TOC payments to government leap from £40m to more than £800m

Discussion in 'UK Railway Discussion' started by CdBrux, 28 Aug 2015.

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  1. CdBrux

    CdBrux Member

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    http://www.railtechnologymagazine.c...ugust+15+week+4&dm_i=IJS,3MROU,G6LINB,D236Z,1



    And the ORR report from which this data is taken:
    http://orr.gov.uk/__data/assets/pdf_file/0005/18842/rail-finance-statistical-release-2014-15.pdf
     
    Last edited: 28 Aug 2015
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  3. aformeruser

    aformeruser Veteran Member

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    I recall there being suggestions the local franchise subsides were miscalculated for 2013-2014 and were actually a lot lower than reported with Northern Rail affected the most. Although, the recent year figures for Northern will reflect the impact of the reduced subsidy Direct Award.

    For those who prefer a graphical representation: http://www.railtechnologymagazine.com/write/MediaUploads/ORR_graph.jpg
     
    Last edited: 28 Aug 2015
  4. The Ham

    The Ham Established Member

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    Although the graph shows that most TOC's have seen an improvement between the 2012/2013 and 2014/2015, there are a few exceptions (i.e. FGW and C2C as well as ending franchises such as FCC and Southern).

    The two TOC's which look like they have done the best (having returned money in the last year rather requiring money in previous years) are EMT, Chiltern and XC. The latter could mean that the next franchise holder could be more interested in acquiring new/additional rolling stock to resolve some of the issues with there not being enough capacity because of the Voyagers.
     
  5. aformeruser

    aformeruser Veteran Member

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    I'm not sure of your definition of 'best' as we know franchises aren't fairly split up meaning some aren't expected to make profits.
     
  6. The Ham

    The Ham Established Member

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    The definition I took was those which had in previous years had been "loss making" for the government but had now started to be "profitable" for them. In the case of EMT from a small loss to quite a reasonable payment to the government (nearly comparable with East Coast Trains a few years back).
     
  7. aformeruser

    aformeruser Veteran Member

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    So in the case of Liverpool-Nottingham (an EMT route) would moving it to Northern or TPE weaken the case for new rolling stock, in your opinion, even if passenger loadings remain the same and it continues to have mainly 4 car 158s under the new operator? If so why?
     
  8. ScotGG

    ScotGG Member

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    I wonder what Southeastern would look like without the very high HS1 track access charges increasing costs?

    Could that be preventing the franchise getting badly needed rolling stock for inner suburban routes as HS1 is skewing figures?
     
  9. Clarence Yard

    Clarence Yard Member

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    The difference in year on year network rail charges (in particular FTAC) is skewing the individual TOC subsidy/premium figures. The comparisons are fairly meaningless, especially when you consider the CP4/CP5 change point for all NR charges!
     
  10. infobleep

    infobleep Established Member

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    No wonder South West Trains were not interested in a direct award. Lower profits with more money for the government. No thank you.
     
  11. WatcherZero

    WatcherZero Established Member

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    The FTAC reflects the expected investment in infrastructure during the current and preceding control periods (depending on repayment length assigned to a projects infrastructure) by Network Rail that the franchise will have to repay. It therefore is highly meaningful for comparison purposes as it shows where the money is being spent on passenger improvements.
     
  12. Clarence Yard

    Clarence Yard Member

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    The FTAC has nothing to do with TOC specific investment. It is a balancing sum.

    After all other charges and subsidies are calculated at a periodic review, the residual NR funding requirement is done through FTAC, which is effectively a Government subsidy "laundered" through the franchised TOCs on a fairly arbitrary basis.

    It was judged in the GNER court case to be an "artificial construct" and TOCs are completely protected in their franchise agreements from any changes in FTAC as they won't know the changes in advance and have no control over the sums paid, which can vary significantly from year to year. The NR website has details.

    Any comparison of changes in TOC subsidy levels has to take into account changes in NR charges otherwise they make no sense at all.
     
  13. aformeruser

    aformeruser Veteran Member

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    It's been suggested by industry insiders that DfT wanted the SWT Direct Award to return a higher premium to DfT and Stagecoach told DfT to **** off (maybe not those exact words.)
     
  14. WatcherZero

    WatcherZero Established Member

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    Your misunderstanding its function.

    it allocates costs to the appropiate TOCs to reflect the actual burden after direct payments for specific projects have been removed (e.g a doubling). It therefore reflects the day to day running costs after Other income has been excluded. Its calculated on a line basis and allocated to the Tocs that use that route according to the proportion of services they make up for it. For example £30m is spent maintaining a route and three Tocs use that route, one provides 10% of services, one 20% and the third 70%, this results in a toc being charged 3m, another 6m and the third 21m. a component is the station charge which is essentially the rent the tocs pay to use the stations and facilties seperate from the variable charge of quantity of station calls and accounts for the maintenence and improvement works NR carries out in that station on their behalf.
     
  15. The Ham

    The Ham Established Member

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    EMT, Northern or TPE would make no difference to whether XC could be more likely to get new trains (the only TOC which I mentioned new trains about) because they are now "profitable" (i.e. as the government is no longer propping it up they could be more inclined to consider the next franchise having new trains).

    With regards to individual routes as given in your example, that depends on a lot more than just if it is part of a "profitable" or "subsidised" franchise. If EMT are not having any new trains but Northern and/or TPE are, then moving it over could mean that it is more likely to get new trains, especially if it allows the current 158's to be used elsewhere (such as replacements for pacers).

    Such an arrangement could lead to the withdrawal of the 158's from the Liverpool-Nottingham route to be replaced with 3/6 coach sets which would lead to an increase in capacity on that route as well as on the services which the 158's take over from pacers.
     
  16. aformeruser

    aformeruser Veteran Member

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    DfT were working on the basis that 185s released from North TPE electrification could be used in 6 car formations on a TPE service between Liverpool and Nottingham with EMT running a Nottingham to Norwich service using 4 car 158s. However, electrification delays and people objecting to the idea of the route being split has put that on hold.

    However, the reason I asked is you were saying a profitable franchise has a better case for new rolling stock, not a profitable route. Surely it should be the route which determines whether it gets new rolling stock.
     
  17. The Ham

    The Ham Established Member

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    I was saying that because XC is now profitable it could make it more likely that they could end up with new trains; now how those trains are distributed within that franchise is likely to be based on how profitable the individual routes are.

    However there is always the possibility that XC could (if the route is fully electrified in time) get new EMU's (dual voltage) for the South Coast/Manchester services to then release the Voyagers to be used on other routes, even if the South Coast/Manchester services are not the most profitable (although with the lower running costs of EMU's it could make it more profitable).

    TPE running 6 coach trains between Liverpool and Nottingham and EMT running a Nottingham to Norwich service using 4 car 158s could use the same number of coaches as EMT running it as a 6 coach train between Liverpool and Nottingham leaving a pair of coaches to then form the next up train and running 4 coach trains betweening Nottingham and Norwich. Yes it would mean having to get the right mix of units, however it shouldn't be impossible and could overcome the concerns about splitting the journey.
     
  18. 455driver

    455driver Veteran Member

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    Or more likely they will pay a dividend to the share holders.

    A TOC cannot simply go out and buy new trains, they have to have DaFT approval for a start.
     
  19. aformeruser

    aformeruser Veteran Member

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    185s being heavier than Sprinters wouldn't be able to keep to 158 timings to/from Norwich so you'd finish up needing an extra diagram over the current number if you used 6 car 185s throughout.
     
  20. infobleep

    infobleep Established Member

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    I thought First Great Western bought trains without DfT approval?
     
  21. NSEFAN

    NSEFAN Established Member

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    And it didn't go down well with the DfT as I understand it. Can't have that Modern, Dynamic, Thrusting Railway getting delusions of grandeur, can we?
     
  22. infobleep

    infobleep Established Member

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    But it proves it's possible. Unless a TOC thinks DfT would hold it against when at the next franchise award. That would be a conspiracy theory mind you.
     
  23. Wolfie

    Wolfie Established Member

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    ... and if a TOC could prove any such thing at a Judicial Review DfT would be crucified...
     
  24. Kettledrum

    Kettledrum Member

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    EMT is also profitable, and could look to order rolling stock for Liverpool to Norwich itself if it was supported by the DfT
     
  25. Bald Rick

    Bald Rick Established Member

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    Old trains, that matched their existing fleet, were suitable for use on the route, that the previous owner wanted to sell, had no other buyers for, and thus sold them for a song.
     
  26. 455driver

    455driver Veteran Member

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    They didnt win any franchises after it though, until the West Coast farce.
     
  27. yorkie

    yorkie Forum Staff Staff Member Administrator

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    No. FirstGroup did.
    Which meaning were you referring to?

    "the act of approving"? Probably true, but they have to lump it, and it was due to DfT inaction that the situation arose so I have no sympathy for them.

    "formal permission or sanction"? Not required!
     
  28. infobleep

    infobleep Established Member

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    I think train companies should be allowed to buy trains if they wish to do so. Free market and all that. Clearly there may be strong incentives not to do so but they shouldn't be politically hindered if they wish to do so.
     
  29. glbotu

    glbotu Member

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    The problem is that the trains are inexorably tied with their route. When the Intercity 225 (91 + Mk4s) was designed, it was designed for running Intercity services on the East Coast Main Line and that is what it's suited to. If a TOC goes out and buys trains to run an enhanced service and then loses that franchise, they'd have every right to take those trains away, leaving the passenger with a worse service.

    Imagine if National Express owned the IC225s. When they lost the franchise, how would the ECML have continued to run? The only options would be leasing them back off the TOC that owned them (not that they'd be under any obligation to do so), or get stock from elsewhere, which would be expensive/time consuming/possibly inappropriate.

    The other alternative would be that the TOC agrees that their train purchase exists only for the life of their franchise and that they'd be forced to sell them on to the next TOC should it change hands. There's no incentive to do this though, because the value of the rolling stock depreciates. To do this, they would literally have to believe that their return on investment over the life of the franchise (say 7 years) was greater than the initial purchase costs. This would be unlikely and from an economic standpoint, immeasurable, because you'd have to predict the likely increase in passengers due to your new stock over 7 years.
     
  30. infobleep

    infobleep Established Member

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    Therefore just let the market decide. If a TOC wants to enhance a service then let it but more stock. Yes you'd lose the extra services if it lost the franchise but if they weren't provided in the first place you wouldn't have them anyway so why not have them for a few years rather than not at all if that is what a TOC wishes to do.
     
  31. headshot119

    headshot119 Established Member

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    There should be no reason that a TOC can't in association with a ROSCO purchase new stock.

    If the DFT feels the level of service needs to be maintained that is given by the new stock they can write that into the next franchise can't they?
     
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