Is everyone tired of franchising?

[swt_passenger]

Wasn't the original idea that the general pattern should be similar to Chiltern -- that where a TOC saw an infrastructure improvement as commercially viable the work would be done by RT (now NR) and the TOC would pay through those increased access charges?

Very much so. The second SWT franchise would ideally have followed the Chiltern model and would possibly have increased Waterloo capacity some years ago. IIRC the government abandoned the idea of long franchises improving their infrastructure at the same time as the SRA was abolished.

 

[coppercapped]

Wasn't the original idea that the general pattern should be similar to Chiltern -- that where a TOC saw an infrastructure improvement as commercially viable the work would be done by RT (now NR) and the TOC would pay through those increased access charges? I have certainly seen paperwork based on that assumption in connection with the infrastructure improvements proposed (and only partially delivered) for the XC Operation Princess exercise.

The original idea was that of managed decline - with the experience of the 40 years of general decline in passenger and freight traffic between 1950 and 1990 it wasn't expected that there would be a significant recovery. As a result the original privatisation model, that in effect from 1994 to the creation of the SRA, did not foresee the need for large capital expenditures - so there was no provision for them. Small scale one certainly and they would be funded in the manner you mentioned - but even that would be difficult as with a 7 or 8 year franchise, and allowing for the planning and building time, a TOC would only see a couple of years benefit. So why bother?

It took some five years after privatisation for it to become accepted that the traffic growth seen was not a flash in the pan. A better way to fund enhancements was needed.

 

[Camden]

Don't understand your point in relation to mine (which is that peoples' objections mean nothing because the commercialised set up is now an EU objective).

British privatisation happened first, so that's why BR were not allowed to bid. As a government pursuing a privatisation agenda, there would have been no point in allowing it.

As for other countries having state owned companies bidding for the franchises, the priority seems rather different. There you have countries who did not want to privatise their railways but which were forced to do so by the EU, introducing "competition", "opening up the rail markets" and so on. Whether they are allowed to carry on doing this longer term remains to be seen, but I suppose you could reasonably assume there is nothing to stop DOR from bidding to run a railway line in Germany provided it is run the same way DB is.

Doesn't change that franchising is here to stay whether people (or government) like it or not. Even if you have a DOR bidding for franchises, it will still have to be awarded to a winner based on a criteria that offers that state company no advantage (and thus could just as easily end up in the hands of any of the existing operators). Nationalisation is not compatible with what is allowed.

Story today confirming the above:

http://www.bbc.co.uk/news/uk-politics-eu-referendum-36464902

Benn is right that direct awards of some contracts can be done, but what he is overlooking is that there will still need to be competition and that competition will need to be fair. "State aid" to produce winning bids wouldn't be allowed, only an arms length company bid with the same (or possibly fewer) chances as the rest of the EU's private (and public) rail companies.

Any prospect of nationalisation is off the table.

 

[LeeLivery]

Story today confirming the above:

http://www.bbc.co.uk/news/uk-politics-eu-referendum-36464902

Benn is right that direct awards of some contracts can be done, but what he is overlooking is that there will still need to be competition and that competition will need to be fair. "State aid" to produce winning bids wouldn't be allowed, only an arms length company bid with the same (or possibly fewer) chances as the rest of the EU's private (and public) rail companies.

Any prospect of nationalisation is off the table.

No it isn't, its not even clear if we'll stay in the EU. How on earth they figured the awful privitisation like what we have had should be adopted everywhere begs belief. The DfT/Govia can't even do a management contract.

 

[Bletchleyite]

No it isn't, its not even clear if we'll stay in the EU. How on earth they figured the awful privitisation like what we have had should be adopted everywhere begs belief. The DfT/Govia can't even do a management contract.

Govia are terrible, yes. But I don't see how anyone can say the privatised railway (sort-of) isn't better than latter-day BR.

 

[Deepgreen]

Govia are terrible, yes. But I don't see how anyone can say the privatised railway (sort-of) isn't better than latter-day BR.

I don't think it is very relevant to compare what the privatised railway now is like if compared to BR then - the more helpful comparison would be what the two regimes would look like side-by-side now. In other words, what would BR's stock, passenger policies, service strategies, etc., look like today, when compared with the TOCs' and NR? Of course, that would involve a fair amount of speculation, but taking BR's regime as fixed in 1993 isn't realistic.

I suspect, given the huge continuing subsidies to the TOCs and the massively complex contractual arrangements, new stock (for example) would have been just as forthcoming under a form of BR as is the case now, but there would have been a greater degree of facilities standardisation, co-ordination of services and so on - in other words, much more of a network-based/integrated regime than is the case now.

 

[Camden]

No it isn't, its not even clear if we'll stay in the EU. How on earth they figured the awful privitisation like what we have had should be adopted everywhere begs belief. The DfT/Govia can't even do a management contract.

I should have added that my statement is based on a UK staying in the EU, which I think is most likely to happen.

Should the UK leave, there is a chance that the above won't apply (but also a chance that it might still, as a negotiated position).

 

[Deepgreen]

I rather fear I'd still be rattling around in a VEP.

Only on a preserved railway. Safety requirements would not have stood still, so slam doors would have gone under any regime. New stock would have replaced them, and that would very probably have been much as we have now, but possibly with better/less cynical accommodation provision (i.e. better seating, better first class, etc.).

Anyway, armchair speculation is fun, but can lead to almost endless threads!

 

[coppercapped]

I don't think it is very relevant to compare what the privatised railway now is like if compared to BR then - the more helpful comparison would be what the two regimes would look like side-by-side now. In other words, what would BR's stock, passenger policies, service strategies, etc., look like today, when compared with the TOCs' and NR? Of course, that would involve a fair amount of speculation, but taking BR's regime as fixed in 1993 isn't realistic.

I suspect, given the huge continuing subsidies to the TOCs and the massively complex contractual arrangements, new stock (for example) would have been just as forthcoming under a form of BR as is the case now, but there would have been a greater degree of facilities standardisation, co-ordination of services and so on - in other words, much more of a network-based/integrated regime than is the case now.

I'm not sure where you get the idea that there are "huge continuing subsidies to the TOCs".

The 'Rail Finance Statistical Release 2014-15" document published by the ORR states:

• The majority of government support was in direct rail support, which is the grant payment to Network Rail. This was £3.8 billion in 2014-15, an increase of £349 million on the previous year. Network Rail uses this money to maintain and improve the network.
  
• Other elements of government support totalled £1.7 billion in 2014-15, down by £19 million from 2013-14. Spending on Crossrail accounts for almost two-thirds of this expenditure.
  
• These levels of government support have been partially offset by the receipt of £802 million in 2014-15 from TOCs through franchise premiums. This reflects money which was received by government from TOCs as part of their franchise agreement.

So the TOCs, taken overall, do not receive subsidies. Some obviously do still receive subsidies by this is covered by the payments made to Government by the other TOCs.

There is nothing a priori which says that complex contractual relationships are a bad thing. They are in most cases a very good thing because they make you think very carefully what it is you are buying or supplying before you start. You may not need all the clauses but having thought about possible issues in advance you are less likely to be surprised during the course of the contract.

And you you honestly think any government would have spent the billions that have been spent on buying new rolling stock over the last twenty years? The DfT couldn't even face guaranteeing the lease payments which would have been due on buying extra centre coaches for the Class 185 dmus.

 

[yorksrob]

I rather fear I'd still be rattling around in a VEP.

I'm not sure where you get the idea that there are "huge continuing subsidies to the TOCs".

The 'Rail Finance Statistical Release 2014-15" document published by the ORR states:



So the TOCs, taken overall, do not receive subsidies. Some obviously do still receive subsidies by this is covered by the payments made to Government by the other TOCs.

There is nothing a priori which says that complex contractual relationships are a bad thing. They are in most cases a very good thing because they make you think very carefully what it is you are buying or supplying before you start. You may not need all the clauses but having thought about possible issues in advance you are less likely to be surprised during the course of the contract.

And you you honestly think any government would have spent the billions that have been spent on buying new rolling stock over the last twenty years? The DfT couldn't even face guaranteeing the lease payments which would have been due on buying extra centre coaches for the Class 185 dmus.

Given that BR had consistently replaced rolling stock roughly every forty years (thirty for diesel and long distance stock) why do you think that this would have been any different had it continued after 1994 ?

 

[Xenophon PCDGS]

And you you honestly think any government would have spent the billions that have been spent on buying new rolling stock over the last twenty years? The DfT couldn't even face guaranteeing the lease payments which would have been due on buying extra centre coaches for the Class 185 dmus.

I have emboldened the very relevant part of your posting that shows timidity and paucity of thought at the DfT in those days.

 

[Class 170101]

I have emboldened the very relevant part of your posting that shows timidity and paucity of thought at the DfT in those days.

I would argue thats the fault of the Treasury.

 

[coppercapped]

Given that BR had consistently replaced rolling stock roughly every forty years (thirty for diesel and long distance stock) why do you think that this would have been any different had it continued after 1994 ?

One of the persistent complaints of people posting in this forum is that BR never purchased enough stock - 2 Sprinters replacing 3 older dmus, for example. BR may have replaced stock - but it never had to do so in the face of rising demand.

For me to accept your argument you have to show that BR would have purchased more new vehicles than in fact have been purchased by the various ROSCOs. As the Government would have had to come up with the capital to buy the trains - apart from the Class 50s built by Engliah Electric which were leased, BR bought its trains outright - this expenditure would have been at risk at every downturn in the Government's tax revenues. It is much easier for a Chancellor to guarantee a future stream of lease payments than it is for him to come up with hard cash.

 

[HH]

It is much easier for a Chancellor to guarantee a future stream of lease payments than it is for him to come up with hard cash.

And he doesn't even want to do that any more.

 

[yorksrob]

One of the persistent complaints of people posting in this forum is that BR never purchased enough stock - 2 Sprinters replacing 3 older dmus, for example. BR may have replaced stock - but it never had to do so in the face of rising demand.

For me to accept your argument you have to show that BR would have purchased more new vehicles than in fact have been purchased by the various ROSCOs. As the Government would have had to come up with the capital to buy the trains - apart from the Class 50s built by Engliah Electric which were leased, BR bought its trains outright - this expenditure would have been at risk at every downturn in the Government's tax revenues. It is much easier for a Chancellor to guarantee a future stream of lease payments than it is for him to come up with hard cash.

I can't say as I've seen this persistent complaint very often on here. BR had a policy of replacing three carriages with two during the early 1980's, but as I understand it, it was part of more efficient diagramming, with shorter formations running more often, rather than long rakes of loco hauled carriages ending up in sidings for long periods of time.

You have no evidence that BR wouldn't have upped the tempo of rolling stock purchase with increases in passenger numbers, particularly as without the great rolling stock drought caused by the run up to privatisation, BR would probably have maintained a more steady supply chain, thus keeping down costs of new carriages.
--- old post above --- --- new post below ---

And he doesn't even want to do that any more.

Which suggests buying on the "never never" and driving up revenue costs isn't a sustainable way to fund rolling stock renewal anyway.

 

[ChrisHogan]

I can't say as I've seen this persistent complaint very often on here. BR had a policy of replacing three carriages with two during the early 1980's, but as I understand it, it was part of more efficient diagramming, with shorter formations running more often, rather than long rakes of loco hauled carriages ending up in sidings for long periods of time.


.

Not correct. It was the policy of the Ministry of Transport throughout the 1980s to only authorise the replacement of blue square DMUs by Sprinters on a three vehicles for two basis. It got worse later when 5-coach LH trains (e.g. Cardiff-Portsmouth) were replaced by Class 155s (2-cars again). Not BR policy at all; it was what we had to work with to get the investment.

 

[Harbornite]

Just remember that if BR had received proper levels of funding in the 1980s, we might nit have had pacers.

 

[yorksrob]

Not correct. It was the policy of the Ministry of Transport throughout the 1980s to only authorise the replacement of blue square DMUs by Sprinters on a three vehicles for two basis. It got worse later when 5-coach LH trains (e.g. Cardiff-Portsmouth) were replaced by Class 155s (2-cars again). Not BR policy at all; it was what we had to work with to get the investment.

Ok, BR inherited a policy from Government of replacing on a two for three basis. However, given Government would have experienced similar political pressures in relation to transport over the past two decades, my suspicion is that, in the face of persistently increasing passenger numbers, they would have authorised an increase in overall rolling stock provision.

(Although they may still have ended up pushing BR down the private finance option rather than outright purchase, but that was seen as the "fix all" financing mechanism at the time).

My point is that even though Tony Blair "didn't do railways", I think the public outlook in relation to train transport had shifted significantly since the mid 1980's and any Government would have had difficulty resisting the call to address some of these capacity issues. To suggest that this context has been brought about by the existence of the ROSCO system seems to be unlikely.
--- old post above --- --- new post below ---
I would also bear in mind that up until the great slam-door cull of the mid noughties, levels of new rolling stock construction hadn't exactly been overwhelming, which suggests that current levels are more a response to the increase in passenger numbers, rather than as a result of the ROSCO system.

 

[Robertj21a]

--- old post above --- --- new post below ---


Which suggests buying on the "never never" and driving up revenue costs isn't a sustainable way to fund rolling stock renewal anyway.

Not really true. It may, at times, be the best way of funding new rolling stock, depending on the cost of funds generally, interest rates, timescales etc etc. I certainly wouldn't assume either is the correct one ALL the time.

 

[Deepgreen]

I'm not sure where you get the idea that there are "huge continuing subsidies to the TOCs".

The 'Rail Finance Statistical Release 2014-15" document published by the ORR states:



So the TOCs, taken overall, do not receive subsidies. Some obviously do still receive subsidies by this is covered by the payments made to Government by the other TOCs.

There is nothing a priori which says that complex contractual relationships are a bad thing. They are in most cases a very good thing because they make you think very carefully what it is you are buying or supplying before you start. You may not need all the clauses but having thought about possible issues in advance you are less likely to be surprised during the course of the contract.

And you you honestly think any government would have spent the billions that have been spent on buying new rolling stock over the last twenty years? The DfT couldn't even face guaranteeing the lease payments which would have been due on buying extra centre coaches for the Class 185 dmus.

So the private 'investors' - TOCs - are buying/leasing all that new stock for social benefits reasons? I think not.

 

[coppercapped]

So the private 'investors' - TOCs - are buying/leasing all that new stock for social benefits reasons? I think not.

No. Where did I write that?

 

[Deepgreen]

No. Where did I write that?

My point was that the TOCs are not spending the "billions" without financial compensation (i.e. benefits to them) to make it worth their while. As this obviously doesn't come from fares, then the money must come from...?

The same source of money (whether directly or indirectly) would have supported a nationalised rail regime, including the provision of new rolling stock. Rolling stock has a design/defined expected life and its replacement generally happens when it is financially sensible to do so, and this would happen under pretty much any capitalism-based regime.

The TOCs are not 'investing' in new stock for anything other than financial benefit, so the provision of such is not a luxury provided by the TOCs that would not have happened under, say, BR/equivalent. If traction is included too, then short life/early replacement examples abounded in the earlier years of BR, for reasons ranging from strategic policy (e.g. steam replacement) or reliability failures (many early diesel classes).

In short - there's no reason to suppose that the TOCs are supply new trains at any greater a rate than a 'BR' equivalent in today's world would have done.

 

[HH]

My point was that the TOCs are not spending the "billions" without financial compensation (i.e. benefits to them) to make it worth their while. As this obviously doesn't come from fares, then the money must come from...?

The same source of money (whether directly or indirectly) would have supported a nationalised rail regime, including the provision of new rolling stock. Rolling stock has a design/defined expected life and its replacement generally happens when it is financially sensible to do so, and this would happen under pretty much any capitalism-based regime.

The TOCs are not 'investing' in new stock for anything other than financial benefit, so the provision of such is not a luxury provided by the TOCs that would not have happened under, say, BR/equivalent. If traction is included too, then short life/early replacement examples abounded in the earlier years of BR, for reasons ranging from strategic policy (e.g. steam replacement) or reliability failures (many early diesel classes).

In short - there's no reason to suppose that the TOCs are supply new trains at any greater a rate than a 'BR' equivalent in today's world would have done.

You don't appear to understand the difference between capital and revenue expenditure, nor to that between committed and non-committed. Nor to the fact that it is ROSCOs that have largely invested in Rolling Stock.

Really, given your complete lack of understanding it's not too surprising that you reach a rather dubious conclusion.

 

[yorksrob]

Not really true. It may, at times, be the best way of funding new rolling stock, depending on the cost of funds generally, interest rates, timescales etc etc. I certainly wouldn't assume either is the correct one ALL the time.

But as HH alluded, that would depend on how much Government is prepared to fund the inflated revenue costs.
--- old post above --- --- new post below ---

You don't appear to understand the difference between capital and revenue expenditure, nor to that between committed and non-committed. Nor to the fact that it is ROSCOs that have largely invested in Rolling Stock.

Really, given your complete lack of understanding it's not too surprising that you reach a rather dubious conclusion.

It's interesting to consider what sort of a PFI system might have been imposed on the railway had the ROSCO system not been devised.

As far as I understand it, if a Council wants to build a new school under PFI, the banks finance the construction and maintenance of the new school in return for an income stream.

If we were to reimagine this as a ROSCO type system, it would be as though we'd gifted a load of already built and running schools to the banks for a knock down price and agreed to pay them an income stream, then on top of that agreed an additional pfi income stream for any additional stock built.

 

[Robertj21a]

But as HH alluded, that would depend on how much Government is prepared to fund the inflated revenue costs.
--- old post above --- --- new post below ---


.

My point was quite clear. You can't make sweeping assumptions about financing new stock without taking in a whole range of variables.

 

[HH]

It's interesting to consider what sort of a PFI system might have been imposed on the railway had the ROSCO system not been devised.

Certainly, with the benefit of hindsight, ROSCOs were probably not the best option when rail was privatised. Not sure how many people realised this at the time.

 

[tbtc]

It's interesting to consider what sort of a PFI system might have been imposed on the railway had the ROSCO system not been devised.

As far as I understand it, if a Council wants to build a new school under PFI, the banks finance the construction and maintenance of the new school in return for an income stream.

If we were to reimagine this as a ROSCO type system, it would be as though we'd gifted a load of already built and running schools to the banks for a knock down price and agreed to pay them an income stream, then on top of that agreed an additional pfi income stream for any additional stock built.

Good points.

Whilst it's obviously tempting to cherry pick the best/ worst bits of BR, to compared against the worst/best of the 21st century railway (e.g. BR singled lots of track to save maintenance, BR introduced Pacers, BR bought ten new DMUs to replace fifteen old DMUs, BR chopped two coach 155s into single 153s... versus BR had a clear long term plan for modernising its multiple unit fleet, BR had rolling stock standards and standardisation, BR avoided the famine and feast of the modern railway, BR had rolling programmes on things like electrification which would have avoided many of the problems we have today etc)...

...I think that a modern BR would be as hidebound by Government as the Civil Service/ NHS/ Prison Service/ Schools etc are. We may not have had ROSCOs, but we may well have had everything wrapped up in PFI deals, as you suggest.

From my OH's involvement in organisations weighed down by PFI, it really looks like a nightmare (short term fudge to make the balance sheet look good, long term consequences) - I don't know whether it's any better or any worse than ROCSOs - interesting comparison - but I think that the railway would have ended up mired in such schemes, had it not been privatised.

Certainly not black and white.

 

[HH]

...I think that a modern BR would be as hidebound by Government as the Civil Service/ NHS/ Prison Service/ Schools etc are. We may not have had ROSCOs, but we may well have had everything wrapped up in PFI deals, as you suggest.

Totally agree.

From my OH's involvement in organisations weighed down by PFI, it really looks like a nightmare (short term fudge to make the balance sheet look good, long term consequences) - I don't know whether it's any better or any worse than ROCSOs - interesting comparison - but I think that the railway would have ended up mired in such schemes, had it not been privatised.

Probably true. The issue with ROSCOs is mainly that they had risk removed but still charged as if it were there. If that could have been avoided then the 'vehicle' was maybe not so bad.

 

[coppercapped]

Good points.

Whilst it's obviously tempting to cherry pick the best/ worst bits of BR, to compared against the worst/best of the 21st century railway (e.g. BR singled lots of track to save maintenance, BR introduced Pacers, BR bought ten new DMUs to replace fifteen old DMUs, BR chopped two coach 155s into single 153s... versus BR had a clear long term plan for modernising its multiple unit fleet, BR had rolling stock standards and standardisation, BR avoided the famine and feast of the modern railway, BR had rolling programmes on things like electrification which would have avoided many of the problems we have today etc)...

...I think that a modern BR would be as hidebound by Government as the Civil Service/ NHS/ Prison Service/ Schools etc are. We may not have had ROSCOs, but we may well have had everything wrapped up in PFI deals, as you suggest.

From my OH's involvement in organisations weighed down by PFI, it really looks like a nightmare (short term fudge to make the balance sheet look good, long term consequences) - I don't know whether it's any better or any worse than ROCSOs - interesting comparison - but I think that the railway would have ended up mired in such schemes, had it not been privatised.

Certainly not black and white.

It already is. Both the deal made by the DfT for the supply of train diagrams with Agility Trains and the Thameslink deal with Siemens are PFI-type deals. I say '-type' with care as normally the PFI asset can be purchased by the local authority/NHS/whatever for a nominal sum at the end of the contract. There isn't any such provision in the train deals so, as I was informed in a letter from the DfT, these are not PFI deals.

Informed Sources claim that the first of these deals at least is costing the railway much more than if similar stock had been purchased by a ROSCO and leased to the TOC.

 

[HH]

It already is. Both the deal made by the DfT for the supply of train diagrams with Agility Trains and the Thameslink deal with Siemens are PFI-type deals. I say '-type' with care as normally the PFI asset can be purchased by the local authority/NHS/whatever for a nominal sum at the end of the contract. There isn't any such provision in the train deals so, as I was informed in a letter from the DfT, these are not PFI deals.

Informed Sources claim that the first of these deals at least is costing the railway much more than if similar stock had been purchased by a ROSCO and leased to the TOC.

DfT don't know how to buy trains shock horror!

This OFC contrasts nicely with TS who let Abellio do the financing deal and will get the stock for £1 at the end of the lease.

So it seems that sometimes the private company does save money...