Why is there now an obsession with re-nationalisation?

[cactustwirly]

Um the German railways are nationalised and the punctuality isn't very good

 

[DanDaDriver]

Um the German railways are nationalised and the punctuality isn't very good

Shush, don’t go against the narrative!

 

[pt_mad]

It isn't illegal.
But the operations must be competed for periodically, to prevent a monopoly and get value for money.
That's why LNER will have to be refranchised out in due course (on current legislation).
It's also the reason we get Direct Awards for 2 years or so to keep the services going pending a full competition.
Our problem is that there are no public operators to compete with each other (and no comprehension of the need to compete, by the look of things).

Couldn't we have say a state-owned company called SNC Lavelin Trains and another called Ernst and Young Rail Transport (examples) and they compete? Utilise the state aappointed consultants into bid teams and ask them to put in bids at the same time the private operators bid for the franchises?

Or what about letting the devolved authorities bid for the franchises? Like West Midlands Rail, say allowing them to bid for the running of the franchise operation for the period and they appoint their own managers if successful?

 

[87015]

Um the German railways are nationalised and the punctuality isn't very good

No they are not, not in the sense of old DB and a real system. See earlier post about Balkanisation.

 

[LNW-GW Joint]

Couldn't we have say a state-owned company called SNC Lavelin Trains and another called Ernst and Young Rail Transport (examples) and they compete? Utilise the state aappointed consultants into bid teams and ask them to put in bids at the same time the private operators bid for the franchises?
Or what about letting the devolved authorities bid for the franchises? Like West Midlands Rail, say allowing them to bid for the running of the franchise operation for the period and they appoint their own managers if successful?

Well, the big 4 consultancies are the arch-privatisers.
They just happen to have been hired by the DfT as OLR to run LNER for a spell.

The devolved authorities could indeed bid to run trains, in their or other areas, if they satisfy the DfT/ORR/RSSB rules for TOCs (safety case, funding etc).
In fact that's the German model where regional trains are increasingly run by operators who also run in their own area.
There are enough local operators to have a decent competition, even if DB Regio wins in the end.
The French regions want to do the same with TER services, but currently can only contract SNCF (that's what the current changes are about).

The service contracts are limited-term, like franchises, but still in the public sector.
So you get the private TOCs (eg NatEx) bidding against public, and therefore competition.
Our problem is that we have currently not got any proper public TOCs.
TfL runs trains of course, and so does DRS (part of the NDA). The tram-operating PTEs are also in the same space.
Scotland has authority to allow bids from public operators but hasn't done it yet.

The downside is that (eg) West Midlands Rail is currently the client, and buys the services (currently from Abellio).
If they also ran the service you would have a cosy closed setup which is not conducive to contract delivery, and you are back to a monopoly.
Hence the phenomenon of a regional operator running trains for another region, or foreign public TOCs as we already have.
TOCs, public or private, are commercial operations (limited companies in our terms) so are not "nationalised" like BR was.
The devolved authorities would need to set up a TOC as a commercial subsidiary, and provide all the funding required (bonds etc).
I'm not sure TfL would qualify as a TOC in that sense, and it is also the client as well as the operator for LU operations.

This is just my perception of the current legislation and how it is interpreted in various countries.
I'm sure there are other models of how it might work in the UK in the future, but we are where we are.
No doubt Chris Grayling and his lawyers have their thinking caps on for the future of LNER and franchises generally, post Brexit.

 

[The Ham]

hmmm.... and what, exactly, do buses get for their money by way of infrastructure? bus companies get nothing... they even struggle to get local authorities to provide adequate "stations" ie bus stops/ interchanges {bus stns}... they certainly don't get much in the way of segregated track. One only has to look at Swansea where First put in millions of pounds of investment for the Metro using the FTR with the promise of proper track... ok so there were flaws which meant that it had to be changed.... but guess what.. instead of adjusting the "track" instead the city council has arbitarily decided to completely remove it... to the point where there will not be a single bus lane in the city centre! In fact, seeing as though trains get proper stations and a guaruntee of a fully reserved track I think there is an argument that trains should pay more in fuel tax whilst bus companies pay less... after all your argument is you should pay for what you get... so the more you get the more you pay!

Buses get access to the road network, trains have access to the rail network.

TOC's have to share the track with other rail users, just like buses have to share it with other road users.

TOC's struggle to get new infrastructure built to allow them to run the services they want to where they want.

Both buses and trains are hindered by government and both have to pay to use the infrastructure. Is what they pay equal, no for the simple reason that they have different requirements. Would nationalising the trains make any difference? Certainly not.

 

[Bletchleyite]

No they are not, not in the sense of old DB and a real system. See earlier post about Balkanisation.

It depends what you mean by nationalised. Network Rail and DB AG are very similar in their ownership - the respective "Government" own all the shares. DB previously was an actual Government agency, which some argue was more nationalised than it is now, so some Germans consider it privatised even though none of the shares have been sold off.

 

[Wivenswold]

I just don't see the future of the railways can be sorted with the binary choices that Westminster presents. I think it dumbs down the debate if anything. The complex issues that blight our railway network won't necessarily be sorted by wholesale Nationalisation or doing nothing with the current model. More nuanced approaches with a dash of innovation is needed, not a rebranding.

 

[MarkWi72]

Like the NHS the Tory Government of the time, followed by Labour failed to invest properly and - hey presto- the railways became private.

 

[dewsnapsliding]

What, out of interest, is the level of BSOG (Bus Service Operator's Grant, aka previously fuel duty rebate) by comparison?

BSOG gives approximately 80% of duty paid back to Public Bus service bus operators (I.e. local services - stops at least every 15km). It also pays back some other services, but most claims are now devolved to the relevant local authority to make a claim against a budget which us no longer ring-fenced.

Interestingly, long distance services which are arguably offering 'competition' to the railways' inter-city services do not receive BSOG if stops are further than the 15km apart.

Hence why Oxford Tube services have (used to have) a stop somewhere in West London so they could claim it, but at the meeting I was at with Directors of many Bus Companies approx 10 years ago to discuss the implementation of Concessionary fare pass roll-out to all "Local Services" there was a degree of incredulity when they realised they were going to have to let all the blue-rinse brigade use their services for free if they wanted to continue to claim BSOG. To be fair, they ought not to have been surprised, the guidance was crystal clear!

 

[cactustwirly]

From what I've seen the delay attribution and PPM targets are good as they act as an encouragement for operators to keep to time.
German and Austrian dispatch of trains is a bit relaxed with no sense of urgency like the UK

 

[matacaster]

Are you saying this sort of thing doesn't happen in the private sector.?

Of course any organisation is susceptible to this problem, but the problem tends to be exponentially greater the larger the organisation. This is simply because in a small company, everyone knows each other, the bosses keep their eyes and ears open and can identify slackers or problem areas. In big organisations the directors often inhabit a rarified world where they don't bother to go and meet staff unless its for a photo opportunity. Directors often stay for a short period in any one job. Its not so much public and private but scale. Even a minor change in the NHS can take years because everyone wants their say, so its like turning round the titanic. Network Rail is a monopoly - if its state controlled (as it is now) then it will suffer in the long term as its up against hospitals and roads for Govt funding. If its privately owned, it will be into cost cutting anyway. There is little incentive for ANY monopoly to change anything, so innovation is unlikely. Its really only when competition is present where two (or preferably several) players have the opportunity to improve and get a larger slice of the cake than their rivals. The current rail franchise model makes little of this as there is little rail competition (as there was between LNER and LMS) and since for example east coast and west coast have some common ownership they aren't likely to rock the boat.

 

[whitrope69]

I think one of the big influencers of what makes the TOC's work well or not are the people. I don't think there are enough highly skilled competent people to go round. Under BR there would be say 5 Area Managers, a few senior Traincrew and Movements Managers for a given geographical area as an example. The interview process for such roles was competitive and rigorous. Now each TOC no matter how small needs an MD, Exec team. Regional team and tactical team. The other TOCS using the same terminus will all have likewise. Lots of duplication and dilution of skills. Same applies to Controls, H&SE specialists and so on.

 

[Journeyman]

Idle curiosity, but what would happen if no-one wanted to bid for a franchise? Would the Government have to take control, or would they have to give a direct award to the incumbent?

I wonder if we're far off that happening. Certainly as the level of risk seems to increase, and several franchises have turned out to be loss-makers, I think you might see a much more cautious bidding strategy, with some bidders put off from bothering. We may not be far away from only one or two bidding in some circumstances, and in that case, the bidders would be in a very strong position and the competitive pressures would be virtually nil.

National Express exited the UK rail market because they thought the risks were too high, but they do quite well operating trains in Germany. We might see more of that sort of thing happening.

 

[pt_mad]

Can anyone address my questions from post 257?

Nobody replied to them


People are saying there'd be a serious lack of if the state owned the TOCs. But why? Surely if the railways are profit making (the NHS and councils aren't) and you remove the premiums that the operators currently have to pay, you'd be well into the black and paying money back into the treasury? Add to that the millions which is taken out in the three percent profit, that'd go back into the treasury wouldn't it or back into investment?

Would the subsidy be reduced if it were stated owned? Well the profit currently being paid out from the company would also be removed so would we need such a huge subsidy?

Are we saying we need the private operators for their expertise? Because I'm fairly confident if the TOCs were transferred to state ownership as the franchises come up that the current leadership would stay and lead for the state railways anyway.

What investment do the private operators put in that isn't generated from income from their operation or our subsidy? If they invested more than they took in profit surely the TOC would go into the red? I.e. if your premium payments are more than you make and you are committed to an extravagant investment programme regardless, you're in trouble. (Like VTEC). And if you remove the profit factor from this it certainly brings every operation such as the East Coast much closer to being permanently in the black surely?

 

[cactustwirly]

Can anyone address my questions from post 257?

Nobody replied to them


People are saying there'd be a serious lack of if the state owned the TOCs. But why? Surely if the railways are profit making (the NHS and councils aren't) and you remove the premiums that the operators currently have to pay, you'd be well into the black and paying money back into the treasury? Add to that the millions which is taken out in the three percent profit, that'd go back into the treasury wouldn't it or back into investment?

Would the subsidy be reduced if it were stated owned? Well the profit currently being paid out from the company would also be removed so would we need such a huge subsidy?

Are we saying we need the private operators for their expertise? Because I'm fairly confident if the TOCs were transferred to state ownership as the franchises come up that the current leadership would stay and lead for the state railways anyway.

What investment do the private operators put in that isn't generated from income from their operation or our subsidy? If they invested more than they took in profit surely the TOC would go into the red? I.e. if your premium payments are more than you make and you are committed to an extravagant investment programme regardless, you're in trouble. (Like VTEC). And if you remove the profit factor from this it certainly brings every operation such as the East Coast much closer to being permanently in the black surely?

Look at the finances of the German/French state railways...

 

[Moonshot]

Can anyone address my questions from post 257?

Nobody replied to them


People are saying there'd be a serious lack of if the state owned the TOCs. But why? Surely if the railways are profit making (the NHS and councils aren't) and you remove the premiums that the operators currently have to pay, you'd be well into the black and paying money back into the treasury? Add to that the millions which is taken out in the three percent profit, that'd go back into the treasury wouldn't it or back into investment?

Would the subsidy be reduced if it were stated owned? Well the profit currently being paid out from the company would also be removed so would we need such a huge subsidy?

Are we saying we need the private operators for their expertise? Because I'm fairly confident if the TOCs were transferred to state ownership as the franchises come up that the current leadership would stay and lead for the state railways anyway.

What investment do the private operators put in that isn't generated from income from their operation or our subsidy? If they invested more than they took in profit surely the TOC would go into the red? I.e. if your premium payments are more than you make and you are committed to an extravagant investment programme regardless, you're in trouble. (Like VTEC). And if you remove the profit factor from this it certainly brings every operation such as the East Coast much closer to being permanently in the black surely?

I'm afraid you misunderstand.....TOCs bid on what is effectively the least subsidy, and to quote an example, TPE are standing the predicted loss on the franchise untill it expires....a loss that would otherwise be replaced with an increased subsidy.

 

[LNW-GW Joint]

Can anyone address my questions from post 257?

TOCs don't run themselves.
Hiring in OLR (SNC Lavelin and E&Y) to run LNER costs money, probably more than the VTEC management team who are about to move on.
Consultants don't so anything for free, and they haven't got a long-term stake in the business.
It will be, as they say in government circles, "minister liable", whereas previously it was effectively "VTEC liable".
We don't yet know how much LNER has to deliver to the DfT, but it will have to be earned by tight cost control and business growth.
DfT will have to agree a profit profile that LNER needs to deliver, which will probably be less than VTEC (who funded the gap themselves for 3 years).
Investment is rather odd for LNER, because VTEC had made most of that already, and the IEP fleet and depots are already contracted by DfT.
The nationalisers' perception is that everything will now work better without the profit ethos.
The next major timetable change and IEP introduction should be fun.

We still have major uncertainty about the ECML capacity enhancements for the ECML in CP6 (not yet approved by DfT/ORR).
Let's see how it turns out...​

 

[pt_mad]

TOCs don't run themselves.
Hiring in OLR (SNC Lavelin and E&Y) to run LNER costs money, probably more than the VTEC management team who are about to move on.
Consultants don't so anything for free, and they haven't got a long-term stake in the business.
It will be, as they say in government circles, "minister liable", whereas previously it was effectively "VTEC liable".
We don't yet know how much LNER has to deliver to the DfT, but it will have to be earned by tight cost control and business growth.
DfT will have to agree a profit profile that LNER needs to deliver, which will probably be less than VTEC (who funded the gap themselves for 3 years).
Investment is rather odd for LNER, because VTEC had made most of that already, and the IEP fleet and depots are already contracted by DfT.
The nationalisers' perception is that everything will now work better without the profit ethos.
The next major timetable change and IEP introduction should be fun.

We still have major uncertainty about the ECML capacity enhancements for the ECML in CP6 (not yet approved by DfT/ORR).
Let's see how it turns out...​

But didn't East Coast pay a surplus back to the treasury? Presumably because of the absence of premium payments? And they still had to pay for SNC consultants.

I suppose one of the questions in my mind is what added value do the private corporations bring that justifies their percentage profit that consultants or managers employed by a DFT TOC couldn't provide?

The percentage profit isn't really a management fee as the directors of the tocs will get very decent salaries anyway. And it's the salaries that pay for their expertise and talent not the profits the company takes.

And another part of it is that if you have an operator that is lead by expectations of profits above all else, then it's not going to be in their interests to look after quality jobs, or to produce quality jobs. As jobs shed or downskilled or lost could lead to increased profits. A job renamed and paid a new lesser salary could lead to increased profits. An operator run on a not for profit basis would presumably have public service as it's top top number 1 rather than making a profit being their number one?

 

[LNW-GW Joint]

You pay a TOC (public or private) to deliver the train services over a period, and deliver an agreed financial result (premium of x or subsidy of y).
The TOCs bid (competitively) at a price to make a margin for themselves - typically 2-3%.
VTEC failed to balance the books and lost money over 3 years to the tune of £200m - exit stage left.
DfT has hired a management team (SNC/E&Y) to run LNER for a limited period.
LNER has the same task as VTEC, and has to return the best value it can to DfT who is paying for the whole show (taking the business risk, which it didn't with VTEC).
You'd expect the return from LNER to DfT to be less than VTEC managed, recognising the continuing revenue shortfall on the route.
Profit will still be made out of LNER - for Hitachi, SNC/E&Y and any other commercial contracts including hired-in people.
I'm pretty sure LNER will not have a "not for profit" target - their job is to maximise the "profit" (premium) for DfT.
It's also a commercial proposition for SNC/E&Y, just as it was for VTEC.
They are not going to give away freebies or cut fares just because it has been "nationalised" (which it hasn't).

 

[pt_mad]

Losses of 200million but this company was employed for their great skill and expertise. They could have got rid of the directors and promoted customer service managers to directors on salaries of less than 100k. And then they'd have only made £197m in losses rather than 200 million.

Someone from the platform at kings cross could have been a director on a third of the salary if all they had to do was anything better than making losses of 200 million. All they'd have to do is say leave everything as it is for 8 years and I'll take a salary of 100k. Or even a salary equal to that of the Prime Minister. And the losses would be down by a couple of million already.

 

[squizzler]

One other comment is that I would make the entire land-based public transport system (train, bus) _integrated_ with through ticketing, almost like what goes on in London on a national scale. This I think is almost more important than whether it's run on the ground by public or private organisations. The main thing is that public transport should be run as public service, not for private profit, with subsidy if need be. If the actual trains and buses are owned by private companies who are paid by government to run the services, that's not so bad as long as the whole system is planned for integration and with an ethos of public service. Switzerland has come up somewhere here, AFAIK this happens in that country. Private companies run services as well as SBB but the whole thing is designed to be integrated. Likewise London.

Try doing a journey like Southampton to Midhurst or Southampton to Swanage and you'll see what I mean. Perfectly doable on public transport, but disproportionately expensive and no attempt to integrate train and bus times. An extension of PlusBus to cover not just suburbs of a town but the rural hinterland would help a great deal.

This doesn't mean getting some inept and clueless politicians to plan the timetables BTW. Timetables would be planned by people with real experience of the industry. The main thing though is to allow people to get around on public transport with good connections and reasonably-priced fares.

With reference to the Swiss, it is a very decentralised country and I understand the cantons which make up the country have their say in the running of their services. Decentralisation might just be the key to integrated UK transport too.

Here in the UK we already have "nationalised" railways. Not nationalised in ownership but something more important in the eyes of the passenger: the infrastructure and train services being integrated and placed in the service of a longer term national plan for growth. It's just that to witness these nationalised railways you must go to other home nations than England: Scotland, and as of October this year, Wales.

I think a similar regionalisation (not nationalisation) is what the UK needs. Scotland and Wales show that current system of network rail and franchising does not even need to be substantially changed. A good argument for local control is made in this recent Guardian article.

 

[mushroomchow]

Um the German railways are nationalised and the punctuality isn't very good

I was in Dusseldorf last month. Most of the local / intraregional services are now privately operated (Keolis and Abellio being amongst those running from the Hbf). Tickets are cheaper, rolling stock was new and I didn't see a single one running late, which I only wish I could say about DB's non-ICE offering!

Not that DB is a bad operator (by UK standards at least, it was a pleasure to use), but if private operators ever get a slice of the Intercity market there then they'll be in trouble. The Locomore startup was basically starved out of existence through extortionate track access charges, primarily because it would have been a threat to their monopoly on long-distance services, but it seems to be rising from the ashes.

I think a similar regionalisation (not nationalisation) is what the UK needs. Scotland and Wales show that current system of network rail and franchising does not even need to be substantially changed. A good argument for local control is made in this recent Guardian article.

That's how Germany does it - in my case, the local contracts referenced were tendered by the Nordrhein-Westphalia government. It only applies to services mostly or entirely within the region though to my knowledge, which is how DB maintains its iron grip on long-distance services.

 

[NSEFAN]

Total nationalisation could work well, but not with a cynical organisation like the DfT in charge of it. From the DfT emails leaked thread :
https://twitter.com/lisanandy/status/1009399963443519489

a classic handling strategy. Propagate the myth that the service is closing entirely, then people will rejoice at the news that it is merely being diverted to Victoria.

 

[B&I]

Total nationalisation could work well, but not with a cynical organisation like the DfT in charge of it. From the DfT emails leaked thread :
https://twitter.com/lisanandy/status/1009399963443519489

A good example of why proper regional bodies are needed in Britain, rather than a morass of mostly-ignored PTEs and other local talking shops, with the odd teacher's pet like TfGM

 

[mushroomchow]

A fully nationalised system would be entirely at the whim of the ruling party.

An undersold benefit of privatisation has been the lumping of unprofitable routes into wider franchises alongside more lucrative lines, keeping them going while they would be lost under a nationalised system review (as has happened en masse in recent decades in many other countries, especially France which has scandalously slashed local and regional services to subsidise loss-making TGV routes).

The likes of Norfolk, Cumbria and Lincolnshire in particular would be under real threat of decimation under a fully nationalised system with the current government in charge, and likewise routes in Wales and Scotland unless their respective regional parliaments were to retain their current say. I would really worry for the peripheries of our national network if it was fully nationalised and a party which didn't have its best interests took charge of the DfT.

 

[Journeyman]

A fully nationalised system would be entirely at the whim of the ruling party.

An undersold benefit of privatisation has been the lumping of unprofitable routes into wider franchises alongside more lucrative lines, keeping them going while they would be lost under a nationalised system review (as has happened en masse in recent decades in many other countries, especially France which has scandalously slashed local and regional services to subsidise loss-making TGV routes).

The likes of Norfolk, Cumbria and Lincolnshire in particular would be under real threat of decimation under a fully nationalised system with the current government in charge, and likewise routes in Wales and Scotland unless their respective regional parliaments were to retain their current say. I would really worry for the peripheries of our national network if it was fully nationalised and a party which didn't have its best interests took charge of the DfT.

I think you're absolutely right - one of the odd side-effects has been creation of an attitude and culture that makes closures almost impossible, even when they're justified (the reprieve of Breich station being a good example - it needs a £2m rebuild but was used by just 48 people last year). When people bang on about how great SNCF is, they're reflecting on how quickly the Duplex TGV has whisked them across the country, but haven't spared much thought for the poor sods who need to get to work in the nearest large town but have had their train service very inadequately bustituted.

Additionally, service levels were protected by law for the first time - a franchisee is committed to meeting minimum service levels on all routes for the life of their contract, and those service levels are usually pretty good. You can't just go in and slash all the services that don't make money.

That said, some franchises are lumbered with more than their fair share of dead ducks, and I do wonder how wise it was to split TPE from Northern, the former taking busy and profitable routes and leaving the latter with a bunch of Pacers and routes that make enormous losses.

PP

 

[swt_passenger]

TOCs don't run themselves.
Hiring in OLR (SNC Lavelin and E&Y) to run LNER costs money, probably more than the VTEC management team who are about to move on.

I thought it had recently been posted in the EC thread somewhere that the entire management team are staying?

 

[LNW-GW Joint]

I thought it had recently been posted in the EC thread somewhere that the entire management team are staying?

I'm not entirely clear, but there will be an executive/director layer above the operational team, where SNC/E&Y people now sit (Robin Gisby etc).
They will replace the VTEC executives who have moved on (except David Horne).
I don't know how they manage for external funding if needed, cap in hand to DfT I suppose for specific things (like rebranding), or dip into the premiums perhaps.

 

[B&I]

I think you're absolutely right - one of the odd side-effects has been creation of an attitude and culture that makes closures almost impossible, even when they're justified (the reprieve of Breich station being a good example - it needs a £2m rebuild but was used by just 48 people last year). When people bang on about how great SNCF is, they're reflecting on how quickly the Duplex TGV has whisked them across the country, but haven't spared much thought for the poor sods who need to get to work in the nearest large town but have had their train service very inadequately bustituted.

Additionally, service levels were protected by law for the first time - a franchisee is committed to meeting minimum service levels on all routes for the life of their contract, and those service levels are usually pretty good. You can't just go in and slash all the services that don't make money.

That said, some franchises are lumbered with more than their fair share of dead ducks, and I do wonder how wise it was to split TPE from Northern, the former taking busy and profitable routes and leaving the latter with a bunch of Pacers and routes that make enormous losses.

PP

Doesn't the political culture making closures very difficult to implement date back to the reaction against Beeching ? And wasn't it legislation from 1968 on which made it less bother ib legal terms to keep routes open than close them ?