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

[Class 170101]

How would Open Access operators calculate revenue workout ORCATS?

Not required - abolished

 

[Bletchleyite]

Not required - abolished

Or if retained they could be required to have their own ticketing only and not be part of the national system, as is the case in other countries.

 

[swt_passenger]

Why is it assumed ORCATS would end? BR used it to try and work out which trains people actually used well before privatisation...

 

[LNW-GW Joint]

The railway will always be divided into pieces, each needing to account for its own revenue/costs.
Open Access covers freight as well, and there will have to be a level playing field between the operators, and to allow new entrants.

 

[ainsworth74]

But surely Intercity not chasing commuters and WMR not chasing Intercity passengers will reduce competition and rationalise ticketing.

But it does mean that if you want to go from Liverpool to Euston rather than having the option of taking a LNR service and using a £36.00 LNR only Super Off-Peak Return the cheapest walk up will become the £92.10 Any Permitted Off-Peak return. I can well believe that as far as the DfT are concerned that means lost revenue. And as for competition I'm relatively certainly that if they thought they could get away with it they'd have tried to legislate away open access (at least in passenger terms) years ago as it risks the revenue of their franchised operators. They'll pay lip service to it of course but in reality the only competition that the DfT is (or at least was) interested in is at the franchise award stage. Actual on rail competition I believe means absolutely nothing to them.

 

[Class 170101]

But it does mean that if you want to go from Liverpool to Euston rather than having the option of taking a LNR service and using a £36.00 LNR only Super Off-Peak Return the cheapest walk up will become the £92.10 Any Permitted Off-Peak return. I can well believe that as far as the DfT are concerned that means lost revenue. And as for competition I'm relatively certainly that if they thought they could get away with it they'd have tried to legislate away open access (at least in passenger terms) years ago as it risks the revenue of their franchised operators. They'll pay lip service to it of course but in reality the only competition that the DfT is (or at least was) interested in is at the franchise award stage. Actual on rail competition I believe means absolutely nothing to them.

Problem is if you put the fares up you reduce yield. There is a point somewhere they cross where the higher fares mean lower yield but same revenue but I hardly consider the DfT capable of finding that point. However what it also does is push people away from the railway either into not making the journey at all or switching to private car(s). In this age of aiming for zero carbon emmissions switching to private cars is hardly a smart move but is the view from the DfT that the Treasury wants more money through road taxes and with fewer people on the railways and less railway subsidy?

 

[ainsworth74]

Problem is if you put the fares up you reduce yield. There is a point somewhere they cross where the higher fares mean lower yield but same revenue but I hardly consider the DfT capable of finding that point. However what it also does is push people away from the railway either into not making the journey at all or switching to private car(s). In this age of aiming for zero carbon emmissions switching to private cars is hardly a smart move but is the view from the DfT that the Treasury wants more money through road taxes and with fewer people on the railways and less railway subsidy?

You presume that the DfT are aware of the limits of their capabilities? I wouldn't!

 

[irish_rail]

There is some good duplicity on the railway ( ie liverpool to london ) but there is so much that is pointless.

For example I'd say why have two groups of drivers at say Plymouth, one who only do voyagers and the other that do GWR stuff. Big savings with one driver depot that does the lot. The same goes for multiple locations where one depot of staff could replace multiple ones. Provided the redundancies where voluntary, you would hope the unions could be kept on side.

 

[Tom Quinne]

Birmingham New Street is a classic example of huge duplication, with WMT, XC and London North Western all depots. Also Manchester Picc with XC, TPE, Northern, Avanti again all having depots some with very close route coverage.

 

[RT4038]

There is some good duplicity on the railway ( ie liverpool to london ) but there is so much that is pointless.

For example I'd say why have two groups of drivers at say Plymouth, one who only do voyagers and the other that do GWR stuff. Big savings with one driver depot that does the lot. The same goes for multiple locations where one depot of staff could replace multiple ones. Provided the redundancies where voluntary, you would hope the unions could be kept on side.

Surely each driver can only drive one train at a time, so unless they spend alot of time sitting about being paid I don't see where 'big savings' would come from. ('Some' savings maybe?)

 

[Tom Quinne]

Yes, but you’ve more chance of a spare crew if your crew sign multiple routes and traction.

For example at Man Pic, you have a XC 221 train to New Street with no driver, however a Avanti driver is booked passenger on it to New St and signs both road and traction.

I know XC and AV 221 are a little different in terms of knowledge now, but the point stands with one big depot.

 

[Class 170101]

Birmingham New Street is a classic example of huge duplication, with WMT, XC and London North Western all depots. Also Manchester Picc with XC, TPE, Northern, Avanti again all having depots some with very close route coverage.

You could add Norwich with EMT and GA. The depot coming under a single management but it could also lead to extra trains for example Liverpool to Nottingham the first train is 06:47 but could be earlier at 05:45 and later departures from Nottingham than currently 18:47 if there was route and traction knowledge at Liverpool and NR might benefit in terms of engineering access with the removal of the 04:00 ECS Nottingham to Liverpool subject to diversionary route knowledge being maintained.

 

[irish_rail]

Surely each driver can only drive one train at a time, so unless they spend alot of time sitting about being paid I don't see where 'big savings' would come from. ('Some' savings maybe?)

Actually there is often quite a lot of spares outside of high summer. If a gwr man could for example take a voyager to exeter or a xc man could take an IET to PZ then fewer drivers are required overall. Also fewer managers, admin staff etc needed. And it's not just drivers. Train managers and catering too. When seen across the country as a whole the savings would be huge.

 

[irish_rail]

Surely each driver can only drive one train at a time, so unless they spend alot of time sitting about being paid I don't see where 'big savings' would come from. ('Some' savings maybe?)

If at Plymouth you could save say 5 drivers out of the current total of just over 100 incl xc, that would be £300,000 a year saved. Similarly say it would save 3 train managers, that's another £100,000, and say another £100,000 in savings on catering staff . Get rid of one manager and one admin that's another 100,000, so at Plymouth alone you could save about £600,000 a year. Multiply that across the UK and savings would be millions and millions. Especially at very large locations like Birmingham and Manchester.

 

[ainsworth74]

Actually there is often quite a lot of spares outside of high summer. If a gwr man could for example take a voyager to exeter or a xc man could take an IET to PZ then fewer drivers are required overall. Also fewer managers, admin staff etc needed. And it's not just drivers. Train managers and catering too. When seen across the country as a whole the savings would be huge.

Absolutely Newcastle is another example with XC, LNER, TPE and Northern all having their own driver and guard depots and various ancillary managers, admin, etc etc. Network wide the possibilities for efficiency and saving money must be significant. Plus I bet natural wastage and voluntary redundancy mean that you could achieve that without having to force anyone out of a job.

 

[Wyrleybart]

Actually there is often quite a lot of spares outside of high summer. If a gwr man could for example take a voyager to exeter or a xc man could take an IET to PZ then fewer drivers are required overall. Also fewer managers, admin staff etc needed. And it's not just drivers. Train managers and catering too. When seen across the country as a whole the savings would be huge.

On a very polite point of pedantry there are female drivers at Plymouth too.
Just saying

 

[irish_rail]

On a very polite point of pedantry there are female drivers at Plymouth too.
Just saying

Very true and quite alot of them!

 

[74A]

And don't forget situations where a train is cancelled at the moment for lack of train crew. Some where like Weymouth GWR may not have a driver for its Weymouth to Bristol service but SWT has a spare but does not sign the traction and route.

 

[Starmill]

Problem is if you put the fares up you reduce yield. There is a point somewhere they cross where the higher fares mean lower yield but same revenue but I hardly consider the DfT capable of finding that point. However what it also does is push people away from the railway either into not making the journey at all or switching to private car(s). In this age of aiming for zero carbon emmissions switching to private cars is hardly a smart move but is the view from the DfT that the Treasury wants more money through road taxes and with fewer people on the railways and less railway subsidy?

The Department have almost always had a pretty unhelpful view over price elasticity, presumably because a large majority of the money comes from business travellers and daily commuters, who are both very price inelastic, in some cases extremely inelastic (they'd pay almost anything). Leisure travellers are much more elastic, and also much, much less loyal. They aren't a good market to be reliant on financially, so there will need to be a serious effort to try and get at least some business and commuting travel back.

It has always been DfT policy to maximise revenue, way, way beyond the point where traffic is maximised. An enormous number of potential travellers are driven away from capacity that goes unused because they're not high yield enough.

 

[Energy]

The Department have almost always had a pretty unhelpful view over price elasticity, presumably because a large majority of the money comes from business travellers and daily commuters, who are both very price inelastic, in some cases extremely inelastic (they'd pay almost anything). Leisure travellers are much more elastic, and also much, much less loyal. They aren't a good market to be reliant on financially, so there will need to be a serious effort to try and get at least some business and commuting travel back.

It has always been DfT policy to maximise revenue, way, way beyond the point where traffic is maximised. An enormous number of potential travellers are driven away from capacity that goes unused because they're not high yield enough.

The DfT is more focused on revenue than satisfying the general public but it is the TOCs which get blamed for high ticket price because of the belief that shareholders are making a lot of money from the high ticket prices while a lot of it is going to the DfT as franchise premiums.

 

[glbotu]

Problem is if you put the fares up you reduce yield. There is a point somewhere they cross where the higher fares mean lower yield but same revenue but I hardly consider the DfT capable of finding that point. However what it also does is push people away from the railway either into not making the journey at all or switching to private car(s). In this age of aiming for zero carbon emmissions switching to private cars is hardly a smart move but is the view from the DfT that the Treasury wants more money through road taxes and with fewer people on the railways and less railway subsidy?

So, just to correct anyone under the common misconception that road taxes (vehicle excise duty) are revenue generating. The cost of building and maintaining roads exceeds the total revenue of VED by several orders of magnitude. Your income tax and council tax pay for roads. If you use public transport, you are technically indirectly subsidising the roads, because you're not using them, thus reducing their maintenance, but you are paying for them. VED is pretty much there to cover the administrative costs of licensing your vehicle.

This problem is much worse outside the UK, where we have a relatively high fuel tax, but the use of roads is still not actually not covered by road users.

 

[gimmea50anyday]

Absolutely Newcastle is another example with XC, LNER, TPE and Northern all having their own driver and guard depots and various ancillary managers, admin, etc etc. Network wide the possibilities for efficiency and saving money must be significant. Plus I bet natural wastage and voluntary redundancy mean that you could achieve that without having to force anyone out of a job.

It gets more ludicrous when you consider TPE and LNER not only sign the same routes, but also the same traction. ( There will be other examples ) Then you consider the actual depots themselves, while LNER and Northern are on the first floor of the station building, XC have their own offices alongside BTP while TPE are in Gunner House. Then look at York where LNER have their head office in their own dedicated buildings, NR and Northern are in Rougier Street, TPE in Tanner Row, Who is paying for all these rents?

 

[ainsworth74]

The DfT is more focused on revenue than satisfying the general public but it is the TOCs which get blamed for high ticket price because of the belief that shareholders are making a lot of money from the high ticket prices while a lot of it is going to the DfT as franchise premiums.

Well quite. The present structure has been ideal for politicians and DfT Mandarins alike precisely because when good news come around (new trains! More seats! etc etc) they can claim credit and when bad news comes around (fares are going up! Timetable chaos! etc etc) they can blame the industry. And the whole mess is so complex that the poor passenger and the media struggle to work out who might actually be to blame. It's only now that the whole thing is properly creaking (note how few bidders there are these days, the bad press around VTEC failing a few years ago, etc) that they're finally going to have to do something about it all as otherwise it's pretty much perfect.

It gets more ludicrous when you consider TPE and LNER not only sign the same routes, but also the same traction. ( There will be other examples ) Then you consider the actual depots themselves, while LNER and Northern are on the first floor of the station building, XC have their own offices alongside BTP while TPE are in Gunner House. Then look at York where LNER have their head office in their own dedicated buildings, NR and Northern are in Rougier Street, TPE in Tanner Row, Who is paying for all these rents?

Absolutely. If it was just a handful of places where you had duplication like this then yeah sure the savings won't be significant but replicated across the country? The extra costs of due to the level of balkanisation in the current industry structure must be gargantuan. Which is money which the fare payer and the tax payer has to pick up the tab for which could either be saved outright or used to reinvest in the network. It might be fun and popular to have a pop at the private companies taking money out of the system in profits but I bet that money is dwarfed by those baked in extra costs...

 

[Starmill]

This problem is much worse outside the UK, where we have a relatively high fuel tax, but the use of roads is still not actually not covered by road users.

Much of the imbalance would be ameliorated by the government simply back-dating the inflationary increases in fuel duty that should have been happening for the last decade but haven't. Of course, the general public wouldn't see it that way, they'd see it as an "outrageous" 12% increase (or something). If we committed to a minimum CPI+1% every year increase on fuel duty, air passenger duty and vehicle excise duty that in and of itself would (slowly) lower our carbon emissions over time. Unfortunately again governments don't see it that way.

 

[Bletchleyite]

Absolutely. If it was just a handful of places where you had duplication like this then yeah sure the savings won't be significant but replicated across the country? The extra costs of due to the level of balkanisation in the current industry structure must be gargantuan. Which is money which the fare payer and the tax payer has to pick up the tab for which could either be saved outright or used to reinvest in the network. It might be fun and popular to have a pop at the private companies taking money out of the system in profits but I bet that money is dwarfed by those baked in extra costs...

Delay attribution has to be a massive cost there. It has been argued that the law should change on car insurance so that the driver's own insurance always covers damage to their vehicle whoever caused it, as this would massively reduce similar costs. If we could just get rid of that (beyond a basic record of *what* caused it so it can be learned from) then that would save a packet.

 

[Speed43125]

Delay attribution has to be a massive cost there

Is there any other country with a system as extensive as the one here? I remember all the fuss that VTWC made £600M over its 22 years, I remember thinking that for such a high revenue franchise that seemed not that big.

Delay attribution has to be a massive cost there. It has been argued that the law should change on car insurance so that the driver's own insurance always covers damage to their vehicle whoever caused it, as this would massively reduce similar costs. If we could just get rid of that (beyond a basic record of *what* caused it so it can be learned from) then that would save a packet.

Good bloody luck with one! That would be brilliant, I would campaign for something like that, but I'm also cynical enough to accept that it will not happen.

 

[markymark2000]

The only issue with merging drivers depots and stuff is unions.
As soon as there is a union dispute (which happens very regularly these days), a lot more area will be affected. Keeping Newcastle as the example with LNER and TPE. If LNER have an issue, TPE services will still run and vice versa meaning passengers can still get around.
The only other potential issue is who employs the on board staff? If the depots are not TOC specific, do you then have to create a staffing agency which is dedicated to hiring and paying staff (with the TOCs essentially paying to 'hire' the staff to the TOCs)

One area I would support merging is catering. I say this since while there are some differences between the companies, the basics remain the same and it would be good to have neutral staff who can man the LNER shop and do the trolley on TPE services for example. I'm sure some stock will be the same as well between companies so that might help reduce inventory needed, reduce the amount of deliveries and potentially reduce the cost of stock since it would be bought in more bulk.

Planning staff it seems is already quite integrated with NR doing much of the timetable and TOCs only having a small say in the schedule except on lines with a lot of other capacity. This area could all be maybe integrated as part of the RDG (Rail delivery Group)

 

[Starmill]

The only issue with merging drivers depots and stuff is unions.
As soon as there is a union dispute (which happens very regularly these days), a lot more area will be affected. Keeping Newcastle as the example with LNER and TPE. If LNER have an issue, TPE services will still run and vice versa meaning passengers can still get around.

Equally, the reverse is also true. BR was a monopsonist. The TOCs have greater bargaining power if they're negotiating combined. There are almost no better paid roles of the same type anywhere else, Eurostar would probably be the sole offer.

 

[glbotu]

Much of the imbalance would be ameliorated by the government simply back-dating the inflationary increases in fuel duty that should have been happening for the last decade but haven't. Of course, the general public wouldn't see it that way, they'd see it as an "outrageous" 12% increase (or something). If we committed to a minimum CPI+1% every year increase on fuel duty, air passenger duty and vehicle excise duty that in and of itself would (slowly) lower our carbon emissions over time. Unfortunately again governments don't see it that way.

Yes, but you'd probably have to improve the public transport offering first. Fundamentally, a big part of why there's such a consistent uproar in this country about increasing the costs of driving, is that for a lot of people, driving is really the only "sensible" option. They may have a 4 x daily bus, that takes 3 x longer, but even an increase in driving costs is not going to result in a huge sway away from it. It's also somewhat regressive, in that the poorer you are, the more you'd pay as a percentage of your salary etc....

Anyway, we digress......

As for the topic at hand, I'd point out that what would probably make the most sense, would be to have drivers be more regionally based and have traction knowledge for that region. If there's a strike that may cause an issue in terms of restricting passenger movement, but that really only applies now in some cases, usually on Intercity flows. The vast majority of people who travel, don't have a choice. Railways are fundamentally monopolistic by their nature. "On-track" competition and alternatives was never the point of the franchising system.

The reason you have the "LNWR only" tickets that are cheaper, is demand management, not on-track competition. Trains are more useful when they're full (with or without profit-motive). The "slow" train, that needs to be 8/12 cars long for a limited portion of the day, might as well use up that excess capacity off-peak, which in turn reduces the demand for the Intercity fast. If all the trains were the same price, people would just all go for the fast train, so I can't see the "LNWR only" tickets going any time soon.

 

[Bald Rick]

So, just to correct anyone under the common misconception that road taxes (vehicle excise duty) are revenue generating. The cost of building and maintaining roads exceeds the total revenue of VED by several orders of magnitude. Your income tax and council tax pay for roads. If you use public transport, you are technically indirectly subsidising the roads, because you're not using them, thus reducing their maintenance, but you are paying for them. VED is pretty much there to cover the administrative costs of licensing your vehicle.

This problem is much worse outside the UK, where we have a relatively high fuel tax, but the use of roads is still not actually not covered by road users.

This carefully and completely misrepresents the facts.

Road taxes are more, much more, than Vehicle Excise duty.

In 2018/19, Government received £6.4bn in VED, £28bn on fuel duty, and a further £9bn in VAT on fuel sales.

In 2016/7 (the last year for which I can find statistics) public expenditure on building new and maintaining existing roads by central and local Government was £8.6bn.

So to say that the use of roads is not covered by road users, or that the cost of building and maintaining roads exceeds VED revenue ‘by several orders of magnitude’ is fundamentally false on a financial basis.

Road construction and taxation (RDE)

Data about the construction, expenditure and taxation of roads, produced by Department for Transport.

www.gov.uk