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Why calls for rail nationalisation miss the point

umm...

Transport for London (the franchising authority) doesn't make a profit

Yes, that's what I meant. Of course the individual bus companies make a profit or they wouldn't be there. Just like rural services.



but the current set up, with multiple contractual relationships between train companies and government, rolling stock leasing companies, then network rail and their contractors and sub-contractors all involve money going on lawyers and accountants (and i'm not going to start on the 'delay attribution' industry) and every company involved is taking a profit, and most of the 'private sector efficiency' means cutting jobs, wages and terms and conditions of employment.

and then there's a hidden cost to the state of benefits and tax credits supporting low wage / zero hour employment.

then there's the cost to the train companies of preparing franchise bids - reported to be well in to seven figures a time, and provides a load more work for accountants, lawyers and consultants. that money has got to come from somewhere - ultimately from passengers on that transport group's other bus and rail services if the bid isn't successful.

the bottom line is that real terms financial support to the railways, while it's been reduced partly due to railtrack having been put out of its misery, and partly through tory policy of reducing subsidy, is still double what it was under BR (can only find this in a PDF so can't post direct link. it's probably somewhere on here.)

Like I said earlier in the thread I argued strongly against privatisation at the time, and most of the things you describe above were amongst my reasons.

However - all these things - they are always brought out in arguments like this but the actual cost never seems to be quantified. It's presented as received wisdom that the contractual arrangements, bids for franchises, all this stuff, that it adds to the cost of providing services. But where's the evidence? If I could find clear evidence that it's really a significant problem in cost terms then I'd be behind getting rid of the franchise system. There are of course all the counter arguments about increased efficiency through competition, and so on, and they are equally difficult to quantify. You mention the cost of running the railways as being higher than under BR - but I'm sure you know that's just not really a meaningful comparison. The railway that exists today is very different from the railway that existed 20 years ago. Not just that it's much busier, but it provides different levels of service and access and safety. It runs with a much younger average age of rolling stock. There has been a long period of catching up on long-term investment and maintenance that was neglected during the latter part of BR's operation.

One way of trying to judge whether our railways are expensive to run is to compare them with other European railways. But as far as I'm aware, those comparisons don't seem to indicate that they are. For example, see the study here, the second one linked to -

Costs and revenues of franchised passenger train operators in the UK | Office of Rail and Road

There's no indication in there that UK TOCs suffer unusually large overheads. They don't seem to be spending all their money on management, and in fact they seem to be spending more on staff than many other countries. British train drivers are amongst the best paid. It does highlight the cost of rolling stock maintenance as a potential issue.

You mention jobs and terms of employment being cut - and everyone's heard about the DOO dispute on Thameslink/Southern. But when you go into that story, it turns out that the scheme to expand DOO is one demanded by the government, not an initiative of a private company, and in any case the management of that particular franchise are very restricted in the decisions they can make thanks to the particular nature of that contract (effectively they do what govt tells them).

In addition to all this, we are constantly being told that our fares are the most expensive in Europe and so on, which is largely nonsense. Commuter fares may be - yes - but they aren't subsidised to the degree that they are in most other countries! That's the result of govt policy, not the franchising system. I'm also constantly having to sit listening to people going on about how our trains are so unreliable and the service is so bad and it isn't like this in France and so on. This is also nonsense. I travel a lot on the railways both here and on the continent. People don't know just how terrible French rural services are, for example, because they've never tried to use them. Again, looking at the numbers, where one can, there isn't any clear indication that our trains do badly in terms of reliability or punctuality, compared to other countries.

There's all this misinformation going around, and it's easy for people to blame it on those private companies running our services down and taking big chunks of the revenue away in profits, and then there's this perceived wisdom about the enormous cost of the contractual arrangements that exist. I get frustrated with this because I just don't see the evidence that this a big problem. I do however see very clear evidence that we have a government set on shifting as much of the financial burden of running the railways onto passengers as they can. And which is cutting funding to local authorities meaning that they are having to cut bus routes in many parts of the country. Those bus routes aren't being cut because the private bus companies feel like it. They are being cut because funding for public transport is being withdrawn. So that's the point of this thread. What's primarily important is whether we have a national transport policy that supports the principle of public transport. Arguments about the franchising system can be had, but I see them as a distraction.
 
I can give you an idea on the legal fees side. If railways, for example, were run as a state owned enterprise, in-house legal would cover most things. All the units now comprising the system of franchising and rolling stock will farm out major contractual negotiations to outside counsel. You're talking £1m worth of fees for City lawyers per contract.

Some accountant bod must have analysed the repplicated functions across the industry that could be united into shared services under state management. Hell, the cost of borrowing for the government is lower than what the banks provide to the private sector.
 
Thinking about the analysis of costs, it is made difficult as the current system involves many private companies who do not have to publish accounts to the same standards as listed or government entities.
 
Why should a national railway be split up amongst different profit-seeking entities? How does that make any sense at all in terms of actually providing a service?

Why not have a single organisation using the same standards, policies and procedures nationwide?

Then it would at least be possible for the right hand to know what the left is doing.
 
Why should a national railway be split up amongst different profit-seeking entities? How does that make any sense at all in terms of actually providing a service?

Why not have a single organisation using the same standards, policies and procedures nationwide?

Then it would at least be possible for the right hand to know what the left is doing.

I suggest you start by looking at the railways prior to nationalisation in 1948 and also prior to WW1
 
BUMP
FT speculating that some train franchises will be nationalised, as their current covid state support ends, and there aren't the commuters to keep the privateers interested


The UK’s Department for Transport is on standby to nationalise more railway lines within days if it fails to agree a new rescue deal with train operators pummelled by the Covid-19 crisis. In March the government rescued the railways by providing six-month Emergency Measures Agreements, worth about £700m a month, underwriting losses for the entire industry. The package, which effectively nationalised the sector, ends on Sunday and the DfT is holding detailed negotiations with the train companies for a successor scheme dubbed ERMAs.

The pandemic has prompted a crisis in the railways with passenger numbers plunging as many workers were ordered to stay at home through the late spring and summer. It was only in July that the government allowed train operators to encourage passengers to return after discouraging all but essential travel for key workers for four months.

Despite the ideological opposition of Conservative ministers to sweeping rail nationalisation, the government has been running two lines since well before coronavirus caused economic havoc: the Northern franchise since March and the East Coast Mainline franchise since 2018. Now the “Operator of Last Resort”, the DfT unit that runs the two services, has braced itself to take over other lines if their operating companies refuse to sign up to the government’s new proposals.

The new multibillion-pound package of funding will provide stability to the rail operators for the coming months, although the new contracts are expected to vary in length. The level of taxpayer subsidy will be lower than the current scheme, given that train occupancy has risen from about 5 per cent in March to 35 per cent today. The contracts are designed to keep the industry going before a longer term move away from the franchise model that has been in place since the railways were privatised in the mid 1990s.

Ministers have offered “take it or leave it” agreements that will see the management fees paid to train companies cut from their previous 2 per cent of revenue. Negotiations are expected to run down to the wire, and one operating company said it still had not seen the government’s final offer.

Industry experts expect one or two lines could return to government hands, including TransPennine and South Western Railway, which are run by First Group and were struggling before the crisis hit. FirstGroup said: “We can’t comment on speculation.

Transport is key for economies as they restart and discussions are progressing with the DfT about the franchises which are under emergency measures.” Other franchises under pressure include Greater Anglia and London commuter service C2C, but the government is not expected to step in to run every line that had been struggling.

Rail industry executives have questioned how many franchises the OLR has the capacity to run simultaneously, particularly the complex commuter services serving big cities. One industry figure said there was still a “fighting chance” that all the operators would accept the new terms — but the government said the OLR was “on standby” to step in.

The franchising model has been dogged by problems caused by overbidding for contracts, repeated government failures to deliver infrastructure upgrades, delays in the delivery of new rolling stock and industrial action. After years of chaos and fare rises, ministers had signalled they favoured a new system modelled on the type of management contracts used on the London Overground.

That would mean a fixed annual fee for running the service, rather than the franchise model in which a train company’s income fluctuates according to passenger numbers.
The pandemic has delayed the publication of a government-ordered report into the railways led by former British Airways chief executive Keith Williams, but he told the Financial Times last year that he favoured “revolution not evolution”.
 
The writer of this article was the chairman of East Coast during the period it was quasi-nationalised. The period which people who don't really understand how the railway franchising system works like to quote as an example of how publicly run franchises make lots of profit for the government, even though the government didn't particularly make any more money out of that franchise whilst it was nationalised than they do when it's in private hands.

The point is that our railways could be much more effectively improved by changes in broader transport policy, and the way the whole system is managed, than by fiddling around with who runs the franchises.

But it's easy for people to say "nationalise" so that's what ends up in the manifesto. Any kind of truly radical transport policy doesn't get a look-in.

Anyway, an interesting read perhaps.

Nationalisation: “a dead-end argument”

In light of today's announcment this makes for interesting reading. I suppose this article was written before the Southern Rail meltdown and timetable fiasco but still makes valid points.
 
They’ll find a way to pick a fight with the unions as part of the process, now as good a time as any to portray strikers as unpatriotic or against the public interest if members stand up for themselves. Will definitely be people in the Tory party looking to see what gains they can get out of the Covid crisis. Watch out.
 
So - now that the railways are quasi-nationalised again - magically the government is going to change its approach to funding and investment?

No? Who could have predicted that!


Railways and governments across Europe are working to attract passengers back to rail in the wake of the pandemic, spurred by the European Commission’s declaration of 2021 as the EU Year of Rail. Many are offering discounted or even free tickets to encourage people to try trains again. In some cases governments are launching subsidised multi-modal transport offers to encourage a transition away from high-pollution, low-occupancy transport to support green objectives; Austria’s Klimaticket initiative which officially launched on October 26 is a high-profile example.


The contrast in the UK could hardly be starker. In his Budget statement on the same day, Chancellor Rishi Sunak announced a 50% cut in the Air Passenger Duty levied on domestic flights, while fuel duty for road vehicles remained frozen for a twelfth successive year. In its response, the Rail Delivery Group noted that taxes make up 40% of the cost of traction electricity for rail, while aviation fuel is exempt from duty.


It seems clear that the Treasury’s primary concern is railway revenue, not the environment, industry sources suggest. Having spent many billions of pounds sustaining rail services through the various pandemic lockdowns, finance ministry officials are now keen to recoup their losses as far as possible as the recovery takes hold.
 
So - now that the railways are quasi-nationalised again - magically the government is going to change its approach to funding and investment?

No? Who could have predicted that!


Only some of them ... unfortunately.

There is a distinct lack of environmentally sound & "joined up thinking" in the UK's so-called transport policy-making.

Too much reactive policy and too little pro-active actions, imo.
 
So - now that the railways are quasi-nationalised again - magically the government is going to change its approach to funding and investment?

No? Who could have predicted that!

That's Tories for you.
 
Is "public control" a way of avoiding actual "public ownership" but making it sound like renationalisation?

It’s a pretty realistic way of getting started on day 1, without having to spend years building up the capabilities to run railways internally.

Specifically with rail - the tfl model is proved to work well and run decent transport.
 
The point is: they are already in "public control". And they are largely now in public ownership too.

As is the purpose of this thread to bang on about: what matters is the policy, more than the ownership.
 
The nicest thing would be a government that genuinely invested in and supported public transport. That would mean more spending on it, and a whole bunch of policies to make it work better, for example getting trains and buses integrated and mandating a less complex ticketing system and making sure rail is attractive compared to private car use. These are all the nice things, and these could all happen with varying levels of private sector involvement.

But OK let's spend all our energy focusing on the amount of profit extracted by private companies and let the current government just get on with cutting spending and cutting back services while we're distracted.

All of the static infrastructure of our rail system has been owned and controlled by Railtrack, a publicly owned entity, for twenty years. As it should be, by the way. But has it meant that the infrastructure is protected from things like asset sweating? No it hasn't - all the arch leases were sold off the other year to a private company for short term gain. Why? Because such decisions are made by the government of the day. Just like the governments of the day decided to let nationalised British Rail be run down into managed decline through various periods in between its inception and its privatisation.
 
An example of the utter failure of a fragmented service. There’s a power cut at Leatherhead today*. It’s a Southern station. However, most people are actually there to get a Southwestern train to Waterloo. However, two Waterloo trains have now gone steaming through the station without stopping. The Southern staff had no idea that was going to happen and no idea if any future Waterloo trains will stop because they could only speak with their Southern controllers. Who neither know nor care about Southwestern trains.


*the station I now have to go from because Dorking has so few trains that stop there these days. But that’s another story
 
It's worth remembering that the reduction in services on SWR and lots of other operators is a consequence of central government policy to reduce funding for the railways. And the post covid railway is not exactly nationalised but is much more directly controlled and micro-managed by the DfT.


I'm aware that that article may be written somewhat from a train operator POV. But I don't think anyone is having a look around at the current setup, with the franchise system largely abandoned, and thinking it's great. Except those whose political ideology is to minimise funding to public transport.
 
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