Transport Select Committee 24 June - Including plans to centralise control of Railways

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Shapps appeared this morning on all transport topics but on rail i picked up

Williams review has partly happened by default due to C19

Pretty well said concessions are coming along LO style but what will happen to EMA in September still to be confirmed

He's very frustrated why it takes so long to get the Timetable changed and he will get that sorted as it needs to be more responsive

Paper tickets need to be eliminated

Trains are running on time because nobody are using them and there are less trains but refuted that this would be permanent

Not sure when the 'don't travel on public transport unless you have to' will be relaxed but implies something needs to be reconciled between need for health needs vs economic needs.
 
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Domh245

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There was also something to the effect of "it breaks my heart as Transport Secretary telling people not to use rail"!
 

PG

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He's very frustrated why it takes so long to get the Timetable changed and he will get that sorted as it needs to be more responsive
Has he got a box of magic tricks?

IIRC he wasn't in post for the 2018 timetable change fiasco, so he could do with taking a look at what happens when people tried to implement changes in shorter than the normal timescales.

I don't disagree that it must be frustrating with the time it takes to get changes implemented, just wonder what (if anything) he proposes to do differently?
 

Brissle Girl

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Has he got a box of magic tricks?

IIRC he wasn't in post for the 2018 timetable change fiasco, so he could do with taking a look at what happens when people tried to implement changes in shorter than the normal timescales.

I don't disagree that it must be frustrating with the time it takes to get changes implemented, just wonder what (if anything) he proposes to do differently?
He won’t. He’ll impose a change, get shifted to another department as is the way with govt ministers, and be well out of the way when the proverbial hits the fan.
 

Jorge Da Silva

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The Government will use emergency coronavirus controls of the UK’s railways to centralise control of Britain’s railways, in a move comparable to nationalisation.
The Transport Secretary said the crisis had provided opportunities to establish a “different type of railway”, in a move that would mean the end of the franchise system established by John Major.
Train operators would receive a fixed fee from the Government which would essentially own all routes and collect fares.
Under the current system franchise holders collect fares and pay a percentage to the Exchequer, which encourages them to maximise income.
The entire system would be overseen by a board, which would likely be chaired by the Transport Secretary, giving the Government more control over pricing and timetabling.
In a meeting of the Commons' Transport Select Committee on Wednesday, Mr Shapps said such a model would "bring the railway back together”.
Mr Shapps compared it to the system of Transport for London, in which operators are contracted to run London Overground lines "as concessions".
It is understood that Network Rail, which currently operates the train networks' tracks, could be given the powers to specify and award such contracts.

It would also be able to set out the targets that train operators have to hit as well as specifying the number of services being run.
The proposals are expected to be incorporated into the final report of a 21-month independent review into the rail industry by former British Airways chief executive Keith Williams.
Mr Shapps promised that more detail would be forthcoming in the long-awaited review.
“Clearly, what we need to do is get to a situation which gets us to the Williams review,” he said.
“The route between where we are and where we were has been changing and you might say speeded up”.
In March ministers took the decision to bring the railways under the Government’s control through emergency measures agreements, protecting franchises from revenue damage due to plummeting passenger numbers.
The agreements are due to end in September, giving the Government fresh opportunity for restructure.
During yesterday’s committee, Mr Shapps also revealed that cyclists are likely to take priority over cars as the country recovers from the impact of coronavirus.
The Transport Secretary said that there should be a "reprioritising" of how local authorities think about road space.
Mr Shapps noted that bike use doubled during the week and trebled at weekends at the height of the coronavirus lockdown.
He said: “We have seen a more than 100 per cent increase in people cycling during the height of lockdown, but the trick is to keep this going, which requires more than the large sums of money we’re putting in.
"It also requires a change in culture.”

In May the Government announced £2 billion for cycling and walking, with £250 million immediately available for the installation of temporary, pop-up measures to aid social distancing.
However, Mr Shapps’ plan to bring half a million unused bikes back into service, with a £50 towards repairs and overhaul, has yet to issue a single voucher.
“We have a problem. There is a massive waiting list for everything to do with bikes,” he admitted.
Mr Shapps also committed to a memorial for transport workers who died of coronavirus.
He suggested that the commemoration could be erected in London’s Victoria Station, in memory of Belly Mujinga.
The ticket officer died of coronavirus in April days after a man who said he had Covid-19 spat and coughed at her as she worked inside the station.
The Transport Secretary said it would be an "appropriate location" for such a tribute.
He said: “I have spoken to the unions and others about doing something in the slightly longer term to commemorate transport workers' extraordinary input and effort to assisting this country in this time of crisis, perhaps with some sort of commemoration or memorial and perhaps even at Victoria station where, sadly, Belly Majinga worked.
“We don’t know whether it (her death) was connected to that incident but nonetheless that might be an appropriate location to remember all transport workers during this crisis.”

any thoughts?
 

185

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any thoughts?
Of the view that finally someone within government has seen sense and realised that running directly managed contracts, or using their own state-owned company is far, far cheaper for the taxpayer than having a private firm running mostly subsidised contracts and taking a huge cut of the cash. The railway should both pay for itself and have enough money to do well, without the need for the current level of subsidy, in my opinion. This could free up money for new projects, such as HS2.
 

Economist

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I don't see the benefit to the public of contracting the running of government controlled services to private companies unless it keeps the debt off of the government's books. One of the main costs to TOCs is rolling stock leasing, wouldn't it make sense for the government to own all new rolling stock? Surely with government bond yields so low at the moment, it'd be cheaper for the government to borrow the money to own the trains outright rather than relying on the ROSCOs.
 

185

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I don't see the benefit to the public of contracting the running of government controlled services to private companies
I was always told using a contractor, primarily avoids legal risk to govt or the taxpayer should something go (horribly) wrong.

...it'd be cheaper for the government to borrow the money to own the trains outright rather than relying on the ROSCOs.
Agree absolutely, it's money down the toilet - but I wonder again if this is also due to avoiding (legal) risk.
 
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ForTheLoveOf

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I don't see the benefit to the public of contracting the running of government controlled services to private companies unless it keeps the debt off of the government's books. One of the main costs to TOCs is rolling stock leasing, wouldn't it make sense for the government to own all new rolling stock? Surely with government bond yields so low at the moment, it'd be cheaper for the government to borrow the money to own the trains outright rather than relying on the ROSCOs.
Absolutely. Current financing rates aren't nearly as usurious as they were about 5 or 10 years ago, but I'm sure that the new generation of ROSCOs still aren't making a loss on their new-build leases. The whole idea of the ROSCOs (and arguably privatisation itself, but definitely the ROSCOs) was simply ideological. It's completely nonsensical for the government to underwrite one private company to pay a lease from another private company, the lease itself being guaranteed by the government. It's no different to PFI.

The argument always goes that putting rolling stock on the government balance sheets isn't possible because it would drive up government debt and thus impair our ability to borrow sustainably. That is a total cock and bull story. This crisis has shown the government can rack up a mountain of debt whilst reducing gilt yields to negative in some cases.

The combined assets of all the ROSCOs are £10-20bn, depending on how you value them. That's a drop in the ocean compared to government debt as a whole, let alone Network Rail's debt (which the Treasury reluctantly admitted constituted government debt a few years ago). You would save hundreds of millions each year in interest payments (according to a 2017 report, leasing payments were £1.2bn a year - it'll be even more now). Of course the issue would be buying the ROSCOs out...
 

Mollman

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Shapps appeared this morning on all transport topics but on rail i picked up

Williams review has partly happened by default due to C19

Pretty well said concessions are coming along LO style but what will happen to EMA in September still to be confirmed

He's very frustrated why it takes so long to get the Timetable changed and he will get that sorted as it needs to be more responsive

Paper tickets need to be eliminated

Trains are running on time because nobody are using them and there are less trains but refuted that this would be permanent

Not sure when the 'don't travel on public transport unless you have to' will be relaxed but implies something needs to be reconciled between need for health needs vs economic needs.
Thanks for the summary. Two key points, his comment on timetable changes has angered quite a few people in the rail industry as it appears he hasn't bothered to understand why it takes so long. Second - the usualy paper tickets garbage, eliminating these completeley will make srailways less accessible as people will need either a) a smartcard (with accociated aditional cost to obtain and replace), b) a smartphone - I know a few people who have been unable to get a 26-30 railcard due to not having a smartphone, or c) a contactless card which again there are certain people who don't have one.

They could call it the British Railways Board
Or the Strategic Rail Authority
 

LNW-GW Joint

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Absolutely. Current financing rates aren't nearly as usurious as they were about 5 or 10 years ago, but I'm sure that the new generation of ROSCOs still aren't making a loss on their new-build leases. The whole idea of the ROSCOs (and arguably privatisation itself, but definitely the ROSCOs) was simply ideological. It's completely nonsensical for the government to underwrite one private company to pay a lease from another private company, the lease itself being guaranteed by the government. It's no different to PFI.

The argument always goes that putting rolling stock on the government balance sheets isn't possible because it would drive up government debt and thus impair our ability to borrow sustainably. That is a total cock and bull story. This crisis has shown the government can rack up a mountain of debt whilst reducing gilt yields to negative in some cases.

The combined assets of all the ROSCOs are £10-20bn, depending on how you value them. That's a drop in the ocean compared to government debt as a whole, let alone Network Rail's debt (which the Treasury reluctantly admitted constituted government debt a few years ago). You would save hundreds of millions each year in interest payments (according to a 2017 report, leasing payments were £1.2bn a year - it'll be even more now). Of course the issue would be buying the ROSCOs out...
How do you account for the global train leasing model which is used by many railways including plenty that are more "nationalised" than ours?
Similar models are used for things like ships, aircraft, containers and many other things in the transport industry.
There's a global market in such things.
The UK likes to be different enough that market forces don't work, but it forces up the cost of everything on the railway that is bespoke - which is nearly everything.

Shapps has said enough to indicate that we are heading towards a TfL model of concession-type TOCs.
But TfL leases its new trains, and the deals mostly include maintenance and performance guarantees by the manufacturer (similarly for Merseytravel's new fleet).
It's not simply a question of funding the initial purchase.

Just now, the government gives the impression it can spend any amount on reconstruction by borrowing money at low interest.
But sure as night follows day, the lenders will want their return, which will bring austerity back with a vengeance if we don't have the GDP to support it.
I doubt very much that Shapps has the green light to nationalise everything on the railway (as well as bailing out the airlines and everything else).
 

ForTheLoveOf

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How do you account for the global train leasing model which is used by many railways including plenty that are more "nationalised" than ours?
Similar models are used for things like ships, aircraft, containers and many other things in the transport industry.
There's a global market in such things.
The UK likes to be different enough that market forces don't work, but it forces up the cost of everything on the railway that is bespoke - which is nearly everything.

Shapps has said enough to indicate that we are heading towards a TfL model of concession-type TOCs.
But TfL leases its new trains, and the deals mostly include maintenance and performance guarantees by the manufacturer (similarly for Merseytravel's new fleet).
It's not simply a question of funding the initial purchase.

Just now, the government gives the impression it can spend any amount on reconstruction by borrowing money at low interest.
But sure as night follows day, the lenders will want their return, which will bring austerity back with a vengeance if we don't have the GDP to support it.
I doubt very much that Shapps has the green light to nationalise everything on the railway (as well as bailing out the airlines and everything else).
Market forces fundamentally don't change the fact that governments with a good enough credit rating can, and always will, be able to borrow at much lower interest rates than private companies can.

In any case, the market for rolling stock in this country could hardly be further from a free market, given the DfT needs to sign off on every new lease that's made - and that was before the pandemic. It's simply not comparable to ships, aircraft and containers, each of which feature truly free markets! Yes, there are areas with monopolies (ahem, Airbus & Boeing), but it is still a free market that doesn't involve the government's authorisation for companies to sign leases.

TfL initially bought the Crossrail fleet (outright). They only did a sale and leaseback because their finances forced them to (and that's precisely the kind of lunacy that the Government are in favour of). The other fleets are on leases through their concessionaires.

At the end of the day it is purely a political decision. And virtually everything about the railways always will be, for as long as they are dependent on the state for subsidy.
 

Domh245

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At the end of the day it is purely a political decision. And virtually everything about the railways always will be, for as long as they are dependent on the state for subsidy.
Perhaps a good one though. Ask the public whether they want to spend (for example) £1 billion on a new fleet for SWR suburban services (very much needed) or on hospitals/armed forces/almost anything else and the railway will never come out on top.
 

ForTheLoveOf

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Perhaps a good one though. Ask the public whether they want to spend (for example) £1 billion on a new fleet for SWR suburban services (very much needed) or on hospitals/armed forces/almost anything else and the railway will never come out on top.
But phrase the question another way and ask a taxpayer whether they would prefer for the government to have 0.1% more debt, or for several hundred million pounds a year to go to a "fatcat" leasing company... that could "go to the NHS instead"... and you might get a rather different answer indeed!
 

Domh245

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A very nuanced point which won't translate well to tabloid headlines (or twitter) I'm afraid. 1 Billion 'now' sounds a lot scarier, and will invoke a whole lot more outrage than a few million per year (considering just a single hypothetical new fleet) - by the time you've gone past the 'break even' point, it's well out of the public's mind. You will never be able to convince the public that outright purchase of a whole new fleet of trains is preferable to pumping the same amount of money into other ventures - even though it does work out more expensive in the long run.

That's not to say that the Government shouldn't do it - as you say, there are savings to be made and a suitably bold government could well do it but the public aren't very good at wrapping their heads around government borrowing/spending, and it's a bold government indeed that goes against public opinion.
 

mmh

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The elephant in the room is that the Government would be able to get away with selling any headline cost of railway reform to the press and Conservative voters right now simply by packaging it with a "saving" from somewhere. There's a rather large railway project ripe for "mothballing" in this sort of climate which would give the headlines they'd like.

Conjecture of course, conversely you could see a Tory government propose Keynesian spending for recovery. We live in very strange times, anything can happen and probably will.
 

Hb06_

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I don't really understand centralising the railways. Would it be similar to what they are doing now with the TOCs (management fees, taking on the losses), or would it be similar to British Rail. or would the government just control the fares and timetables and nothing else and First or Abelio just continue operating the franchise?
 

mmh

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Of the view that finally someone within government has seen sense and realised that running directly managed contracts, or using their own state-owned company is far, far cheaper for the taxpayer than having a private firm running mostly subsidised contracts and taking a huge cut of the cash. The railway should both pay for itself and have enough money to do well, without the need for the current level of subsidy, in my opinion. This could free up money for new projects, such as HS2.
Has the railway as a whole ever paid for itself?
 

lordbusiness

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Has the railway as a whole ever paid for itself?
Nope?

Two comments:

Going to a TFL model- Not exactly a model of efficiency, and profitability. Grossly over staffed.

At least getting rid of paper tickets completely would remove the need for ticket offices which would be a big saving overall in staff costs.
 

LNW-GW Joint

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Has the railway as a whole ever paid for itself?
For most of the first 100 years (with plenty of individual bankruptcies along the way, mostly in the construction phase).
Since 1914 the government has controlled the railway (which then included hotels, ferries, property etc) to a greater or lesser degree.
I think the railway (BR by then) dipped into permanent loss from about 1958 and has never quite got out of that situation, despite all the reorganisations.
The railway was "too big to fail", being critical to strategic transport objectives, until the 1960s.
Once the government and public realised they didn't need the railway it has become an optional extra which needs to pay its way to survive.
Freight also used to pay a high proportion of the cost of the railway (king coal etc), and that has steadily diminished in recent decades.
The passenger railway now has to pay its own way without any cross-subsidy from freight.
Many of the other assets (notably land) have also been sold off for redevelopment.
 

The Planner

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He's very frustrated why it takes so long to get the Timetable changed and he will get that sorted as it needs to be more responsive
:lol: :lol: Don't think he realises what is required there. Either we go STP constantly or we spend years sorting out Part D of the Network Code as the process is set in that, let alone shorting the timescales it takes to sort driver diagrams.
 

Bletchleyite

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:lol: :lol: Don't think he realises what is required there. Either we go STP constantly or we spend years sorting out Part D of the Network Code as the process is set in that, let alone shorting the timescales it takes to sort driver diagrams.
I think there's probably a happy medium - for instance, it was really a big problem that it was going to take upwards of a year to fix the issues with the LNR timetable despite it being found that it was causing serious issues both for passengers of that TOC and for other TOCs. There really needs to be scope to fix this kind of problem more quickly, even if it's mostly done fairly crudely by fiddling with diagrams rather than the timetable, or by simple tweaks like stepping back 20 minutes at Northampton, so there's no effect on paths, and it's a station with plenty of platform capacity.
 

ChiefPlanner

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Would need some serious consideration - not that either TOC's and FOc's are exactly awash with excellent train planners - they have some great people , but hard pressed at best of times.

Apart from the regulatory infrastructure , operators have considerable duties involved in public consulatation to deal with - so "Plenty to do" ...to say the very least.
 

mmh

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Would need some serious consideration - not that either TOC's and FOc's are exactly awash with excellent train planners - they have some great people , but hard pressed at best of times.

Apart from the regulatory infrastructure , operators have considerable duties involved in public consulatation to deal with - so "Plenty to do" ...to say the very least.
But the suggestion is that those duties such as public consultation would be centralised and no longer a direct concern of the operator. It may or may not be easy to evolve the current system into a centralised one, but it'll be easier to sell to the public.
 

tbtc

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So private companies but with no incentive to check fares or improve passenger numbers (since they'd get a flat fee for operating things, and just accept whatever state-controlled decisions to change timetables/ fares/ rolling stock)?

The only question is whether you trust the DfT more than you trust private operators... be careful what you wish for!
 

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