Why is there now an obsession with re-nationalisation?

[jon0844]

The TSGN 'franchise' is a good taster of what things could be like. LNER too, except that's really just a task of keeping things ticking over than anything clever.

 

[ac6000cw]

The government would simply let franchises reach the end of their term, and could then purchase new rolling stock direct rather than lease from the rolling stock companies.

...which would then lead to the same issues with Treasury spending limits on rolling stock investment that NR is already having with infrastructure investment. How do you think we ended up with Pacers instead of proper DMUs, fewer HST sets than was really needed, fewer Sprinter carriages than the trains they replaced (roughly 2 carriages for every 3 old ones) etc. It was because BR couldn't convince the Treasury that the financial return-on-investment was good enough to order any more, or because the money was needed for other government spending.

 

[yorksrob]

The TSGN 'franchise' is a good taster of what things could be like. LNER too, except that's really just a task of keeping things ticking over than anything clever.

It could be.

But then again, private franchising seems to have achieved the same level of chaos over the North of England, so I'm not sure you can read too much into it.

 

[LNW-GW Joint]

People think that undoing the past 20/30 years will somehow make the UK great again, but alas it is not that simple and would we be better off with our Railways being owned and run by HM Government? Could there not be a 50/50 deal whereby the TOC's get to keep their company names on their services, but HM Government has a greater say about things such as fare rises to prospective new routes?

It already is 50-50, or more like 75-25.
The government owns and operates the infrastructure (NR), and the private sector (TOCs, ROSCOs) owns the trains and operates them (to government spec).
Nothing moves or changes without government say-so (except for freight and open access).
Company names are the least of the structural problems.
The fares regime, and 50% of the actual fares, notably season tickets, are set/approved by government (sometimes locally rather than nationally).
HS2, Crossrail and other major enhancements are specified by government.
Very occasionally some private sector infrastructure is built (eg the Heathrow branch, port facilities or freight terminals).
Private sector contractors deliver most of NR's enhancement work, including electrification, signalling, new stations etc.
It was different when NR was in the private sector (as Railtrack), but that ended in 2002.

 

[DynamicSpirit]

"Why is there now an obsession with re-nationalisation?

This is a strange question IMHO. We could re-frame the question, "Why is there not an obsession with privatising the road network".

You could argue that roads and rail are quite similar in some ways in how they are managed: For both road and rail, the infrastructure is largely in the hands of the public sector, but almost all vehicles running on the infrastructure are run privately.

 

[JohnB57]

You could argue that roads and rail are quite similar in some ways in how they are managed: For both road and rail, the infrastructure is largely in the hands of the private sector, but almost all vehicles running on the infrastructure are run privately.

I think you meant “in the hands of the public sector...”?

 

[DynamicSpirit]

I think you meant “in the hands of the public sector...”?

Thanks, yes, you're absolutely right. I've now fixed my post.

 

[squizzler]

I think that there is currently a cultural obsession with the past, and the belief that things were somehow better back then.

In music, for example, there are bands like Greta Van Fleet who are harking back to the days of 70s Led Zeppelin and Queen and capitalising on younger people turning off from conventional music and instead listening to Queen, Boston, Foreigner, Led Zeppelin etc.

People think that undoing the past 20/30 years will somehow make the UK great again, but alas it is not that simple and would we be better off with our Railways being owned and run by HM Government? Could there not be a 50/50 deal whereby the TOC's get to keep their company names on their services, but HM Government has a greater say about things such as fare rises to prospective new routes?

This! IMO Rail nationalisation is such a policy hit because it wins support from two parishes:

1. The people who Modron identified. Let's call them the brexiteers, those who think everything was better in the 1950's, and apparently make up 52% of the voting population. Ironically these people are likely to be retired and do very well out today's privatised railways. Because they have flexibility in travel times they can benefit from great fare offers from booking in advance, and probably own the relevant railcard.
2. The millennial generation who have to use the railways for commuting, and therefore have no flexibility in the times they travel. This group are reminded of their travelling expenses by the annual fare rises, and calls for nationalisation is a national response to this.

 

[yorksrob]

This! IMO Rail nationalisation is such a policy hit because it wins support from two parishes:

1. The people who Modron identified. Let's call them the brexiteers, those who think everything was better in the 1950's, and apparently make up 52% of the voting population. Ironically these people are likely to be retired and do very well out today's privatised railways. Because they have flexibility in travel times they can benefit from great fare offers from booking in advance, and probably own the relevant railcard.
2. The millennial generation who have to use the railways for commuting, and therefore have no flexibility in the times they travel. This group are reminded of their travelling expenses by the annual fare rises, and calls for nationalisation is a national response to this.

You've forgotten those of us 'inbetweens' who don't have access to railcards with which to dull the worst excesses of TOC pricing.

 

[squizzler]

You've forgotten those of us 'inbetweens' who don't have access to railcards with which to dull the worst excesses of TOC pricing.

As just over 40 I am able to take my pick as to whether i am generation X or millennial. My argument that rail nationalisation unites the baby boomer generation (on nostalgic grounds) and genX / millenials (working age and subject to peak fares) - who were the opposed tribes in the EU referendum - stands.

 

[yorksrob]

I think that there is currently a cultural obsession with the past, and the belief that things were somehow better back then.

In music, for example, there are bands like Greta Van Fleet who are harking back to the days of 70s Led Zeppelin and Queen and capitalising on younger people turning off from conventional music and instead listening to Queen, Boston, Foreigner, Led Zeppelin etc.

People think that undoing the past 20/30 years will somehow make the UK great again, but alas it is not that simple and would we be better off with our Railways being owned and run by HM Government? Could there not be a 50/50 deal whereby the TOC's get to keep their company names on their services, but HM Government has a greater say about things such as fare rises to prospective new routes?

Having heard a lot of the grating modern pop music they insist on playing on Radio 2 every five minutes, I'm not surprised people are looking to the past.

 

[yorksrob]

As just over 40 I am able to take my pick as to whether i am generation X or millennial. My argument that rail nationalisation unites the baby boomer generation (on nostalgic grounds) and genX / millenials (working age and subject to peak fares) - who were the opposed tribes in the EU referendum - stands.

I'm also just over 40 and I'm not sure we count as Millennial, however I take your point.

I'm also old enough to remember that BR had its rough edges but wasn't anywhere near as bad as some try to make out.

 

[AndrewE]

A new reason to support "renationalisation" (whether or not that is the correct term!) thanks to Yorkie in this thread: https://www.railforums.co.uk/threads/rdg-plans-to-stop-split-ticketing.177688/

I agree but the train companies don't see it that way. They also do not mind if the overall rail market or the reputation of rail is damaged.

One of the worst consequences of the present position to my mind, assuming that we do want rail to be able to regain public trust, justify investment and expand.

 

[Bletchleyite]

A new reason to support "renationalisation" (whether or not that is the correct term!) thanks to Yorkie in this thread: https://www.railforums.co.uk/threads/rdg-plans-to-stop-split-ticketing.177688/
One of the worst consequences of the present position to my mind, assuming that we do want rail to be able to regain public trust, justify investment and expand.

If you want to see silly fares systems, you only need to look at the various Romance and Slavic-style nationalised railway systems around Europe...just because the Germanic-style systems by and large get fares and timetabling right doesn't mean that nationalised railways necessarily do by definition.

 

[AndrewE]

If you want to see silly fares systems, you only need to look at the various Romance and Slavic-style nationalised railway systems around Europe...just because the Germanic-style systems by and large get fares and timetabling right doesn't mean that nationalised railways necessarily do by definition.

I wasn't commenting on the fares system, but on Yorkie's observation that

[The TOCs] also do not mind if the overall rail market or the reputation of rail is damaged.

 

[Sad Sprinter]

As just over 40 I am able to take my pick as to whether i am generation X or millennial. My argument that rail nationalisation unites the baby boomer generation (on nostalgic grounds) and genX / millenials (working age and subject to peak fares) - who were the opposed tribes in the EU referendum - stands.

It's funny you should say that because I got the impression that the youngest generation stood with the baby boomers on the EU referendum-not millenials.

But I think the nationalisation argument is to do with sentiment rather than anything else. It's typical British "the state knows best" thinking. A sort of nationalistic style of left-wingism.

Personally, I find the railways to be rather soulless. It isn't really a railway, just a..."thing". I can't find the excitement and romance about the latest train operating company owned by another country's railway system-it just seems a bit surreal. Nor can I really see the value of having so much directed from the DfT itself, and not from the people who actually run the railway day to day.

 

[433N]

But I think the nationalisation argument is to do with sentiment rather than anything else. It's typical British "the state knows best" thinking. A sort of nationalistic style of left-wingism.

Oh dear.

The nationalisation argument is to do with the state providing appropriate infrastructure for the country's needs with some kind of strategic planning for the future.

That might perhaps have become the preserve of those to the left of British politics but only because the right wing has abandoned all responsibility for anything through it's obsession with small government and laisser-faire capitalism (well until 2008 showed what a silly idea that was). For a long time, Conservative governments were happy with nationalised railways ... or were they nationalistic left-wingers too ?

 

[Sad Sprinter]

Oh dear.

The nationalisation argument is to do with the state providing appropriate infrastructure for the country's needs with some kind of strategic planning for the future.

That might perhaps have become the preserve of those to the left of British politics but only because the right wing has abandoned all responsibility for anything through it's obsession with small government and laisser-faire capitalism (well until 2008 showed what a silly idea that was). For a long time, Conservative governments were happy with nationalised railways ... or were they nationalistic left-wingers too ?

The Conservative and Labour government both had a disdain for railways in general and for a long time the Conservatives didn't really stray to far from the post-1945 Atlee mentality. Until Thatcher of course.

I am all in favour of nationalisation but not because I think the State is the best one to know how to run the railway. Well, that depends on who the State is. Chris Grayling? DfT civil servants? Probably not. I think the railways should be run by the people who own it, and run not for profit but as a public service.

 

[Andyh82]

The reason there is an obsession with nationalisation is simply because it’s different than now.

The current service was delayed or cancelled and has high fares, but if it changes to something else then it’ll be better, is what they think.

They assume operators are taking home massive profits and at the same time are the sole reason why trains are late and why they don’t have unlimited carriages.

Also they think nationalised trains in other countries are perfect because they once travelled on a TGV on holiday for leisure purposes and it went better than a daily commute here in winter.

Of course all these ideas are encouraged by those who want nationalisation.

It’s also just in the same way that almost every rail franchise ending is met with ‘good riddance’

Remember how disliked First Capital Connect was and how GTR will do better?
Or Serco Abeillio operated Northern?

In reality a nationalised service will probably be no different than now, some things may change for the better but something else will change for the worse to compensate

 

[Mingulay]

The reason there is an obsession with nationalisation is simply because it’s different than now.

The current service was delayed or cancelled and has high fares, but if it changes to something else then it’ll be better, is what they think.

They assume operators are taking home massive profits and at the same time are the sole reason why trains are late and why they don’t have unlimited carriages.

Also they think nationalised trains in other countries are perfect because they once travelled on a TGV on holiday for leisure purposes and it went better than a daily commute here in winter.

Of course all these ideas are encouraged by those who want nationalisation.

It’s also just in the same way that almost every rail franchise ending is met with ‘good riddance’

Remember how disliked First Capital Connect was and how GTR will do better?
Or Serco Abeillio operated Northern?

In reality a nationalised service will probably be no different than now, some things may change for the better but something else will change for the worse to compensate

I think your summary is a fair one. For nationalisation to be very different the state part of it needs to be very different. If we just have dft and transport Scotland fully running things they would need to raise their game and acquire some talent since they haven’t shown any great aptitude for strategic or short term decision making in transport issues on rail and in other areas of transport.

That said. There would surely be benefits of a unified train fleet being more flexible across the Uk than fragmented under various leasing agreements. As the semi privitiasation that is the franchise does not offer competition as for most there is no choice of operator the alleged benefits of competition are not there. There is only one thing worse than a public monopoly and that’s a private monopoly .

When virgin stagecoach can just hand back East coast because they screwed up and lose money but want to hold onto the west coast franchise which apparently make money on. It makes a mockery of the risk and reward criteria which is at the heart of private sector involvement. All the more unjustified if the profits are not taxed in the Uk. Virgin ? Stand to be corrected ?

So in balance I favor the full nationalization of our railways with conditions attached. A demonstrably capable government department and the unions would need to play their part too and be prepared to commit to a no strike bond with the public. I have admiration for on train staff on Scotrail. But as passengers it matters not if your service is cancelled due to management incompetence or industrial action. Neither wins sympathy. It’s a public service and the traveling public must be the priority in every action

 

[yorksrob]

The Conservative and Labour government both had a disdain for railways in general and for a long time the Conservatives didn't really stray to far from the post-1945 Atlee mentality. Until Thatcher of course.

I am all in favour of nationalisation but not because I think the State is the best one to know how to run the railway. Well, that depends on who the State is. Chris Grayling? DfT civil servants? Probably not. I think the railways should be run by the people who own it, and run not for profit but as a public service.

Who owns it though. There has been no move towards state control over the last thirty years. Both Con and Lab have preferred to leave everything, including ownership of public services to the vaguaries of 'the market'.

That said, if nationalisation were ever to happen, I believe that there would need to be a far more robust, legally binding representation of passengers interests built in from the start.

History has shown central Government to be incapable of balancing taxpayers and passengers interests.

 

[HH]

The current franchising model doesn't work very well, due, I think, to the fact that the government is asking private companies to take risks without allowing them much control of their business. However, the TfL concessions seem to work better (not perfect, but better), largely because TfL have assumed revenue risk, but hold the concessionary to a high standard of delivery.

 

[Bletchleyite]

The reason there is an obsession with nationalisation is simply because it’s different than now.

That's a very good point. You could certainly argue that a lot of the drive for Brexit was not a genuine desire to leave the EU, but in fact a desire to change the face of politics which have poorly served people at grass roots level for years, to use another contemporary example.

 

[underbank]

That's a very good point. You could certainly argue that a lot of the drive for Brexit was not a genuine desire to leave the EU, but in fact a desire to change the face of politics which have poorly served people at grass roots level for years, to use another contemporary example.

Nail on head there in both respects.

 

[ac6000cw]

Yes, it's the 'grass is greener on the other side of the fence' idea.

(It never is after the initial 'honeymoon period', because as soon as you start grazing it the grass on the 'old' side of the fence gets greener...plus ça change, plus c'est la même chose...)

 

[Meerkat]

When virgin stagecoach can just hand back East coast because they screwed up and lose money but want to hold onto the west coast franchise which apparently make money on. It makes a mockery of the risk and reward criteria which is at the heart of private sector involvement.

Virgin didn’t “just” hand it back though did they? Firstly they were acting in accordance with the contract, and secondly it cost them a lot of money before they could hand it back.

 

[LNW-GW Joint]

When virgin stagecoach can just hand back East coast because they screwed up and lose money but want to hold onto the west coast franchise which apparently make money on. It makes a mockery of the risk and reward criteria which is at the heart of private sector involvement. All the more unjustified if the profits are not taxed in the Uk. Virgin ? Stand to be corrected ?

It's my understanding that Virgin Trains (like all UK TOCs) is taxed in the UK - the VT figures are in the Stagecoach annual reports.
Maybe you didn't get the soundbite that the VTEC losses (£180 million) wiped out all Virgin's profits in rail since they started in 1996?
At any time since 2012, DfT could have re-competed the West Coast franchise, but they have chosen not to (four times), leaving VT in situ.
In a year's time we might well have a new WC operator (including HS2) - there are 3 bidders.

 

[gsnedders]

It's my understanding that Virgin Trains (like all UK TOCs) is taxed in the UK - the VT figures are in the Stagecoach annual reports.
Maybe you didn't get the soundbite that the VTEC losses (£180 million) wiped out all Virgin's profits in rail since they started in 1996?
At any time since 2012, DfT could have re-competed the West Coast franchise, but they have chosen not to (four times), leaving VT in situ.
In a year's time we might well have a new WC operator (including HS2) - there are 3 bidders.

I didn't realise they wiped out Virgin's profits, given the parent company guarantee and performance bonds were provided by Stagecoach (who, after all, had a 90% stake in VTEC).

 

[w1bbl3]

I didn't realise they wiped out Virgin's profits, given the parent company guarantee and performance bonds were provided by Stagecoach (who, after all, had a 90% stake in VTEC).

Not quite Virgin group had to take 10% of the VTEC pain and stagecoach 90% of the pain, so Virgin group took a £18m hit and stagecoach a £162m hit. VTWC are Virgin Trains group (51% owned by Virgin Group) whilst VTEC where seperate and not part of Virgin trains.

The total profit returned by Virgin trains group to Virgin and Stagecoach is greater than the losses both racked up with VTEC. However the EC forary by Stagecoach did wipe out 80% of group profits in 2017 and 2018, the £160m loan has/had been capitalised by Stagecoach and so far they do not appear to have fully written it off doing so in either '17 or '18 would have wiped out group profits and resulted in them reporting a net loss.
The overall position of stagecoach in terms rail profits is fairly marginal once the VTEC losses are fully written off, 15 years in rail will have netted about the same as annual UK regional bus profits.

Coming back to wider point about nationalisation I suspect part of call is due to perception of excess profits reported by the TOC's, actually in percentage terms UK rail is pretty bad business to be in. Media reports of XYZ TOC make £1bn give the appearance of large TOC profits when in reality the figure reported is the turnover not the profit of say £60 to £20m.
Then you see reports that for example state the privatised system costs £1.2bn pa, which whilst superficially true ignores how the system functioned in BR so things like the cost of delay attribution is put down as privatisation cost. Even if 100% state owned and control delays would still be attributed so the relevant operating budgets could be charged accordingly, e.g. your 180 sets down outside Doncaster delaying all ECML services heading north for a couple of hours, the fictional Intercity east trains would be attributed the delay and thus delay costs..., broken rail outside Euston blocks all movements for three hours. The fictional GB rail maintenance west gets the delay attribution.

Do not get me wrong I do personally think the current privatisation system doesn't work as success is dependent on either DfT or the bidder screwing up the numbers. A concessionary model similar to TfL buses would probably work better in terms tax payer return

 

[Goldfish62]

Not quite Virgin group had to take 10% of the VTEC pain and stagecoach 90% of the pain, so Virgin group took a £18m hit and stagecoach a £162m hit. VTWC are Virgin Trains group (51% owned by Virgin Group) whilst VTEC where seperate and not part of Virgin trains.

The total profit returned by Virgin trains group to Virgin and Stagecoach is greater than the losses both racked up with VTEC. However the EC forary by Stagecoach did wipe out 80% of group profits in 2017 and 2018, the £160m loan has/had been capitalised by Stagecoach and so far they do not appear to have fully written it off doing so in either '17 or '18 would have wiped out group profits and resulted in them reporting a net loss.
The overall position of stagecoach in terms rail profits is fairly marginal once the VTEC losses are fully written off, 15 years in rail will have netted about the same as annual UK regional bus profits.

Coming back to wider point about nationalisation I suspect part of call is due to perception of excess profits reported by the TOC's, actually in percentage terms UK rail is pretty bad business to be in. Media reports of XYZ TOC make £1bn give the appearance of large TOC profits when in reality the figure reported is the turnover not the profit of say £60 to £20m.
Then you see reports that for example state the privatised system costs £1.2bn pa, which whilst superficially true ignores how the system functioned in BR so things like the cost of delay attribution is put down as privatisation cost. Even if 100% state owned and control delays would still be attributed so the relevant operating budgets could be charged accordingly, e.g. your 180 sets down outside Doncaster delaying all ECML services heading north for a couple of hours, the fictional Intercity east trains would be attributed the delay and thus delay costs..., broken rail outside Euston blocks all movements for three hours. The fictional GB rail maintenance west gets the delay attribution.

Do not get me wrong I do personally think the current privatisation system doesn't work as success is dependent on either DfT or the bidder screwing up the numbers. A concessionary model similar to TfL buses would probably work better in terms tax payer return

An excellent post.