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

[Bald Rick]

Delay attribution has to be a massive cost there.

Delay attribution is required whatever the structure of the industry, ie the need to identify the root cause of delays.

The ‘arguing’ about the small percentage of delays where there is disagreement as to cause is where there is extra cost caused by the industry’s current structure, but this is, frankly, a small cost in the scheme of things.

 

[ainsworth74]

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)

If we're merging train crew depots we're going to be merging companies (and note that this doesn't mean we're forming BR Mk2) so it's a fairly moot point. Creating a "train crew agency" (trying to ignore the negative connotations of the word "agency" when it comes to employment) would seem to solve very little and simply add yet another interface into proceedings. In my view you don't just merge train crew depots you have to merge franchises. It's the balkanisation of the industry with twenty-odd different companies all doing the same thing that, I believe, has helped drive costs and inefficiency up.

 

[LNW-GW Joint]

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?

BR initially had 6 geographic Regions inherited from the Big 4, eventually whittled down to 3 passenger Sectors (plus freight) after they abolished the Regions.
Each of those was managed independently and had their own cost structure and management methods.
By the end of BR, the Sectors had been broken down into a line/service structure of TOUs with separate P&L and management.

All privatisation did was franchise out those TOUs as independent commercial TOCs (with some splits and amalgamations and remapping over time).
The aim was to find the optimum scale to make the TOCs accountable and to maximise revenue/reduce costs (and increasingly to address devolution).
I'm not saying the current structure is optimum, it certainly isn't, but you must have cost controls or the railway's costs will simply "run away" as they did more than once under BR.

 

[Clarence Yard]

Everyone has their idea of how to make the railway more "efficient" and achieving decent "economies of scale" is behind Andrew Haines (& others) wish for Regional VI railways under a common banner but that doesn't quite sit well with the DfT's aim to keep things smaller and they then "have to" (!) retain direct control.

Delay attribution jobs were created by just turning the various Ops Clerks into either dobbers or query posts so, with the continuing need to investigate delays, there isn't a huge lot to be saved there. However, Schedule 4 could be largely switched off now and as the OA operators don't go for Type 1 and 2 compensation anyway, you can see their isn't really a commercial rationale for anything going forward into new structures apart from, perhaps, the most disruptive possessions. Also the larger you make the TOCs now, the less Schedule 8 arguments you have to deal with.

The commercial side is where the big growth industry in jobs has occurred since 1994. If decisions on advertising, products and fares was done more centrally, a whole swathe of posts could be cut out. ORCATS is a system that is dying anyway - most TOCs, if they don't get 100% on major flows, have long since headed off in the direction of dedicated revenue, both own account and through bi-lateral deals, to get more of the revenue cake - that is the prime aim of going dedicated and always has been, at least on the TOCs I've been at. You can code revenue 100% to Lennon through the trains service code and if you want differentiation, i.e. a through train to x, just change the TSC at the appropriate point.

You can get some saving in head offices but don't forget the scale effect - you might need more than one, the BR regions didn't just have one HQ building - places like York were awash with separate ER Regional offices.

Train planning is a big area to get savings in. TOC TPU's are sometimes quite large and that is where a lot of the TPU experience now is so splitting out MK and creating integrated Regional TPU's would probably benefit the railway in a number of ways. Again, if you remove TOC commercial gaming in current franchises, the intricate "what if" timetabling work also goes.

Everyone goes on about management on the ground but unless you take some of the decision making powers off them (and turn them into just glorified supervisors), you could easily get into overload situations so you have to look at both the breath and depth of the job before making a decision. Certainly if you combined roles further up the tree in a Regional situation, there are significant savings to be made.

Some query Regional structures because of border interfaces. It never bothered BR or the big 4 - you just set up simple joint arrangements to manage those aspects.

 

[markymark2000]

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.

Any strike could seriously hinder the network if you had regional based staff. Look at how Southern was when they had their strikes. You could hardly get anywhere and that was an area which had 1 operator and no viable alternative for much of the network. I can see the appeal and cost savings involved, unions are my main worry though. They will fight over anything these days.

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.

TOC specific fares also help to make more money over the 'anytime' or 'off peak' fares since they are subject to ORCATs. Chester to Liverpool for example, some of that money goes to Northern for people to travel via Warrington (Who on earth is going that way round to Liverpool?) so having the specific fares, even if only a few pence cheaper than the Anytime ticket, it means that the money goes to the company running the train which you are using rather than to every other company getting some of the funds just incase you take that route.

More restricted fares are needed if they want people to use the railway as I sure as heck am not going to pay more to travel on more open tickets. TFWs Chester to Manchester fare put me off travelling with them and now I will not travel to Manchester by train unless I am on Northern because of the £7 saving.

 

[ainsworth74]

Any strike could seriously hinder the network if you had regional based staff. Look at how Southern was when they had their strikes. You could hardly get anywhere and that was an area which had 1 operator and no viable alternative for much of the network. I can see the appeal and cost savings involved, unions are my main worry though. They will fight over anything these days.

I am not entirely convinced that it is sensible policy to throw out some options that might otherwise be very good simply because there's a chance that there might be some disruptions in the event of industrial action.

 

[geoffk]

Much of what has been written above is good and is aimed at getting the costs of operating the railway down by reducing duplication and eliminating "misaligned incentives" in the post-Covid world, where there are fewer commuters and where leisure travellers need incentives to try the train again. No-one has mentioned the safety culture, the huge cost of palisade fencing, the fines imposed by the Courts for "allowing" trespassers to kill or injure themselves. How can we get to a more common sense-based culture or is that just a no-go area?

 

[glbotu]

Any strike could seriously hinder the network if you had regional based staff. Look at how Southern was when they had their strikes. You could hardly get anywhere and that was an area which had 1 operator and no viable alternative for much of the network. I can see the appeal and cost savings involved, unions are my main worry though. They will fight over anything these days.

I think we agree - the point I'm making is that for the majority of people, this is true anyway. Yes, there is some redundancy when multiple operators run on any given line, but that isn't true for the majority of journeys, so it won't make much difference to most people. This isn't like bringing back "BR" where any dispute anywhere would shutdown the entire railway.

TOC specific fares also help to make more money over the 'anytime' or 'off peak' fares since they are subject to ORCATs. Chester to Liverpool for example, some of that money goes to Northern for people to travel via Warrington (Who on earth is going that way round to Liverpool?) so having the specific fares, even if only a few pence cheaper than the Anytime ticket, it means that the money goes to the company running the train which you are using rather than to every other company getting some of the funds just incase you take that route.

More restricted fares are needed if they want people to use the railway as I sure as heck am not going to pay more to travel on more open tickets. TFWs Chester to Manchester fare put me off travelling with them and now I will not travel to Manchester by train unless I am on Northern because of the £7 saving.

Surely you mean "cheaper" fares are needed. If you could buy an Off-Peak Single for the same price as an Advance Northern-Only single, then it wouldn't matter, and my understanding is that the government do want to get rid of a lot of the complexity from the ticketing system, possibly by just running a search over any given journey and charging you the cheapest available price, regardless of the operator/journey. You shouldn't have to understand that TfW and Northern have different fares for the exact same journey in order to buy a reasonably priced ticket.

 

[glbotu]

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

You're right, my apologies, although £8.6bn seems very cheap for road construction - especially given things like the land-purchase requirements. A quick Google doesn't find anything else, though. I also hadn't realised fuel duty brought in £28 bn /year.

 

[Bald Rick]

You're right, my apologies, although £8.6bn seems very cheap for road construction - especially given things like the land-purchase requirements. A quick Google doesn't find anything else, though. I also hadn't realised fuel duty brought in £28 bn /year.

£8.6bn isn’t just for road construction, which is rather less than half that sum. It is also for all DBFO payments for previously built privately financed roads, all renewals, repairs and maintenance, and also includes other items such as winter treatment (gritting) and the cost of operating street lights (half a billion alone).

 

[markymark2000]

I think we agree - the point I'm making is that for the majority of people, this is true anyway. Yes, there is some redundancy when multiple operators run on any given line, but that isn't true for the majority of journeys, so it won't make much difference to most people. This isn't like bringing back "BR" where any dispute anywhere would shutdown the entire railway.

Any dispute wouldn't shut down the entire railway but it would disrupt a big part of it. It's the only issue I really have with any such change. If it can be overcome that the unions will stop throwing their toys out the pram over things every 30 seconds, it wouldn't be as bad but seeing how much disruption the Northern and Southern strikes had and they were self contained to their own operating companies, I do not want for this to start more disruption since it will be a lot more widespread.

Surely you mean "cheaper" fares are needed. If you could buy an Off-Peak Single for the same price as an Advance Northern-Only single, then it wouldn't matter, and my understanding is that the government do want to get rid of a lot of the complexity from the ticketing system, possibly by just running a search over any given journey and charging you the cheapest available price, regardless of the operator/journey. You shouldn't have to understand that TfW and Northern have different fares for the exact same journey in order to buy a reasonably priced ticket.

Cheaper is good but if you go for cheaper fares, you risk overcrowding some of the busier trains. It's supply and demand pricing. Every business does it. I can see ridding 'advance' fares as being a positive but company specific tickets don't seem to be as bad. There is flexibility there while still having some restriction.

I suppose the further issue is do the government opt for making all the fares the cheapest possible and then the railway loses out on a lot of money and risks being very overcrowded at times or do they go for the more expensive price and put people off travelling. Neither is good and that is why some company specific tickets are good because for those who have a choice (those services where more than 1 TOC exists), you can get much cheaper fares. Some fares do need taking out of the system though since some of the fares are bonkers (as per my example of Northern selling tickets from Chester to Liverpool via Warrington) and should never be bought.

Lots of options for fare reform however I do like company specific tickets and as long as the saving over an any operator ticket is decent, I see no reason why these tickets should stop. It provides some competition (even if all owned by the same place, competition makes each operating arm work a bit more for it's money. If there is no competition, you get to a stage where you have substandard service and get away with it because people can't opt for anyone else) and it provides choice for passengers (Cheap ticket, takes longer).

 

[glbotu]

Any dispute wouldn't shut down the entire railway but it would disrupt a big part of it. It's the only issue I really have with any such change. If it can be overcome that the unions will stop throwing their toys out the pram over things every 30 seconds, it wouldn't be as bad but seeing how much disruption the Northern and Southern strikes had and they were self contained to their own operating companies, I do not want for this to start more disruption since it will be a lot more widespread.

Again, I still think we agree. I'm just saying that that happens anyway, and that the benefit that a minority of people get for being lucky enough to have 2 or more operators on their line is outweighed by the benefits of regionalised operation.

Cheaper is good but if you go for cheaper fares, you risk overcrowding some of the busier trains. It's supply and demand pricing. Every business does it. I can see ridding 'advance' fares as being a positive but company specific tickets don't seem to be as bad. There is flexibility there while still having some restriction.

I suppose the further issue is do the government opt for making all the fares the cheapest possible and then the railway loses out on a lot of money and risks being very overcrowded at times or do they go for the more expensive price and put people off travelling. Neither is good and that is why some company specific tickets are good because for those who have a choice (those services where more than 1 TOC exists), you can get much cheaper fares. Some fares do need taking out of the system though since some of the fares are bonkers (as per my example of Northern selling tickets from Chester to Liverpool via Warrington) and should never be bought.

Lots of options for fare reform however I do like company specific tickets and as long as the saving over an any operator ticket is decent, I see no reason why these tickets should stop. It provides some competition (even if all owned by the same place, competition makes each operating arm work a bit more for it's money. If there is no competition, you get to a stage where you have substandard service and get away with it because people can't opt for anyone else) and it provides choice for passengers (Cheap ticket, takes longer).

I think the LNWR v. VT example is better, because the two trains basically serve different markets, and I reckon even if they were run by the same "company", you'd still use demand pricing to move people from the Intercity to the Regional if the regional had spare capacity.

Your NT v TfW doesn't work as well, because fundamentally they're both regional/local trains. The reason one's cheaper is probably because of a subsidy, in which case, realistically, you'd probably want that subsidy applied across both trains, because their job is to serve a similar market. If that resulted in some times being more crowded, then your problem is that your trains aren't long enough (which, let's be honest, is definitely the case for both TfW and NT), not that you haven't managed your demand correctly.

 

[Bletchleyite]

I think the LNWR v. VT example is better, because the two trains basically serve different markets, and I reckon even if they were run by the same "company", you'd still use demand pricing to move people from the Intercity to the Regional if the regional had spare capacity.

Here's the rub - it doesn't. The price-dumping going on here is causing severe overcrowding on the LNR services, which is a problem for those whose journey can't be done on Avanti, while Pendolinos run more quietly.

 

[glbotu]

Here's the rub - it doesn't. The price-dumping going on here is causing severe overcrowding on the LNR services, which is a problem for those whose journey can't be done on Avanti, while Pendolinos run more quietly.

I mean that's just silly....... (and largely endemic of the failures in the franchising system)

 

[LNW-GW Joint]

Some fares do need taking out of the system though since some of the fares are bonkers (as per my example of Northern selling tickets from Chester to Liverpool via Warrington) and should never be bought.

That fare was there because it was the only non-Merseyrail Chester-Liverpool route for decades, and is still run as a through route by Northern to position the EP-Helsby shuttle.
Also during the first part of the lock-down the TfW direct service via Runcorn was axed, so it was useful again.
They could of course just make the via Runcorn fare the Any Permitted one of course.
As far as I can see the Anytime Day Return is actually 10p cheaper via Warrington than via Runcorn.

 

[yorksrob]

Isn't the point of LNWR isn't that it's "price dumping" as such, rather that it offers a pricing model that passengers want - i.e. affordable walk-up fares.

 

[Bletchleyite]

Isn't the point of LNWR isn't that it's "price dumping" as such, rather that it offers a pricing model that passengers want - i.e. affordable walk-up fares.

You can call it what you like, but pre-COVID the effect of it was that those whose journey required use of LNR lost out due to cheap, non-quota-controlled walk-up fares causing overcrowding with long distance passengers. Furthermore, the move to running long-distance through trains partly for the benefit of those passengers caused near collapse of the service. It was an abject disaster.

Perhaps Avanti should have cheaper walk-up fares (or Advance Purchase on the Day perhaps), but either way it isn't acceptable to do this to the point of it causing standees on nominally off-peak services.

 

[ComUtoR]

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.

We ARE regionally based.

 

[yorksrob]

You can call it what you like, but pre-COVID the effect of it was that those whose journey required use of LNR lost out due to cheap, non-quota-controlled walk-up fares causing overcrowding with long distance passengers. Furthermore, the move to running long-distance through trains partly for the benefit of those passengers caused near collapse of the service. It was an abject disaster.

Perhaps Avanti should have cheaper walk-up fares (or Advance Purchase on the Day perhaps), but either way it isn't acceptable to do this to the point of it causing standees on nominally off-peak services.

Well that's the key. Provide a pricing structure that people want on all services.

 

[Bletchleyite]

Well that's the key. Provide a pricing structure that people want on all services.

Trouble is to do that you're going to have to up the subsidy. But APOD may provide a halfway house, I don't believe Avanti presently offer that, and it does allow for a form of "walk-up".

 

[Starmill]

Trouble is to do that you're going to have to up the subsidy. But APOD may provide a halfway house, I don't believe Avanti presently offer that, and it does allow for a form of "walk-up".

They do offer it, but there's no way they'd offer it at £17.50 which is what it would need to be to compete. There is a train from Liverpool to London at 1947 today, 70 minutes from now, and it's £37.

 

[Merle Haggard]

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

Bear in mind there's a difference between taxation and charges.

For example, alcohol is taxed, too; but does that mean the revenue should be spent on public houses?

(I may be giving people ideas...)

 

[Railwaysceptic]

Bear in mind there's a difference between taxation and charges.

For example, alcohol is taxed, too; but does that mean the revenue should be spent on public houses?

(I may be giving people ideas...)

Certainly it's true that the money extorted from motorists via various Government imposts* is not ringfenced for exclusive use on roads but is instead also spent on other form of Government expenditure, including subsidising railways. However this does not change the fact that motorists pay in far more than is spent in total on roads.

*In addition to those already mentioned, there's also VAT on car sales, spare parts and servicing plus 12% on car insurance.

 

[The Ham]

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

Whilst all the above is true there's potentially other factors to consider.

Firstly the cost to developers of road building/maintenance/improvements which they pay for which doesn't go through the government's books. It's nearly impossible to quantify, but it's likely to be significant, over the years there's been a lot of relief roads built where they provide access through or are to one side of a site but also provide capacity improvements to the local highway network. Likewise the numbers of junctions which have been improved must be significant. Even little things like resurfacing a shall section of road across the site frontage the reduces the ongoing maintenance liability by resetting the clock on when that needs further maintenance.

Then there's the cost to the economy of all those road accidents which happen each year, the government put a figure on this of about £15bn.

Next there's the cost of emissions, which as we get closer to 2050 is likely to become much more significant. Even if we switched to all EV cars this would still be noticeably higher than rail. For example rail is around the 37g/user/km whilst highly efficient EV' are around the 57g/user/km mark.

Even at the carbon credits trading cost for carbon of around the £18/tonne mark a further £1.5bn to the cost of the economy. However if you put it at the £40/tonne of carbon capture then that more than doubled the figure.

There's other factors which could be laid at the feet of car use, such as a chunk of the cost of obesity (which is probably fairly justified given that people are willing to drive their children less than 600m to school to then drive themselves back home (I know that this happens as I've seen it happen whilst walking my own children to school). Likewise the cost to the NHS of air pollution.

Many suggest that the total cost is such that the costs exceeds the taxes generated, which isn't hard to believe given that getting on for 2/3 of the fuel duty income is required to cover the cost of accidents to the country.

On the actual cost to the country of the railway, whilst the publicised value of the subsidy is £7.1bn in 2018/19, however that's not the cost of the day to day running of the railways.

Firstly there's £3.8bn for enhancements to the rail network and £2.6bn for the building of HS2, leaving £0.7bn for the day to day operating of the railways. This was much higher than of late (circa £0.2bn want unheard of) however it does show (especially given that there's £10bn in ticket sales) that the level of how much the railways would need to cover to break even isn't really all that much more.

 

[Class 170101]

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.

To a point there is demand management but also its an attempt as alluded to elsewhere to get 100% of the revenue for a journey rather than share it out through ORCATS.

Train planning is a big area to get savings in. TOC TPU's are sometimes quite large and that is where a lot of the TPU experience now is so splitting out MK and creating integrated Regional TPU's would probably benefit the railway in a number of ways. Again, if you remove TOC commercial gaming in current franchises, the intricate "what if" timetabling work also goes.

But remember the 'what ifs' gave us Hull Trains, Grand Central, WSMR as well as other popular services today that are part of the franchises, such as Norwich to Cambridge through services. The railways need to be able to keep up with these and reflect society travel patterns that aren't static. I'd be concerned if the concessions go ahead or franchising abolished and returned to BR style of the past that you wouldn't get these services which are now very popular, or the next big idea.

Bear in mind there's a difference between taxation and charges.

For example, alcohol is taxed, too; but does that mean the revenue should be spent on public houses?

(I may be giving people ideas...)

Alcohol taxes spent on the ills they can cause - so police, fire NHS etc.

 

[Clarence Yard]

But remember the 'what ifs' gave us Hull Trains, Grand Central, WSMR as well as other popular services today that are part of the franchises, such as Norwich to Cambridge through services. The railways need to be able to keep up with these and reflect society travel patterns that aren't static. I'd be concerned if the concessions go ahead or franchising abolished and returned to BR style of the past that you wouldn't get these services which are now very popular, or the next big idea.

The "what if" I am talking about is the "what if I move this train by 1 minute - how much ORCATS do I gain?" style of commercial management, not the "how can I make this work?" can do style of wider commercial innovation that I can definitely say was the ethos behind Hull Trains and the Norwich-Cambridge services. That requires a deeper understanding of the potential untapped market and the customer base than just playing ORCATS games or budgeting crude % increases.

What does worry me is if the DfT, through larger TOC organisations, revert to pricing off demand and not going for the real market change opportunities as they arise. History tells us that passenger demand never stands still, in either direction.

 

[Bletchleyite]

This would point rather more towards the idea of a "BR" of some kind which actually has a bit of freedom to innovate and market their product and concentrate on competing with other modes.

 

[Class 170101]

What does worry me is if the DfT, through larger TOC organisations, revert to pricing off demand and not going for the real market change opportunities as they arise. History tells us that passenger demand never stands still, in either direction.

Not sure it will be politically acceptable to price off demand now in the light of environmentalism and carbon emmissions.

 

[JonathanH]

Not sure it will be politically acceptable to price off demand now in the light of environmentalism and carbon emmissions.

Doesn't that depend on where the demand goes instead? If it reduces overall travel but maintains economic activity, it may be fine to price off demand. If it increases car travel, that is more of a problem.

It would seem that one particular advantage to the Treasury of centralising control is to try and maximise revenue and reduce subsidy.

 

[Merle Haggard]

Alcohol taxes spent on the ills they can cause - so police, fire NHS etc.

Taxation isn't 'ring-fenced'.