government suspends rail franchise agreements

[Dr Gerbil-Fritters]

https://www.theguardian.com/world/2020/mar/23/covid-19-government-suspends-rail-franchise-agreements

[woodenhead]

i am surprised yours is the first post on this, I heard it on the radio before 9am this morning.

 

Not a surprising turn of events and the correct response in a time of national emergency.

[DavidB-AU]

Hmm.... bringing all the different railways under a single operating body during a crisis. Where have we seen that before? I wonder if it will have the same effect as the previous times!

[woodenhead]

1 minute ago, DavidB-AU said:

Hmm.... bringing all the different railways under a single operating body during a crisis. Where have we seen that before? I wonder if it will have the same effect as the previous times!

In the past though the emphasis was on more trains especially troop and equipment movement, this time it is to protect against insolvency as the services are being cut.

[The Stationmaster]

Here is the real version from HMG - without the Guarniad's twist applied to it.  Note that it is voluntary and strictly time limited in application (they say) although no doubt most (all?) franchised operators will grab it.  Note that is also allows for refunds on advance purchases tickets and mentions refunds on season tickets but what it says in that respect appears no different from the standard refund arrangement. There is no mention of support for freight operators.

 

https://www.gov.uk/government/speeches/rail-emergency-measures-during-the-covid-19-pandemic

[PenrithBeacon]

HMG are also applying a 'twist to it'

[The Stationmaster]

17 minutes ago, DavidB-AU said:

Hmm.... bringing all the different railways under a single operating body during a crisis. Where have we seen that before? I wonder if it will have the same effect as the previous times!

Hmm, my reply vanished!   And no, that is not what Govt are doing.   As 'Woodenhead' said it is a financial arrangement and not a takeover in the way you imply.  The arrangements for 'an operator of last resort' taking over from a franchise remain.

 

I reckon even Grant Shapps is plenty bright enough not to take over operational control with all the downstream problems that would bring - like nobody able to run it, and an immediate call from the TUs for wage and consitions equalisation across the industry.

[corneliuslundie]

I assume this applies only to England.

In Wales the operator has a different arrangement with the government anyway, and things in Scotland are totally different.

BTW I think the BBC also reported it as mandatory rather than voluntary.

Jonathan

[Glorious NSE]

26 minutes ago, The Stationmaster said:

Hmm, my reply vanished!   And no, that is not what Govt are doing.   As 'Woodenhead' said it is a financial arrangement and not a takeover in the way you imply.  The arrangements for 'an operator of last resort' taking over from a franchise remain.

Quite so - giving the same private operator a  different sort of contract to run the service is not "nationalisation".

The interesting one for the medium term is with so many franchises struggling in the first place, whether any will go back to the franchising financial model.

My suspicion is that most - maybe all - will stay as management contracts....?

[PaulRhB]

Well I have to say I am impressed with the special refund for advance tickets. I went on the x-country site clicked on the special box, entered reference and email, clicked on the covid19 refund and that was it, email immediately confirmed full refund

Whoever put that simple and clear page together so fast should be congratulated. 

[fezza]

A key reason for the privatisation programmes was to take financial risk away from the taxpayer. What we have discovered since is that this is an illusion in the utility industries as governments cannot allow them to fail. Once again, profits are privatised, losses are nationalised. Socialism for owners and  shareholders. Capitalism for workers. 

[The Stationmaster]

2 hours ago, fezza said:

A key reason for the privatisation programmes was to take financial risk away from the taxpayer. What we have discovered since is that this is an illusion in the utility industries as governments cannot allow them to fail. Once again, profits are privatised, losses are nationalised. Socialism for owners and  shareholders. Capitalism for workers. 

If you believed that privatisation was to take financial risk away from the taxpayer I think you're starting from the wrong place.  The official idea was to get things off the Govt's books to help reduce PSBR and reduce the cost to The Treasury by introducing non-state sector management because non-state sector, management was seen as 'good' and 'innovative'.  The political reasons were similar but far more importantly John Major wanted a privatisation notch on his tally stick and most MPs (although many of them would never admit it) were overjoyed to see the back of being hammered by their constituents for trains running late or not at all or not clean or too expensive and so on (and that was a comment from Roy Hattersley in a speech at a Railway Study Association dinner).

 

Of course - as ever - anything which is changed comes with a trail of unintended consequences   However one question which interests me in the preseent situation is does the guaranteed week still exist in any part of the railway industry - if it doesn't then the Govt is definitely going to save money compared with BR days.

[fezza]

No I didn't believe at the time - although that is what the proponents of privatisation claimed.

 

I'm not sure the PSBR argument works any more either as the Central Banks and IMF have got wise to the tactic and realised that governments have to effectively underwrite the debt of privatised core utilities.  

[The Stationmaster]

13 minutes ago, fezza said:

No I didn't believe at the time - although that is what the proponents of privatisation claimed.

 

I'm not sure the PSBR argument works any more either as the Central Banks and IMF have got wise to the tactic and realised that governments have to effectively underwrite the debt of privatised core utilities.  

Which is why Network Rail was nationalised - Govt was guaranteeing its debt so the EU insisted it be nationalised in order to regularise the situation.

[mdvle]

5 minutes ago, Lantavian said:

A quick reminder of the success of privatisation in boosting passenger journeys to record highs.

 

Like anything, one can pick and choose to fit a narrative.

 

For others, the key point will be that the climb in the graph starting before privatisation and thus there is no reason to believe if BR had been kept that it wouldn't have continued.

 

As always though, things are usually more complicated.  The early 90s were an economic downturn, and so there is an argument to be made that once that ended things returned to the climb that British Rail saw during the 80s. (or, if that downturn hadn't happened, there is no reason to expect the drop in passenger numbers of that era).

 

But is also reasonable that the railway benefited from changes in larger society - more commuting into London (and the inability to do this by car), more train usage in other ways again as roads couldn't keep up, and the massive investments that the private TOC's were able to force the government into making into the rail network, money that BR couldn't get the government to spend.

[Steamport Southport]

23 minutes ago, Lantavian said:

 

Socialism takes control of industry and runs it for the benefit of the nation, not private profit.

 

So the comment "socialism for owners and shareholders" is nonsense.

 

Rubbish. Socialism is for the benefit of a few socialists and the rest of the population are made to be poor, living just on the breadline.

 

 

Look at history and the even in the current world where the most impoverished people live in socialist countries. China, North Korea, Vietnam, etc. 

 

Too much politics on this site recently....

 

 

 

Jason

[62613]

1 hour ago, Lantavian said:

Here's another graph showing that things improved after privatisation

 

Rail modal share (rail's share of total travel) 1952–2016

 

 

With this and your previous graph: correlation is not causation. You have chosen only one single possible cause, i.e. privatisation. The turning point comes just before privatisation came into effect. I would suggest that was from the pick-up after the UK was forced out of the ERM. As well as the state of the road system encouraging people onto rail, there is the increasing effect of exporting employment into city centres from outlying districts (and I don't just mean London), Those people who still have sufficient disposable income are travelling more frequently, by road, rail, air and sea.

 

 As to "Socialism for the rich, and capitalism for the less well - off", what is meant is governments stepping in and paying eye-wateringly large sums of money to business entities deemed too big to fail, and then loading the costs onto ordinary people and shrinking services for those at the very bottom. It happened in 2008 - 12, and it will happen again after the present crisis has gone.

 

Anyroad up, here we are, arguing about fine points and splitting hairs, while those at the top laugh at us on the way to their tax havens.

Edited March 24, 2020 by 62613

[mdvle]

2 hours ago, Lantavian said:

 

I think it's pretty clear. Passenger numbers MORE THAN DOUBLED ending seven decades of decline.

 

Picking data to fit a narrative.

 

Looking at the graph tells another story.

 

The graph tells us the BR in the 80s was reversing decline, with passenger numbers increasing.

 

The trend reversed in the early 90s, a period of economic downturn when all businesses suffered a reveral of fortunes.

 

Then in the mid 90s, the trend again started upwards - which was then continued by the privatised railway.

 

 

2 hours ago, Lantavian said:

And if the TOCs were able to get the government to invest so much money that BR didn't get, then surely that is because of privatisation.

 

Um, exactly what I said.

 

2 hours ago, Lantavian said:

The other things you mention may have had an effect, but really? NUMBERS MORE THAN DOUBLED

 

If your graph was up to date to today, March 24th, would it be accurate to say privatisation was a disaster for the railways because look - passengers numbers collapsed!!!!!

 

There are a lot of external factors that have helped to drive the increases in passenger growth and that means the growth potential was there regardless of who was running the railways - assuming the investment was there.  Which takes us back to the only real difference is that privatisation was a way to force the government to increase funding to the railways (and to hide some costs - leasing rolling stock means the upfront purchase price is hidden into long term lease costs, which makes it easier to update the fleet given you don't have to go begging to the government for a large upfront sum of money).

[The Stationmaster]

1 hour ago, 62613 said:

With this and your previous graph: correlation is not causation. You have chosen only one single possible cause, i.e. privatisation. The turning point comes just before privatisation came into effect. I would suggest that was from the pick-up after the UK was forced out of the ERM. As well as the state of the road system encouraging people onto rail, there is the increasing effect of exporting employment into city centres from outlying districts (and I don't just mean London), Those people who still have sufficient disposable income are travelling more frequently, by road, rail, air and sea.

 

 As to "Socialism for the rich, and capitalism for the less well - off", what is meant is governments stepping in and paying eye-wateringly large sums of money to business entities deemed too big to fail, and then loading the costs onto ordinary people and shrinking services for those at the very bottom. It happened in 2008 - 12, and it will happen again after the present crisis has gone.

 

Anyroad up, here we are, arguing about fine points and splitting hairs, while those at the top laugh at us on the way to their tax havens.

One important point in respect of passenger travel was the Adley amendment to the privatisation Act.  that meant fare increases were controlled and what had happened in the BR period (fare increases above inflation) ceased.  Thus the real cost of a lot of passenger journeys began to fall to fall particularly on short distant commuter lines outside London.  Price was an important factor in kicking off and sustaining growth.

[The Stationmaster]

There can be some unexpected amusement in all this as a letter to this week's edition of our local 'paper has demonstrated.

 

A Mr X, who seemingly couldn't even get his own street name right in his email to the 'paper,  claims to have been heartened by the Govt's announcement that it it is taking on the rail infrastructure - I'm not sure why he has waited so long to say that?  Oddly he then goes on to welcome the Govt's announcement that season tickets would be refundable - maybe he didn't realise that they already were refundable and have been more years than I can remember?

 

But then he turns  bit fidgety saying many rail franchises have adopted this but GWR have taken the opposite approach.  He seems not too distressed by the £10 admin fee for a season ticket refund but he then whitters on about a refund based on 10 months not 12 (which suggests to me that he's had his ticket for a couple of months) and how nasty GWR are depriving him of £900 and how they will profit from his misfortune in seeking a refund etc, etc and so on.

 

The Editor as ever  sought professional advice and went to GWR for an explanation.  They have explained that season ticket holders who are following Govt advice and are not travelling are able to claim a refund under the usual terms and conditions.  and that, they quote, 'The Dept for Transport has confirmed  that administration fees continue to be paid  ...'  Their spokesperson then added a nice little sting in the tail 'It is wrong to suggest that GWR is profiting from this fee.  As the franchise is being run on a fixed term, fixed fee contract for the next six months, the revenue risk passes to the Govt'.  (And of course GWR has been on a fixed fee contract for some time back, I think the 6 months is the remaining part of their original 1 year contract.)

 

N.B. What the paper does is directly copy a reader's email into their own page set-up programme hence they publish, occasionally very slightly edited, exactly what you have written to them complete with the street name from your address.  They can do it out from an email's text but not out from an insertion into an email (guess how I know that).  So what you wrote is - minor editing aside - what the 'paper prints