Network Rail in line to take control of trains in major overhaul

Discussion in 'UK Railway Discussion' started by Class 170101, 18 Jun 2019.

  1. matt_world2004

    matt_world2004 Established Member

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    Incidents could be anything from asking passengers to leave when the last train has departed. To evacuating the ststion during a fire alert to making sure intoxicated customers do not present a risk to themselves or others to closing sections of station due to overcrowding
     
  2. HH

    HH Established Member

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    They already pay for Access & Renewals with the Long Term Charge. You really ought to understand how things work before making such bald statements!
     
  3. matt_world2004

    matt_world2004 Established Member

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    £3 million a year for Paddington on an amount of space that on the commercial market would go for 10-20 x that. Particularly in zone 1 Heathrow Airport valued its four platforms worth of space for tfl rail services at over 10x that
     
  4. HH

    HH Established Member

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    They do the fire alerts, but most (almost all) of those arise on retail premises! Intoxicated passengers are generally handled by BTP if they're too much for the TOC to handle. They're just there most of the time, and there's a lot more of them because of the retail premises.
     
  5. HH

    HH Established Member

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    That's the regulated amount, commercial markets is a red herring.

    I could argue that NR should pay the TOCs for ferrying shoppers to their shopping centres; it would have as much merit.
     
  6. matt_world2004

    matt_world2004 Established Member

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    Not at paddington they are almost always handled by nr staff
     
  7. matt_world2004

    matt_world2004 Established Member

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    No it isnt it shows that a service NR is providing is not at the commercial rate £3million probably barely pays for the electricity for a site like paddington.
     
  8. HH

    HH Established Member

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    Who gets the rents from the bars on the station?
     
  9. matt_world2004

    matt_world2004 Established Member

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    Since most people aren't getting drunk in the bars in the station that's a moot point, most people have drunk outside the station and have entered the station to travel home. And the majority of station evacuations will be caused by an incident on the rails or overcrowding; All major network rail stations employ security guards regardless of weather there are bars on the premises or not.
     
    Last edited: 2 Jul 2019
  10. HH

    HH Established Member

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    Yes, because they are not there for drunken passengers, which the TOCs deal with on every other station without the need for vast numbers of security staff.

    You know nothing, matt_world. Electricity is part of the QX, not the LTC and is paid for as part of that charge.

    And again I say that commercial is a herring of the reddest colour. Station LTCs are part of the total amount of funding that NR receives, as decided by the Regulator, and in response to what NR request. NR are there to maintain the railway, not to be a property mogul - that is the mistake that Railtrack made and no-one sensible wants a repeat of that. Certainly not the current Chief Executive of Network Rail (with whom I used to work at Paddington Station).
     
  11. yorksrob

    yorksrob Veteran Member

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    I don't think we want to go down the road of train operators charges being linked to commercial property values of City centre platforms. That really would be a money-go-round !
     
  12. matt_world2004

    matt_world2004 Established Member

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    The point being made is network rail are charging less than the going commercial rate to TOCs to use those facilities and kess than the cost of providing those facilities. With NR being underwritten by the taxpayer thats a indirect subsidy to the TOCs
     
  13. Bletchleyite

    Bletchleyite Veteran Member

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    So? Why does that matter?
     
  14. RLBH

    RLBH Member

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    The cost of providing those facilities is
    • The capital cost of building the station - by now, long since paid off
    • The direct operating costs of paying the staff and maintaining the station
    • Any taxation due on the station site
    Whatever the notional commercial rate might be of using the station as something other than a station is irrelevant to what it actually costs to run. Yes, NR might well make more money by closing the London termini and building office blocks. The government would also make more money by selling the Palace of Westminster for flats and setting up shop in Derby, but that's not going to happen either.

    The commercial rate for land use might well be relevant if looking at a decision to build a new terminus, or if one was becoming surplus to requirements. But for a going concern, it's one of those things that keep economists in jobs (like depreciation on cars that are, in reality, leased) rather than an actual cost that has to be paid with real money.
     
  15. matt_world2004

    matt_world2004 Established Member

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    Because it undermines the argument that network rails taxpayer subsidy is caused by mismanagment. It is in effect an indirect subsidy to the TOCs and open access operators who pay less for the service than the cost of providing it to them.

    Personally, i would rather TOCs paid a cost reflective of providing the service and recieved a direct subsidy fron the government. This would be much more transparent and it means the subsidy is directed away from open access operators who have no public service committments
     
  16. Bletchleyite

    Bletchleyite Veteran Member

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    You must understand, though, that a cost reflective of providing the service is not the same thing as a commercial rent on something like a ticket office, as if you fill a station with retail but no railway related functions it's then a shopping centre, not a station.

    You could construct an artificial model based on the premise that NR leased the stations at a commercial rate, but the fact is that it doesn't, it owns them all, so that cost is of no relevance.
     
  17. matt_world2004

    matt_world2004 Established Member

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    L
    No of course not but 3 million a year does not cover the cost of operating a station like paddington
     
  18. coppercapped

    coppercapped Established Member

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    To underline RLBH's post, you really have to brush up on your microeconomic theory - what you are banging on about seems to be about a misunderstanding of 'opportunity cost' - that is the return forgone by making an alternative decision. 'Opportunity costs' are some of the fundamental costs in economic theory.

    Opportunity costs are not recorded in profit and loss accounts or balance sheets as they do not involve 'real' money (as in cash) but are used in decision making, to calculate the benefits (or otherwise) of decisions which have to be made. The concept of 'opportunity cost' is based on the fact that every resource (land, money, time, etc.) can be put to an alternative use, this means that every action, choice, or decision has an associated opportunity cost. That is a benefit, profit, or value of something has to be given up in order to acquire or achieve something else.

    The decision to build Paddington Station has already been made. There are no plans to demolish it or build over it to achieve a greater return on the use of the land than is currently the case in its use of a railway station. Thus there are NO opportunity costs - the ONLY costs of interest are the on-going costs of maintaining the fabric of the station, tracks and signalling and the day-to-day operational costs - these last being mostly staffing costs.

    Your arguments are specious.
     
  19. HH

    HH Established Member

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    It's simply not true that they are charging less than the cost of providing those facilities.
     
  20. HH

    HH Established Member

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    But they don't charge just £3m. They charge LTC which is for long term renewals only and they charge QX which is to cover the everyday running costs; which amount is not in the public domain.

    I would note that NR do not only get the LTC and QX, they also get vast amounts of rents from all the retail premises.
     
    Last edited: 2 Jul 2019
  21. The Ham

    The Ham Established Member

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    The net cost to the government of the rail network (excluding HS2 & rail enhancements) is about £178 million a year.

    Compare this to the circa £3bn spent on maintenance each year and it's off by a factor of about 6%, so probably not that far adrift.

    Enhancements should be paid back over a longer than a single year period. As an example you wouldn't expect the existing network to pay for the building of HS2 before it opened (you could use any project you liked, but course that one as an extreme example to prove a point).
     
  22. coppercapped

    coppercapped Established Member

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    You have set up two straw men in this response:
    1. You have clearly misunderstood the thinking behind the creation of the ROSCOs
    2. You claim that I wrote that the Railways Act got franchising ‘right’.
    This is a long post - I’m sorry, but such an issue cannot be dealt with in the written equivalent of a ’sound bite’.

    Rather than try to write my own response to the first point from scratch, I thought it would be more useful to return to original sources. The following is adapted from Chapter Five in the definitive book on rail privatisation ‘All Change British Railway Privatisation’ edited by Freeman and Shaw and published by McGraw-Hill in 2000. The chapter was written by John Prideaux who was Director of InterCity between 1986 and 1991 - you can be assured that it is accurate.

    The government’s decision to privatise British Rail in a vertically integrated form raised three major questions about the trains:
    1. who should own them?
    2. who would use them?
    3. who would look after them?
    The question of who would build them was already decided as they had been bought in a free market for sometime but the answers to the other questions would determine who would influence the design and specification of new trains in the future.

    Different solutions were adopted for freight and passenger trains. This reflected the different approaches taken to operating those two parts of the industry. The three trainload freight companies (which eventually became EWS, Railfreight Distribution and Freightliner) were sold outright, but the position of the passenger railway was very different: passenger train operating companies were to be franchised for a fixed term of between five and 15 years. The outcome was that rolling stock in the freight business - other than some which was already leased - passed directly to the new freight companies, whereas in the passenger business it passed to three specially created rolling stock companies. These companies would own the rolling stock for the whole of its 30 to 40 year life, the equivalent of up to five franchise terms.

    The decision to adopt a leasing structure for passenger rolling stock reflected trends in the transport industry in general and answered a long-standing criticism that public sector spending restrictions had inhibited investment in rolling stock. The need for leasing was actually identified by ministers and officials prior to the 1992 general election and was confirmed as policy shortly afterwards. (In this context I would add that these restrictions were also a significant driver for the privatisation of other industries such as British Airways and the water authorities - the demand for capital for necessary investments to improve water and beach quality and reduce the number of leaking pipes and the need to buy Boeing 747s as well as all the other capital expenditures which were mounting up in other nationalised undertakings was more that the public purse could accommodate without a significant increase in taxation).

    There were three main reasons underpinning the decision to adopt a leasing structure:
    1. separating train ownership from operations would drastically reduce the barriers to entry facing a potential franchisee by limiting the amount of capital needed to acquire a TOC
    2. it was recognised that franchises could be let for periods much shorter than the life of assets
    3. there was a belief that because privatised rolling stock companies would be outwith the public sector funding requirements they would be free to invest.
    It is clear from the way the ROSCOs were structured and the allocation of rolling stock between them that there was little or no expectation that the ROSCOs, at least in the short term, would be competing to supply the TOCs with trains.

    Why three Roscos? It was felt that three was the minimum number of substantial companies needed to make future markets competitive. Although the Treasury would have liked more, it accepted the Department for Transport’s argument that to create too many ROSCOs may have rendered the new companies unsaleable; selling two would have been less difficult but on the other hand only two wouldn't have created the conditions for competition.

    The preference within BR was for the three companies to reflect the identity of the existing business sectors. This was quickly ruled out however on the grounds that it would not promote competition, moreover the number of numbers of vehicles allocated to the companies would have differed widely with the ex-Network SouthEast company having by far the largest number. The Treasury’s preference was to divided every type of rolling stock into three but this was problematic because it would have meant replicating numerous functions in all three companies and subdividing some very small classes. The outcome of the discussion was that one large class of vehicle (Class 423, 4VEP) was divided between the three companies, the remaining large classes were divided between two companies and the smaller classes were allocated to one or other of the companies.

    To the second point. If you had correctly parsed my sentence you would have realised that I was referring to the separation of functions, so no one body would be simultaneously judge, jury and executioner.
     
  23. yorksrob

    yorksrob Veteran Member

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    But in terms of generating competition, it didn't really work. Since (to use the example quoted) Connex, as an example couldn't very well go to Rosco 1 and say "Your leasing charges are too high, I'm going to borrow my VEP's from Rosco 2 instead". Rosco 2's VEP's were already spoken for, so instead of exerting a downward pressure on rolling stock costs, you've introduced a fixed cost where (in the case of already paid for stock) this might have been less.

    In terms of separation of powers, I've said that something arms length from Whitehall holding rolling stock in trust would have been preferable (perhaps similar to PTE's). Charges could have been set and invested for rolling stock replacement on a not for profit basis, and local stakeholders could have supplemented stock (such as happenned with WYPTE) as they were able).
     
    Last edited: 2 Jul 2019
  24. coppercapped

    coppercapped Established Member

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    Deleted
     
  25. coppercapped

    coppercapped Established Member

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    What did I write? Ah, yes...
    So what are you going on about?
    Competition now exists between the ROSCOs for the supply of new rolling stock which will be reflected in, inter alia, the lease charges. The TOCs have now a choice of where to get their financing for new trains, the original three ROSCOs and all the other companies which are now active in the field.
    That's not what I was writing about. The discussion was centred on whether Network Rail should be responsible for franchising.
     
  26. yorksrob

    yorksrob Veteran Member

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    Which goes back to my original point that there was effectively no downward pressure on leasing charges, which left TOC's, and ultimately passengers paying over the odds for rolling stock that had be bought several times over.
     
  27. coppercapped

    coppercapped Established Member

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    The first of your points is addressed in the Competition Commission's report which I mentioned in an earlier thread and which you said you had not read.
    The second is that the leasing costs do not only cover the depreciation of the stock, but the on-going engineering to keep them in service. The trains are available on operating leases, not capital leases. I have explained this to you previously.
     
  28. yorksrob

    yorksrob Veteran Member

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    As I said earlier, the competition commission report stated in it's own summary some of the problems inherent in the system of leasing trains.

    Secondly, we all know that it costs money to maintain trains. It costs money for me to maintain my house, but either I keep costs down by maintaining it myself, or if I can't maintain it, I shop around for someone who can maintain it for a reasonable price.

    TOC's have been relieved of the ability to maintain the trains themselves, and they do not have the ability to shop around for someone who can.
     
  29. Bletchleyite

    Bletchleyite Veteran Member

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    Eh? TOCs absolutely can shop around on maintenance. Most have chosen with new fleets to have the manufacturer do it, though, which is in common with large lorry operators these days, as nobody knows a design like the manufacturer does.
     
  30. coppercapped

    coppercapped Established Member

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    To add to Bletchleyite's post, I'm convinced you don't read the posts if they don't fit your world view. In my post #82 above I wrote:
    Other examples of TOCs doing their own maintenance are Northern at Newton Heath, GWR at St. Philips Marsh, Laira and Long Rock.

    For modern, more complex stock the TOCs may, if they wish, contract the manufacturer to do the maintenance, but they don't have to. In the quote above I point out that SWR has its Siemens' Desiro fleet maintained under contract by Siemens at Northam, but it maintains the even newer Siemens Desiro City Class 707s itself at Wimbledon.
     

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