management view of what rolling stock is required, how it will be transferred following major changes to the network - be that electrification or a major new line (Crossrail/HS2 etc). I'm not actually averse to a rolling stock company leasing to the DfT to then decide where that stock goes on the network, but the existing system of TOC leasing directly from owner clearly isn't working.

There is a place for the private sector in the railways, but not how it is now.

 

[Dave1987]

The main point about this is is that under nationalisation if the govt needed to cut costs then the day to day running costs of the railway would almost certainly be slashed. It's far far easier to pump money into health, education and welfare to get votes. The capital investment would stay there for the big headline grabber stories. Now with franchises the private companies have obligations to meet. I really really think that the franchising system should be reformed but no way should we go back towards the bad old days of BR. And even the Labour Party have acknowledged that that cannot happen.