Is it in ROSCO's interests to swap an old unit for a newer unit?

[modernrail]

So this is a question the ROSCO's must be facing. Interested in forum member's views.

ROSCO's have lots of EMUs coming off lease. If they have older EMUs in another franchise, how does their decision making process run. Are they better to go to those franchises and say we will offer you newer units for roughly the same price as the older units provided you take a longer lease.

The pure asset managers answer must be yes. I have two fleets here, both written down or substantially written down. My job is to secure long term income and so in a market with very few takers, getting the longest contract possible must be my priority. The alternative is maximising income through spot hire but that market doesn't exist in UK rail. With more assets than contracts, I should prioritise having my longer life assets on hire.

With franchises they can't do this because the franchisee can't sign a lease longer than the franchise term.

So, are ROSCO's thinking lile this and if they are, will they put pressure on the DfT to support some longer leases.

 

[js1000]

Depends what you mean by keeping older assets in service to maximise their value. Logically yes but in reality there is also great risk attached due to new franchises and competing ROSCOs.

The risk is that when the franchise comes up for renewal, prospective bidders will aim to replace all the older units that are practically life-expired that only in service because the ROSCO is trying to play their cards right to maximise value and avoid scraping units which results in costly asset write-downs.

Porterbrook were caught out by this. They took the 17 323s off Northern and gave them the surplus 319s that were being phased out on Thameslink. The assumption was made that the new West Midlands franchise would take Northern's 17 323s and operate the entire 323 fleet. This did not happen and the new WMT franchise made an order for 26 Class 196s to replace their 323s while the new Northern franchise ordered 43 331s from Eversholt to replace the 323s.

So Porterbrook have no takers for the 323s and there is a risk that the Northern 319s will also be replaced in the new franchise given the will be 35 years old. To answer your question, it's a balancing act. Ensure assets are maximised but also ensure the units are perceived to be modern and attractive to future operators so they don't look to other ROSCOs for new units.

 

[tbtc]

It's a really interesting market at the moment - after a generation of ROSCOs being able to rely on income from desperate TOCs (unable to go elsewhere), now we have a fluid market - the kind of competitive one that ideally we would have had twenty years ago (I am fairly ambiguous over nationalisation/privatisation, and I don't want to turn this into a debate about these things, but certainly feel that the profiteering ROSCOs are one of the best adverts for nationalisation!).

I suppose that there are other costs to consider - will track access charges be the same with different stock - will it be worth taking staff off to train on new stock for a few days - are platforms able to cope with a change (e.g. a 323 is 3x23m - which is a nice way of remembering the length - whilst a 319 is 4x80m) - do the franchise terms require a certain number of seats for certain journeys?

There's also the issue that, whilst ROSCOs would love to secure long term leases for their stock, a lot of franchises are bumping along with a short term extension here and a short term extension there - e.g. I think the Northern and Wales/Borders franchises spent about as long in short term extensions than they did in the original duration of the franchise - look at how Virgin West Coast/ EMT/ XC keep getting short term extensions - which must make it hard for ROSCOs to get their trains tied down (I know that these aren't the ones running the kind of EMUs that the OP referred to, so apologies for going off at a slight tangent).

Also, I guess in the case of Porterbrook, when you've got three different vintages of stock that could go to a franchise like Northern - 319, 323, 350/2 - you have to decide whether it's worth trying to encourage them to take the older stock (319) because you know that there's a chance of a more profitable TOC being able to take on the 350/2s (e.g. London - Corby, as a hypothetical example).

I can certainly see the TOCs wanting to get the DfT to agree to leases longer than current franchises - I wouldn't have a problem with that either - there's something to be said for the Government deciding upon service levels and trains with the TOC providing the service dictated to in the franchise agreement - but at the same time I'm happy with the short term competition.

 

[Metal_gee_man]

Whilst I understand that ROSCOs are in business not to serve the interests of TOCs and the public, but exclusively for profit (mainly pension funds)
It bothers me that once they've milked a cow (train) dry run it into the ground and made an eye watering amount of a return on their investment they still continue to flog the trains as a valid option to either desperate TOCs or cash strapped ones, I feel they should be forced to retire stock by the DfT once its made a 20%/30% return on the investment, or it hits a certain age whichever happens first!

This is the reason why privatisation has been a financial failure for the nation because we the paying public have been lining the fund managers pockets for years, I for one hope they scrap a number of these clapped out trains, it hits the ROSCOs in the pocket and the TOCs are given the power to run to a different ROSCO and let market forces take their course, forcing down prices

 

[Meerkat]

I for one hope they scrap a number of these clapped out trains, it hits the ROSCOs in the pocket and the TOCs are given the power to run to a different ROSCO and let market forces take their course, forcing down prices

Surely scrapping trains reduces competition and raises prices?
Several mentions of ROSCO profiteering.....didn’t the DfT fail in all its attempts to prove this, with various reviews rudely refusing to give the ‘right’ answer DfT wanted?

 

[AM9]

... I feel they should be forced to retire stock by the DfT once its made a 20%/30% return on the investment, or it hits a certain age whichever happens first!

So you want to force the scrapping of perfectly good trains just because they have made somebody a profit. What would be the purpose of that and who would benefit, (apart from train manufacturers).

 

[Metal_gee_man]

Those were hyperthetical figures of 20/30% but the free market option of TOCs walking away from a lease agreement to another ROSCO is a good idea, I know it'll leave us with old stock laying around, but no one should be tolerating Pacers right now, or re-engineered D stock, the DfT have the balls to tell bus operators how old a bus should be before it must be retired, why because of the ROSCO rather than the TOC owning the rolling stock should it be acceptable

 

[PeterC]

I rather have the feeling that the whole ROSCO set up was dreamed up by civil servants with no understanding of railways who were thinking in terms of loco hauled carriages that could be redeployed anywhere on the system.

When you have a heap of issues over combining traction and route knowledge that model rapidly breaks down. (eg all the reasons why 315s can't be drafted in to the GOBLIN)

 

[LNW-GW Joint]

Surely scrapping trains reduces competition and raises prices?
Several mentions of ROSCO profiteering.....didn’t the DfT fail in all its attempts to prove this, with various reviews rudely refusing to give the ‘right’ answer DfT wanted?

The CMA blamed the DfT for effectively rigging the market by directing TOCs to use particular stock (and giving long-term Section 54 guarantees for it).
Since then, the DfT has stepped away from that (except where they/TfL did the procurement, as for class 700/800/345, and for the upcoming HS2 stock).
So now we have emerging situations of redundant but useable stock, meaning the market is at last working and the TOCs have a choice.
On top of that, much new stock has by-passed the traditional ROSCOs into other finance houses, so it is not even a closed triumvirate any more.
Manufacturers are also taking on more direct life-cycle maintenance as part of procurement deals, taking more work from ROSCOs.
It all seems quite healthy and competitive to me, although I agree it can produce some bizarre results at times.
We are also getting more coherent, go-anywhere designs which have a greater chance of reuse on the network.
Although the holy grail of being able to pick trains off the shelf from global manufacturers still seems pretty far off.
The next key step will be when all new stock is ETCS fitted.
Meanwhile the ROSCOs are innovating more with bi-mode and new traction conversions, and are having to work harder to get their trains on-lease.

 

[Bletchleyite]

I'm not sure I'd say the ROSCOs are an advert for nationalisation, but they are one of the things that was got most wrong at privatisation. It would have been better if the TOCs had had more commercial freedom as to how they procured rolling stock, including purchasing it themselves. The one rider I'd have put on that would be that they would have been sold the existing ex-BR stock at a peppercorn price reflecting it already being depreciated, but also contractually required to resell it to the next franchisee at the same price (adjusting for inflation).

 

[Meerkat]

Without ROSCOs there would have been far less new stock. They give governments the ability to do what they really love - give their electorate lots of shiny new stuff without the government having to find the cash for it, and committing future governments to help pay for vote winning stuff now.
Would a government have been so willing to sign up to early PRM and condemn the Pacers if the Treasury had to front the cash to replace them?

 

[MatthewRead]

Depends what you mean by keeping older assets in service to maximise their value. Logically yes but in reality there is also great risk attached due to new franchises and competing ROSCOs.

The risk is that when the franchise comes up for renewal, prospective bidders will aim to replace all the older units that are practically life-expired that only in service because the ROSCO is trying to play their cards right to maximise value and avoid scraping units which results in costly asset write-downs.

Porterbrook were caught out by this. They took the 17 323s off Northern and gave them the surplus 319s that were being phased out on Thameslink. The assumption was made that the new West Midlands franchise would take Northern's 17 323s and operate the entire 323 fleet. This did not happen and the new WMT franchise made an order for 26 Class 196s to replace their 323s while the new Northern franchise ordered 43 331s from Eversholt to replace the 323s.

So Porterbrook have no takers for the 323s and there is a risk that the Northern 319s will also be replaced in the new franchise given the will be 35 years old. To answer your question, it's a balancing act. Ensure assets are maximised but also ensure the units are perceived to be modern and attractive to future operators so they don't look to other ROSCOs for new units.

The 196's are DMU's replacing the 170's the 323's will be replaced by Class 730's.

 

[BantamMenace]

Without ROSCOs there would have been far less new stock. They give governments the ability to do what they really love - give their electorate lots of shiny new stuff without the government having to find the cash for it, and committing future governments to help pay for vote winning stuff now.
Would a government have been so willing to sign up to early PRM and condemn the Pacers if the Treasury had to front the cash to replace them?

I agree with this but if it were fully true it would have been a complete pacer and sprinter replacement for northern during this franchise, not just pacers. There is a cost to the government in leasing cost subsidy don’t forget.

 

[sprinterguy]

This did not happen and the new WMT franchise made an order for 26 Class 196s to replace their 323s while the new Northern franchise ordered 43 331s from Eversholt to replace the 323s.

The point stands, but no they didn't: They've ordered 36 x 3-car Bombardier Aventras to replace the 323s. The 196s are diesel units to replace the 170s.

 

[Meerkat]

I agree with this but if it were fully true it would have been a complete pacer and sprinter replacement for northern during this franchise, not just pacers. There is a cost to the government in leasing cost subsidy don’t forget.

There is a limit to Government charity! See if the new trains get the subsidy down, sort the staffing out, and maybe the government will think it’s a wise investment.

 

[edwin_m]

I'm not sure I'd say the ROSCOs are an advert for nationalisation, but they are one of the things that was got most wrong at privatisation. It would have been better if the TOCs had had more commercial freedom as to how they procured rolling stock, including purchasing it themselves. The one rider I'd have put on that would be that they would have been sold the existing ex-BR stock at a peppercorn price reflecting it already being depreciated, but also contractually required to resell it to the next franchisee at the same price (adjusting for inflation).

I don't think there's any ban on TOCs purchasing stock - after all First Group (admittedly the parent group not a specific TOC) bought some HSTs. Stagecoach also owned Porterbrook for a while.

However it's not really viable for TOCs to do this most of the time as they would be landed with the trains in the event of losing a franchise. The whole leasing system was devised to make franchises of less than 10 years compatible with train lifetimes of more than 30 years, and to allow bidders for a replacement franchise to offer new or different stock if they felt that would win more passengers and revenue. Owning the trains would also increase the amount of cash a TOC would have to raise at the start of its franchise before it has any revenue coming in.

The only alternative is probably the TfL model where the public sector buys the stock (or secures a long-term finance lease) and effectively lends it to the franchisee for the duration. This appears to be what happens in Germany as well. Clearly this removes a lot of the commercial freedom for TOC bidders to offer novel solutions, but if the public sector gets it right then it probably works out cheaper for them.

 

[43096]

I don't think there's any ban on TOCs purchasing stock - after all First Group (admittedly the parent group not a specific TOC) bought some HSTs. Stagecoach also owned Porterbrook for a while.

However it's not really viable for TOCs to do this most of the time as they would be landed with the trains in the event of losing a franchise. The whole leasing system was devised to make franchises of less than 10 years compatible with train lifetimes of more than 30 years, and to allow bidders for a replacement franchise to offer new or different stock if they felt that would win more passengers and revenue. Owning the trains would also increase the amount of cash a TOC would have to raise at the start of its franchise before it has any revenue coming in.

The only alternative is probably the TfL model where the public sector buys the stock (or secures a long-term finance lease) and effectively lends it to the franchisee for the duration. This appears to be what happens in Germany as well. Clearly this removes a lot of the commercial freedom for TOC bidders to offer novel solutions, but if the public sector gets it right then it probably works out cheaper for them.

Absolutely spot on, and it is something that a lot of people seem incapable of understanding. First (or was it still Great Western Holdings at the time?) actually set up a subsidiary called Wiltshire Leasing in the early days which was buying the Class 180 fleet. Ultimately the decision was made to sell them to Angel - clearly TOCs owning new trains wasn't really a go-er.

It is interesting to note how successful the ROSCO concept has been: the freight operators, which are a pure commercial operation, have all used leased equipment (locos and wagons), including state-owned DRS. Likewise the concept has been successfully exported into Europe which has enabled many private operators to acquire new trains, and has also been used by plenty of nationalised operators. NS, DB, DSB, SNCB, SNCF, SBB, ČD, ZSSK and no doubt others all lease stock. If it was such a bad idea, why has it been so successful?

 

[rebmcr]

a 319 is 4x80m

Must need some fairly straight track, but I bet you can get a huge amount of passengers on board.

 

[Bletchleyite]

The only alternative is probably the TfL model where the public sector buys the stock (or secures a long-term finance lease) and effectively lends it to the franchisee for the duration. This appears to be what happens in Germany as well. Clearly this removes a lot of the commercial freedom for TOC bidders to offer novel solutions, but if the public sector gets it right then it probably works out cheaper for them.

Before recent cuts, it wasn't unusual for local authorities to do this when tendering the operation of bus routes, to ensure smaller firms got a look-in.

 

[Randomer]

To me the one good thing about the amount of different new stock being ordered by the different TOC is the amount of competition being introduced for the three main ROSCOs which profited hugely from sweating the assets of old BR stock they were sold for very little money initially.

It is interesting though that the current DfT negotiated contracts for rolling stock with new ROSCO e.g. Agility for the IEP class 800s is reputed to be far more expensive than the class 802 orders done through traditional ROSCO with GWR and TPE.

To me the ROSCO setup and Railtrack were the two biggest faults of privatisation which even the current political parties pushing for nationalisation don't seem to want to talk about. Especially the issues at Network Rail controlling cost for the ongoing projects it now has.

It is interesting that before privatisation we had started to move towards a model where local PTE owned rolling stock that they contracted with BR to operate e.g. WYPTE and Strathclyde. Were the local public bodies forced to sell the rolling stock as part of privatisation or did it become uneconomic to run and maintain them without the supporting BR infrastructure?

Edit to add bit that didn't copy and paste.

In some parts of Europe ROSCO lease to the local transport authority who then contract to someone else to run the service. Bringing control of commuter transport down to a local level like the TFL control of London Overground. Surely this could be the way forward for other PTE like WYPTE or Greater Manchester?

 

[Meerkat]

In theory the ROSCOs wouldn’t have profited massively as they would have paid more at privatisation.
Of course Labour promising to renationalise probably reduced the price received quite significantly.

 

[superkev]

1. The dft (dept of twirps) have allways seemed to have it in for the leasing company's more recently with the tender adudication points scoring system biased towards new stock.
Sending good quality emu's for scrap seems the economics of the asylum.
Perhaps they can sell them aboard.

2. Not sure about the Roscos. Modern a.c. drive aluminium emu's must be much cheaper to run for the users so presumably command higher leasing charges.
K
P.s. parallel with the airline industry the first 10yr old A380 is reported heading for scrap as no one wants to lease large planes anymore.

 

[43096]

To me the one good thing about the amount of different new stock being ordered by the different TOC is the amount of competition being introduced for the three main ROSCOs which profited hugely from sweating the assets of old BR stock they were sold for very little money initially.

You are making the mistake of confusing the value of a business sold as such and the value of the assets that the business owns. The actual trains themselves have a book value on the company's balance sheet. The value of the business is what anyone is prepared to pay for it - which does not affect the value of the individual assets. In the case of the ROSCOs, the Government got a lower sell price when they were sold off, at least in part because of the risk of a change of Government and John Prescott's renationalisation rhetoric which turned out to be bluster. When the ROSCOs were later re-sold at much higher values, the book value of the trains themselves would not have changed as a result.

 

[Randomer]

You are making the mistake of confusing the value of a business sold as such and the value of the assets that the business owns. The actual trains themselves have a book value on the company's balance sheet. The value of the business is what anyone is prepared to pay for it - which does not affect the value of the individual assets. In the case of the ROSCOs, the Government got a lower sell price when they were sold off, at least in part because of the risk of a change of Government and John Prescott's renationalisation rhetoric which turned out to be bluster. When the ROSCOs were later re-sold at much higher values, the book value of the trains themselves would not have changed as a result.

Reading it back my post could have been more clear.

Perhaps what I was trying to say is that the ROSCO who purchased the then current BR stock have made back there initial investment many times over in terms of rental income from TOC compared to the low initial cost of purchase.

The asset price of the trains has only depreciated during the time of ROSCO ownership whereas I suspect the cost of rental (not the precise term I appreciate) has only gone up for any TOC.

The DfT are not blameless in this with how prescriptive they have became at one point in defining which TOC could use the available rolling stock (especially with the previous no growth franchises) but to my mind the ROSCO system has lead to the current shortage of DMU by not encouraging investment in low margin rolling stock nationally in the late 1990's and early 2000's. I appreciate that this is a very personal opinion based on which services I use most often which are still running 1980's and early 1990's BR era rolling stock and will continue to do so for the foreseeable future.

 

[43096]

Reading it back my post could have been more clear.

Perhaps what I was trying to say is that the ROSCO who purchased the then current BR stock have made back there initial investment many times over in terms of rental income from TOC compared to the low initial cost of purchase.

The asset price of the trains has only depreciated during the time of ROSCO ownership whereas I suspect the cost of rental (not the precise term I appreciate) has only gone up for any TOC.

It really is not that simple. The lease value depends on what is included - if it includes heavy maintenance or not, what improvements have been made to the fleet (refurbishments, PRM mods etc), etc etc.

You say "suspect the cost of rental has only gone up". Without any evidence, that is just rumour and suspicion.

 

[Bertie the bus]

So this is a question the ROSCO's must be facing. Interested in forum member's views.

ROSCO's have lots of EMUs coming off lease. If they have older EMUs in another franchise, how does their decision making process run. Are they better to go to those franchises and say we will offer you newer units for roughly the same price as the older units provided you take a longer lease.

The pure asset managers answer must be yes. I have two fleets here, both written down or substantially written down. My job is to secure long term income and so in a market with very few takers, getting the longest contract possible must be my priority. The alternative is maximising income through spot hire but that market doesn't exist in UK rail. With more assets than contracts, I should prioritise having my longer life assets on hire.

With franchises they can't do this because the franchisee can't sign a lease longer than the franchise term.

So, are ROSCO's thinking lile this and if they are, will they put pressure on the DfT to support some longer leases.

So effectively you are saying the ROSCOs want to make as much profit as possible with as little risk as possible and the tax payer should ensure they do by the government guaranteeing their income.

Can’t see any problems with that.

The government did guarantee minimum lease terms on new stock which would have not been ordered otherwise, e.g Pendolinos and Voyagers. That is sensible enough but guaranteeing usage of trains the ROSCOs have found themselves without leases for due to their own errors wouldn't go down too well.

 

[43096]

The government did guarantee minimum lease terms on new stock which would have not been ordered otherwise, e.g Pendolinos and Voyagers. That is sensible enough but guaranteeing usage of trains the ROSCOs have found themselves without leases for due to their own errors wouldn't go down too well.

But then there are cases like the 707s, where new stock has been bought and the ROSCO has been basically done over.

Even worse, in some ways, is the way the 455 re-tractioning has been handled. Porterbrook did this as it helped DfT out as it avoided the cost of a new depot when the 707s were ordered (by decreasing maintenance requirements on the 455s to free capacity). That the same DfT that had benefited from this then effectively wrote the 455s out of the SWR franchise before re-tractioning was barely complete, is ethically dubious at best.

 

[whhistle]

This is the reason why privatisation has been a financial failure for the nation because we the paying public have been lining the fund managers pockets for years

Do you realise how much of each £1 goes to stock lease?

BBC News article on where money for ticket prices goes

 

[Metal_gee_man]

So 13% of Revenue not profit goes to pay for rolling stock! So SE railway turned over £850m a year so £110m paid for the trains and they've been paying that for the last 13 years of their franchise so £1.436b direct to hedge funds and fat cats

 

[tbtc]

Without ROSCOs there would have been far less new stock. They give governments the ability to do what they really love - give their electorate lots of shiny new stuff without the government having to find the cash for it, and committing future governments to help pay for vote winning stuff now.
Would a government have been so willing to sign up to early PRM and condemn the Pacers if the Treasury had to front the cash to replace them?

True - it's a bit like PFI - a way of keeping "investment" off the Government books, so the true cost isn't shown - whether it's efficient or not is another story but there's certainly the argument that no Government is going to be paying for new trains with cash - they'll always fund them with some convoluted means of borrowing (however much we'd like to believe that they'll just go onto National Debt at the lowest marginal rate that the Government borrows at).

I don't think there's any ban on TOCs purchasing stock - after all First Group (admittedly the parent group not a specific TOC) bought some HSTs. Stagecoach also owned Porterbrook for a while

Remember the days when the Received Wisdom on hte Forum was that First had scuppered any prospects of getting new franchises due to this behaviour (before going on to win SWR and TPE and getting lots of extensions to FGW/GWR)?

However it's not really viable for TOCs to do this most of the time as they would be landed with the trains in the event of losing a franchise. The whole leasing system was devised to make franchises of less than 10 years compatible with train lifetimes of more than 30 years, and to allow bidders for a replacement franchise to offer new or different stock if they felt that would win more passengers and revenue. Owning the trains would also increase the amount of cash a TOC would have to raise at the start of its franchise before it has any revenue coming in.

The only alternative is probably the TfL model where the public sector buys the stock (or secures a long-term finance lease) and effectively lends it to the franchisee for the duration. This appears to be what happens in Germany as well. Clearly this removes a lot of the commercial freedom for TOC bidders to offer novel solutions, but if the public sector gets it right then it probably works out cheaper for them.

This is the trouble that we have - we can't expect (say) Stagecoach to own their own fleet of trains, we can't expect them to buy the whole fleet off the previous TOC, how do we square the circle (of ten year franchises and thirty year stock lifespans)?

In some areas (London, Scotland, Walesnborders) it might be feasible for a branch of Government to own the stock (although this would restrict flexibility to bring in additional trains and create even more prospects of "fringe" areas of the franchise being ignored) - that also assumes that these branches of Government would be able to afford to buy (and maintain) trains and wouldn't end up flogging a few DMUs next time the budget is cut in these Austere times.

I don't like ROSCOs but I don't know what works better. And whilst the London system seems to work okay, most franchises don't have large well funded pro-public transport Assemblies/ Mayors backing them with money - who is going to fund the East Midlands franchise?

Must need some fairly straight track, but I bet you can get a huge amount of passengers on board.

Oops!

It is interesting that before privatisation we had started to move towards a model where local PTE owned rolling stock that they contracted with BR to operate e.g. WYPTE and Strathclyde. Were the local public bodies forced to sell the rolling stock as part of privatisation or did it become uneconomic to run and maintain them without the supporting BR infrastructure?

Edit to add bit that didn't copy and paste.

In some parts of Europe ROSCO lease to the local transport authority who then contract to someone else to run the service. Bringing control of commuter transport down to a local level like the TFL control of London Overground. Surely this could be the way forward for other PTE like WYPTE or Greater Manchester?

That would work reasonably well in somewhere like London (and marginally less so in Strathclyde) but most services cross borders - which is one reason why Mayors and PTEs like Light Rail (that can be designed to stay inside their territory).

For example, although WYPTE have been good at railways, a lot of services out of Leeds continue to North Yorkshire (Selby, York, Harrogate, Skipton), South Yorkshire (Doncaster, Sheffield), Lancashire (Blackpool, Manchester) and beyond (and I'm using the traditional counties, rather than get into a pedantic argument about modern day Unitary Authorities and what not!).

Having PTE-controlled trains would mean a move to situations like Kirby/ Ormskirk, where services are organised to suit PTE boundaries (rather than to reflect actual travel patterns).

Perhaps what I was trying to say is that the ROSCO who purchased the then current BR stock have made back there initial investment many times over in terms of rental income from TOC compared to the low initial cost of purchase

..and if you buy a house (or other building) then you might make your initial investment back after twenty years (comparing monthly rental costs to outright purchase) - does that mean that Landlords shouldn't be trading?

Or does it mean that some people will only have a short term need for a long term asset (and therefore be unable to pay the outright price), so renting it is a viable option?

So 13% of Revenue not profit goes to pay for rolling stock! So SE railway turned over £850m a year so £110m paid for the trains and they've been paying that for the last 13 years of their franchise so £1.436b direct to hedge funds and fat cats

To put it into context, what would the cost of buying those trains outright have been?

How does paying ROSCOs 13% of your annual income compare to the cost of buying those trains yourself?

I mean, it's easy to say that 13% looks like a big number, and over thirteen years of a big franchise adds up to a large sum of money, but are you suggesting that the franchise should only be open to companies willing to buy the entire fleet outright?

Say that's four hundred trains... maybe four coaches long on average (395s are longer, 466s are shorter, but let's say four coaches on average to keep the maths simple)?

That's 1600 carriages at over a million pounds a carriage (for brand new trains)?

How are you going to pay for that (if not via a ROSCO)?

I'm of the left, I'd love to get outraged about "fat cats" and "hedge funds" (maybe chuck in some rhetoric in about "Bankers" too), but what's the alternative? Who is going to pay for those shiny new 395s otherwise?

(about half of the fleet is post-privatisation so the argument about the "peppercorn" fees paid by the ROSCOs only goes so far - hundreds of carriages have been ordered for South Eastern since then)