Rail nationalisation now official Labour policy

[Oakydoke]

...Unless the railways could be restructured as an arms length independent state entity independent of politicians in terms of operations with the government limiting itself to strategy and major investment approvals......

Corbyn and McDonnell have openly said they favour significant involvement of the trade unions, political appointees and members of the public, in the running of their "Peoples Railway" (my description).

Their idea is for a politicised railway, run by the workers and people, for the people.

It all sounds like airy fairy cloud cuckoo land thinking.

[phil-b259]

Corbyn and McDonnell have openly said they favour significant involvement of the trade unions, political appointees and members of the public, in the running of the People's Railway.

Their idea is for a politicised railway, run by the workers and people, for the people.

It all sounds like airy fairy cloud cuckoo land thinking.

 

Ask any Polish or Eash German, or Czech, or...... citizen just how wonderfully things worked out in the 'Peoples state' with the 'Peoples' Railway, 'Peoples tractor factory' 'Peoples department store'

 

Its why I can't stand my unions Political direction.

 

Corbyn and his Comrades are simply making themselves even more un-electable by the bulk of the UK electorate guaranteeing us another Conservative victory in 2020 if things carry on like this - something the Union Barrons consistently ignore. As ever its the ordinary people that suffer from excessive political ideology (be it right or left)

[phil-b259]

I don't think it's the Government that should take most of the blame here. The noise about ROSCOs being a rip-off seems to mostly come from opposition MPs and various select committees. It seems to get airtime mainly because it fit in with their general worldview at the moment that evil business is out to rip us all off and something needs to be done!. 

 

If you examine the issue closely you will find that over the past 15 years there have been repeated attempts by the Treasury to try and get the Rail regulator / the ORR / the Competition commission to say that the ROSCOs are abusing their position with regard to stock hire fees. EVERY SINGLE TIME the answer came back that the ROSCOs were behaving responsibility and high costs of rolling stock leasing WERE ENTIRELY due to the structure of the privatised industry including the whole Franchising business.

 

This is what prompted the DfT to say 'sod it we will design a train without your involvement" - that train is the horrendously overpriced much altered IEP, which could have been obtained for at least HALF the cost if the whole thing had been left to the ROSCOs.

 

Ultimately it comes down to this - bashing a business is all very well if they have behaved badly, but when they have been proved to have behaved reasonably according to the business regulations then attention turns to those who put said regulations in place - namely the inhabitants of Whitehall and their political masters.

[pete_mcfarlane]

Ultimately it comes down to this - bashing a business is all very well if they have behaved badly, but when they have been proved to have behaved reasonably according to the business regulations then attention turns to those who put said regulations in place - namely the inhabitants of Whitehall and their political masters.

Interesting - so basically keep the status quo by relying on the left-wing of the opposition to make a lot of noise about it being a rip-off, thus ensuring that a large chunk of the population switches off. 

[The Stationmaster]

Given that the railways (at least passenger operations and infrastructure) seem to be firmly under government control already and that many of the less sensible things affecting the railways emanate from DafT I'm not sure why people think nationalising will be some sort of panacea. Unless the railways could be restructured as an arms length independent state entity independent of politicians in terms of operations with the government limiting itself to strategy and major investment approvals then I think nationalisation will make no difference and if anything is liable to make things worse.

This of course is exactly what happens with politicos.  In their own funny (as in strange, not as in humour) little way they somehow think that grasping about 1% of the total implications of one of their bright ideas confers on them amazing powers of understanding and forethought and that everything will go exactly the way they know it will go.  Cloud cuckoo land I'm afraid for most of them but particularly for those with thoughts based more on drawing room philosophical discussion rather than on any practical knowledge or awareness of the real world.

 

Simple fact is that it would be well nigh impossible to recreate the arms length (from politicians) railway that we had under BR - and that is about the only way a state owned railway organisation running trains could work.

[phil-b259]

Interesting - so basically keep the status quo by relying on the left-wing of the opposition to make a lot of noise about it being a rip-off, thus ensuring that a large chunk of the population switches off. 

 

I'm not quite sure what your getting at here.

 

The ROSCOs have not done anything wrong here and as such are not the ones to blame its the system they operate within.

 

A historical parallel here would be long ago in Spain (I think) where Christians discriminated against the Jews in all but one important area (shop traders) because such an activity was considered to be "Beneath them". Unsurprisingly all this did was effectively force the Jews to become rich as a result - at which point the Christians started persecuting them again - ignoring the fact that it was their own actions that caused the Jews to become rich in the first place.

[PhilH]

Corbyn and McDonnell have openly said they favour significant involvement of the trade unions, political appointees and members of the public, in the running of their "Peoples Railway" (my description).

Their idea is for a politicised railway, run by the workers and people, for the people.

It all sounds like airy fairy cloud cuckoo land thinking.

That's because it is.

[pointstaken]

As usual, talk's cheap.

 

Dennis

[brianusa]

Sailing close to the political wind here! When one remembers BR in its expensive prime with its inordinate number of locos and rolling stock compared to todays comparative few, its difficult to believe that other than unions and left wing thinkers would even consider such an option. If we are to believe various reports, passenger numbers are higher with improved service, something BR could never achieve so why would any government in their right mind advocate something that only a few would support.

 

Brian.

[phil-b259]

Sailing close to the political wind here! When one remembers BR in its expensive prime with its inordinate number of locos and rolling stock compared to todays comparative few, its difficult to believe that other than unions and left wing thinkers would even consider such an option. If we are to believe various reports, passenger numbers are higher with improved service, something BR could never achieve so why would any government in their right mind advocate something that only a few would support.

 

Brian.

 

Be a bit careful here because there is a well respected body of thought that says (1) Passenger numbers would have risen regardless of whether privatisation occurred and (2) had BR got the levels of subsidy the industry gets it would have been able to have done so much more with regards to new stock, electrification etc in its final few years.

 

When asked if people support nationalisation most people tend to say yes simply because:-

 

It sounds nice or they think the cost of their ticket will go down or it sounds like sticking two fingers up at bankers or because their mum said it was all so much better in the old days or their train was delayed that morning, or.... etc... If you explained and people understood the full implications if such a move I doubt support would be quite so forthcoming.

['CHARD]

It's a complex issue, Brian. Bear in mind that for 99% of the population the railways - if anything - register as no more significant than water, gas or electricity suppliers. The masses will have infinite knowledge about mobile phone tariffs but their barometer of rail is probably the last tabloid smear they noticed.

 

Even working in the industry I find myself conflicted. Several of the roles I've undertaken simply would not have existed before privatisation yet in some places I shake my head at the eye-watering inefficiencies and waste, not to say needless compound mark-ups that the current industry structure has tacitly fostered.

 

If anything, the passion that folk seem to harbour for renationalisation perhaps speaks volumes about the Brits' confused love-hate relationship with our railways!

[Glorious NSE]

... something that only a few would support.

Oddly enough, I suspect that this will be a very popular idea in some quarters, as there is a groundswell of opinion that "it was much better then"...for whatever reason denying that a large portion of the things they don't like existed under BR as well!

 

Unfortunately i'm with JJB1970 here, if what we're talking is a gradual takeover of TOCs on renewal, I don't see that it'll fundamentally change anything for the better.

 

It won't make it any easier to have more stock, it won't suddenly make ticketing any different, it won't suddenly make timekeeping better. At best, IF the nationalised operator(s) can retain the same level of efficiency then you free up a fairly small (relative to the size of the industry) amount of cash to either drop fares or reinvest. The TOCs are reckoned on making 3%, if you knock 3% off fares that's a £24.25 fare instead of a £25 one. Whoopee! Don't spend it all at once! 

 

 

 

 

['CHARD]

What he said!

 

People are shocked when I cite the 3% figure. It's sixteen flavours of pain for precious little gain. The transport groups have mighty cajones when you stop and evaluate their stake in this process.

[Clearwater]

The alternative way to look at how much money the TOCs make is to look at the proportion of their overall valuation relates to the rail business of the listed operators (national express, stagecoach, first). I don't have the figures to hand but the majority of those businesses value is in their bus operations. Check the equity broker research notes

[Kenton]

 

It's a complex issue, Brian. Bear in mind that for 99% of the population the railways - if anything - register as no more significant than water, gas or electricity suppliers.

Probably far less than that. We all use water and electricity, a large proportion even use gas. But very few use the railways and those that do not probably do not care what happens to the railways.

 

I don't understand this policy idea - it just seems to me that they are just making themselves unelectable and are destined for the political wilderness. Not to be seen again in government until they wake up get rid of the doctrine and dogma. It is a pity as they do have the opportunity to get real populous input - taking from the true middle (not the extreme far left) and then put themselves forward as a credible popular alternative rather than simple naysayers and opposition to everything.

[pete_mcfarlane]

I'm not quite sure what your getting at here.

 

The ROSCOs have not done anything wrong here and as such are not the ones to blame its the system they operate within.

 

The point I was trying to make (badly) was that there's so much predictable noise coming from certain parts of the political establishment that a lot of us just mentally switch off and pay no more attention. 

 

As you've said, there clearly is a problem with the DfT end of the leasing system, but that's not going to be fixed when a) the opposition jumps on their usual bandwagon about banks and businesses ripping us off and b) the Government can prove them wrong on this issue.  

[br2975]

...................... up while reintegrating the different sections of the pension fund would also be a long drawn out task and would very likely require some sections of the fund (both management and employee sections) to make up shortfalls where their section has fallen behind others.[/i]

Now that's something different....... when Labour re-nationalise the railways, will the Government take on the pension scheme as well ?

 

If so, they will have to start a new pension pot, from scratch.

 

Brian R

[phil-b259]

Now that's something different....... when Labour re-nationalise the railways, will the Government take on the pension scheme as well ?

 

 

Of course! Brother Cash will INSIST on it as will his comrades in ASLEF, Unite, TSSA, etc

[br2975]

For those hankering after the good old days of a nationalised British Rail, remember the phrase:-

.

"The past is a foreign country, they do things differently there"

.

Brian R

[stovepipe]

What he said!

 

People are shocked when I cite the 3% figure. It's sixteen flavours of pain for precious little gain. The transport groups have mighty cajones when you stop and evaluate their stake in this process.

 

I'm interested in this. I assume the TOCs don't own very many assets? It's possible that 3% might be a decent return in relation to a low level of capital put into the venture. What risks are they bearing in their income stream - it would be nice to have some general context without wading through pages of bid documents.

[Glorious NSE]

I'm interested in this. I assume the TOCs don't own very many assets? It's possible that 3% might be a decent return in relation to a low level of capital put into the venture. What risks are they bearing in their income stream - it would be nice to have some general context without wading through pages of bid documents.

 

TOCs generally do not own assets (barring a couple of exceptions) - that simplifies TOC changeovers (and makes TOCs returning to a nationalised operator fairly simple for that matter.)

 

As to risk, income depends on passenger numbers which are somewhat tied to external factors - the health of the economy is traditionally reflected in commuter numbers for example although growth appears to have remained during the 2008+ recession. Meanwhile much of your expenditure is fixed, you can't just lay off staff and run fewer trains if the economy tanks, even your major suppliers will give you little chance for saving money by competition, you have no choice but to use Network Rail, and you may well be signed up by the government to a long contract already with a ROSCO, even assuming other ROSCO's have spare trains that fit your needs...

 

The major TOCs will have also bid on the assumption that they can attain growth and so have bid on the basis of paying a large premium to the government, some of them took a big hit for example when Railtrack dropped the ball at Hatfield crippling the network, driving down numbers and setting growth back a couple of years.

[xveitch]

Knowing the public sector quite well, I think that these plans are clear signs of some serious lack of thought! From what I've seen, private businesses do not fall to the will of politicians whose viewpoints change every 5 years (such sudden changes the railway cannot cope with) and which are generally more efficient. . After reading a book on passenger transport during BR, it's a surprise they got anything done at all

Xander

(On a separate note has anyone heard of First Great Western changing to Great Western Railway, it's like calling your tech company Apple)

[Clearwater]

I'm interested in this. I assume the TOCs don't own very many assets? It's possible that 3% might be a decent return in relation to a low level of capital put into the venture. What risks are they bearing in their income stream - it would be nice to have some general context without wading through pages of bid documents.

The three percent is not the return but the OP's estimate of

the profit margin. The toc's parent will focus on other metrics - internal rate of return (cf the interest rate on a deposit account) / return on capital invested and earning per share accretion

 

Ultimately, they run these franchises through limited recourse vehicles so if the risk becomes too great, they can hand the keys back to DFT. As happened to connex and more recently NEX on the ecml franchise. The risks are largely delivering the operations, managing the cost base and achieving the revenue targets. The detail of the franchise agreement will set out the risk allocation between DFT and the franchisee. For example, I doubt franchisees will take the risk of Gov change of law impacting their costs (eg gov introduces new workers right that increases cost base by x% per annum). The franchisee will

Seek to pass risk back to the government to protect their own narrow margin.

 

 

Although the actual capital invested is low, and hence the risk manageable from their balance sheet, they'll also be .thinking of the impact of having any bid bonds called and the reputation risk associated with the business

[phil-b259]

I'm interested in this. I assume the TOCs don't own very many assets? It's possible that 3% might be a decent return in relation to a low level of capital put into the venture. What risks are they bearing in their income stream - it would be nice to have some general context without wading through pages of bid documents.

 

As you say, the average TOC owns very little - and this was something the owners of the first few franchises to be let were shocked about - they were led to believe that they were buying a franchise that was totally inefficient, overstaffed and ripe for a bit of private secretor reform. What they actually found was that BR had left the business units as very efficient organisations with very little that could be cut without negatively impacting the service.

 

So to begin with the biggest cost for the TOC is the leasing of the trains themselves and this consumes a large chunk of the subsidy the Government provides to TOCs leading to accusations that the Government is basically subsidising the banks not the TOC.

 

The second greatest expense is staff that ranges from Drivers, Guards / Conductors, maintenance staff (if maintenance is done in house rather than contracted out to the train builder*) Ticket office staff, timetable planners, roster clerks train cleaners (though theses are also prime candidates to being contracted out to outsourcing specialists who employ low pay zero hours contracts)

 

The third greatest cost is station and depot leases. While NR own all the freehold of all operational railway land those bits that are not related to the tracks themselves are looked after by the TOCs

 

*The engineers employed at Northampton, Southampton and the new Three Bridges depots are directly employed by Siemens and thus are not part of the Railway Pension scheme, have no travel perks and form separate pay agreements with the Unions. The engineers employed at Selhurst Lovers Walk, Wimbledon and Bournemouth are employed by Southern or SWT, get all the travel perks afforded to other TOC employees, are members of the Railway pension Scheme and are covered by the Unions pay agreements with the relevant TOC

[melmerby]

(On a separate note has anyone heard of First Great Western changing to Great Western Railway, it's like calling your tech company Apple)

Do you mean this?

https://www.gwr.com/?gclid=clqonfljn8gcfsiowwoda0wnva

I don't understand that analogy

Apple has always been Apple. It just found that the way to make lots of money was to charge high prices. (because as everyone knows - expensive things are better!)

 

Keith