TOC contract expiry dates

[LNW-GW Joint]

This is a minimalist announcement, with still no clarity about how (s)GBR will manage the railway.
The BBC web site also uses the term "eventually" for the integration of Network Rail into GBR.
£130 million* in fees is a drop in the ocean compared to the management costs of government ownership - there will be no-one to kick for poor performance.
Will the DOL SWR get class 701s into service any quicker than First/MTR?

*I think that is across all 10 private TOCs

 

[HerneHill]

£130 million* in fees is a drop in the ocean compared to the management costs of government ownership - there will be no-one to kick for poor performance.

Just kick TOC leadership directly - set their bonus targets to be based on performance levels etc.

The £130m goes to Owning Group leadership which frankly add no value anyway, and there will be no need to replace them like-for-like within the DfT Operator Ltd structure

 

[JonathanH]

Just kick TOC leadership directly - set their bonus targets to be based on performance levels etc

I think most people find the idea of any sort of bonus toxic unless the railway runs perfectly day in day out.

Paying managers over the odds is as much a symptom of taking money out of the railway as having private companies involved.

 

[Djgr]

This is only a first step...but an absolutely essential one.

 

[HerneHill]

I think most people find the idea of any sort of bonus toxic unless the railway runs perfectly day in day out.

Call it a “variable component” to their salary if you will - point is just to create a mechanism where TOC/NR/future GBR management has upside for doing well, downside for doing poorly. Doesn’t have to be a large amount at all, but having *something* will help sharpen the priority focus.

Privatisation nuts like Rail Partners always like to present the false dichotomy that “once you remove the private sector, no one will have the commercial incentive to do well anymore, so everything will go down the drain” - I say, why not incentivise the public employees directly??

 

[Goldfish62]

OK, what's everyone's solution then everyone?

If taking into public ownership so that the separation between track and train can be removed and a multitude of unnecessary complex contractual relationships removed isn't the answer, what's your proposal for running the railways?

You can't just rubbish something without have an idea of what should be done instead. Or perhaps people think the current set-up is so great it shouldn't be changed.

 

[Lee898]

This is only a first step...but an absolutely essential one.

Maybe. However, I don't see the Welsh and ScotRail franchises being merged into what should be an national rail/BR or the project is an no-starter.

Call it a “variable component” to their salary if you will - point is just to create a mechanism where TOC/NR/future GBR management has upside for doing well, downside for doing poorly. Doesn’t have to be a large amount at all, but having *something* will help sharpen the priority focus.

Privatisation nuts like Rail Partners always like to present the false dichotomy that “once you remove the private sector, no one will have the commercial incentive to do well anymore, so everything will go down the drain” - I say, why not incentivise the public employees directly??

Quite true with last statement! I hope the government might take the network southeast model of management as a firm bedrock to breed excellence and ingenuity in this sense.

 

[Clarence Yard]

..

So instead of paying First Group they will instead be paying the unaccountable 'OLR Holdings ltd" money to attempt to run the railway.

Don't worry I'm sure like with Northern things can only get better, single units all around other than in the high peaks most likely

DfT OLR Holdings Ltd (as was) is a wholly owned DfT company and is not unaccountable. It is responsible to the DfT (and therefore parliament) and its accounting officer is the permanent secretary at the DfT.

It is not “profit making” and receives no management fees, unlike the previous private “owners” of the TOCs. Its staff are salaried employees, not consultants.

 

[Goldfish62]

I think most people find the idea of any sort of bonus toxic unless the railway runs perfectly day in day out.

Paying managers over the odds is as much a symptom of taking money out of the railway as having private companies involved.

There's bonuses and bonuses. Middle and senior management staff at TfL get annual bonuses (or "lump sum" if you prefer) but haven't had an annual cost of living salary rise for getting on for a decade now.

 

[JonathanH]

I hope the government might take the network southeast model of management as a firm bedrock to breed excellence and ingenuity in this sense.

What is the Network South East model of management and how does it apply to the current day?

 

[Goldfish62]

What is the Network South East model of management and how does it apply to the current day?

That'll be sectorisation. The business model whereby BR was growing into a successful and highly efficient business, before dogmatic privatisation dismantled it all.

 

[JamesT]

OK, what's everyone's solution then everyone?

If taking into public ownership so that the separation between track and train can be removed and a multitude of unnecessary complex contractual relationships removed isn't the answer, what's your proposal for running the railways?

You can't just rubbish something without have an idea of what should be done instead. Or perhaps people think the current set-up is so great it shouldn't be changed.

The problem is that's exactly what the government are doing. They're throwing out the TOCs without any obvious plan for what comes next. Or if there is a plan, they've kept very quiet about it.

 

[Wolfie]

Delightful news. The only way is up. According to RecentTrainTimes, over the past six months, my SWR train is on time 5% of the time. Now a change of management may not be the panacea to the abysmal performance on the South West mainline, but a change is needed nonetheless.

Before you get too excited you might wish to see how Northern has fared since being taken over by OLR.

Isn't the *whole* point of having a parliament with absolute power that when they pass legislation they're NOT open to legal action... Just nationalise them and the courts should throw the case out.

If we had a Parliament with the sort of powers that you describe the UK would rightly become a pariah state who no one would do business with. Who in their right mind would loan or invest in a country where, regardless of legally binding contracts, assets could just be seized?

In reality at the very least vast amounts of compensation would arise from your proposed course of action.

I have to ask... why does a Government Transport Secretary think it's a good idea to specifically make announcements through an article on a newspaper's website, rather than through... Government channels?

Mr Speaker may well be asking her the same question....

 

[Goldfish62]

The problem is that's exactly what the government are doing. They're throwing out the TOCs without any obvious plan for what comes next. Or if there is a plan, they've kept very quiet about it.

You are surely aware that there's another rail bill pending which will address all that by enabling GBR and the future structure? Just because it hasn't been made public yet doesn't mean that no one is working on it! There's going to be a public consultation on it early in the New Year.

The paper that the Labour Party published in April makes clear that they very much have a plan.

Given that GBR is going to take 2-3 years to become established bringing TOCs under common ownership gradually over that time is far more sensible than trying to do them all at once on a single day, wouldn't you say?

Or they could just shrug their shoulders, be defeatist and carry on with the current dysfunctional set-up that absolutely no one is happy with.

 

[NorthLondoner]

Does anyone know what is going to happen to Chiltern, GTR, GWR and WMT contracts?

 

[LNW-GW Joint]

That'll be sectorisation. The business model whereby BR was growing into a successful and highly efficient business, before dogmatic privatisation dismantled it all.

Multiple businesses, actually.
Intercity, Network South East and Regional Railways were devolved sectors at the end of BR, ie profit centres.
Plus the 4x freight TOCs which, structured differently to BR, will remain private.

Regional Railways was the Cinderella of the passenger sectors and was neither successful nor efficient, although it did its best with what it had.
Cross-Country was the Cinderella within Intercity, and is still so today.

 

[Wolfie]

But following the contracts and serving notice is exactly what they are doing. If the contract contains an unfavourably (to government) worded break clause the failing was with the government department that negotiated it in the first place. They couldn’t just move the goal posts when it suits and expect to retain credibility.



Large multinational organisations choose which governments they deal with. Governments that don’t honour their own agreements aren’t likely to be looked upon favourably.

It is actually rather concerning that things like that need to be explained.

 

[Goldfish62]

Multiple businesses, actually.
Intercity, Network South East and Regional Railways were devolved sectors at the end of BR, ie profit centres.
Plus the 4x freight TOCs which, structured differently to BR, will remain private.

Regional Railways was the Cinderella of the passenger sectors and was neither successful nor efficient, although it did its best with what it had.
Cross-Country was the Cinderella within Intercity, and is still so today.

Yes, a business model that encompassed multiple businesses.

Intercity was making a healthy profit and NSE was on the verge of doing so. Imagine what could have been done if same level of subsidy that needed pumping into the privatised railway was instead pumped into BR at that time

The only successes really have been the FOCs and it's quite right that they stay private (apart from DRS which is publicly owned anyway).

 

[Nicholas Lewis]

Does anyone know what is going to happen to Chiltern, GTR, GWR and WMT contracts?

Heidi Alexander been on Times radio this morning and said we will take in house all remaining operators over the next 3 years is maybe a clue there in no rush and just dealing with the ones whose contracts are running out first.

https://x.com/TimesRadio/status/1864226574381293979

 

[physics34]

Just kick TOC leadership directly - set their bonus targets to be based on performance levels etc.

The £130m goes to Owning Group leadership which frankly add no value anyway, and there will be no need to replace them like-for-like within the DfT Operator Ltd structure

It won't be TOC based eventually anyway apparently.. more likely large geographical sectors.

Personally, I think bringing back Intercity isn't a bad idea. Profits from that operation subsidise the other sectors. Sounds a bit familiar!

 

[LNW-GW Joint]

Yes, a business model that encompassed multiple businesses.
Intercity was making a healthy profit and NSE was on the verge of doing so. Imagine what could have been done if same level of subsidy that needed pumping into the privatised railway was instead pumped into BR at that time
The only successes really have been the FOCs and it's quite right that they stay private (apart from DRS which is publicly owned anyway).

Privatisation was the trigger for the West Coast Route Modernisation and Thameslink 2000, as they were baked into the sale of Railtrack and ICWC/TL.
Network Rail funded major upgrades in its semi-private days by adding to the regulated asset base (aka credit card).
HS1 was built and is operated with private money - so was Heathrow Express.
Many TOC franchises got new rolling stock and more frequent services, where BR would have made them wait until cascades were available.
All that changed with Covid of course, but privatisation in principle was not a total failure, I think.
HS2 is not, so far, much of an advert for the government-controlled railway.

 

[jackdoyle]

There is a bit more detail in this Written Ministerial Statement. https://questions-statements.parliament.uk/written-statements/detail/2024-12-04/hcws281

services currently operated by South Western Railway and c2c will be the first to transfer into public ownership when their National Rail Contracts expire on 25th May 2025 and 20th July 2025 respectively. The Government is also announcing that, in line with our approach of transferring services as existing contracts expire, Greater Anglia’s services will be next to transfer in autumn 2025. The Government will issue an expiry notice to Greater Anglia in due course to confirm the exact transfer date.

Following Greater Anglia, the programme will continue with the transfer of one operator's services roughly every three months. We expect these to follow the order in which operators’ current contractual minimum terms expire, unless a TOC defaults on its contract to the extent that there is a contractual right to terminate (in which case it will transfer as soon as reasonably practicable) or other extenuating circumstances arise.

The changes made by the Passenger Railway Services (Public Ownership) Act 2024 make appointing a publicly owned operator the default rather than a last resort. Therefore, I am also announcing that, from today, the organisation responsible for managing the Public Sector Operators will be changing its name to DfT Operator Ltd. I look forward to working collaboratively with them as these transfers into public ownership begin and as the work of Shadow GBR continues.

 

[physics34]

That'll be sectorisation. The business model whereby BR was growing into a successful and highly efficient business, before dogmatic privatisation dismantled it all.

I think the treasury wouldn't provide the funds for the replacement of thousands of slam door carriages. Private investment was needed. NSE wouldn't have been in profit had it continued in that form.

 

[Goldfish62]

I think the treasury wouldn't provide the funds for the replacement of thousands of slam door carriages. Private investment was needed. NSE wouldn't have been in profit had it continued in that form.

The early replacement of slam door stock of which some was less than 30 years old was more a safety requirement than anything else.

Nothing wrong with private investment in the public sector. I'm not a dogmatist. Which works both ways of course - I'm sure some people would privatise their grandmother if they could.

 

[Lee898]

What is the Network South East model of management and how does it apply to the current day?

Quite autonomous, was given quite a wide latitude to experiment, and was given quite a wide scope in financially making his remit financially green, something that was done unless I am mistaken.

New trains were bought and made in Britain, brand became a hit after an few Years only, and this was due to the large autonomy it had. Wasn't perfect but it was the testbed where y the rest of the network would have become had not privatisation come and somewhat, wrecked it all.

 

[Goldfish62]

Quite autonomous, was given quite a wide latitude to experiment, and was given quite a wide scope in financially making his remit financially green, something that was done unless I am mistaken.

New trains were bought and made in Britain, brand became a hit after an few Years only, and this was due to the large autonomy it had. Wasn't perfect but it was the testbed where y the rest of the network would have become had not privatisation come and somewhat, wrecked it all.

Yes. I recommend reading the Network SouthEast story by Chris Green. There was far more autonomy, flexibility and enthusiasm back then.

Talking of Chris Green, with one or two exceptions the senior managers back in the Bob Reid Mk 1 era were titans compared with the lamentable quality nowadays.

 

[Wolfie]

The early replacement of slam door stock of which some was less than 30 years old was more a safety requirement than anything else.

Nothing wrong with private investment in the public sector. I'm not a dogmatist. Which works both ways of course - I'm sure some people would privatise their grandmother if they could.

A natural consequence of continuing for far too long to procure obsolete rolling stock. Slam door production should have stopped in the 1950s at the latest.

 

[Goldfish62]

A natural consequence of continuing for far too long to procure obsolete rolling stock. Slam door production should have stopped in the 1950s at the latest.

Yes, but that's not the point.

 

[LNW-GW Joint]

There are currently 10 private DfT TOC contracts, and we now know that 3 will transfer to DOL in 2025.
Of the 7 remaining contracts on 1 Jan 2026, all of them will be past their core term expiry dates except Avanti (Oct 2026) and Cross Country (Oct 2027).
So at 4 per year the DfT should be able to complete TOC transfers by October 2027.
The most obvious date is that for the West Midlands Trains contract which fully expires in Sept 2026.

That still leaves the non-DfT concession contracts: LO (Arriva), EL (Tokyo Metro/Go-Ahead) and Merseyrail (Transport UK/Serco) in private hands, at least for now.
Arriva's contract for LO expires in May 2026, the Merseyrail contract expires in 2028 and the new 7-year Elizabeth line contract expires in 2032.

 

[physics34]

Yes. I recommend reading the Network SouthEast story by Chris Green. There was far more autonomy, flexibility and enthusiasm back then.

Talking of Chris Green, with one or two exceptions the senior managers back in the Bob Reid Mk 1 era were titans compared with the lamentable quality nowadays.

Agreed. Just yes men (and women) now. If only Chris Green, Graham Eccles et al could come out of retirement!