• Our booking engine at tickets.railforums.co.uk (powered by TrainSplit) helps support the running of the forum with every ticket purchase! Find out more and ask any questions/give us feedback in this thread!

Network Rail Budget Cut

Status
Not open for further replies.

Robertj21a

On Moderation
Joined
22 Sep 2013
Messages
7,520
Firstly - Every Little Helps as a certain supermarket keeps telling us.

Secondly We are all in this together - aren't we?

You could also say that the bigger budgets are the best to look for 'Every Little Helps' - there's usually quite a bit of contingency added in for 'just in case'. It never does any harm to keep an even closer eye on costs.
 
Sponsor Post - registered members do not see these adverts; click here to register, or click here to log in
R

RailUK Forums

moggie

Member
Joined
2 Jan 2010
Messages
426
Location
West Midlands
Firstly - WCML was a Railtrack project which was taken over by Network Rail on its demise.

Secondly - how convenient to government that two electrification projects are running behind schedule. If they had used realistic timescales from the start with a proper contingency for those areas of the works not fully surveyed they might not be in the mess they are now. But of course government will just blame NR for all the problems while quietly undermining each and every project with unplanned cost reductions, re-scoping, redesign and re-scheduling all of which takes time and more money redoing things already done once before. The desired result of the cost spread out over a longer period, less work done of plainly put off for another administration to deal with but hey presto there your cost 'saving'. Thatcher and Major did it the whole time they were in office with only essential patch and mend carried out to the vast majority of the network. So it starts again.

You don't save money doing this, you just defer the spending for another time or reduce capability. The historic evidence is plain and simple to see if you choose to look research it.

Even if it is George being a smart alec if NR are asked to plan for a reduction in budget do you think they'll carry on spending on new project startup only for it to be canned next year? Of course not. The hiatus will start now with only committed spending on current contracts continuing. Everything else (including the private sector infrastructure supply companies who deliver most of the new work) just stop. So we then have another round of staff shedding thus perpetuating the skill shortages which dog the industry each time the treasury wonks get permission to press the 'feel good factor' spending button again (about two years before the general election) which now show up in the problems being experienced on GWML et al. When a revised budget is announced works already in abeyance stay that way. Committed works either continue, but maybe delayed or is stopped with whatever damages paid to the suppliers do that if the budget cuts that deep.

Nothing to do with HS2 - of course (which government dept is paying for both)?
 
Last edited:

Tubby Isaacs

Member
Joined
9 Sep 2011
Messages
13
What difference does which department it is make? The key is meeting overall expenditure/deficit targets. You might as well blame it on Gove wasting a fortune at the DfE.
--- old post above --- --- new post below ---
Reduce MPs and ministers pay by 25% to 40% as well as their number.

Reduce the number of MPs and you basically make it impossible for the government to be defeated. Not a good thing.
 

BRblue

Member
Joined
13 May 2015
Messages
271
Location
Sunny Sussex...
Firstly - WCML was a Railtrack project which was taken over by Network Rail on its demise.

Secondly - how convenient to government that two electrification projects are running behind schedule. If they had used realistic timescales from the start with a proper contingency for those areas of the works not fully surveyed they might not be in the mess they are now. But of course government will just blame NR for all the problems while quietly undermining each and every project with unplanned cost reductions, re-scoping, redesign and re-scheduling all of which takes time and more money redoing things already done once before. The desired result of the cost spread out over a longer period, less work done of plainly put off for another administration to deal with but hey presto there your cost 'saving'. Thatcher and Major did it the whole time they were in office with only essential patch and mend carried out to the vast majority of the network. So it starts again.

You don't save money doing this, you just defer the spending for another time or reduce capability. The historic evidence is plain and simple to see if you choose to look research it.

Even if it is George being a smart alec if NR are asked to plan for a reduction in budget do you think they'll carry on spending on new project startup only for it to be canned next year? Of course not. The hiatus will start now with only committed spending on current contracts continuing. Everything else (including the private sector infrastructure supply companies who deliver most of the new work) just stop. So we then have another round of staff shedding thus perpetuating the skill shortages which dog the industry each time the treasury wonks get permission to press the 'feel good factor' spending button again (about two years before the general election) which now show up in the problems being experienced on GWML et al. When a revised budget is announced works already in abeyance stay that way. Committed works either continue, but maybe delayed or is stopped with whatever damages paid to the suppliers do that if the budget cuts that deep.

Nothing to do with HS2 - of course (which government dept is paying for both)?

I have to agree with all of that, unfortunately many, many years of under or indeed no investment have culminated in a archaic, unreliable and dis-jointed network. Ever since Beeching wielded his axe numerous governments have treated our railways as a boil on Westminsters backside!
To a point Beeching was right... we did need to streamline the network but the way it was done left a lot to be desired. Just closing lines and stations in addition to reducing the number of wagons and services, was never going to substantially reduce the running costs. A more tailored approach trimming back where needed and running a more cost effective railway (even if at a loss) would of served the country better and I believe would of left us in a much better position for the future.
The trouble was... successive governments from the 60's onwards failed to acknowledge that British Rail still had a big role to play, as far as they were concerned transport by road was the future and nobody had any faith in the railways.
The lack of investment left us with a still largely Victorian network which is now creaking at the seams. When Major started the privatisation process in the early nineties British Rail were out on their feet... ready to be systematically sold off to the highest bidder.
In truth had the oil price stayed low and the motorway network had the investment to expand to carry the extra vehicles that were then using them (ring any bells?) instead of allowing them to become clogged up and bursting at the seams, our railways would of remained under utilised and loss making.
As it is passenger numbers have increased steadily back up to pre war levels... the trouble we now have is that passengers want a ultra reliable 21st century railway run on a ageing Victorian network and pay as little as possible for the privilage!
You reap what you sow and in this case I truly believe that if this Government do the same as so many others have before them, we will be left with a shambolic rail system not fit for purpose... I do acknowledge that some parts of the network are virtually there already. :(
 

Robertj21a

On Moderation
Joined
22 Sep 2013
Messages
7,520
Osbourne and Co have tied their hands behind their backs as they have ruled out certain tax rises

Quite right too. I've no wish to have my direct taxation increased, far better to use indirect taxation, where I may have some discretion.
 

daccer

Member
Joined
11 Feb 2009
Messages
371
Interesting discussion. The headline figure is curious as it doesn't specify if this includes the savings that have already bee agreed by NR in CP5 or if this is off the agreed budget and on top of these savings.

As the majority of the budget is for maintenance and upkeep of the network
and something like 20%-25% is for enhancements it seems v difficult for these kinds of cuts to be made without the former being compromised. A bit of a political own goal. To cut the whole enhancement programme would be v difficult as much of it has already started.

I think that deferments and postponements are the order of the day. I think its safe to say that the days of massive station refurbishments and headline grabbing projects are over for the time being.
 

yorksrob

Veteran Member
Joined
6 Aug 2009
Messages
39,011
Location
Yorks
Quite right too. I've no wish to have my direct taxation increased, far better to use indirect taxation, where I may have some discretion.

The problem is that so called indirect taxation is often anything but discretionary, attaching to items that are far from luxury. VAT is an administrative fiasco from start to finish and frankly it would be better if Revenue and Customs spent more of their effort closing corporate loopholes rather than trying to decide whether Hobnobs or Jaffa Cakes are 'luxury' items. It's usually highly regressive as well.
 

quantinghome

Established Member
Joined
1 Jun 2013
Messages
2,265
And there's nothing more you can do at Leeds within the existing footprint - but lengthening platforms around West Yorks to allow longer trains is certainly possible if not always easy.

You could add more terminating platforms where the car park currently is. This would cause little disruption to the rest of the station, although obviously you'd have to find somewhere else for a car park.

The main issue with Leeds is the massive increase in usage in the past 15 years. The 'Leeds 1st' upgrade was started in 1999. When it was designed, passenger numbers were 10 million p.a. They are now around 30 million p.a. I suspect this growth rate is well above the highest predicted levels back in the 1990s. Blaming Network Rail for failing to foresee this is rather harsh, given no one else at the time did either.
 

JohnB57

Member
Joined
26 Jun 2008
Messages
722
Location
Holmfirth, West Yorkshire
The problem is that so called indirect taxation is often anything but discretionary, attaching to items that are far from luxury. VAT is an administrative fiasco from start to finish and frankly it would be better if Revenue and Customs spent more of their effort closing corporate loopholes rather than trying to decide whether Hobnobs or Jaffa Cakes are 'luxury' items. It's usually highly regressive as well.
So what would your solution to the "administrative fiasco" be?
 

Tio Terry

Member
Joined
2 May 2014
Messages
1,178
Location
Spain
It's not a 25% cut in CP5 you need to worry about, from what I hear from colleagues CP6 is being decimated.
 

NSEFAN

Established Member
Joined
17 Jun 2007
Messages
3,504
Location
Southampton
Perhaps this shows that we need to move towards a rolling programme of improvements, rather than a turbo-capitalist boom-and-bust approach? I can see several advantages, such as realistic timelines for delivering results and maintaining a skilled workforce to get the job done. Sadly I don't think this will happen, partly to keep on winning votes by promising to deliver the unfeasible, and partly because what is feasible is quite limited anyway when you have a DfT that couldn't organise a party in a brewery!
 
Last edited:

Robertj21a

On Moderation
Joined
22 Sep 2013
Messages
7,520
The problem is that so called indirect taxation is often anything but discretionary, attaching to items that are far from luxury. VAT is an administrative fiasco from start to finish and frankly it would be better if Revenue and Customs spent more of their effort closing corporate loopholes rather than trying to decide whether Hobnobs or Jaffa Cakes are 'luxury' items. It's usually highly regressive as well.

I think you'll find that indirect taxation is far more discretionary than direct taxation. I see no problem with, say, cars or clothes or TVs being subject to a tax that I can choose whether I want to pay, or not.

There's no reason why a simple change to a tax rate should take away resources from those staff already 'closing corporate loopholes'.
 

yorksrob

Veteran Member
Joined
6 Aug 2009
Messages
39,011
Location
Yorks
I think you'll find that indirect taxation is far more discretionary than direct taxation. I see no problem with, say, cars or clothes or TVs being subject to a tax that I can choose whether I want to pay, or not.

There's no reason why a simple change to a tax rate should take away resources from those staff already 'closing corporate loopholes'.

Last time I checked, clothes were pretty much a necessity - particularly in this climate !

I don't have a problem theoretically with a tax on luxury items. The convoluted meetings I've had with the tax department of my employer, trying to work out who's ordering what from who, whether its a grant or a service, is the customer procuring the service or are we etc. It seems needlessly complicated.

And with regard to clothes, we all need them, but a millionaire pays the same rate of VAT as a pauper, so it is regressive.
 

gareth950

Member
Joined
3 Nov 2013
Messages
1,009
Can someone please briefly explain to me why Network Rail was effectively nationalised last year? Before this wasn't it an arms-length not for profit body, with it's budget NOT on the government books? Was it a Coalition government decision to bring NR's budget directly onto the government's books? And why on earth was that decision made?
 

najaB

Veteran Member
Joined
28 Aug 2011
Messages
30,826
Location
Scotland
Last time I checked, clothes were pretty much a necessity - particularly in this climate.
Clothes are a necessity, but designer clothes are not. So those who spend silly money in order to get a label pay more tax in absolute terms than those who buy more sensible attire.
 

LNW-GW Joint

Veteran Member
Joined
22 Feb 2011
Messages
19,685
Location
Mold, Clwyd
Can someone please briefly explain to me why Network Rail was effectively nationalised last year? Before this wasn't it an arms-length not for profit body, with it's budget NOT on the government books? Was it a Coalition government decision to bring NR's budget directly onto the government's books? And why on earth was that decision made?

The Office for National Statistics decided after a lengthy investigation that Network Rail could not be considered a private company.
Its status was indeed an arms-length not for profit body, but its "shareholders" (members) were not deemed to have sufficient influence on the directors as for a private company, and its funding and direction were essentially determined by the state.
Another factor was that it believed it would not pass new EU accounting rules as a private body.
http://www.modern-railways.com/view_article.asp?id=7290

So the change to public sector was made by the Coalition last September, with the DfT's Permanent Secretary (Philip Rutnam) becoming the "accounting officer" for NR to the Treasury.
NR's £34 billion debt was added to the government's overall "budget deficit" (used to be the PSBR).
And now because of Network Rail's failings this year the Treasury's knives are going in, with the DfT exercising more direct control at board level.
 

JohnB57

Member
Joined
26 Jun 2008
Messages
722
Location
Holmfirth, West Yorkshire
Clothes are a necessity, but designer clothes are not. So those who spend silly money in order to get a label pay more tax in absolute terms than those who buy more sensible attire.
Agree. The "luxury tax" argument has no relevance to indirect taxation and anyone who thinks it has is living in the 70s.

You could use the same argument for rail travel. Travel to work or on business is essential. Leisure travel is not and, using the same argument, should be subject to VAT. Equally with postage costs - charge VAT to deliver a birthday card but not on business mail? Doesn't work does it?

The fact is that we have to collect tax both from wages and from the sale of goods and services and the VAT system is a mature way of doing the latter and it's well understood and effective, whatever some may say.
 

yorksrob

Veteran Member
Joined
6 Aug 2009
Messages
39,011
Location
Yorks
Clothes are a necessity, but designer clothes are not. So those who spend silly money in order to get a label pay more tax in absolute terms than those who buy more sensible attire.

That would be a fair argument if only designer clothes for silly money attracted VAT, but all clothes attract VAT at the same rate (unless you're small enough to fit into childrens clothes).

VAT is effectively a flat tax (and we wouldn't tolerate one of those on wages), which is why it's regressive.
 

Robertj21a

On Moderation
Joined
22 Sep 2013
Messages
7,520
Last time I checked, clothes were pretty much a necessity - particularly in this climate !

I don't have a problem theoretically with a tax on luxury items. The convoluted meetings I've had with the tax department of my employer, trying to work out who's ordering what from who, whether its a grant or a service, is the customer procuring the service or are we etc. It seems needlessly complicated.

And with regard to clothes, we all need them, but a millionaire pays the same rate of VAT as a pauper, so it is regressive.

We might need *some* clothes, we don't need *more* clothes. I can still choose whether or not to buy (and at what quality/price) - that's fundamentally different to direct taxation.
 

najaB

Veteran Member
Joined
28 Aug 2011
Messages
30,826
Location
Scotland
That would be a fair argument if only designer clothes for silly money attracted VAT, but all clothes attract VAT at the same rate (unless you're small enough to fit into childrens clothes).
The problem with luxury taxes is how to define luxury (hence the Jaffa cake reference up-thread). A flat tax on purchases is the simplest system, those who earn more tend to purchase more (or more expensive items) and so pay more tax - in absolute terms.
 

deltic

Established Member
Joined
8 Feb 2010
Messages
3,224
That would be a fair argument if only designer clothes for silly money attracted VAT, but all clothes attract VAT at the same rate (unless you're small enough to fit into childrens clothes).

VAT is effectively a flat tax (and we wouldn't tolerate one of those on wages), which is why it's regressive.

According to Office of National Statistics the poorest 10% of households pay 14% of their income in VAT compared to just 7% for the richest 10%
 

yorksrob

Veteran Member
Joined
6 Aug 2009
Messages
39,011
Location
Yorks
According to Office of National Statistics the poorest 10% of households pay 14% of their income in VAT compared to just 7% for the richest 10%

Indeed. Infact, I'm at a loss to understand the benefit of VAT over direct taxation since quite apart from being regressive, it is also a direct tax on economic activity within the national economy and contributes to inflation, which are surely both bad things.
--- old post above --- --- new post below ---
We might need *some* clothes, we don't need *more* clothes. I can still choose whether or not to buy (and at what quality/price) - that's fundamentally different to direct taxation.

That rather depends on where *some* clothes ends and *more* clothes begins. We all have to buy *some* clothes.
--- old post above --- --- new post below ---
The problem with luxury taxes is how to define luxury (hence the Jaffa cake reference up-thread). A flat tax on purchases is the simplest system, those who earn more tend to purchase more (or more expensive items) and so pay more tax - in absolute terms.

Indeed, which is why we're probably better off steering clear of clothes and food and sticking to yachts, jewellry and faberge eggs and the like.
 

WatcherZero

Established Member
Joined
25 Feb 2010
Messages
10,272
The advantage of VAT over direct taxation is visitors to the country pay it and it offsets the cost of services they use which they would not otherwise pay any taxes despite using.

It also taxes activity only for the end user not for each stage of the production and retail chain avoiding double taxation.
 
Last edited:

yorksrob

Veteran Member
Joined
6 Aug 2009
Messages
39,011
Location
Yorks
The advantage of VAT over direct taxation is visitors to the country pay it and it offsets the cost of services they use which they would not otherwise pay any taxes despite using.

It also taxes activity only for the end user not for each stage of the production and retail chain avoiding double taxation.

The first point is a fair one, although for the second one, since businesses ought to be paying corporation tax anyway, one might say that adding VAT on top pretty much guarantees double taxation !
 

Jonny

Established Member
Joined
10 Feb 2011
Messages
2,562
The first point is a fair one, although for the second one, since businesses ought to be paying corporation tax anyway, one might say that adding VAT on top pretty much guarantees double taxation !

However, a VAT-registered company is entitled to claim back "input VAT" (which is the VAT payable on its legitimate business expenses).
 

yorksrob

Veteran Member
Joined
6 Aug 2009
Messages
39,011
Location
Yorks
However, a VAT-registered company is entitled to claim back "input VAT" (which is the VAT payable on its legitimate business expenses).

At least all of this bureaucracy must be keeping someone in a job !
 
Status
Not open for further replies.

Top