Simple answer is operationally the railway is profitable, it returns enough farebox revenue to pay for operating and renewal costs (though this has only been the case for the last couple of years due to the explosion in passenger numbers since privatisation). The revenue isn't however enough to cover investment in expanding or improving the infrastructure. Its this that the government subsidises through the credit card.
Does it cover renewal costs ? I would consider the replacement of life expired rolling stock on Northern as a renewal, yet it's unlikely that this will be replaced without taxpayer intervention.
In truth, in may ways we've never had it so good with the railway so, having watched the privatisation fiasco roll out through its low years, I'm not sure why the issue has become prominent now.
There's been a piece in The Times (apologies, can't quote as I don't have an online subscription) and the following things stood out:
It's often quoted that TOC's make on average 3% profit, yet no one seems to attempt to quantify what this actually amounts to. It would be interesting to compare this to the amount of private sector investment into the railways (Rail Magazine always managed to come up with a figure, so presumably its possible).
The other thing I noticed about the article was that while NR's shortcomings were alluded to, there was little mention of the travails of Railtrack, which makes me suspect that the Establishment is softening us up for another ill considered sell-off.
As rail users, we have at least been shielded from the worst aspects of de-regulation (Needless to say, Professor Richard Wellings' pro-deregulation opinion was quoted) which leads me to think that perhaps tackling the basket case and unmitigated failure that is bus deregulation should be a bigger priority in the public mind !
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Once the government decided to franchise the passenger railway to the private sector, it was inevitable that the public sector was excluded.
Private firms would not be keen to bid if there was a public outfit with bottomless pockets in competition to them.
On top of that, once all the BR TOCs were in private hands, there was no-one left in the public sector with the skills and resources to run trains.
That is pretty much still the case.
Also, what UK state bodies are prepared to risk their taxpayers' money to operate trains? They have other jobs to do.
Foreign state railways are also restructuring and are having to allow external competition.
So you have Trenitalia running domestic services in Germany, or Italo (SNCF) running domestic trains in Italy.
Competition works both ways.
All very plausible arguments, none of which dispel the feeling that we are being taken for a ride. As the public, we are told that it isn't possible to have an effective system in which profits are recycled directly into the railway, yet it's ok to recycle those profits into someone else's railway ?
Frankly, if the Establishment are that committed to private sector ownership, it would probably be politically expedient for them to exclude all state owned organisations from the process wherever they are based, because the current situation robs the argument of credibility.
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The cost of the rolling stock would be insurmountable though and I think will be the nail in the coffin for all renationalisation attempts. We just can't afford to buy back all the stock from the ROSCOs. There ARE other countries that would lease the stock if we "hardballed" them (sure, poorer ones, but if they offer more than we do, then we wouldn't get the stock which we would need).
Aren't we moving to a situation in which the state pays for rolling stock which is then maintained by the manufacturer (such as the Javelin, the class 800 etc). In which case, it's hard to see what added value the ROSCO system actually provides.
Wasn't the whole idea behind it to provide an ongoing market for rolling stock that would be self sustaining, although this patently hasn't happened. I suspect the better idea would be to have it owned by a branch of the infrastructure owner, which negates any problems with changing franchises and cascades etc. Then if newly constructed rolling stock doesn't go to the ROSCO's, they will eventually wither as their remaining stock gets withdrawn.
