Network Rail to be broken up?

[higthomas]

There is an article in the Telegraph today saying that the govenment is considering breaking up or selling Network rail. Although they don't really seem to have much to back up their claim, they do come out with some interesting claims about moving it into the private sector 'boosting efficiency,' and seems to slightly gloss over the whole series of rail disasters thing.

Anyway here is said article:

The Daily Telegraph
The Government is thought to be exploring restructuring options over the future of Network Rail, fuelling speculation that the state-owned company could be broken up or sold.
Taking some or all of the organisation, which owns and repairs the UK’s railway lines, into private ownership would ease pressure on the public finances.
Last year Network Rail was reclassified as a public sector company, meaning its £33bn debt pile took the UK further into the red.
Shaking up its structure is said to be under consideration by ministers with Network Rail under pressure to improve performance after high-profile failures, including the chaos at London Bridge as the station is redeveloped, over-running engineering works at Christmas and delays electrifying inter-city lines.
A move out of state ownership could boost efficiency. Network Rail itself was created out of the ashes of privately owned Railtrack, which the Labour government controversially pushed into administration in 2001 after a series of train disasters that resulted in expensive safety measures the company could not afford.
However, it is likely to be tough to persuade private companies to buy into Network Rail in its current state, with questions over the value of its assets and its debt load set to be major obstacles.
Industry watchdog the Office of Rail Regulation (ORR) said that while it does not have the power to break up Network Rail, it is looking at how it can compare the organisation’s performance over different parts of the train network to see where it is failing.
A spokesman for ORR said: “As part of ORR’s key role in holding Network Rail to account, it is exploring the benefits of route-level rail information [which compares performance on different lines] to benchmark and incentivise levels of performance.”
Train users are unlikely to be worried about who owns and maintains the country’s 20,000 miles of rail lines and stations, according to Transport Focus, which represents passengers interests.
David Sidebottom, director of Transport Focus, said: “Passengers tell us that what matters to them most are value-for-money fares on punctual, frequent trains where they can get a seat.
“Who or how the railway is run matters very little to them, so any changes to the structure will be judged by results, and results only.”
The Department for Transport refused to confirm or deny whether it was looking at how Network Rail’s structure or ownership could change, saying only that “the Government has no plans to break up Network Rail”.

 

[ADRboy]

It's absolutely outrageous if true. NR are doing really well - £££ over passengers lives if it takes place.

 

[eisenach]

Yet another reason, if one were needed, not to vote Conservative.

By the way, I don't believe that bit about the travelling public not caring about who runs the show. Polling consistently shows that a majority of the public, and even a majority of Conservative voters wishes the railway to be renationalised entirely.

 

[bb21]

Two main things jump out at me immediately on a quick scan through this article:

• Prelude for flogging Network Rail off for pennies (so that certain individuals and companies may or may not benefit - you decide) - not much different to what certain groups of individuals are good at there (Royal Mail anyone?);
• Cost rather than safety top priority for passengers - pull another one :roll:;

There are only certain swear words I would like to use to describe this article. :roll:

They really do live up to their ideologies, regardless of facts I suspect.

 

[cf111]

I'd rather be on a late, safe train than an on-time unsafe one. We have seen what a privatised infrastructure can do, I'd really rather not see it again.

 

[Train2Win]

The only reason the Goverment want to sell Network Rail is so they don't have to take part blame of this falling company .

 

[SpacePhoenix]

It'll be chaos if it does happen, the maintenance of the infrastructure needs to be under one company

 

[Bevan Price]

NR is imperfect, and there is room for improving performance & costs. However, selling it is typical Tory doctrinaire cr*p. They tried it once and it was a failure - does anyone believe that a repeat performance would be any better ?

 

[Merseysider]

Tory rag, can't believe everything it comes out with. But it wouldn't surprise me if DC did work out a way to sell it off so his millionaire mates could make a fast buck.

 

[route:oxford]

There's more than one way to "break-up" Network Rail.


Don't the Scottish Nationalists want Network Rail to be broken up with assets and control North of the Border transferred to the Scottish Goverment?

Would that be a reason not to vote SNP?

 

[Zoidberg]

Oh, will that be the end of 'over-running engineering works'?

Thumbs up, if so, but I fear not.

 

[Islineclear3_1]

The only reason the Goverment want to sell Network Rail is so they don't have to take part blame of this falling company .

I don't know about failing but I agree with the motive. Like privatising the NHS (for example), the idea would mean that the Secretary of State for Transport would be absolved from being in charge of NR and can criticize NR (or whoever takes over) without having to acknowledge responsibility for, or offer solutions for any of its failings arising from government policy.

It would mean that the Secretary of State would no longer be in charge, nor will he be responsible to, or accountable for NR. But whichever company might take over, it won't be accountable to the public and won't have to divulge "commercially sensitive" facts and figures etc unlike a public company, or one accountable to government

 

[PHILIPE]

We don't want another Hatfield.

 

[Argosy]

There's more than one way to "break-up" Network Rail.


Don't the Scottish Nationalists want Network Rail to be broken up with assets and control North of the Border transferred to the Scottish Goverment?

Would that be a reason not to vote SNP?

Perhaps it is already happening with a joint NR-ScotRail MD. More concessions to Holyrood then NR and ScotRail in Scottish public ownership in say 2020?

 

[LNW-GW Joint]

I don't doubt that there are Tories (and probably UKIP) members who would like to sell off Network Rail, but I don't see it becoming policy.
There are precedents though, with HS1 and intentions for HS2.
Ports and airports, telecoms, energy etc are all in the private sector, and many economists don't see rail infrastructure as any different.
Pension funds and sovereign wealth funds are the sources being wooed at the moment.
It would help pay for HS2.

Breaking up Network Rail, whether sold off or not, is probably nearer the agenda.
Ministers are exasperated at NR's inability to control its costs and projects, and to deliver things in the course of a single parliament.
It will be lucky to remain intact for another parliament, irrespective of devolution legislation which may force NR to be split into three (England, Wales and Scotland).
However, only one of the reasons the Telegraph gives (electrification) bears real scrutiny.
The irritants of Christmas overruns and London Bridge congestion are hardly reasons to put the knife in, but they do wind up the commuter belt and the media.

Anyway, it all depends on the way we vote on May 7.
If it isn't in the Tory manifesto we can probably forget it.

 

[Clarence Yard]

What the Telegraph didn't say is that one of the options is regional railway companies, either as Alliances or even vertically integrated.

The lack of oomph in NR is what is concerning Government. Whilst politicians may favour one pet solution or another, the inability of NR to deliver is fast becoming an issue that has to be addressed. The TOCs and FOCs are starting to lose patience as well.

Where all this is going to end up is anybody's guess but at the present level of dissatisfaction, I don't think the current industry set up is going to survive another 5 years, whoever gets in on May 7th.

 

[muddythefish]

Tory rag, can't believe everything it comes out with. But it wouldn't surprise me if DC did work out a way to sell it off so his millionaire mates could make a fast buck.

The problem is, the Torygraph is owned by the Barclay brothers, arch-conservatives who have the ear of govt right to the top. I have no doubt this story is true, and will become policy should the Conservatives win the election. There is also the desire to get NR's debt off the national balance sheet, which would be achieved by privatisation.

 

[Clarence Yard]

The story has been covered by other papers too, some not exactly right leaning. But it is, of course, a deliberate leak. There is a lot of tension between the DfT and NR at the moment, not political tension but operational and financial tension.

Thank goodness David Serpell is not about any more!

 

[muddythefish]

Thank goodness David Serpell is not about any more!

Serpell may not be around but there are plenty within DfT who think the same way. Should the Tories win a second term I have no doubt with their ideological thinking there will be new moves to close loss-making lines and pare back others.

 

[Bletchleyite]

There is a fairly solid argument in favour of "sectorising" it or even making maintenance part of the primary TOC's role, but actually flogging the family silver for a second time is madness.

 

[IanXC]

What the Telegraph didn't say is that one of the options is regional railway companies, either as Alliances or even vertically integrated.

Even splitting Network Rail into separate companies limited by guarantee for each route would make it easier to compare and contrast their performance. There's plenty of precident in the public sector... Routes could even be plavlced in special measures I'd they're not performing...

 

[Bletchleyite]

Serpell may not be around but there are plenty within DfT who think the same way. Should the Tories win a second term I have no doubt with their ideological thinking there will be new moves to close loss-making lines and pare back others.

We thought that last time, and look what actually happened...

 

[WatcherZero]

I think its unlikely that a workable privatisation solution could be found, bearing in mind the Market knows what happened to Railtrack. Civil servants were meeting to discuss how it could be achieved, likely as they have been asked by the Government to create a post election strategy. The motivation is clear, Network Rail has £36bn of debt that will rise to approaching £50bn by the end of the decade. Privatising it will reduce the national debt by 3.3% and stop more commercial borrowing appearing as state borrowing.

As a privatised entity though its likely only a few routes would be commercially profitable so you would end up with Government privatising the best bits and keeping the rump.

This is how Industry finances by route currently stands for the year 13/14:

Route/Commercial income/Industry expenditure/Government subsidy/Surplus or "profit" before tax and pensions

Anglia £1120m -£1189m +£143m = £75m
Kent £890m -£1132m +£322m = £79m
LNE £1362m -£2063m +£535m = -£167m
LNW £1908m -£2963m +£1194m = £139m
East Midlands £626m -£513m +£208m = £321m
Sussex £858m -£885m +£59m = £32m
Wessex £1079m -£1079m -£15m = -£14m
Western £909m -£1126m +£295m = £79m
Wales £261m -£555m +£320m = £26m
Scotland £469m -£1173m +£728m = £24m

As you can see only Anglia, Sussex and Wessex routes are anywhere close to be financially independent enough to spin off without heavy ongoing public infrastructure subsidy. East Midlands route was the only route that was commercially profitable before subsidy but still attracted a quite hefty subsidy likely to cover low level of services (only route where service cost wasn't 50-100% larger than infrastructure costs, in fact they were 2/3 the infrastructure costs)

£8.9bn of industry costs were rail services, £6.2bn of it is infrastructure, there is a £3.2bn shortfall in commercial income compared to total costs and an extra £3.7bn of government subsidy added on top to cover that gap.

 

[muddythefish]

£8.9bn of industry costs were rail services, £6.2bn of it is infrastructure, there is a £3.2bn shortfall in commercial income compared to total costs and an extra £3.7bn of government subsidy added on top to cover that gap.

Interesting, and to think BR was privatised because it was costing the taxpayer about £1bn a year ?

 

[cjmillsnun]

We don't want another Hatfield.

Or another Ladbroke Grove. Or another Potter's Bar.

 

[WatcherZero]

Well £1 in 1992 is over £2 now, so you could say the Government support is double but then you have to compare the quality and usage of services between 1992 and now.

 

[CockneySparrow]

Oh, will that be the end of 'over-running engineering works'?

Thumbs up, if so, but I fear not.

More like the start of white knuckle rides

 

[Oliver]

Or another Ladbroke Grove. Or another Potter's Bar.

or Clapham, Lewisham, or any other accident during the last 50 years. If you look at the data http://www.rssb.co.uk/Library/risk-...eporting/2014-07-aspr-2013-14-full-report.pdf (pp 16-17) you will see that the long-term trend has been a steady reduction in accidents and deaths (excluding suicide/trespass) irrespective of private or public ownership.

 

[class26]

The problem is, the Torygraph is owned by the Barclay brothers, arch-conservatives who have the ear of govt right to the top. I have no doubt this story is true, and will become policy should the Conservatives win the election. There is also the desire to get NR's debt off the national balance sheet, which would be achieved by privatisation.

Yes but the closest the Conservatives are likely to get to no 10 after May 7 is another coalition and so it will be down to the other party(s) concerned to veto it (or not). No party is likely to win overall.
--- old post above --- --- new post below ---

Serpell may not be around but there are plenty within DfT who think the same way. Should the Tories win a second term I have no doubt with their ideological thinking there will be new moves to close loss-making lines and pare back others.

Evidence for this is .....?

 

[yorksrob]

What the Telegraph didn't say is that one of the options is regional railway companies, either as Alliances or even vertically integrated.

The lack of oomph in NR is what is concerning Government. Whilst politicians may favour one pet solution or another, the inability of NR to deliver is fast becoming an issue that has to be addressed. The TOCs and FOCs are starting to lose patience as well.

Where all this is going to end up is anybody's guess but at the present level of dissatisfaction, I don't think the current industry set up is going to survive another 5 years, whoever gets in on May 7th.

Engineering overruns excepted, I don't think anyone with any knowledge of the railway can accuse NR of being lacklustre in terms of getting things done (not that I would ever accuse Tory policy makers of ever knowing what they were talking about). A lot of very timely investment has been carried out, including on parts of the Regional Railway that would have missed out in the past. It would be ludicrous (but not surprising) for them to propose wholesale changes to the ownership of the railway off the back of a couple of relatively minor managerial balls ups over Xmas.

About the only possible justification for breaking it up that I could see would be to create vertically integrated railway companies along the lines of the big 4, however would the EU even allow such a move to happen, or is it but a fig leaf to hide the usual Tory itch to flog everything that's not screwed down.
--- old post above --- --- new post below ---

Even splitting Network Rail into separate companies limited by guarantee for each route would make it easier to compare and contrast their performance. There's plenty of precident in the public sector... Routes could even be plavlced in special measures I'd they're not performing...

Or another stick with which to beat the Regional Railway if we're not careful.