Real subsidies

[YorkshireBear]

Modern Railways this month has some rather interesting data in it.

Most notably a table showing real subsidies to all operators.

Only one franchise is not subsidised, FCC. East Coast break even but virgin require a lot!
Anyone else read it and be surprised?

 

[DarloRich]

Modern Railways this month has some rather interesting data in it.

Most notably a table showing real subsidies to all operators.

Only one franchise is not subsidised, FCC. East Coast break even but virgin require a lot!
Anyone else read it and be surprised?

I am not surprised in the slightest

 

[John55]

Modern Railways this month has some rather interesting data in it.

Most notably a table showing real subsidies to all operators.

Only one franchise is not subsidised, FCC. East Coast break even but virgin require a lot!
Anyone else read it and be surprised?

Why would anyone be surprised? The information used in Modern Railways is freely available (though not all in the same place). I posted the same calculation for last years figures a while ago and another poster posted this years info in a thread a few weeks ago.

 

[YorkshireBear]

Why would anyone be surprised? The information used in Modern Railways is freely available (though not all in the same place). I posted the same calculation for last years figures a while ago and another poster posted this years info in a thread a few weeks ago.

I would not have guessed that east coast would break even and be better off than Virgin.

The figures may be freely avaliable but its not something id take the time and effort to do as its not my primary field of interst.

 

[Goatboy]

20 years ago was it not the case that of all the Intercity routes only XC required subsidy and that subsidy was paid out of IC profits and not government?

 

[The Ham]

Here is a link to a report about the TOC:
http://www.rail-reg.gov.uk/upload/pdf/toc-benchmarking-report-2012.pdf

Which is you look through shows the costs of the railways over the last 11 years, showing that now the overall subsidy (excluding that to NR) to the TOC is £20 million (as some cost money whilst other pay money to the government). This works out as a 3p per passenger km subsidy.

 

[Metroland]

There's some interesting quotes in that report, further proof the railways are not in the real world, and nobody else in their right mind would run a business like they do.

"The residual 37% increase in cost per train kilometre might relate to lower staff efficiency but also ‘added value’ services, such as the provision of staff to enhance the on-board customer experience (catering, customer service, etc.), which cannot be captured by using train kilometres as a measure of volume of service. The gap could also be driven by the deployment of increased numbers of revenue protection inspectors and barrier staff, in order to meet tightening targets for ticketless travel. A further factor, which might need to be considered, is the potential cost impact of operators recruiting staff from each other, at least partly by offering either higher pay or better terms and conditions. This might contribute to faster than average increases in real earnings, at least for groups of railway employees in demand."

 

[tbtc]

East Coast break even but virgin require a lot!
Anyone else read it and be surprised?

I would not have guessed that east coast would break even and be better off than Virgin

The ECML franchise (i.e. GNER in reality, NXEC in theory) was paying large premium to run that TOC, whilst Virgin sucked up subsidies - despite the spin from Mr Branson you could argue that GNER were paying for all of the investment on "his" trains

20 years ago was it not the case that of all the Intercity routes only XC required subsidy and that subsidy was paid out of IC profits and not government?

It depends on how you do the accounting - since there were no track access charges back then how do you calculate the true infrastructure costs applicable to each service?

I doubt the IC profits were enough to subsidise the rest of the railway - my suspicion is that it was convenient for the Government to be able to show a profitable part of the railway that would be attractive for privatising (even if the costs were skewed due to not attributing the track access charges etc you get now).
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There's some interesting quotes in that report, further proof the railways are not in the real world, and nobody else in their right mind would run a business like they do.

"The residual 37% increase in cost per train kilometre might relate to lower staff efficiency but also ‘added value’ services, such as the provision of staff to enhance the on-board customer experience (catering, customer service, etc.), which cannot be captured by using train kilometres as a measure of volume of service. The gap could also be driven by the deployment of increased numbers of revenue protection inspectors and barrier staff, in order to meet tightening targets for ticketless travel. A further factor, which might need to be considered, is the potential cost impact of operators recruiting staff from each other, at least partly by offering either higher pay or better terms and conditions. This might contribute to faster than average increases in real earnings, at least for groups of railway employees in demand."

The part that I've highlighted happens in certain other job markets, where companies have to pay a premium for qualified "talent" - and the scarce number of people qualified to do those jobs can manipulate this position to ensure significant rises in earnings (with the "threat" that they could go off to work for another company if they don't get their way).

Investment Bankers, Film Stars, Premiership Footballers, Train Drivers... there are a handful of rich groups who can manipulate an apparent "scarcity" to suit their salary demands - BR didn't need to bend over backwards to retain staff as they were the only railway employer, but one TOC can poach staff from another (like LM staff going to XC) meaning that TOCs have to offer higher salary conditions etc. Not quite the socialist utopia that some would like.

 

[northwichcat]

Here is a link to a report about the TOC:
http://www.rail-reg.gov.uk/upload/pdf/toc-benchmarking-report-2012.pdf

Take some of those figures with a pinch of salt.

For instance, level of seat occupancy depends on how the train has been furbished or refurbished. A Northern class 150 can have empty seats and have more passengers on it than an ATW class 150 with all seats occupied. Likewise the same applies when comparing an EMT 158 to a Northern 158.
--- old post above --- --- new post below ---

20 years ago was it not the case that of all the Intercity routes only XC required subsidy and that subsidy was paid out of IC profits and not government?

XC manages 0 stations so that should help keep running costs low. Although, in turn that increases station running costs for other operators like LM, Northern, FGW etc.

 

[swt_passenger]

...XC manages 0 stations so that should help keep running costs low. Although, in turn that increases station running costs for other operators like LM, Northern, FGW etc.

Your logic appears somewhat flawed, because XC still have to pay a station access fee to the 'managing TOC' of each station they call at. ORR has something to do with setting the rates that TOCs charge each other - but they basically still have to pay their pro-rata share of the costs of operating stations.

 

[Metroland]

It's always been clear all TOCs are not equal, we know that TOCs with less passengers, longer trains, yet move them long distances (Airline style operations like East coast) do better than those with short trains, more train hours (read low speed) with short journeys and manage more stations (bus style operation such as Northern).

However, that report make it apparent that short train multiple unit policies don't help generally.

Drivers, Guards, and other on train staff are expensive, as is maintaining each engine (if it's a DMU), as is fitting a lot of track and signals to accommodate more short trains instead of few longer ones. Yet, it hasn't stopped the railway moving away from fewer, but longer trains that require less overall staff, less traction, less infrastructure and so on and indeed less cost. Okay, there is a more attractive walk on service (questionable outside urban areas?), but at what cost?

 

[northwichcat]

Your logic appears somewhat flawed, because XC still have to pay a station access fee to the 'managing TOC' of each station they call at. ORR has something to do with setting the rates that TOCs charge each other - but they basically still have to pay their pro-rata share of the costs of operating stations.

The major stations like Manchester Piccadilly, Leeds, Birmingham New Street etc. are Network Rail managed and those are generally the ones which have extended layovers and stabling for Intercity trains.