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Yes these comparisons between public and private are a bit simplistic . Yes private companies have to make money, that's what they are there for , but they also invest if they think they can make more money. Not that I don't believe that certain entities should be in public ownership regardless

 

Anyhow I see the BBC are reporting it as a need for a "Fat Controller" to take charge . No sign of dumbing down the news there then!

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2 hours ago, caradoc said:

 

 

I recall a reference many years ago to Private Eye attributing some of the blame for the Great Heck accident onto the rail industry. Try as I might I have never been able to confirm what was said so I stand to be corrected.

 

 

I recall that too, and IIRC, it concerned the alleged "failure" of the industry to lobby sufficiently (to councils on whom the responsibility lay) for those parts of the road network deemed to be a risk to the railway, to be properly barriered, and further for such risk areas to have a system similar to avalanche detectors, which would put the signals automatically to danger, when breached. Neither allegation was given much shrift at the following enquiry.

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29 minutes ago, Clearwater said:

Sorry Phil but under the way water is regulated and remunerated, that isn’t correct.  Water companies earn a regulated rate of return on their asset base.  If they invest in the base, eg build a new reservoir, that would be added to the asset base on which they can earn their regulated return.  As such, one of the critiques of the rcv/rab model is that it over incentivises investment in capex at the expense of opex solutions leading to a more “totex” model of incentivising companies based on total expenditure.

 

My point is that a fully private water company would just charge more. As you say, we have "privatised" utilities but then decided that the market can't be left to decide and created these weird hybrids where the private company has to do what the government tells it. As far as I can see, you don't get the benefits of a private company, nor the security of a state-owned one. 

 

The railways are the same. We can't have longer Voyage trains on the Leamington to Birmingham route, even though they are always standing room only from 7:30am, because the DFT won't let the company lease the rolling stock, and certainly not buy it.

 

To my simple mind, we need to decide - it's private and let the market decide for good or ill, or public and put up with what we have. Instead, the parties of small government create ever more labyrinthine systems that suit lawyers and the people who sell them a Mercedes, but no-one else.

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33 minutes ago, Nearholmer said:

Some basic stuff about accountability and power:

 

Anything or anybody that uses ‘public money’ ought to be accountable to the public for their effective use of the same, the usual mechanism being that they are accountable to the public through elected representatives of the public (councillors, MPs etc).

 

The body or person that is accountable needs to have effective power to allow them to discharge their accountability, otherwise their time and salary are being wasted.

 

Power without accountability quickly leads to tears (corruption, abuse, complacency etc).

 

Accountability without effective power also quickly leads to tears (crises of expectation, disappointment, frustration etc).

 

Our National Railway industry is currently without effective accountability, accountability for its outcomes being ludicrously diffuse. It is also without an effective power structure, again because of diffusion, but also because of balkanisation.

 

I haven’t read the “Williams review to date” yet, but unless it sorts both accountability and powers, it won’t work out well.

 

As a footnote, Nationalised BR wasn’t too bad as regards power, although wielding it was difficult, but it wasn’t all that marvellous on accountability, because the link between the public and BRB via the MoT was pretty tenuous.

 

IMO, it is only in London in the UK that the accountability and power structures actually work anything like properly for public transport, and they are noticeably simpler and more direct than the current national model.

 

One of the best summaries i have ever read about such matters - thank you.

 

Just one issue perhaps, in that BR's decisions were basically decided by the Treasury, and not the MoT (pre-DfT). Even the current, much criticised, arrangements, of Regulation, Binding Contracts and DfT accountability is theoretically much better than that. But the changes made to the ORR's Remit for the next Control period have attempted to go back to the BR days (in that the ORR have to "take account" of the affordability, to HM Treasury, of the settlement they ultimately allow). 

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@Phil Parker that’s the point of regulation. The regulator specifies what *has* to be delivered but not the method.  However, in price cap regulation, they protect the consumer from over charging.  Take airports, Heathrow is regulated under a price cap regime.  It’s full.  When demand fell in aviation in 2008/2009, there was a net movement in traffic from the cheaper Gatwick to Heathrow.  Gatwick numbers fell by c10% year on year, Heathrow barely fell.  Stansted fell by even more than Gatwick.  Clearly the owner of Heathrow could charge a higher price for their scarce capacity but is unable to do so due to the regulation.  However, this does not prevent them thinking of new ways to try and outperform within a quinquennium.  They keep that upside albeit it passes back to consumers in lower charges in the subsequent pricing review.

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24 minutes ago, Phil Parker said:

 

My point is that a fully private water company would just charge more. As you say, we have "privatised" utilities but then decided that the market can't be left to decide and created these weird hybrids where the private company has to do what the government tells it. As far as I can see, you don't get the benefits of a private company, nor the security of a state-owned one. 

 

The railways are the same. We can't have longer Voyage trains on the Leamington to Birmingham route, even though they are always standing room only from 7:30am, because the DFT won't let the company lease the rolling stock, and certainly not buy it.

 

To my simple mind, we need to decide - it's private and let the market decide for good or ill, or public and put up with what we have. Instead, the parties of small government create ever more labyrinthine systems that suit lawyers and the people who sell them a Mercedes, but no-one else.

 

I get that logic. But BR were one of the worst offenders of pricing off demand, because that was about the only tool we had left, due to severe Treasury restrictions on investment and operating expenditure. An unfettered privately-owned operation, would do much the same, unless it could make a profit through further investment. Rural and commuter services would undoubtedly suffer.

 

One of the key points is to keep as much investment and risk off the government PSBR books as possible. The whole point, I would presume, of allowing longer franchises (with whatever other changes are deemed appropriate), would be to allow further schemes like Evergreen, on the Chiltern, where a whole railway was transformed, and subsidy reduced, by use of private investment. The problem arises, as typified by Evergreen 2, when even a large firm like Laing cannot take on the risks on a more major project. So there needs to be fundamental guarantees available from government, or direct investment when there is clearly a social rather than profit aspiration, to keep public borrowing to a practical level, whilst using as much private capital as possible, but with a compulsion to achieve minimum levels of service and provision, through contract and regulation.

 

If the national will is for a nationalised railway again, the Treasury will run the railway, and that is not "a good thing". It will be about cash available and not value for money / good business cases. If a private company wants to exploit a growing market, such as the railways still continue to be, it will borrow or find other investors, to make more bucks. The fact that the National Infrastructure Commission, which was meant to separate capital investment from all other government expenditure, for better UK plc long term growth, has achieved practically nothing after several years now, tells me plenty.

Edited by Mike Storey
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1 hour ago, pete_mcfarlane said:

I used to be a big fan of the Eye. but I increasing think it's fallen into the trap of attacking the mainstream media for printing one kind of rubbish, whilst simultaneously printing rubbish of its own. 

 

I also never quite understood what their railway correspondent had against Double Fairlies. 

 

I used to be an avid reader but then found that a few of their own hobby horses weren't exactly well found and I started seeing a lot of it as just supercilious sneering rather than humour or insight. 

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2 minutes ago, Mike Storey said:

If a private company wants to exploit a growing market, such as the railways still continue to be, it will borrow or find other investors, to make more bucks.

 

Why? The private company is set up to make money and do this as efficiently as possible.

 

4 coach Voyagers are an example. Even if DFT would let the buy an extra coach, all this would do is let more people sit down and couldn't be guaranteed to bring more custom to the line. Those people standing paid the same amount as those sitting, they have no choice in many cases to travel this way so, in crude financial terms, you let them stand for the good of your bottom line. 

 

I like the idea that a company would see a potential investment and looks to invest to exploit it, but I fear that most decisions are made on a short-term basis. Results are reported to the city quarterly and shareholders demand action based on these. Convincing them that your 10-year plan is a good idea requires some impressive powers of persuasion or a government-backed guarantee. Even this isn't assured as governments wobble - HS2 is far from assured and we are a bit low on electricity generating capacity.

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Mike

 

of course money, and therefore the treasury, are key to any nationally-publicly-funded model, old BR included, and that applies equally to things like the NHS or the armed forces, but the ‘model’ is that the departmental minister, not the chancellor, is accountable (presumably to do the best with what he/she can wheedle out).

 

More generally, there must be a case for routing public expenditure on a fair proportion of railway provision through regional authorities, ideally regional authorities with tax-raising powers. It works in London, it works in all sorts of places worldwide, and I think it operates to a limited degree In other UK cities. Why? Because it massively helps with real accountability ........ but only if the regional authority has proper powers.

 

Why should any other than inter-regional trunk routes need Westminster politicians and civil servants involved?

 

K

 

 

Edited by Nearholmer
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19 minutes ago, Nearholmer said:

Mike

 

of course money, and therefore the treasury, are key to any nationally-publicly-funded model, old BR included, and that applies equally to things like the NHS or the armed forces, but the ‘model’ is that the departmental minister, not the chancellor, is accountable (presumably to do the best with what he/she can wheedle out).

 

 

 

 

Unfortunately past experience over many decades and Governments (of all sorts of colours) has shown this 'Model' is never actually used and in reality HM Treasury are the ones in charge - be it NHS funding, Warships or Trains.....

 

I fail to see ANY evidence this will change in future and as such have to conclude that removing politicians (particularly Westminster ones) from as much of the railway industry (the same could be said of other bodies) is essential if we are to ever put the rail system on a stable footing.

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I am sure I read somewhere about good practice public/private partnerships to run quite excellent railway services. Was it that big country over the North Sea/English Channel where they have beer festivals and like pickled cabbage? Only saying Mr. Williams, but I am sure you looked at all those systems didn't you.

P

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7 minutes ago, Mallard60022 said:

I am sure I read somewhere about good practice public/private partnerships to run quite excellent railway services. Was it that big country over the North Sea/English Channel where they have beer festivals and like pickled cabbage? Only saying Mr. Williams, but I am sure you looked at all those systems didn't you.

P

 

Yes, he has included DBAG. The problem is that their model has now broken down, and they are having to sell some of their most profitable bits to pay the bills. The grass ain't necessarily greener.

 

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3 hours ago, Phil Parker said:

 

Why? The private company is set up to make money and do this as efficiently as possible.

 

4 coach Voyagers are an example. Even if DFT would let the buy an extra coach, all this would do is let more people sit down and couldn't be guaranteed to bring more custom to the line. Those people standing paid the same amount as those sitting, they have no choice in many cases to travel this way so, in crude financial terms, you let them stand for the good of your bottom line. 

 

I like the idea that a company would see a potential investment and looks to invest to exploit it, but I fear that most decisions are made on a short-term basis. Results are reported to the city quarterly and shareholders demand action based on these. Convincing them that your 10-year plan is a good idea requires some impressive powers of persuasion or a government-backed guarantee. Even this isn't assured as governments wobble - HS2 is far from assured and we are a bit low on electricity generating capacity.

 

All true - but your alternative does not work either. Many more people had to stand in London and the SE during the BR years, with little prospect of relief - the one shining light was the re-opening of Blackfriars - Farringdon, and associated electrifications north of London, but with a limited and packed service. Only what was to become TfL was starting to believe in a renaissance, driven by developer contributions to DLR.

 

Under the current regime, notwithstanding all its multiple faults and failings, there is hope - post the Thameslink commissioning fiasco, there are now more services, more seats, and to more destinations than ever before. There are still problems, of course there are, and many services are yet to be implemented, plus continuing industrial action. Likewise, between Hull and Liverpool and many points in between, there are new trains arriving, and extra carriages, and extra services. they just have not arrived fast enough, or well enough. But Scotland now has services they could only dream of in BR days, as to a more limited extent, do Wales and growing. The South West is growing, from a slow start, and although GWIP is a fiasco, it is a large investment. Even East Anglia no longer has to put up with second hand trains. Compare that to BR days, away from small, privileged sections.

 

As for your contention over shareholders' short-termism, most franchise holders are now subsidiaries of the state owned enterprises of other countries. How does that compute?

 

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52 minutes ago, Nearholmer said:

So, you want public money to be spent with no overview whatsoever by your elected representatives (aka politicians)?

 

Given the evidence of the past 50 years I'm tempted to say yes!

 

With the current minister having 'Oversight' of the industry gone and signed a contract for a ferry company with no ship and whose terms were lifted from  a Chinese takeaway (despite insisting his department had undertaken 'due diligence when doing so) and who has subsequently been forced to hand over wads of taxpayers cash to Eurotunnel (and also possibly P&O) following a high court challenge to said contract you will understand things are unlikely to improve either!

 

Things aren't that good on the civil service side too with Mr Wikinson's determination to 'break the Unions having caused extensive misery for millions of rail users from the South coast to Scotland.

 

Then there is the current ORR who stood round not providing much oversight of NR when its timetabling division got into trouble despite clear warning signs all wasn't well for many months prior to the chaos actually being unleashed on the public.

 

I could go on.....

 

However, as you say as you rightly say handing over public / taxpayers money with no 'oversight at all is quite possibly unwise.

 

I would however say that there is a big difference between 'oversight and the micromanaging from Whitehall that goes on these days - Civil servants specifying the exact design of trains, drawing up outrageously expensive / restrictive / dysfunctional lease contracts or pulling the plug on further extensive electrification schemes is NOT what I would call 'oversight'.
 

 

 

In some ways the optimum setup is probably not that different from the initial post privatisation setup (albut with actual infrastructure staying an arms length state backed Network Rail).

 

(1) An SRA style body (NOT MINISTERS) to provide strategic direction (as in work towards full MML electrification in 20 years, steer the Thameslink project, sponsor HS2, etc.

 

(2) An, independent franchising body (OPRAF) letting LONG franchises - 20 years say (with break points every 5 years for poor performance) and maybe fewer franchises overall. Devolving responsibility for certain service groups (i.e. London Overground, Mersey rail) to other suitable bodies to take into account specific needs. Franchises possibly let on a concession basis with the SRA + relevant LAs public bodies keeping branding etc in house to avoid unnecessary wastage when contracts change. 

 

(3) An independent regulator (the ORR under Tom Windsor) who acts as a firewall between political meddling and a cooperate free for all.

 

(4) Rolling stock matters left in the hands of ROSCOs - long franchise terms and stability will ensure best value for money as regards stock leases

 

Governmental oversight is maintained by appointments to the above mentioned bodies (alongside industry professionals to shape the general trends)- but these independent structures would go a long way towards limiting short termism and ministerial ambition / Treasury greed from causing havoc.

 

 

 

Edited by phil-b259
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1 hour ago, Nearholmer said:

Mike

 

of course money, and therefore the treasury, are key to any nationally-publicly-funded model, old BR included, and that applies equally to things like the NHS or the armed forces, but the ‘model’ is that the departmental minister, not the chancellor, is accountable (presumably to do the best with what he/she can wheedle out).

 

More generally, there must be a case for routing public expenditure on a fair proportion of railway provision through regional authorities, ideally regional authorities with tax-raising powers. It works in London, it works in all sorts of places worldwide, and I think it operates to a limited degree In other UK cities. Why? Because it massively helps with real accountability ........ but only if the regional authority has proper powers.

 

Why should any other than inter-regional trunk routes need Westminster politicians and civil servants involved?

 

K

 

 

 

That is all true Kevin, if the regional authority can raise enough money. London TfL/GLA has enormous powers and enormous wealth available to exploit, but it is still in deep trouble financially, only partly because of the fares freeze, and no longer gets Westminster funds. But Scotland still relies on seriously major UK funding, as will Wales. The North of England wants such powers, but studies done some time ago, suggest the level of funding they could realistically raise from local taxation, business and personal, is pretty limited, leaving them still exposed to Westminster largesse. I do not disagree that power and accountability is often best served locally, but there is a price.

 

German Lander can fund local transport provision due to the unique arrangements between government, industry and German banks, which obviate short term investor issues, but many of their actions have caused even greater problems. The new, much larger, French Regions, are being given such powers, but almost all of them want to use that power to by-pass the state operator, because they are so expensive, unresponsive and inefficient (and many may well stop rail funding in order to concentrate on buses and coaches). Paris has gone for broke, just like London, but there are clear signs of financial stress and Elysee involvement. Italy, on the other hand, is spending money like water, on all types of trains services and lines, but no-one seems to know who is paying the bill (and often, who is actually getting the money). New York has phenomenal powers of taxation and transport decisions, but its transport system is in deep crisis (again). And so on.

 

So I would suggest there is no such simple divide, and certainly no one example which is exemplary. Local decision making does not necessarily mean good decision making. That was well demonstrated to me when living in North Yorkshire - possibly the meanest county in the country......

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Good points, and to be clear: to some degree I'm flying a kite, to get thoughts going on alternatives to the centralised model, which is too easily accepted as the only possible way.

 

But, be it national or sub-national, we will get (at best) what we vote to be taxed to pay for, if that makes sense.

 

Totally OT, but on the point of different local authorities having different priorities, we live in a city with a unitary authority, which is bordered by a largely rural district in a county. The contrast in services between the rural and city almost amounts to a trench down the middle of the road, with the rural district/county having far poorer public services, because that district votes "low council tax", and returns councillors who seem to regard public spending as a form of original sin. 

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8 minutes ago, Nearholmer said:

Good points, and to be clear: to some degree I'm flying a kite, to get thoughts going on alternatives to the centralised model, which is too easily accepted as the only possible way.

 

But, be it national or sub-national, we will get (at best) what we vote to be taxed to pay for, if that makes sense.

 

Totally OT, but on the point of different local authorities having different priorities, we live in a city with a unitary authority, which is bordered by a largely rural district in a county. The contrast in services between the rural and city almost amounts to a trench down the middle of the road, with the rural district/county having far poorer public services, because that district votes "low council tax", and returns councillors who seem to regard public spending as a form of original sin. 

 

I think your last point is extremely relevant - the contrast between Greater Manchester and Cheshire is perhaps one of the most obvious examples, as too is that between West and North Yorkshire. These are issues that the Northern Powerhouse / TfN will have to sort out, if any future solutions are to be effective.

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1 hour ago, Nearholmer said:

So, you want public money to be spent with no overview whatsoever by your elected representatives (aka politicians)?

Overview is one thing. Uninformed micro-management and deliberate attempts to provoke industrial strife within the industry are altogether different beasts.

 

John

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Well, after all that, this report just seen, of Keith Williams' speech to the Northern Powerhouse, gives a very different view. "Franchises have had their day" he said, and "Revolution not Evolution". I feel a little more optimistic now, even if the end result is far from clear.

 

https://www.theguardian.com/business/2019/jul/16/uk-railway-needs-revolution-not-evolution-review

 

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The reason for the proposal for an arms-length body inplace of direct Government control is precisely because elected politicians are in hock to short-termism. If you are Secretary of State you will favour a quick win that produces a good headline and little else to a long-term decision that will deliver benefit a decade after you are out of power. In theory, a stable, in-for the-long-haul company will be more focussed on making the right long-term decisions but the franchise process doesn't allow this to function. 

As Mike Storey has said, BR's relationship to the Treasury meant that rather than investing for the long term, the onus was very much on cost cutting, putting up fares and pricing off excess demand. Everything was done on a year-by-year basis.

This is where the current structure could be adapted because since 2005 the industry has worked to 5 year Control Periods specified against a funding settlement (the 'High Level Output Statement') - if this could be coupled to a management body that wasn't actually within Government but was required to make the detailed decisions needed to deliver Government priorities, it might actually work.

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1 hour ago, andyman7 said:

The reason for the proposal for an arms-length body in place of direct Government control is precisely because elected politicians are in hock to short-termism. If you are Secretary of State you will favour a quick win that produces a good headline and little else to a long-term decision that will deliver benefit a decade after you are out of power. In theory, a stable, in-for the-long-haul company will be more focused on making the right long-term decisions but the franchise process doesn't allow this to function.

 

The problem is there are few companies that work that way anymore - the changes over the last 30+ years means that private companies are in some way even more short-term focused than governments are whether it be an executive paid with stock options worrying about the stock price or an activist shareholder wanted to make a quick windfall.

 

But in the end it won't matter because it will come to nothing, a prediction based on the following quote:

 

"Fares and ticketing should be overhauled, he said, but warned that reform would “require tough decisions” and “create winners and some losers”."

 

I suspect that is a way of saying the regulatory limits on tickets prices need to be removed, and there is no way the commuters will accept that and hence no government is likely to implement it.

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6 hours ago, mdvle said:

because it will come to nothing, a prediction based on the following quote:

 

"Fares and ticketing should be overhauled, he said, but warned that reform would “require tough decisions” and “create winners and some losers”."

 

I suspect that is a way of saying the regulatory limits on tickets prices need to be removed, and there is no way the commuters will accept that and hence no government is likely to implement it.

There's more than one way of looking at that. The post-privatisation fare structure has for some time now been held up as being complex and confusing to the average passenger. It is more than overdue for some sensible simplification.

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8 hours ago, andyman7 said:

The reason for the proposal for an arms-length body inplace of direct Government control is precisely because elected politicians are in hock to short-termism. If you are Secretary of State you will favour a quick win that produces a good headline and little else to a long-term decision that will deliver benefit a decade after you are out of power. In theory, a stable, in-for the-long-haul company will be more focussed on making the right long-term decisions but the franchise process doesn't allow this to function. 

As Mike Storey has said, BR's relationship to the Treasury meant that rather than investing for the long term, the onus was very much on cost cutting, putting up fares and pricing off excess demand. Everything was done on a year-by-year basis.

This is where the current structure could be adapted because since 2005 the industry has worked to 5 year Control Periods specified against a funding settlement (the 'High Level Output Statement') - if this could be coupled to a management body that wasn't actually within Government but was required to make the detailed decisions needed to deliver Government priorities, it might actually work.

One good reason for putting an arm's length body in control of the nation's railway system is that, as last year's timetabling mess demonstrated, the system needs a controlling body (not the DfT) that can take the operational decisions that affect both the infrastructure operations and the train operators without each side being able to blame the other. The same is true for major disruptions.

It is no more than has been normal for decades on the other European railways, even with the infrastructure/operations division that is required by EU law. SNCF is still a unified railway system, so is DB; the exception is the UK, whose railway privatisation model has long been held up as the example of how not to do it.

 

Jim

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