Railway 'privatisation'

Status
Not open for further replies.

michaelhill94

Member
Joined
16 Jul 2012
Messages
11
This is my first ever post, so sorry if this is all wrong.
I have always found 'privatisation' a complete misnomer. Arriva, Cross Country and Chiltern Railways are all owned, entirely, by the German government. They use the huge profits from their ownership of British railways to fund their own public sector. Merseyrail is 50% owned by the Dutch Government as is Northern Rail while the Dutch have complete control of Anglia. Southern and London Midland are 35% owned by the French government while First Trans-Pennine express is 45% owned by the French. Can any supporters of rail privatisation tell me why, if public sector monoliths are so inefficient it is public sector monoliths defeat the competition for franchises when it is left to the market to decide?
 
Sponsor Post - registered members do not see these adverts; click here to register, or click here to log in
R

RailUK Forums

Michael.Y

Established Member
Joined
14 Oct 2011
Messages
1,416
Privatisation was the process of taking the railways out of state ownership into private ownership.

That's the long and short of it.

Whomever these private companies are (Arriva have only recently been taken over by DB) is fairly irrelevant.

Technically DB is a private company (being an AG, a company with shareholders) except that 100% of the shares are owned by Germany.

It would be so much better in this country if we had a nationwide TfL-style system - responsibility and branding owned by a national rail body with services sublet to private operators.
 

transmanche

Established Member
Joined
27 Feb 2011
Messages
6,017
Don't forget South Eastern (also 35% owned by Keolis).

It just seems very strange that in this country, the government prevented the state-owned rail organisation (BR) from even bidding for a franchise; whereas other European governments have encouraged their state-owned railways to go out and compete.

We even have a situation now where RATP (the Paris equivalent of TfL) owns London United - part of London Buses that was privatised in the 90s.
 

Attachments

  • 9087-l.jpg
    9087-l.jpg
    58.6 KB · Views: 57
Last edited:

ainsworth74

Forum Staff
Staff Member
Global Moderator
Joined
16 Nov 2009
Messages
22,665
Location
Redcar
I'd be interested to hear about where these huge profits are found because in general most TOCs make a very very small profit (their revenue might be large but after accounting for costs and payments to the DfT very little is normally left over).
 

Gwenllian2001

Member
Joined
15 Jan 2012
Messages
665
Location
Maesteg
I'd be interested to hear about where these huge profits are found because in general most TOCs make a very very small profit (their revenue might be large but after accounting for costs and payments to the DfT very little is normally left over).

I wonder then why the French; Germans and Dutch find them so attractive.
 

transmanche

Established Member
Joined
27 Feb 2011
Messages
6,017
I'd be interested to hear about where these huge profits are found because in general most TOCs make a very very small profit (their revenue might be large but after accounting for costs and payments to the DfT very little is normally left over).
According to FirstGroup's 2012 annual report, their UK Rail division has approx 24% of the rail market with revenues of £2.5billion. And it made an operating profit of £110million - that's approx 4.5% of revenue.
 

Clip

On Moderation
Joined
28 Jun 2010
Messages
10,616
According to FirstGroup's 2012 annual report, their UK Rail division has approx 24% of the rail market with revenues of £2.5billion. And it made an operating profit of £110million - that's approx 4.5% of revenue.

Thats not a huge profit though is it? I think TOCs only make something on average like 3p in the pound or something silly. A huge profit would be something around 20-25% of turnover IMO.
 

transmanche

Established Member
Joined
27 Feb 2011
Messages
6,017
According to FirstGroup's 2012 annual report, their UK Rail division has approx 24% of the rail market with revenues of £2.5billion. And it made an operating profit of £110million - that's approx 4.5% of revenue.

Thats not a huge profit though is it? I think TOCs only make something on average like 3p in the pound or something silly. A huge profit would be something around 20-25% of turnover IMO.

I'd say that 4.5% of revenue is a very healthy profit; for what is effect a semi-utility, with a guaranteed income stream.

Most people consider Tesco to be a very profitable company. Tesco UK makes almost £2.5billion operating profit on revenues of almost £43billion - approx 5.8% of revenue.
 

NSEFAN

Established Member
Joined
17 Jun 2007
Messages
3,323
Location
Southampton
Arguably what we have isn't full privatisation. The railways are still heavily controlled by the DfT, although they seem to like to keep this quiet when it suits them. It's an ideal situation for the government, because it allows them to tinker with the railway as they see fit, without risking taking the blame for when things go wrong.

One thing nobody can do is say how things would have turned out if we still had BR. All we can do is look at the current situation and decide where to go from here. If I had to guess what would have happened without privatisation, I suspect that some projects like crossrail and the networker programme would have been completed already, but railfreight and regional railways would still be suffering.
 

jopsuk

Veteran Member
Joined
13 May 2008
Messages
12,460
Pretty sure none of the original owners are privatisation were owned by any state? They were a mix of venture capitalists, management buyouts, bus barons (some of which were themselves management buyouts from bus privatisation) and shipping lines.
 

Metroland

Established Member
Joined
20 Jul 2005
Messages
3,212
Location
Midlands
Arguably what we have isn't full privatisation. The railways are still heavily controlled by the DfT, although they seem to like to keep this quiet when it suits them. It's an ideal situation for the government, because it allows them to tinker with the railway as they see fit, without risking taking the blame for when things go wrong.

One thing nobody can do is say how things would have turned out if we still had BR. All we can do is look at the current situation and decide where to go from here. If I had to guess what would have happened without privatisation, I suspect that some projects like crossrail and the networker programme would have been completed already, but railfreight and regional railways would still be suffering.

If the government pulled out tomorrow, 90% of the railway, perhaps 100% would collapse.

There is very little risk for NR or the franchise owners. The former are backed by government and the latter throw the cards in if they can't make the money agreed when they take on the franchise.

Even if the franchise is lost, most of the same people remain in jobs. Sheltered by guaranteed pay rises every year. Very little is actually linked to personalised performance.

Because the railway is so specialised, unlike all other areas in the transport sector recruitment and training is basically all in house. There are very if any public training courses, which means there is a restricted pool of labour which can basically name it's price - and does so at any opportunity including times of public need.

The only really private area of the railway are the supply companies, and many of these, are in effect dependent on government (read the DFT) to issue contracts.

In short, it's nothing like privatisation, merely play capitalism. Private companies and staff live and breath on their own financial performance, the railway merely waits for the government to make up the latest policy.

Don't get me wrong, I don't think it should have been privatised at all for the reasons above, I also think staff should have pay set by an independent body and be restricted from striking because they are in a special position like the police. The only areas that should be open up to private companies should be at no risk to the tax payer (Supply companies, maybe some aspects of running retail at stations or property development etc)

I can only imagine the gravy train will go on for the foreseeable future, as the government has no appetite for major reform, merely tinkering at the edges. Indeed, every steering group that has been set up has failed because essentially the railway does not operate in the "real world".

Let's not forget if the railway doesn't cut costs, many of these projects that have been promised will not go ahead because that's where the money is coming from.
 

phil8715

Member
Joined
19 Aug 2007
Messages
266
I think that railway privatisation in this country has been a disaster. More accidents, rip-offs fares,hardly any of the TOCS are British owned a bit like our utilities.

I hope the government are proud of themselves.


Sent from my iPad using Tapatalk HD
 

WestCoast

Established Member
Joined
19 Jun 2010
Messages
5,438
Location
Glasgow
I wonder then why the French; Germans and Dutch find them so attractive.

It's a way of diversifying their businesses, and that's exactly how they are now supposed to operate, as businesses rather than state providers.

The EU Commission has been pushing for a degree of rail privatisation and competition across all the member states, you don't hear about it in the UK, because the UK's railways go way over and above the directives that were set. Personally, I think the EU Commission are rather naive (like many things) about the whole issue of privatisation, as they just seem to think 'competition', in whatever form that takes, will improve networks.

ATOC has made a number of presentations to the other rail operators in Europe, detailing their 'strategy' for success in privatisation....:|

Anyway, in the Netherlands and Germany, it's not just one big state owned operator. Germany has a few open access operators, but both countries have competition on regional rail. The local Governments put regional rail contracts out to tender, but these are gross-cost tenders (i.e. they are paid for by the Government (incl. stock) and fares are set by the Gov./a 'PTE'). So that means that DB Regio and NS have to compete against company's owned by Keolis/SNCF, Veolia, FS (Italian state railways) and local partnerships to run regional rail services in their own countries.

That method of rail privatisation is much more limited in scope to what we have in the UK, but the Government's involved have an appetite for rail investment and subsidisation with direct control over the service levels, stock and fares.
 

Mojo

Forum Staff
Staff Member
Administrator
Joined
7 Aug 2005
Messages
18,107
Location
0035
I think that railway privatisation in this country has been a disaster. More accidents
There have not been more accidents. The railway is much safer since privatisation, although not necessarily owing to privatisation.
 

WatcherZero

Established Member
Joined
25 Feb 2010
Messages
9,456
I think that railway privatisation in this country has been a disaster. More accidents, rip-offs fares,hardly any of the TOCS are British owned a bit like our utilities.

I hope the government are proud of themselves.


Sent from my iPad using Tapatalk HD

Are you kidding? The accident rate has been smashed since privitisation. Apart from a small blip around the turn of the millenium when it was only half, the accident rate is one quarter what it was under BR.
 

paul1609

Established Member
Joined
28 Jan 2006
Messages
4,115
Location
Wittersham Kent
If the government pulled out tomorrow, 90% of the railway, perhaps 100% would collapse.

There is very little risk for NR or the franchise owners. The former are backed by government and the latter throw the cards in if they can't make the money agreed when they take on the franchise.

Even if the franchise is lost, most of the same people remain in jobs. Sheltered by guaranteed pay rises every year. Very little is actually linked to personalised performance.

Because the railway is so specialised, unlike all other areas in the transport sector recruitment and training is basically all in house. There are very if any public training courses, which means there is a restricted pool of labour which can basically name it's price - and does so at any opportunity including times of public need.

The only really private area of the railway are the supply companies, and many of these, are in effect dependent on government (read the DFT) to issue contracts.

In short, it's nothing like privatisation, merely play capitalism. Private companies and staff live and breath on their own financial performance, the railway merely waits for the government to make up the latest policy.

Don't get me wrong, I don't think it should have been privatised at all for the reasons above, I also think staff should have pay set by an independent body and be restricted from striking because they are in a special position like the police. The only areas that should be open up to private companies should be at no risk to the tax payer (Supply companies, maybe some aspects of running retail at stations or property development etc)

I can only imagine the gravy train will go on for the foreseeable future, as the government has no appetite for major reform, merely tinkering at the edges. Indeed, every steering group that has been set up has failed because essentially the railway does not operate in the "real world".

Let's not forget if the railway doesn't cut costs, many of these projects that have been promised will not go ahead because that's where the money is coming from.

Well said. I agree totally.



 

ANorthernGuard

Established Member
Joined
8 Oct 2010
Messages
2,564
If the government pulled out tomorrow, 90% of the railway, perhaps 100% would collapse.

There is very little risk for NR or the franchise owners. The former are backed by government and the latter throw the cards in if they can't make the money agreed when they take on the franchise.

Even if the franchise is lost, most of the same people remain in jobs. Sheltered by guaranteed pay rises every year. Very little is actually linked to personalised performance.

Because the railway is so specialised, unlike all other areas in the transport sector recruitment and training is basically all in house. There are very if any public training courses, which means there is a restricted pool of labour which can basically name it's price - and does so at any opportunity including times of public need.

The only really private area of the railway are the supply companies, and many of these, are in effect dependent on government (read the DFT) to issue contracts.

In short, it's nothing like privatisation, merely play capitalism. Private companies and staff live and breath on their own financial performance, the railway merely waits for the government to make up the latest policy.

Don't get me wrong, I don't think it should have been privatised at all for the reasons above, I also think staff should have pay set by an independent body and be restricted from striking because they are in a special position like the police. The only areas that should be open up to private companies should be at no risk to the tax payer (Supply companies, maybe some aspects of running retail at stations or property development etc)

I can only imagine the gravy train will go on for the foreseeable future, as the government has no appetite for major reform, merely tinkering at the edges. Indeed, every steering group that has been set up has failed because essentially the railway does not operate in the "real world".

Let's not forget if the railway doesn't cut costs, many of these projects that have been promised will not go ahead because that's where the money is coming from.

:o never read anything so ridiculous. ANYONE can apply for a job on the railway and IF they are GOOD ENOUGH, like ANY JOB they will be successful, Gravy Train my A**e.
 

ANorthernGuard

Established Member
Joined
8 Oct 2010
Messages
2,564
Oh,I don't know - have a quick scan through the threads recently and there are posts just as bizarre.

Seems to me there are a lot of envious members on this forum.

maybe a part of it is envy, but i'm not here to bait. Just offer my opinion which is a lot more educated then a small minority here (the majority I have alot of respect for)

Like I say to anyone who wants to work on the railway

Apply

Do Your Best

If you get on Good for you

and if you don't Try Again

If after numerous attempts you fail maybe you should try a different industry?
 

ANorthernGuard

Established Member
Joined
8 Oct 2010
Messages
2,564
Or join a rail forum and tell us all how it should be done 'in the real world'...
;)

The rest of your post makes sense to me.

I think I might be in the minority though.

now now behave lol we all know the real world is not actually what exists in real life but what a few people feel should exist in a perfect world lol <D
 

Metroland

Established Member
Joined
20 Jul 2005
Messages
3,212
Location
Midlands
:o never read anything so ridiculous. ANYONE can apply for a job on the railway and IF they are GOOD ENOUGH, like ANY JOB they will be successful, Gravy Train my A**e.

You don't seem to grasp that unlike other industries there is no ready pool of labour waiting to come in. If truck drivers went on strike like train drivers, they wouldn't get away with it because they would simply be replaced.

As for envious, you know nothing about me and just disagree with your point of view. It is a statement of fact the RMT and ASLEF are only strong because of the restrictive labour practices and red tape in the railway industry - something McNulty and others have identified. There are very few, if any groups of workers on strike with the regularity these groups are, despite being on in some cases very reasonable salaries at the level of professionals.
 

jon0844

Veteran Member
Joined
1 Feb 2009
Messages
24,508
Location
UK
I think that railway privatisation in this country has been a disaster. More accidents, rip-offs fares,hardly any of the TOCS are British owned a bit like our utilities.

We're in the EU so I am not sure it matters that much. It's nice to sit and say you want British jobs, but when it comes to the crunch it's not even as simple as that.

People get bothered enough about jobs moving from one town to another, and people in London are in competition with workers elsewhere in the UK and vice versa. Is there really that much love for a company having British jobs if you're not one of them with that job?

If a British company can't bid or won't bid, that's the problem. Why are foreign companies making better bids and winning these franchises? That is the problem to address, not banning foreign companies (especially if they're most likely employing British people anyway).

And there's nothing to stop British companies and workers getting work abroad, as many do.
 

Pen Mill

Member
Joined
19 Oct 2010
Messages
337
Location
Yeovil Somerset
Would a British government backed TOC be allowed to operate passenger services in Germany or France or Holland ? That's a capital no because they are nationalised.

These foreign government backed TOCs are using their massive national taxpayer funded resources infrastructure to undercut genuine (British) commercial enterprises.

It's absolute rubbish that the British government and for that matter the EU allows this to happen.
 

jon0844

Veteran Member
Joined
1 Feb 2009
Messages
24,508
Location
UK
They may not be British Government backed, but both Stagecoach and First Group seem to do quite well abroad. Arriva did too, but is obviously now German owned!
 

317666

Established Member
Joined
4 Sep 2009
Messages
1,552
Location
Ely
One thing I personally like about privatisation is advance fares. Usually when travelling long-distance I am able to plan months in advance so can get very good value tickets. Although the decision to introduce advances hasn't gone well with others, I know, as the price of on-the-day tickets has soared.
 

the sniper

Established Member
Joined
4 Sep 2007
Messages
2,406
Oh,I don't know - have a quick scan through the threads recently and there are posts just as bizarre.

I agree that RailUK has sadly recently become awash with ridiculous and completely uninformed posts/threads, but I certainly wouldn't include Metroland's post in that. It's quite obvious that the positions of Drivers, Signallers and even Guards nowadays are so strong because of the specialised, extensive in house training the railway has to provide. If these people strike, they can't just be replaced, and when they strike, it makes a major impact. This is why the railways unions are in such a strong position.

I'm personally certainly not saying the above is a bad thing. Having such extensive training has helped to make the railways as safe as they are today. The job protection aspect also helps my grade and my job security, at the moment at least!

By the way, I've always been under the impression that Metroland worked or works in the rail industry.
 

Holly

Member
Joined
20 May 2011
Messages
783
I'd be interested to hear about where these huge profits are found because in general most TOCs make a very very small profit (their revenue might be large but after accounting for costs and payments to the DfT very little is normally left over).
In tax havens of course.
That's where the profits of all multinationals are to be found. They are only going to make a token profit anywhere that taxes.
 

SWTCommuter

Member
Joined
17 Oct 2009
Messages
311
One thing I personally like about privatisation is advance fares. Usually when travelling long-distance I am able to plan months in advance so can get very good value tickets. Although the decision to introduce advances hasn't gone well with others, I know, as the price of on-the-day tickets has soared.

APEX tickets were available on British Rail long before privatisation.
 
Status
Not open for further replies.

Top