How would you change the franchise system...?

[Moonshot]

The government didn't really want the NR debt back on its books, but the audit commission wouldn't budge.
But now it is on the Treasury's books they will surely exert greater control.
Austerity is an odd thing. The railway has been largely exempt in this recession so far because of the franchise system, and subsidies are now under pressure at each renewal.
BR would have wielded the axe long ago (under government pressure).
Meanwhile the recent NR CP5 settlement was quite generous under the prevailing conditions, partly because capital spend needs to be kept high.

Indeed it was ....i rather think that CP6 may well be different though, particularly if passenger growth flatlines.

 

[dstrat]

But rail is providing a service....to record numbers of passengers. The fact that the front line of that service is being provided by the private sector isnt really an issue to the passenger, yet it seems to get the goat of some people who seem to think its unfair that the private sector shouldnt make a profit from providing that service. Would you consider electric gas and water supply critical infrastructure? If so , isnt it true that consumers now have a choice of who to take that supply from?

Moonshot, If I invest in the Stock Market, the indicators I am looking into is the security of the investment and its expected relative return. I am not looking into the fickle relative merits of how well their train service operates.

Please explain to me, how in any way, having a private firm operating current services how this benefits the passenger?

How does these firms raising revenue through ticket sales and subsidy, accumulating profits and then allowing for these profits to be spent on matters outside the railway (assuming that most investors do not simply reinvest their profit into the company) benefits the railway?

It simply doesn't! In no way can you infer that Northern Rail accumulating £40mill in profits through fares and subsidy and then allowing people to buy flash cars or boats with the proceeds (yes, I know this is a generalisation) benefits the rail service. It is MASSIVE inefficiency.

An efficient rail service would be something lets say like East Coast/DoR. East Coast operate the service, East Coast make a profit,

BUT

BUT

those profits are not directly taken away from railway. They are actually put back into the public purse. Obviously in a perfect world, these monies would then be REINVESTED into the railway for its betterment.

Isnt it true that back the old days of state run industries, the state itself was subsidising them? isnt it true that the likes of the Electric, gas and Water Companies now make profits on which they pay corporation tax ?

Water, gas and electricity infrastructure? Have you seen energy prices, the cost of transmission and the massive, massive profits that ALL the energy firms are making across the board off customers?

I think by you mentioning that they pay Corporation Tax you agree on the principle of redistributing some level of profit back to the Country. So why not do away with the current crop of firms and operate your own infrastructure, providing better prices to customers?

A nationalised service could operate exactly the same structure, still take back similar amounts as they claw back in corporation tax but at the same time have lower prices for the customer.

Well firstly the subsidies you talk about are paid because the relevant TOC's run at a loss as they run services that cost more to run than they get in ticket revenue. That would not change under nationalisation.

Secondly if you have total nationalisation, day to day running costs come under the treasury and you def don't want that.

What would change is you wouldn't be paying money to firms for them to spirit away through divested profits.

Day-to-day running costs under the treasury? Demand for rail is highly predictable. It would represent minimal issue. Look at DoR / East Coast for example?

So you are saying that ANY company that exists to make a profit is morally wrong or something along those lines? Have you seen how the world works? The world is not made up of mutuals you know! In fact one pretty large mutual in this country was found to be corrupt! You seem to think its a sin for any company to run to make a profit, let alone if that company provides a service to transport people.

I genuinely don't and I think you have mistaken me. I don't have any issue whatsoever so Apple or Samsung to charge and make as much profit as they can.

The difference though, is that they provide a relatively frivolous good that you do not HAVE to have.

Electricity, rail, healthcare, education are all things that arguably are REQUIRED for the good of the country and as such we should select the best method for providing these.

Clearly, privatisation of rail has failed as it is not the most efficient way of managing the service. We just require an evolution in thought over the current way of thinking from those in power.

 

[Moonshot]

Electricity, rail, healthcare, education are all things that arguably are REQUIRED for the good of the country and as such we should select the best method for providing these.


You mean best method as in 1 choice only ? And that choice being state provision?

 

[dstrat]

I would say generally where the profit motive is absent and all parties involved are required to be purely concerned about providing the best service then state provision is often the best method, yes.

But really, if you have anybody who cares enough about the provision and rather than the financial reward that is enough. So not-for-profit firms or charities could be involved. I would treat this with caution however as there usually is a lot more accountability when it comes to government as opposed to handing responsibility for big budgets over to little knowns...

 

[Moonshot]

I would say generally where the profit motive is absent and all parties involved are required to be purely concerned about providing the best service then state provision is often the best method, yes.

But really, if you have anybody who cares enough about the provision and rather than the financial reward that is enough. So not-for-profit firms or charities could be involved. I would treat this with caution however as there usually is a lot more accountability when it comes to government as opposed to handing responsibility for big budgets over to little knowns...

Ok so we have a state provider for healthcare ( NHS ). How do you feel about the likes of drug companies supplying the NHS and making a profit out of doing so.....is that right?

isnt it also true that rail staff like myself would , had we remained in the public sector , be subject to the same 3 year pay freeze that employees in the public sector are currently under? A lot of those public sector employees have took strike action over it recently.......do you think rail staff would have joined them ?

 

[Manchester77]

Ok so we have a state provider for healthcare ( NHS ). How do you feel about the likes of drug companies supplying the NHS and making a profit out of doing so.....is that right?

In my opinion no because they're making a profit out of people being ill and having conditions like cancer or arthritis.
I might add that state provision of health are is the best out of 11 developed nations with the only truly private system being the USA coming last. The NHS came first for various different points including efficiency and quality.

 

[Moonshot]

In my opinion no because they're making a profit out of people being ill and having conditions like cancer or arthritis.

How do drug companies fund R&D if there are no profits to invest? Some drugs can take 20 years to develop...

 

[Manchester77]

How do drug companies fund R&D if there are no profits to invest? Some drugs can take 20 years to develop...

You do the work in house as opposed to getting some other company to do it.

 

[Moonshot]

You do the work in house as opposed to getting some other company to do it.

Are you saying that the state provider ( ie NHS ) should take the risk of R&D for drugs? If so. would you agree to a significant rise in income tax to pay for this?

 

[Manchester77]

Are you saying that the state provider ( ie NHS ) should take the risk of R&D for drugs? If so. would you agree to a significant rise in income tax to pay for this?

I think I've said before that I'd support an increase in tax to support the NHS, so yes I would.

 

[Moonshot]

I think I've said before that I'd support an increase in tax to support the NHS, so yes I would.

Ok - so lets say 50% tax rate instead of 20%.......reason its so high is that the amounts of R&D funds spent by the likes of Merck would dwarf the GDP of a small country ......are you ok paying that , and do you think the rest of the electorate would?

 

[Manchester77]

Ok - so lets say 50% tax rate instead of 20%.......reason its so high is that the amounts of R&D funds spent by the likes of Merck would dwarf the GDP of a small country ......are you ok paying that , and do you think the rest of the electorate would?

Probably not but this is only my opinion which is pretty insignificant because I hold no power to decide such things!

 

[Moonshot]

Probably not but this is only my opinion which is pretty insignificant because I hold no power to decide such things!

well you do have the power to vote for a party who makes such proposals in their election manifestos!!!

 

[Manchester77]

well you do have the power to vote for a party who makes such proposals in their election manifestos!!!

Yes but it's whether a party will or not at the time of a GE!!

 

[Moonshot]

Yes but it's whether a party will or not at the time of a GE!!

Lets be honest here.....it aint gonna appear in anyones manifesto......because no one wants to pay more tax despite your brave comments to the opposite.

The reality is this.....income tax on a per person basis has been falling for many years due to the policy of reducing taxes where people have no choice, and increasing them where people do have a choice. No one is forcing anyone to drink , smoke , drive , etc.......but drinking and smoking imposes a cost on the NHS, and if that cost has to be met by taxing the very things that cause health issues in the first place, then great.

 

[Deerfold]

Ok - so lets say 50% tax rate instead of 20%.......reason its so high is that the amounts of R&D funds spent by the likes of Merck would dwarf the GDP of a small country ......are you ok paying that , and do you think the rest of the electorate would?

Initially you pay that - then if you develop a successful drug, you can sell it to the rest of the world (or if there's other countries working it like we would we swap rights to those drugs).

 

[Moonshot]

Initially you pay that - then if you develop a successful drug, you can sell it to the rest of the world (or if there's other countries working it like we would we swap rights to those drugs).

And make a profit at the same time.....

isnt it true that NHS healthcare is rationed due to funding constraints? There was a particular incident not so long back involving Tony Wilson ( RIP ) of Factory Records fame......he could have had a drug subscribed which would have extended his life by 18 to 24 months, but was horrendously expensive and was refused. So going back to a point Dstat made about having only 1 state supplier for healthcare ( ie the NHS ) , why should we rely on a state provider when we have no choice in the healthcare we recieve due to funding issues? Shouldnt we be able to make our own choices, and fund them ? Of course we can , with the likes of BUPA, who commit to a contract of care with individual patients based on their ability to pay.

Now lets bring this back to the rail industry .....isnt it true that by inviting the private sector to run rail services brings about a choice for the state budget holder? That choice is governed by Franchise Bids, with terms set by the state. The bidder who brings best value to the table wins....its that simple. To take that to the next level, a lot of forumites have pointed out that the DFT micromanages the industry....its a valid point as far as I m concerned. Of course the State is a stakeholder, because they are providing the investment capital to some tune. But what if the tap was turned off or down significantly ? Which is increasingly likely now that Rail debt sits directly on the state books.

 

[muz379]

Now lets bring this back to the rail industry .....isnt it true that by inviting the private sector to run rail services brings about a choice for the state budget holder? That choice is governed by Franchise Bids, with terms set by the state. The bidder who brings best value to the table wins....its that simple. To take that to the next level, a lot of forumites have pointed out that the DFT micromanages the industry....its a valid point as far as I m concerned. Of course the State is a stakeholder, because they are providing the investment capital to some tune. But what if the tap was turned off or down significantly ? Which is increasingly likely now that Rail debt sits directly on the state books.

In theory that sounds very nice , the state getting to pick the best value bid

But sometimes they pick the cheapest bid because of political pressure to spend as little as possible , and then it all goes wrong and the state has to step in any road . The cheapest bid doesn't always represent the best value

Just look at what has happened with patient transport services in Manchester since Ariva won the contract to take over this service .

 

[Moonshot]

In theory that sounds very nice , the state getting to pick the best value bid

But sometimes they pick the cheapest bid because of political pressure to spend as little as possible , and then it all goes wrong and the state has to step in any road . The cheapest bid doesn't always represent the best value

Just look at what has happened with patient transport services in Manchester since Ariva won the contract to take over this service .

And just look whats happened with Intercity Travel between Birmingham/Manchester and London......3 trains an hour at least....much better than the old BR days.

Interstingly someone posted a comment on this forum about competition on the Birmingham to London routes with Chiltern , LM and Virgin....I ve no idea what the outcome of the question was at the time but the question was " Which is best value way to get to London from Birmingham? "

 

[muz379]

And just look whats happened with Intercity Travel between Birmingham/Manchester and London......3 trains an hour at least....much better than the old BR days.

Interstingly someone posted a comment on this forum about competition on the Birmingham to London routes with Chiltern , LM and Virgin....I ve no idea what the outcome of the question was at the time but the question was " Which is best value way to get to London from Birmingham? "

Now Now there you go jumping the gun
The problem there is you are comparing BR days with today two very different times indeed .As we know there has been an increase in people using the railways not necessarily caused by that increase in frequency itself but leading to increases in frequency just like that . This is caused by other things such as rising fuel & insurance costs , reduced journey times ,the list goes on .

There are so many differences between BR days compared to today . it is no longer useful to compare using things that happened 17+ years ago . I mean I could argue that fares have increased at a disproportionate level since privatization . But I am well aware that there are other issues at play there then who is at the sharp end of it operating the railway .

A private railway to me isnt a major problem I was not arguing a return back to BR days by any stretch of the imagination . I just think that people are applying a binary method of assessment in this discussion when the thread is about how we would change the franchise system yet the options being portrayed are that either the method we have now is perfect or we need a pubic operating model when there is a middle ground IMO .

I think the system at the moment has some flaws , a big one being as I mentioned the awarding decision is open to government whims and so the cheapest bid is most likely to win but as we saw in the case of East coast the cheapest bid doesn't represent the best deal

I personally would make the body awarding the franchises an independent body fully open to judicial and parliamentary scrutiny but not directly at the whim of the government of the day .

 

[Moonshot]

Now Now there you go jumping the gun
The problem there is you are comparing BR days with today two very different times indeed .As we know there has been an increase in people using the railways not necessarily caused by that increase in frequency itself but leading to increases in frequency just like that . This is caused by other things such as rising fuel & insurance costs , reduced journey times ,the list goes on .

There are so many differences between BR days compared to today . it is no longer useful to compare using things that happened 17+ years ago . I mean I could argue that fares have increased at a disproportionate level since privatization . But I am well aware that there are other issues at play there then who is at the sharp end of it operating the railway .

A private railway to me isnt a major problem I was not arguing a return back to BR days by any stretch of the imagination . I just think that people are applying a binary method of assessment in this discussion when the thread is about how we would change the franchise system yet the options being portrayed are that either the method we have now is perfect or we need a pubic operating model when there is a middle ground IMO .

I think the system at the moment has some flaws , a big one being as I mentioned the awarding decision is open to government whims and so the cheapest bid is most likely to win but as we saw in the case of East coast the cheapest bid doesn't represent the best deal

I personally would make the body awarding the franchises an independent body fully open to judicial and parliamentary scrutiny but not directly at the whim of the government of the day .

Im not jumping any gun......I m simply pointing out the reality. i dont think it unfair to compare anything with BR days, and the reason being is two fold....it wasnt all that long ago that BR existed and many forumites on here are familiar with the day to day running of BR......the other reason being that investment in the railway has a very long lead in time, and longer than average waiits for some meaningful data to see the benefits of that investment.

As far as your point about awarding franchises goes, bid are anonomised. It was somewhat suprisingly revealed at the West Coast Frabchise enquiry that the Permanent Secretary of the DFT ( Philip Rutnam ) was not allowed to be made aware of the identity of the bidders so as to remain impartial.

 

[muz379]

Im not jumping any gun......I m simply pointing out the reality. i dont think it unfair to compare anything with BR days, and the reason being is two fold....it wasnt all that long ago that BR existed and many forumites on here are familiar with the day to day running of BR......the other reason being that investment in the railway has a very long lead in time, and longer than average waiits for some meaningful data to see the benefits of that investment.

As far as your point about awarding franchises goes, bid are anonomised. It was somewhat suprisingly revealed at the West Coast Frabchise enquiry that the Permanent Secretary of the DFT ( Philip Rutnam ) was not allowed to be made aware of the identity of the bidders so as to remain impartial.

i would beg to differ about comparing things to BR days personally , Its 17+ years ago . a lot has changed in this country since them and the changes you were going on about are not necessarily just down to who is operating the railway public v private but other factors outside the control or influence of the railway that have to led to increased demand making 3 tph viable .
I mean a london-Manc return has gone up 221% since 1995 , that is well more than respective inflation over the same time period . But you would say it is wrong of me to argue that trains are more expensive (relatively) to BR days and it is the fault of privatization ?

Bids are anonomised , but that makes no difference to the political imperative to pick the cheapest bid when that might not necessarily be the most worthwhile or viable bid . Making the person who picks bids independent from that government influence would make the body choosing the bid more able to assess properly the viability of the bids without having to worry about justifying the extra costs .

And besides do you really think the minister is not aware of who the bidders are and could identify the bids from some of the ideas they have put forwards/financial details provided .

 

[Moonshot]

i would beg to differ about comparing things to BR days personally , Its 17+ years ago . a lot has changed in this country since them and the changes you were going on about are not necessarily just down to who is operating the railway public v private but other factors outside the control or influence of the railway that have to led to increased demand making 3 tph viable .
I mean a london-Manc return has gone up 221% since 1995 , that is well more than respective inflation over the same time period . But you would say it is wrong of me to argue that trains are more expensive (relatively) to BR days and it is the fault of privatization ?

Bids are anonomised , but that makes no difference to the political imperative to pick the cheapest bid when that might not necessarily be the most worthwhile or viable bid . Making the person who picks bids independent from that government influence would make the body choosing the bid more able to assess properly the viability of the bids without having to worry about justifying the extra costs .

And besides do you really think the minister is not aware of who the bidders are and could identify the bids from some of the ideas they have put forwards/financial details provided .

And yet we have Rail Unions wanting the whole industry to be re nationalised...........so I do think I have a very valid point in making comparisons with BR , even if things have changed in the intervening years. Such reports as the Mcnulty one did use graphs and data from those years to make comparisons.

 

[muz379]

And yet we have Rail Unions wanting the whole industry to be re nationalised...........so I do think I have a very valid point in making comparisons with BR , even if things have changed in the intervening years. Such reports as the Mcnulty one did use graphs and data from those years to make comparisons.

I beg to differ , we both know that is a union pipe dream that even the supposedly red ed isnt going to see through ,even if he did see it though his current suggestion takes us nowhere near BR territory, and I dont think any politician in their right mind would return us to the BR days . you already know what I think about the Mcnulty report anyway ,

I dont want a return to BR days , I am just saying comparing directly between service and cost in BR days and today is an incorrect comparison to make . If you must use BR as an example at least take account for things outside of the control of the railways that have led to passenger increases and demand increase since BR . The success of the railway today is not just down to the privatized nature of it IMO , as you said in an earlier post the traveling public care not for who is operating the train .I didn't state that the disproportionate fare increase was just down to privatization despite the fact that passengers could view it that way .


seeing as you seem hell bent on making this just about privatization being better than BR days do you have anything to say about my proposal for an independant body to award the franchise ?

 

[Aictos]

Simply said the Government of the time rather then listen to the Treasury should have simply have done what the French did, one company responsible for infrastructure and the other responsible for running trains.

You could either use separate branding ie RFF/SNCF or do what Virgin Trains did with Cross Country/WCML and brand it as British Rail as long as it's separate accounting there is no reason to smash the railways into a million pieces.

 

[Moonshot]

I beg to differ , we both know that is a union pipe dream that even the supposedly red ed isnt going to see through ,even if he did see it though his current suggestion takes us nowhere near BR territory, and I dont think any politician in their right mind would return us to the BR days . you already know what I think about the Mcnulty report anyway ,

I dont want a return to BR days , I am just saying comparing directly between service and cost in BR days and today is an incorrect comparison to make . If you must use BR as an example at least take account for things outside of the control of the railways that have led to passenger increases and demand increase since BR . The success of the railway today is not just down to the privatized nature of it IMO , as you said in an earlier post the traveling public care not for who is operating the train .I didn't state that the disproportionate fare increase was just down to privatization despite the fact that passengers could view it that way .


seeing as you seem hell bent on making this just about privatization being better than BR days do you have anything to say about my proposal for an independant body to award the franchise ?

Would the results of franchise bids be any different? What would you propse be the make up of an independant panel? At the end of the day , if government policy for rail is to bring in the private sector to run certain elements of its operation, there has to be a methodology of doing so. Private sector companies running services on behalf of the state is nothing new, NHS MOD etc has hundreds of these contracts. Railways are no more privatised than they were 20 years ago......

 

[SpacePhoenix]

One of the downsides of the franchising has been the loss of inner-operability with stock, eg all the 14x and 15x could work together in any combination. The old slam door EMUs, VEPs, etc could work together, even with a 442, now there are so many different combinations of coupling and TMS that any given EMU or DMU seems to only have one, maybe 2 other classes that it can work with.

 

[muz379]

Would the results of franchise bids be any different? What would you propse be the make up of an independant panel? At the end of the day , if government policy for rail is to bring in the private sector to run certain elements of its operation, there has to be a methodology of doing so. Private sector companies running services on behalf of the state is nothing new, NHS MOD etc has hundreds of these contracts. Railways are no more privatised than they were 20 years ago......

I dont know if there is any evidence to back up the results being any different but I doubt you would get what occurred with the bodged west coast franchising .
Id say the body should be made of of economic experts as well as experts in rail operations , instead of getting someone who has no experience of the rail industry to write a damming report of the industry (Mcnulty) and then letting the government of the day use that to go about importing its political policy of austerity all over the railways . This would in my view impart a bit more long term ism into the industry .

There you go again jumping the gun talking about rail has to be in the private sector and its no more privatized now than it was 20 years ago , I have not disputed this for one minute and my method would not impart any more forms of nationalization on the process than the current model does . In fact the current model makes it more possible than having an independent body because any party could win the election and award all of the franchises to a state body . If you in fact believe and support that idea would an independent body not be a better way of awarding the franchises because they would not be at the whim of plans like those that the unions and the labour party want which is some sort of bodged attempt at renationalisation .

I think another plan that would overall benefit the railways and the public and the governments desire for reduced spending on railways is letting the franchises for a longer period of time . Look at the northern franchise by 2016 they will have been running it for 12 years , they originally only let the franchise for 6and a bit years . Surely if northern had known they would be running the franchise for 12 years they would have invested a lot more at the start of the franchise on the hopes of seeing a return on it . Letting the franchises for longer would again increase stability and encourage investment

 

[Moonshot]

I dont know if there is any evidence to back up the results being any different but I doubt you would get what occurred with the bodged west coast franchising .
Id say the body should be made of of economic experts as well as experts in rail operations , instead of getting someone who has no experience of the rail industry to write a damming report of the industry (Mcnulty) and then letting the government of the day use that to go about importing its political policy of austerity all over the railways . This would in my view impart a bit more long term ism into the industry .

There you go again jumping the gun talking about rail has to be in the private sector and its no more privatized now than it was 20 years ago , I have not disputed this for one minute and my method would not impart any more forms of nationalization on the process than the current model does . In fact the current model makes it more possible than having an independent body because any party could win the election and award all of the franchises to a state body . If you in fact believe and support that idea would an independent body not be a better way of awarding the franchises because they would not be at the whim of plans like those that the unions and the labour party want which is some sort of bodged attempt at renationalisation .

I think another plan that would overall benefit the railways and the public and the governments desire for reduced spending on railways is letting the franchises for a longer period of time . Look at the northern franchise by 2016 they will have been running it for 12 years , they originally only let the franchise for 6and a bit years . Surely if northern had known they would be running the franchise for 12 years they would have invested a lot more at the start of the franchise on the hopes of seeing a return on it . Letting the franchises for longer would again increase stability and encourage investment

I have absolutely no idea what you mean by jumping the gun.......as I stated, railways are no more privatised than they were 20 years ago.

20 years ago who was deciding what the levels of investment were, the levels of fares were, the timetable etc.......the state was. Fast forward 20 years and who is doing all that now? The state !!!

 

[muz379]

I have absolutely no idea what you mean by jumping the gun.......as I stated, railways are no more privatised than they were 20 years ago.

20 years ago who was deciding what the levels of investment were, the levels of fares were, the timetable etc.......the state was. Fast forward 20 years and who is doing all that now? The state !!!

Fast forward to post general election next year , a general election labour could win . Who will then be deciding who runs the railways . A labour minister in the DFT , what have labour said they wish to see after the next election ? Thats right a public body bidding for and ultimately running franchises. Is this a plan you support ?