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Sir TophamHatt

Stagecoach Lose EMT to Abellio / Disqualified from 3 Franchises

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22 minutes ago, ColinK said:

the DfT have been pushing for this service to be split for quite a while, perhaps to give more geographically convenient franchise areas, I don’t think passenger consideration has been a big factor.

 

Throughout government, in my view certainly since the early '90s, the aim of "the game" has been to find a scapegoat for anything that is going wrong, that might go wrong and even what will go wrong as a result of known and planned policies. In terms of rail users, they are just pawns in the Westminster Bubble's experiments. That we still have many opportunities for passengers to benefit from split ticketing is only indicative of a very fractured system. I believe the user should pay a fair price for the journey he/she needs to make but I also feel that national transport infrastructure (which is surely what our railways are) cannot be upgraded if the companies expected to pay for or do those upgrades are pulled in different directions by the DfT, TOC shareholders and NR's strange position. I fear that returning to the ways of BR are probably not ideal because it seems that a lack of responsibility / accountability is at the route of today's issues. Certainly something has to change - losing a minster that has links to the prey of Isaak Walton may be a start.

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2 hours ago, Joseph_Pestell said:

 

Different operator of course, but a Norwich - Birmingham could potentially be joined to a Stansted - Birmingham en route to save track capacity.

 

If you want to make it even more convoluted for a 3-way swap they are talking about a Norwich - Stansted run too...

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Does this mean that in the not too distant future all passenger traffic on the Breckland line is either going to be a Stadler Flirt, or a Stadler Flirt in a slight livery variation?!... exciting times...

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EMT [Stagecoach] are not going to be much missed, having been at the fagend of the franchise for a long time , unless Abellio are worse.

 

Train cancellations, quality, dirt, no reservations, crowding etc have all got worse. Staff do their best, management invisible.

 

Bi-modes are a poor substitute for full electrification and are likely to offer fewer seats, poorer environmental & speed performance than straight electric depending on whether Hitachi or other option.

 

Lets see what Abellio actually deliver. End of the HSTs is likely to be part of his, the question being when? 

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This would appear to be yet another monumental example of incompetence by DfT.

 

Under BR, the railways pension scheme was extremely well managed - if at times controversial, especially for its investments in object of art during the high inflation 70's. When I joined BR, 10% of my gross salary was deducted as the employee contribution. I cannot recall what the BR contribution was. Within a short time of my employment with BR, the employee contribution was reduced to 5% and BR permitted a pension holiday as the fund's surplus was deemed to be too large. At that time a new Additional Voluntary Contribution scheme, called BRASS II was set up. BR matched pound for pound the employees' contributions. Investing in this was the best financial decision I have ever made.

 

On privatisation it was realised that fragmentation might result in difficulties, for example if a newly privatised part went bankrupt, so legislation was enacted to protect current staff and pensioners. I wonder now whether I as a pensioner need to review the protection under that legislation.

 

I can see how pension liabilities for TOC's may have grown wildly: for example IIRC a driver's pension would be based on his base salary, but his take home pay would include many allowances. ASLEF rightly got these consolidated so a driver's pension would be much higher than before.

 

However, DfT (and its predecessors) should have had oversight on what was happening to prevent a TOC from building pension liabilities that would be passed on to the next franchisee. No franchisee can reasonably be held responsible for the liabilities of its predecessors, but I take the Stationmaster's point that where a franchise such as West Coast has been in the hands of one company for a long time, it should not complain about having to fund them if it continues to bid. But it has been reported that the 'you must take on these liabilities' element was not in the original bid invitation. If not, then expect claims for refund of bid costs from any bidder who has been disqualified.

 

Newspaper reports are that the deficit is in the region of £5-6bn, £1.3bn of which is with Network Rail. Given the low margins in the industry, I cannot see how any private company can ever take on the liability.

 

For those who are now rail staff, what level of contributions are you making now? I foresee some industrial unrest if these have to be increased significantly as seems inevitable.

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Is it cynical of me to not be surprised that an outfit that effectively humiliated dft last time out through court action are conveniently disqualified this time?

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The Norwich - Liverpool split is down largely to punctuality with the added thought that the Northern section could change operators at some point. EMT have conceded in a recent forum that running such a lengthy service with key connection points in seven locations was taxing and by splitting the service, meeting them would be easier, albeit at the risk of extended journeys for longer distance travellers. A late running service at Ely for instance has no opportunity to make up time and with the path lost, is likely to be even later at Sheffield or Manchester.

 

The proportion of travellers between Peterborough and Nottingham who travel beyond  there is small, ECML services and connections are usually a better option.

 

overall I think it’s a sad day for EMT travellers, they weren’t perfect but they did an extremely good job, main lines at least, can’t say for the other routes (OK they lost our train yesterday, could happen to anyone) and there seems little confidence either inside or outside the rail industry that Abellio has any capability to deliver on the promises made. Evidence elsewhere seems to back this.

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Just now, RANGERS said:

The Norwich - Liverpool split is down largely to punctuality with the added thought that the Northern section could change operators at some point. EMT have conceded in a recent forum that running such a lengthy service with key connection points in seven locations was taxing and by splitting the service, meeting them would be easier, albeit at the risk of extended journeys for longer distance travellers. A late running service at Ely for instance has no opportunity to make up time and with the path lost, is likely to be even later at Sheffield or Manchester.

 

I rather fancy that this is the main driving force behind the decision.

 

For another example, look at the appalling record of TPE services to Scarborough after the last timetable change, when there were more & more delays to services to Scarborough which come through Manchester. Once out of path, the Leeds area was the next chokepoint. As a consequence, and given the short turnround time at Scarborough (only 7 minutes, iirc), then in order to try and get the return services back into their path, many trains were being terminated at Malton. I believe that the record was this happening to 3 consecutive services. Totally unacceptable. OK, whoever thought that a 7 minute turnround was a good idea was perhaps overly optimistic, but the root cause is how vulnerable to delays these long distance services can be when routed through busy areas, with little or no recovery time built into the timetable.

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1 minute ago, MarkC said:

I rather fancy that this is the main driving force behind the decision.

 

For another example, look at the appalling record of TPE services to Scarborough after the last timetable change, when there were more & more delays to services to Scarborough which come through Manchester. Once out of path, the Leeds area was the next chokepoint. As a consequence, and given the short turnround time at Scarborough (only 7 minutes, iirc), then in order to try and get the return services back into their path, many trains were being terminated at Malton. I believe that the record was this happening to 3 consecutive services. Totally unacceptable. OK, whoever thought that a 7 minute turnround was a good idea was perhaps overly optimistic, but the root cause is how vulnerable to delays these long distance services can be when routed through busy areas, with little or no recovery time built into the timetable.

 

Manchester is now a major bottleneck, with extra trains routed through the Piccadilly-Oxford Road section without the benefit of, I understand, government promised widening to four tracks. The answer apparently is the 'digital railway' whatever that means. More government waffle?

Both TPE and EMT services are delayed by all this, also caused in part by previous DaFT meddling and increased Northern services.

Regarding Abellio, all I'll say as a (now) future employee, have you seen the state of a lot of the Anglia rolling stock? Not a particularly promising advert.

Guess I'll be needing a new tie come August.:rolleyes:

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3 hours ago, great central said:

 

Manchester is now a major bottleneck, with extra trains routed through the Piccadilly-Oxford Road section without the benefit of, I understand, government promised widening to four tracks. The answer apparently is the 'digital railway' whatever that means. More government waffle?

Both TPE and EMT services are delayed by all this, also caused in part by previous DaFT meddling and increased Northern services.

Regarding Abellio, all I'll say as a (now) future employee, have you seen the state of a lot of the Anglia rolling stock? Not a particularly promising advert.

Guess I'll be needing a new tie come August.:rolleyes:

 

If you mean the dirty external state of Crown Point based stock the reason behind that is the fact the washing plant has been out of use for several months while rebuilding work to Crown point takes place.

 

Washing stock is in the hands of just two staff doing everything by hand. Hardly surprising they're fighting a losing battle.

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51 minutes ago, admiles said:

 

If you mean the dirty external state of Crown Point based stock the reason behind that is the fact the washing plant has been out of use for several months while rebuilding work to Crown point takes place.

 

Washing stock is in the hands of just two staff doing everything by hand. Hardly surprising they're fighting a losing battle.

I did quite a bit of travelling on Anglia local services out of Norwich and Ipswich last year and I though the interiors of the DMU's were all quite tired and grimy compared with my local line's EMT 153s which were all clean, tidy and sparkling by comparison!

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11 hours ago, david.hill64 said:

This would appear to be yet another monumental example of incompetence by DfT.

 

Under BR, the railways pension scheme was extremely well managed - if at times controversial, especially for its investments in object of art during the high inflation 70's. When I joined BR, 10% of my gross salary was deducted as the employee contribution. I cannot recall what the BR contribution was. Within a short time of my employment with BR, the employee contribution was reduced to 5% and BR permitted a pension holiday as the fund's surplus was deemed to be too large. At that time a new Additional Voluntary Contribution scheme, called BRASS II was set up. BR matched pound for pound the employees' contributions. Investing in this was the best financial decision I have ever made.

 

On privatisation it was realised that fragmentation might result in difficulties, for example if a newly privatised part went bankrupt, so legislation was enacted to protect current staff and pensioners. I wonder now whether I as a pensioner need to review the protection under that legislation.

 

I can see how pension liabilities for TOC's may have grown wildly: for example IIRC a driver's pension would be based on his base salary, but his take home pay would include many allowances. ASLEF rightly got these consolidated so a driver's pension would be much higher than before.

 

However, DfT (and its predecessors) should have had oversight on what was happening to prevent a TOC from building pension liabilities that would be passed on to the next franchisee. No franchisee can reasonably be held responsible for the liabilities of its predecessors, but I take the Stationmaster's point that where a franchise such as West Coast has been in the hands of one company for a long time, it should not complain about having to fund them if it continues to bid. But it has been reported that the 'you must take on these liabilities' element was not in the original bid invitation. If not, then expect claims for refund of bid costs from any bidder who has been disqualified.

 

Newspaper reports are that the deficit is in the region of £5-6bn, £1.3bn of which is with Network Rail. Given the low margins in the industry, I cannot see how any private company can ever take on the liability.

 

For those who are now rail staff, what level of contributions are you making now? I foresee some industrial unrest if these have to be increased significantly as seems inevitable.

Just to give some numbers from my section of the fund  (you will presumably have similar information for the section you belong to as it is a legal requirement to provide the information although that might not apply if you havea deferred pension).  I am - although it might be obvious - a pensioner in my section. 

 

In my section of the fund a full actuarial assessment was carried out for year end 31 December 2016 (I think, without checking, that these are required every three years or so) - anyway 31.12.16 figures

Estimated Liabilities (current and forecast) - £418.0 million

Assets valued at  - £410.8 million

Shortfall  - £ 7.2 million

 

To address the shortfall it was agreed to increase both the employees' and employer's contributions to a total of 28.2% of (pension fund) section pay with the employer paying 16.92% and the employee 11.28% (an extra 1.5 percentage points for the employer and an extra 1 percentage point for an employee)  for a period of one year.  This sort of thing is quite common and as dDavid Hill pointed out he at one time was paying 11% into the BR fund and I at one time - somewhat earlier I would think - was paying 12% - it's how well managed funds maintain a surplus.

 

The position was estimated for 31.12.17 and obviously took into account the increase in contributions but was also influenced by improved investment returns etc - resulting in -

Estimated Liabilities £442.1 million

Assets.  £447.7 million

Surplus  £5.6 million

 

The above are 'real' figures in so far as actuarial calculation of liabilities can be arrived at against what amounts to a snapshot valuation of assets.  But now look at the 'unreal' figure which would apply if the fund were to be wound up and transferred to an insurer while maintaining the same scheme benefits.  This was assessed as part of the full valuation at 31.12.16 and came out like this -

Cost of securing the beniefits with an insurance company. £959.5 million

Assets £410.8 million

Shortfall £548.7 million

 

Because there is a legal requirement to assess the reinsurance value of a fund against its liabilities there will inevitably be some potential extremely large shortfalls.  And note too that even in my section which was in surplus at 31.12.17 if it was reassessed on a reinsurance basis there would inevitably been a shortfall in excess of £500 million.   So if you want nasty looking headlines just take the reinsurance figires for a few sections of the fund and even if thay are all in surplus on an actuarial basis you can 'prove' there is a shortfall.  I do not trust any pension figures bandied about by politicos or Civil Servants unless they are properly qualified and it is explained whether or not it is a scheme shortfall (which one might logically expect) or a reinsurance shortfall (which can be useful to some for 'political' reasons. or for making a particular point).  

 

From what I have seen in the daily press or elsewhere the figures quoted in the Stagecoach etc case have not been qualified.  assuming franchisees have been correctly managing their involvement in pension funds, as they should have done, then the figures might be reinsurance numbers and are very misleading.  But if they are 'real' numbers then somebody, including Stagecoach and Virgin, has been getting away with financial murder.  The latest assessments for my section were issued to fund members on 31 March and presumably the figures for other sections would have appeared at about the same time

 

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The RMT are warming up the tubs for some thumping over this pension issue apparently.  Talks of national strikes being uttered.

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Another fine mess the DFT has got itself into civil servants are not the people to be involved with commercial activities also I thought that pension contributions were written in law.I know that companies can be given pension contribution holidays but surely they are monitored by the   government depts. as to how the funs are being run?

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1 hour ago, John M Upton said:

The RMT are warming up the tubs for some thumping over this pension issue apparently.  Talks of national strikes being uttered.

 

Yup

 

https://www.rmt.org.uk/news/rmts-mick-cash-warns-of-national-industrial-action/

 

And while I am not normally a fan of the RMT, if it does turn out the DfT have been asleep on the wheel on this issue or are trying to repeat the worst excess of the 1980s which saw millions of folk lose out on a decent final salary pension just so city traders, shareholders and short term investors could make a load of cash then I will wholeheartedly support such action.

 

Workers should not be made to pay for Government screw ups.

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I presume we can look forward to the DfT, who brought us the consistency of wanting to phase out diesel road vehicles in a generation whilst simultaneously insisting on bi-modes with diesel engines for new trains, applying a similar level of consistency by not barring the other SE bidders from all future franchises?

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15 hours ago, phil-b259 said:

 

Workers should not be made to pay for Government screw ups.

Were all workers for the government.

we pay UK plc our taxes.

 

All that happens is a swarm of ants for a handout, that gets recollected as taxes and redistributed again by the same government.

 

If the government screws up, ultimately we pay for it in taxes, if that fails, inflate everything and start collecting a bit more.

 

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They haven't produced it yet and given the long gestation it was probably announced when Stagecoach just got the franchise!

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19 hours ago, lmsforever said:

Another fine mess the DFT has got itself into civil servants are not the people to be involved with commercial activities also I thought that pension contributions were written in law.I know that companies can be given pension contribution holidays but surely they are monitored by the   government depts. as to how the funs are being run?

I'm not at all sure if its the job of DfT to keep an eye on pension funds although obviously any deficit ought to be identified as a potential liability for a bidder when a franchise is let.

 

The responsibility for seeing how any section of the fund stands is very clearly the responsibility of the trustees, which in the various current sections of the BR fund will include a trustee appointed by the employer (i.e. the current holder of the franchise) who therefore effectively  - if not spelt out as such - has a duty t of care in relation to that section.  In reality putting a fund deficit right is not necessarily much of an imposition as iit will involve an increase of both employees' and employer's contributions if it is managed properly.  The simple art in managing any pension fund is to keep it out of shortfall in the first place or if it does get into that situation to take quick action to rectify things.

 

Interestingly in the section I belong to the pensioners' elected trustee is our past director of Human Resources - so he fully undertsands what is involved and how it can be corrected if there is a shortfall.

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Maybe someone can answer this as I’ve never figured it out, why are the franchises so short?  I’ve spoken to several friends, some who run their own businesses including one a huge international fast food chain and they have all said they would never go for a franchise which was less than 25 years.

 

If you are expected to invest in people, pensions and the business in general, you need the security of a long franchise to invest and profit from.

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4 minutes ago, jools1959 said:

Maybe someone can answer this as I’ve never figured it out, why are the franchises so short?  I’ve spoken to several friends, some who run their own businesses including one a huge international fast food chain and they have all said they would never go for a franchise which was less than 25 years.

 

If you are expected to invest in people, pensions and the business in general, you need the security of a long franchise to invest and profit from.

A lot of government and local government outsourcing (which is what franchising effectively is) was short term in nature - allows them to drive further efficiencies on a regular basis and easier to get rid of a problematic partner.

 

For the staff - regular churn in employer as you find you are just a chattel to be swapped between owners as the franchises refresh.

 

Transformational franchises/outsource contracts can last longer to reflect the period of transformation but soon after the transformation itself ends the company running the contract will lose interest as their risky but profitable transformation element is over, the government body also wants to re-let as they can now go for a lower price service delivery contract.

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On 10/04/2019 at 09:56, DY444 said:

Rumour has it that all three bids for the SE franchise were non-compliant on the pension issue which is why the expected date for the announcement has come and gone.

I heard this Weds am straight from a Virgin WC manager, the WC pension fund is running a healthy surplus so guess who wants to get their hands on it. Virgin said no so Grayling  "you're out". I can't comment on other TOC's

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According to the magazine that gets sent to me a few times a year by the Pension people, the Railways Pension Scheme won the top award as European Pension Fund of the Year in 2018, as judged by a panel of "12 senior figures across the European financial services industry". As they continue to send me over £2k per month I don't ask questions. 

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1 hour ago, woodenhead said:

A lot of government and local government outsourcing (which is what franchising effectively is) was short term in nature - allows them to drive further efficiencies on a regular basis and easier to get rid of a problematic partner.

 

For the staff - regular churn in employer as you find you are just a chattel to be swapped between owners as the franchises refresh.

 

Transformational franchises/outsource contracts can last longer to reflect the period of transformation but soon after the transformation itself ends the company running the contract will lose interest as their risky but profitable transformation element is over, the government body also wants to re-let as they can now go for a lower price service delivery contract.

 

Quite so - which is why the DfT needs to play close attention as franchises draw to a close.

 

They didn't with FCC - which led to the new TSGN operation being massively short of drivers when they Govia took over and there have been plenty of other incidents where civil servants have been 'asleep at the wheel' so to speak.

 

Hence the concern that the same thing is about to be repeated with pensions - and as ever its not the outgoing company which suffers, its the staff at the front end which are expected to take a hit.

 

Those of us who joined the industry since 1995 also have the ever present worry that we might be shafted while colleagues those who enjoy 'safeguarded / protected persons' status under the privatisation legislation remain unaffected.

 

Part of the problem is in Mr Grayling and co, we have a set of people with a track record of taking on staff / trying to steamroller their plans over the industry - DOO and blaming high ticket prices on 'greedy' staff being two recent examples. If the likes of Patrick McLoughlin were still in charge we at the sharp end might be more reassured.

 

In such a climate is it any wonder folk are nervous as to what might follow?

Edited by phil-b259
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