Should track access charges be higher?

[squizzler]

I understand that track access charges in the UK are lower than that of other countries, which is why the Uk has so many short trains running around.

Should track access charges be higher? This can be matched by an equal reduction in the premium that franchises pay to the DfT (and government support to Network rail) so outlay from the Train Operators and budget to Network rail would be the same.

Could operators run fewer and longer trains where frequency would still be adequate, leading to less congestion on the network?

 

[Dr Hoo]

As I understand it variable track access charges in GB are designed to be purely cost-reflective - essentially 'wear and tear'. They are calculated with reference to the weight, speed and general dynamics of different types of vehicle. There is no 'scarcity' or 'premium' element.
Hence a (say) 4-car hourly formation of 2 x Class 150s would generate the same access charges as a half-hourly service operated by two 2-car class 150s.
So, whilst the reduced frequency service might be more reliable because of reduced congestion it wouldn't be any cheaper to run in access charging terms. (This obviously ignores costs like crewing and shunting.) Reduced frequency leads to increased 'generalised journey time' and would be expected to depress revenue.
I presume that the OP envisages a 'mark up' in charges on congested lines - there being no point in increasing charges in areas where things are basically satisfactory, such as Merseyrail. Access charging is already seen as complex and arcane. I am not convinced that making it even more complicated would be an improvement.
If there are too many trains (and I am not sure that I agree) it might be better if franchising bodies reduced the level of service specification, Network Rail was less keen to sell so many 'last paths' and the ORR was less keen to approve such access rights.

 

[squizzler]

I presume that the OP envisages a 'mark up' in charges on congested lines

Something along those lines. I was thinking aloud about how you might get rid of the money-go round where train operators hand over a large part of their revenue to the DfT and the DfT in turn hand a large sum over to Network Rail for upgrades and improvements. Better just to let Network Rail charge what the market would bear (rather than franchise payments being effectively the same, but a sum that is locked in for the term of the franchise).

The advantage is that Network Rail regards the train operator as their customer, not the DfT, making them more responsive to the former.

A charging regime reflecting network congestion should, as you imply, reduce the congestion and make services more reliable. If the franchise is getting into financial problems it could renegotiate with network rail on how much it pays for paths which is probably less politically charged than asking to pay less into the treasury as per current regime, or indeed look to run fewer, longer, trains within the terms of its franchise. This could be a safety valve to stop so many franchises failing.

 

[Indigo Soup]

Something like the Adam Smith Institute's idea of auctioning off train paths would be theoretically brilliant in this respect - the paths that can generate most revenue will be sold for the most, and the profit-seeking train operator will run a train that makes the most money out of it. Which means, in practice, getting bums on seats (or feet in aisles, if south of Watford).

The only small difficulty is, of course, that it doesn't work on anything that resembles a real railway.

More practically, demand-based pricing only really makes sense where the customer has a choice about whether to pay. Since a TOC is obliged to operate (say) the 11:54 to Anytown, Network Rail can make up any number they like for the track access charge, send the TOC a bill, and the TOC then applies arcane accounting procedures to turn it into a different bill the they send to the Department for Transport. Which, since the Department for Transport also funds Network Rail, largely serves to enrich accountants.

There might be some sense in flat-rating track access charges, so that payments are made per train-mile rather than per tonne-mile (or vehicle-mile). That way, there wouldn't be any disincentive to TOCs running the longest train they can fill. Though this might bugger up charging for electric trains, since I believe that's based on their load. Perhaps someone could go around and install electricity meters on them all?

 

[coppercapped]

Something along those lines. I was thinking aloud about how you might get rid of the money-go round where train operators hand over a large part of their revenue to the DfT and the DfT in turn hand a large sum over to Network Rail for upgrades and improvements. Better just to let Network Rail charge what the market would bear (rather than franchise payments being effectively the same, but a sum that is locked in for the term of the franchise).

The advantage is that Network Rail regards the train operator as their customer, not the DfT, making them more responsive to the former.

A charging regime reflecting network congestion should, as you imply, reduce the congestion and make services more reliable. If the franchise is getting into financial problems it could renegotiate with network rail on how much it pays for paths which is probably less politically charged than asking to pay less into the treasury as per current regime, or indeed look to run fewer, longer, trains within the terms of its franchise. This could be a safety valve to stop so many franchises failing.

A point of order...! The Fixed and Variable track access charges, as indeed all the various charges for stations and so on, are paid to Network Rail directly. The DfT has no part in these transactions.
The DfT's involvement in the franchises' cash flows is essentially limited to the receipt of any premiums that are to be paid or the paying out of any subsidy.

These days (for the past six or seven years or so) the operating railway essentially breaks even on a day-to-day basis. The Network Grants payable to Network Rail by the DfT essentially pay the interest on NR's accumulated debt and for infrastructure enhancements. The railway as a whole is not (yet?) in a financial position where it can pay for enhancements out of its income so this Government funding will continue to be the case for some time to come.

The Shaw report (and others) made the point that Network Rail is the creature of the DfT and legally the DfT is responsible for its accounts. This is the core of the problem - the DfT is Network Rail's owner, funder, infrastructure specifier and regulator. Until this tight linkage can be broken Network Rail will inevitably see the DfT as its customer.

The same is also the case for the train operating companies - the quantity of management time taken up by responding to the DfT's and the ORR's questions and investigations limits the 'bandwidth' they have available for dealing with the fare-paying customers...

The system is complicated enough as it is - adding another level of complexity to include a congestion charge will not change anything as the train service frequency and number of seats is defined by the DfT in the franchise contracts. And the franchise contracts are not aligned with infrastructure capabilities or enhancement timescales - although the DfT controls both!

A congestion charge might work if the TOCs were allowed to set their timetables without interference from the DfT.

 

[pdeaves]

There is also a capacity charge (a 'congestion charge', if you like) in existence. TOCs pay a premium over and above the 'wear and tear' element; for places like London terminal approaches this is higher than a 1tph branch line. This link https://drive.google.com/file/d/18cCK3j8urXSHPuCK-iTNIDUKZgb8MZZd/view takes you to a letter from ORR to MTR Crossrail about their capacity charge.

 

[squizzler]

A point of order...! The Fixed and Variable track access charges, as indeed all the various charges for stations and so on, are paid to Network Rail directly. The DfT has no part in these transactions.
The DfT's involvement in the franchises' cash flows is essentially limited to the receipt of any premiums that are to be paid or the paying out of any subsidy.

I appreciate that the track charges go straight to network rail and that some operators pay premiums to the DfT. I was asking if things should be rebalanced so that Network rail charges operators on busy mainlines significantly more to account for the scarcity of path; since these busy main routes are those where the successful operators ply their trade their will be less (if any) need for ToC payments to government anymore. Since Network rail would be getting more of its income from track charges government can in turn pay NR less by the same amount.

I accept your argument that NR might be seen as an arm of government anyway even if they act at arms length.

A congestion charge might work if the TOCs were allowed to set their timetables without interference from the DfT.

Or at least if only they had a bit more flexibility in setting timetables than they do at the moment...

There is also a capacity charge (a 'congestion charge', if you like) in existence. TOCs pay a premium over and above the 'wear and tear' element; for places like London terminal approaches this is higher than a 1tph branch line.

That's interesting. I am curious as to what proportion it increases track access charges on average (the latter of course being dependent on train length) and how many operators are currently subjected to it?

 

[pdeaves]

and how many operators are currently subjected to it

All of them, I believe.

 

[Dr Hoo]

All of them, I believe.

I thought that the 'capacity charge' was essentially supposed to relate to the extra costs under the performance regimes (e.g. triggered by greater reactionary delay than originally assumed at the five-yearly re calibration) rather than reflecting 'scarcity' or involving the DfT.
I was also under the impression that the ORR had decided as far back as 2017 to wind up the capacity charge for Control Period 6 so it was hardly relevant to mention it in a forward looking context. The documentation is quite complicated but there are some relevant references in https://orr.gov.uk/__data/assets/pd...ble-usage-charge-consultation-conclusions.pdf . Sadly it is not feasible to summarise this.