ECML franchise fails .... again....

[The Stationmaster]

Re #320, surely someone, somewhere, owns these trains?

 

Taking the specific case under discussion, that the Franchisees are being allowed to walk away, or bailed out, as the case may be, someone, somewhere must be bearing the cost. I don’t imagine Hitachi have built them for their own amusement.

 

There seems to be a good deal of press coverage, to the effect that the taxpayer has not been well served in the matter - is this so?

 

Agility Trains (a joint company owned by Hitachi and John Laing) owns them - albeit supported in that by bank loans and money from the partner companies.  Like virtually all passenger rolling stock in Britain the franchisee operating companies simply lease the train from Agility and thus do not own them, they are normally leased for the duration of a franchise.

 

If the franchisees walk away (which is not exactly what's happening in this case) then someone else takes over the operation of the franchise and becomes the concern which takes up the lease

 

Any press coverage in the non-technicalmedia should be taken with a few bucketfuls of salt because the way in which the story is presented depends very much on the person presenting it, you'll get some real sense from Roger Ford in an interview starting at 16m30 in this iplayer clip (you have to register to listen to it) -

 

http://www.bbc.co.uk/programmes/b09jqtpr

[phil-b259]

 I suspect that the Government have had to provide guarantees that the mortgage will continue to be paid whatever happens to the Franchisees.

 

As they have done ever since the first post privatisation rolling stock was ordered.

 

The average life expectancy of a train is around 40 years - and it doesn't take a genius to realise that unless guarantees were provided no private sector business (be it a bank or a TOC) will invest in something when they only have 7 or so years to reclaim the costs of ordering them.

 

The IET / class 800 trains are even more complicated due to the insistence of the DfT in micromanaging their procurement - and making a right dogs dinner of it according to respected commentators like Roger Ford.

 

What has thrown things into disarray however is this recent fashion for awarding franchises on a 'total fleet replacement basis' and leaving vehicles that would otherwise have had another 10 - 30 years of life left in them!

[lmsforever]

Franchisies and manufactures are the people to design trains not civil servants and ministers DAFT did this under orders of Downing St for political ends otherwise we could have had Bombarier,etc trains suited for the UK.

[cunningduck]

I can’t help but think that at Franchise assessment time DfT may have looked at the “best” franchise, seen that it is over-optimistic and bound to fail. However since the Virgin West Coast debacle they may have had to award the franchise based on their own specified criteria, which I don’t think would include a clause along the lines of “don’t award the franchise to someone that is relying on Network Rail not to deliver so they can get bailed out”. Therefore they're tied to the best franchise according to their own criteria, which may not be the best franchise...

[Ron Ron Ron]

Franchisies and manufactures are the people to design trains not civil servants and ministers DAFT did this under orders of Downing St for political ends otherwise we could have had Bombarier,etc trains suited for the UK.

 

Nobody in the DafT, nor any civil servant "designed" the train.

The people involved with the programme (IEP) drew up the specifications.

Hitachi designed the train to meet the specifications.

Then they had to redesign it to meet the changes asked for.

 

Incidentally, in the earlier stages of the programme, some rail industry consultants were involved in drawing up the specs, or at least advising the programme team.

I remember certain names of senior industry consultants being mentioned in articles on the subject.

I've no idea of the details, or what happened later regarding professional involvement.

 

 

.

 

.

[Ron Ron Ron]

.... DAFT did this under orders of Downing St for political ends otherwise we could have had Bombarier,etc trains suited for the UK.

That would be the previous Labour government then, continued on by the Tory/Lib Dem coalition.

...and no, we wouldn't necessarily have had foreign Bombardier trains either (even if assembled in the UK).

In the case of the IEP,  the only manufacturing groups who remained interested in bidding at the final round, were.... 

Agility Trains (inc. Hitachi being the train builder) and.... 

Express Rail Alliance (inc. German based Bombardier + Siemens as the train builders).

 

.

Edited January 1, 2018 by Ron Ron Ron

[jjb1970]

Asset leasing is nothing new or unusual. Industries like aviation and shipping have relied on leasing for decades and even in electricity generation things like gas turbines are sometimes leased. The automotive sector in the UK at any rate relies on finance products such as PCP and leasing. The concept of leasing assets is hardly controversial (outside of the political bubble where some politicians see the slightest whiff of somebody somewhere making a profit as being unclean) or "bad". When left to themselves (free of civil servants getting involved) a whole range of industries seem capable of making leasing work to mutual benefit and choose it willingly.

[jjb1970]

One criticism I think is utterly baseless when sometimes brought up is the fact that Hitachi is a Japanese company. Hitachi are as British as Siemens or Bombardier (i.e. they're not) but they made significant investment in the UK and personally I don't see that Japan is any less of a country than the alternatives who'd have won the contract. I find that often there is something pretty unpleasant about threads when the question of Hitachi being Japanese gets brought up.

[Clearwater]

I worked on financing the acquisitions on Angel and Porterbrook and the debt raising for XL Trains (Thameslknk). From a creditor perspective, there are two key provisions of the 1994 (from memory) transport act.

1) S54 - can be summarised as Gov guarantees that any new stock will be leased for a minimum of [15] years

2) S30 - in the event of TOC insolvency, Gov guarantees to keep making payments ToC was projectedes to make

 

(Again if my section references are wrong, I apologise but it is 7pm on NYE!)

 

Therefore, if you’re building rolling stick with a projected life of 30-40 years, the question is what residual value you see for the stock at 15 years’ life? You are also likely to be bidding against other parties to win the contract and will be looking to bid as lower price as possible to win the deal. The lower the price you bid, the more capital you will have outstanding at 15 years (exactly like comparing a 10 year and 25 year mortgage). Also the more debt you borrow, the cheaper you can make your overall price - the cost of debt being less than the cost of equity as it’s less risky), however, persuading lenders to take large residual value risk is a challenge. How do they know what policy a future government will have to the railways? Will future franchisees be able to make the payments or will they have to take a loss? One obvious haggle that reduces the cost is to extend the guarantee period allowing more long term cheap debt to be raised.

 

Most lenders currently take the view that UK government honours it’s contractual commitments - one of the reasons why Uk gov debt is so highly rated. If a future Government were to take a different approach, we may see the global markets taking a different view and our cost of debt increasing.

 

David

[Clearwater]

On the franchise bidding process, I can see how what might look like an odd situation to outsiders could arise. Most processes will set a host of parameters for parties to bid against. THese will include a standard contract, standardised assumptions on, e.g. RPI, interest rates etc. Purpose being to try and make the bids comparable. They will also likely specify the timings and impacts on any upgrades to the system and infrastructure. Therefore, even if you think that it is impossible scheme X will happen by date Y, becuase you are being told to assume it, you have to otherwise if you competitor includes the benefits, you will automatically be hampering your bid.

 

The problem is then exacerbated when the procuring authority cannot admit that scheme X will not happen by date Y at the point you sign a binding contract. If you are the bidder, you (and your lawyer friends) will be making sure that the authority obligation clauses/variation clauses will allow you to either mechanically reprice the contract or get back to the negotiating table. Arguably both parties have an interest in kicking the can down the road to get the deal signed and to deal with the problem when it arises. You never know, the scheme may miraculously be delivered on time.

 

Issue then becomes how to unpick and revalue the bid/financial obligations. If the bidder had assumed that the new rolling stock would allow a faster service/an extra stop generating extra /remove the need for certain servicing/creating an operational efficiency becuase a new diagramme would mean less staff required etc etc. Disaggregation of bids post fact is always challenging and the negotitiating position is neither simple nor wholly in the procuring authority's favour. Sure they can hold them to a commitment but the franchisee will be saying - "fine but pay us £xxxx for not delivering Scheme X"

 

You can see how the negotiations will become complex and not practical, as suggested by some politicians, to be negotiated in public. Good or bad deal for the tax payer? Good or bad original deal? No idea. Looks like one for the National Audit Office to review. They generally get to the bottom of the issues.

 

David

[rockershovel]

I don’t see anything wrong with leasing, per se. As several people have already pointed out, it’s simply a means of spreading the total cost of ownership over the predicted life of the asset, and it’s widely used in a number of sectors.

 

The problem here, appears to be that the actual operation of the process is compromised by factors which don’t really relate to the actual function.

 

PFI deals have acquired an unsavoury reputation among the UK electorate, or at least those who pay any attention, for good reason. The NHS appears to have serious long-term problems derived from such contracts. In this case, the taxpayer appears to be paying a greatly inflated price so that a third party can be left with usable, productive assets, fully paid for. There also appear to be serious practical problems in applying the concept to the railway sector.

 

Do I care that Hitachi are a Japanese company? No, I don’t. But, I’ve spent plenty of years in countries where such contractors are expected to develop the domestic capacity as part of the contract. It also bears pointing out, that as much as we are told how wonderful The City is, when it comes to actually funding railways, power stations or similar baubles, we appear to be unable to do this for ourselves...

[Mike Storey]

Re #269, above, you are missing a couple of important points. Peterborough had sold itself heavily as “45 minutes to London” and drawn in a LOT of commuters, who quickly drove up prices locally. To tell those commuters “actually, 45 minutes to London costs quite a lot extra, and may not be available at all” was never going to be acceptable, least of all when you bear in mind that AT THAT TIME, there was no separation of services: that, and selective validity of tickets was a later innovation.

 

Regarding Dr Mawhinney, my main impression of him was that he did a good job of keeping order in meetings which, more than once, seemed to me to be on the point of degenerating into multi-sided shouting matches, serving no purpose at all. There was a widespread impression that the railway took no interest whatsoever in its more-or-less captive commuter trade, and with all due respect, you aren’t doing much to alter that. I’d feel that “allowing the railway to take the flak” was pretty much a case of “letting it fall where it belonged”

 

Commuters never cared in the slightest, about the constant management changes and rebranding. Still don’t. They just want a seat on an affordable train which gets them to work on time. Nothing else registers with them: my son-in-law is a regular commuter, and still uses the term “WAGN train” to denote a stopping EMU service, and he’s probably never even SEEN a train actually carrying the WAGN logo.

 

I cannot speak for Greater Peterborough's marketing policy, given that BR never actually ran the City. BR had to respond to a speed of growth in demand that the planners had not indicated would take place as fast as it did. Indeed, much of their marketing had focused on local jobs availability, and they went in hard for company relocation on the basis of the lower wages they could pay. What they had not reckoned on was that an office worker could earn, (let's say in the 80's, although inflation drove numbers up a lot), £5-7k pa in Peterborough, but more like £15k in London, more than paying for the travel and getting a much cheaper house in the bargain. Multiply that for the many higher paying jobs, and also the many LT and BR staff who moved there for the cheap housing. A significant percentage of commuters there paid either nothing or only a small percentage of the market cost of their journeys. I don't understand your assertion that faster travel would cost more and then that there was no differentiation. Which point are you making? NSE brought in differentiated ticket prices after a couple of years of its creation. Incidentally the fastest IC journey time was 47 minutes (most were around 49), whatever the estate agent said, and the fastest NSE/WAGN service was c.60 minutes, calling only at Huntingdon, which several did in the peaks. 

 

It is interesting that you should continue to reflect on "our" attitude as not having cared, when we increased the number of HST's and the IC225's calling at Peterborough from 3/4 in the morning peak, in the early 80's, to around 9 (between 06.35 and 08,50 I believe) by the time I left as APM. We also changed the calling patterns further north to alleviate overcrowding as much as possible. We also re-routed the IC's into Platform 2 as much as possible, instead of the inconvenient 3. We also upgraded the old Post Office footbridge to allow passengers to more safely use it, relieving overcrowding on the existing one. We also introduced a streamlined season ticket ordering desk at the Travel Centre to make life easier for commuters. We also increased the forecourt lighting and improved the surfacing and moved the taxis out of the way of kiss-and-ride to ease commuter's being dropped off and picked up. We also paid to treble the size of secure car parking and introduced discounts for rail users, when increasing the prices overall to deter the increasing number of local workers and shoppers using our facilities because the council had increased their charges so much. Yeah, right, we did not give a tinker's cuss.

 

Nothing will ever be enough for commuters. I became a paying commuter, again from Peterborough to London, for five years, when I left NR to work in rail projects for someone else. I chose to use the WAGN services for lower cost initially, but later switched back to the EC season, in Standard, for speed, but rarely comfort as most morning peak journeys were spent in a vestibule. I grumbled like billy-o. But, unlike you, I realised just what was possible as opposed to what was desirable, but financially, economically, environmentally or practically possible, unless demand management pricing was re-introduced. Hopefully, given the recent investments in Peterborough's increased platforms and new track layout, which has dramatically decreased the number of conflicting movements to improve reliability and allow more timetable flexibility, plus the imminent Werrington Junction scheme, which will further reduce conflicts, projects we could only dream about in BR days, there will be a better service overall. But Shinkansen or suchlike, which is the only absolute solution to your complaints, with its 2 min interval services, very high speeds and dedicated services devoid of conflict with any other operations, are not something this country seems to want to do, or certainly pay for. Just look at the criticism of HS2, only slightly matched by HS1. No-one in Kent even mentions HS1 now, apart from how much faster it is to get to London.

 

Your defence of Dr Mawhinney is admirable, but I suggest you look at his voting record in parliament when it came to transport funding (or any social, health or other similar financial needs). His only redeeming feature, IMHO,was the interest he took in mental health care (not that I could find any evidence of him voting for additional funds for its provision). I do not recall multi-sided shouting matches. I just recall being shouted at, along with Stuart.

 

Of course commuters want an affordable seat on a reliable train. That's very easy to do. You just slow them all down and run dozens more, like an extended Northern Line. But if you want speed and an intensity of service to meet demand, that costs and is very difficult to mix with stopping trains and freights. I am sad that you are on here, clearly an interested and talented railway modeller, but that you cannot bring yourself to recognise the operating, financial and economic issues that surround them. A sort of Sodor perhaps?

[Clearwater]

I don’t see anything wrong with leasing, per se. As several people have already pointed out, it’s simply a means of spreading the total cost of ownership over the predicted life of the asset, and it’s widely used in a number of sectors.

The problem here, appears to be that the actual operation of the process is compromised by factors which don’t really relate to the actual function.

PFI deals have acquired an unsavoury reputation among the UK electorate, or at least those who pay any attention, for good reason. The NHS appears to have serious long-term problems derived from such contracts. In this case, the taxpayer appears to be paying a greatly inflated price so that a third party can be left with usable, productive assets, fully paid for. There also appear to be serious practical problems in applying the concept to the railway sector.

Do I care that Hitachi are a Japanese company? No, I don’t. But, I’ve spent plenty of years in countries where such contractors are expected to develop the domestic capacity as part of the contract. It also bears pointing out, that as much as we are told how wonderful The City is, when it comes to actually funding railways, power stations or similar baubles, we appear to be unable to do this for ourselves...

PFI is often poorly explained with some politicians erroneously comparing the full life cost of maintenance and service (eg cleaning) with the straight capital cost. PFI originated, partly, because public sector owned buildings were either extremely old and no longer suitable for modern delivery of services, or had not been maintained properly. WHat public sector body wouldn't defer maintenance for a year to pay for extra services? Of course the fact the building then leaks in five years time and needs replacing is not their problem... WIth whole life cycle costing, PFI contractors are incentivised to make sure they can maintain what they build and look for efficiencies in design that save long term costs. In a competitive bid process, that is what, in my experience, happens.

 

Your point re the City and funding of infrastructure in the UK is factually incorrect. From my time in financing infrastructure schemes, I've worked billions raised from banks and UK institutions in the bond market (pension funds, insurance companies etc). In rail alone, XLTrains raised £1.5bn from banks via the City, Angel has raised over £4bn, Porterbrook £3bn, Eversholt £2bn, IEP I'd guess another £2bn. HS1 another £2bn. Check their accounts and those of Centrica, SSE etc to see how much long term debt they have raised via the City. If the City doesn't fund something, its because it doesn't believe it will get its money back. Not everyone always shares a view, there was one deal I declined that got financed. That company has spend the last five years being restructured and those who did lend money have lost considerable sums.

 

David

[jjb1970]

I find when it comes to political positions on the railways and PFI MP's fall into three groups:

 

• Those who cynically manipulate things in order to make a cheap appeal to populist support and jump on the nearest passing band wagon they think is flavour of the month
• Those who live in an ideological bubble and genuinely believe that if things don't work as their ideology thinks it should then it is reality and not their ideology which is wrong
• Those who make a genuine effort to navigate the arguments and understand at least some of the underlying issues and try to promote informed, mature debate

 

Unfortunately the last group tend not to be the ones who get the media attention as they're not as headline worthy. And I say that as somebody who has quite a high regard for MP's in general.

[jjb1970]

PFI is often poorly explained with some politicians erroneously comparing the full life cost of maintenance and service (eg cleaning) with the straight capital cost. PFI originated, partly, because public sector owned buildings were either extremely old and no longer suitable for modern delivery of services, or had not been maintained properly. WHat public sector body wouldn't defer maintenance for a year to pay for extra services? Of course the fact the building then leaks in five years time and needs replacing is not their problem... WIth whole life cycle costing, PFI contractors are incentivised to make sure they can maintain what they build and look for efficiencies in design that save long term costs. In a competitive bid process, that is what, in my experience, happens.

 

Your point re the City and funding of infrastructure in the UK is factually incorrect. From my time in financing infrastructure schemes, I've worked billions raised from banks and UK institutions in the bond market (pension funds, insurance companies etc). In rail alone, XLTrains raised £1.5bn from banks via the City, Angel has raised over £4bn, Porterbrook £3bn, Eversholt £2bn, IEP I'd guess another £2bn. HS1 another £2bn. Check their accounts and those of Centrica, SSE etc to see how much long term debt they have raised via the City. If the City doesn't fund something, its because it doesn't believe it will get its money back. Not everyone always shares a view, there was one deal I declined that got financed. That company has spend the last five years being restructured and those who did lend money have lost considerable sums.

 

David

 

Indeed, a lot of the criticisms of PFI are based on an apples and pears comparison and tend to compare the up front cost to acquire an asset with a lease arrangement which includes management and maintenance. Unless you know what is included in different prices quoted in these debates it is difficult to have an informed opinion.

[Mike Storey]

So taxpayers are paying over the odds because of HM Governments incompetence then.

 

When you actually stand back and look at ALL the relationships involved, once again we see who the real villains are in all this - and its not the private sector as too many like to believe.

 

Hardly unusual I'm afraid to say - and it won't be the last instance while the Civil Service / ministers try to micromanage things it knows nothing about - be that Hospitals, Warships or Railways!

 

Its why I am a firm advocating of adopting the German or French health service model for our Health service- it keeps interfering Governments out of the picture. Democratic countability is all very well - but NOT if persons responsible for said 'accountability' keep messing things up by short term, ideological tinkering that causes the taxpayer to be charged over the odds for the privilege.

 

I no nuffink about the German health service, but I would honestly leave the French health and social care system out of this. It is entirely directed by central government - it has to at least break even by law - and that is why it is breaking down and now having to be fundamentally revised. I will spare you all the details, but I work with it and against its failures on a weekly basis as a volunteer with a national charity here. At least Macron has the guts to insist that revision is necessary and is making it happen.

 

I can't comment on the efficacy of the civil service on matters outside transport. In all my years of dealing with DofT/DfT and later with Dept of Culture and Media Studies (for London 2012), I found them all (bar the odd one) to be extremely competent, knowledgeable and dedicated to making stuff happen, if sometimes a little pompous. What was much harder was framing things in a way that their political masters would both comprehend and agree. It did not always work because political issues/dogma/changes would frustrate progress or indeed, direction.

 

The times I worked for private enterprise were much simpler. In GNER, you were not allowed to present a business case longer than an A4 sheet of paper. If longer, James Sherwood would not read it. No-one below him had the authority to order much more than a paper clip. His philosophy was that if you argued something would work and make him money, but you got it wrong, he would sack you. He never sacked anyone, to my knowledge, but the numbers all went west by the 2nd franchise and he eventually went practically bankrupt. In Railtrack, we were supposed to produce all the paperwork that BR had required but in different format. But when I did a powerpoint presentation to Gerald Corbett when at last he took over, he authorised £1 million on the strength of it, just to develop ECML upgrade proposals. That would never have happened in BR. But then, RT went south. NR went back to BR style processes, despite Iain Coucher's supposed largesse.

 

In the many times I have worked with, contracted to, or contracted from, private rail firms, I have found a very mixed bag indeed. Some focus on customer satisfaction, but only to preserve their ratings for the purposes of franchise performance measurement. Some, a very few, focus on customer satisfaction, because that is their philosophy, and that included Virgin West Coast. But the vast majority focus on their contract, and how to bleed the living daylights out of it.

 

I do know how BMW works (through a close relation), and it is basically, do it and raise the prices, because punters will still pay. When I ran my own company, we focused on customer satisfaction but then could not deliver due to supply, financial guarantees and then quality control problems with their products. I do not think there is one solution to anything.

[rockershovel]

Some very interesting replies, above.

 

A propos Dr Mawhinney, I don’t defend his record particularly, but I do think that he was a figure from a different time, when the Conservative Party was much more connected to its Shire County heartlands.

 

I’d also agree, mostly, with your view of the Civil Service. I’ve had dealings with the Mines Inspectorate, the Fishing authorities and the Health and Safety people over time, and found them to be mostly very knowledgeable and professional (HMRC are a different matter).

 

Peterborough has always puzzled me, and I’ve lived there for over thirty years now, but never had a worthwhile local job. Its historic function is as a transport hub, and it has the anomalous position of being at the intersection of three counties, without being the county town for any of them. It came late to the New Towns party, expanding greatly at a time when local employment was in steep decline. Privatisation has not treated it kindly, and the effects of the EU manifested themselves in 2016 (don’t forget that it is divided between two constituencies, by the way, which change frequently). I take your point about the railway not driving the local planning, and I’m open to the point that the situation is compounded of a range of issues, and probsbly insoluble, but nonetheless it’s all the result of the same government, which is all commuters care.

 

The effects of commuting on local prices and wages are severe. Pearl Assurance tried to build a major local centre, but found that the effects of London wages on local prices and wages defeated them; the predicted savings never came close to being realised, and they are long gone, back to the M25 loop.

 

I take the point about funds raised in The City for HS1, but I’ll see your HS1 and raise you Hinckley Point C, with construction costs alone estimated as an order of magnitude higher...

Edited December 31, 2017 by rockershovel

[david.hill64]

I worked on financing the acquisitions on Angel and Porterbrook and the debt raising for XL Trains (Thameslknk). From a creditor perspective, there are two key provisions of the 1994 (from memory) transport act.

1) S54 - can be summarised as Gov guarantees that any new stock will be leased for a minimum of [15] years

2) S30 - in the event of TOC insolvency, Gov guarantees to keep making payments ToC was projectedes to make

 

(Again if my section references are wrong, I apologise but it is 7pm on NYE!)

 

Therefore, if you’re building rolling stick with a projected life of 30-40 years, the question is what residual value you see for the stock at 15 years’ life? You are also likely to be bidding against other parties to win the contract and will be looking to bid as lower price as possible to win the deal. The lower the price you bid, the more capital you will have outstanding at 15 years (exactly like comparing a 10 year and 25 year mortgage). Also the more debt you borrow, the cheaper you can make your overall price - the cost of debt being less than the cost of equity as it’s less risky), however, persuading lenders to take large residual value risk is a challenge. How do they know what policy a future government will have to the railways? Will future franchisees be able to make the payments or will they have to take a loss? One obvious haggle that reduces the cost is to extend the guarantee period allowing more long term cheap debt to be raised.

 

Most lenders currently take the view that UK government honours it’s contractual commitments - one of the reasons why Uk gov debt is so highly rated. If a future Government were to take a different approach, we may see the global markets taking a different view and our cost of debt increasing.

 

David

 

I worked for one of the ROSCOS - long time ago now - and I think this is spot on. The issue for the ROSCOs now is that with DfT's determination that 'Quality' - ie New Trains - is important in franchise bid evaluation, the residual risk element of costing a lease has suddenly become more difficult to assess. While new trains are currently cheap to build, it is likely that the residual values will have taken a hit so the leasing costs will rise if the vehicle owners have to get their money back in a shorter period.

 

DfT has the opposite of the Midas touch: it seems that everything they get involved with turns to dust.

[rockershovel]

.... which brings us to something which I have long believed to be true, but can’t demonstrate because I don’t know the subject in enough detail; that the whole system is too complex, too highly stressed and in particular, contains too many parties trying to extract a profit from every stage of the process.

 

Hence the flawed decision making, because the goals of the system are unsound.

[Clearwater]

I’ve not followed Hinckley closely but I’d make the following observations:

1) they have a Contract for Difference (cfd) for c.£90/MWh for 35(!) years that should produce a large, predictable

2) capital cost is c£20bn

3) whenever I read the newspapers commentating on a situation I’m actually familiar with, it seems as if the newspaper is writing on a completely different subject so inaccurate is the reporting. Therefore, anything I read about business in the press, particularly when there’s an interaction with policy, I’m sceptical about what agenda the journalist is projecting.

 

The size here is notable. You’re effectively creating a new entity with a total value of £20bn+. There’s not many companies in the Ftse of that size never mind new build single purpose entities where the construction is potentially very risky with large overruns possible. Never mind the decommissioning risk!

 

Generally, if the risk is right, the financing will follow. However, some mega projects, where the magnitude of risk and the cash flows don’t stack need to be financed by Government. It all comes down to balance sheet, UK Gov’s is larger than pretty much anything. For a FtSe company, a £1bn loss is a big figure. For Uk gov revenue c£700bn, a billion a year is in the roundings. The gilts it issues are brought by pension funds, insurance cos etc, just backed by all uk revenue not a single, risky project

 

David

[ess1uk]

Some developers/builders are still peddling the idea of a new station in Hampton / Farcet / Yaxley.

It was even in election rubbish stuffed through our door last year.

Commuters are still falling for it and buying on a promise that will never happen.

 

Peterborough station is unrecognisable (for the better) from when I first started using it 30 odd years ago.

 

I cannot speak for Greater Peterborough's marketing policy, given that BR never actually ran the City. BR had to respond to a speed of growth in demand that the planners had not indicated would take place as fast as it did. Indeed, much of their marketing had focused on local jobs availability, and they went in hard for company relocation on the basis of the lower wages they could pay. What they had not reckoned on was that an office worker could earn, (let's say in the 80's, although inflation drove numbers up a lot), £5-7k pa in Peterborough, but more like £15k in London, more than paying for the travel and getting a much cheaper house in the bargain. Multiply that for the many higher paying jobs, and also the many LT and BR staff who moved there for the cheap housing. A significant percentage of commuters there paid either nothing or only a small percentage of the market cost of their journeys. I don't understand your assertion that faster travel would cost more and then that there was no differentiation. Which point are you making? NSE brought in differentiated ticket prices after a couple of years of its creation. Incidentally the fastest IC journey time was 47 minutes (most were around 49), whatever the estate agent said, and the fastest NSE/WAGN service was c.60 minutes, calling only at Huntingdon, which several did in the peaks. 

 

It is interesting that you should continue to reflect on "our" attitude as not having cared, when we increased the number of HST's and the IC225's calling at Peterborough from 3/4 in the morning peak, in the early 80's, to around 9 (between 06.35 and 08,50 I believe) by the time I left as APM. We also changed the calling patterns further north to alleviate overcrowding as much as possible. We also re-routed the IC's into Platform 2 as much as possible, instead of the inconvenient 3. We also upgraded the old Post Office footbridge to allow passengers to more safely use it, relieving overcrowding on the existing one. We also introduced a streamlined season ticket ordering desk at the Travel Centre to make life easier for commuters. We also increased the forecourt lighting and improved the surfacing and moved the taxis out of the way of kiss-and-ride to ease commuter's being dropped off and picked up. We also paid to treble the size of secure car parking and introduced discounts for rail users, when increasing the prices overall to deter the increasing number of local workers and shoppers using our facilities because the council had increased their charges so much. Yeah, right, we did not give a tinker's cuss.

 

Nothing will ever be enough for commuters. I became a paying commuter, again from Peterborough to London, for five years, when I left NR to work in rail projects for someone else. I chose to use the WAGN services for lower cost initially, but later switched back to the EC season, in Standard, for speed, but rarely comfort as most morning peak journeys were spent in a vestibule. I grumbled like billy-o. But, unlike you, I realised just what was possible as opposed to what was desirable, but financially, economically, environmentally or practically possible, unless demand management pricing was re-introduced. Hopefully, given the recent investments in Peterborough's increased platforms and new track layout, which has dramatically decreased the number of conflicting movements to improve reliability and allow more timetable flexibility, plus the imminent Werrington Junction scheme, which will further reduce conflicts, projects we could only dream about in BR days, there will be a better service overall. But Shinkansen or suchlike, which is the only absolute solution to your complaints, with its 2 min interval services, very high speeds and dedicated services devoid of conflict with any other operations, are not something this country seems to want to do, or certainly pay for. Just look at the criticism of HS2, only slightly matched by HS1. No-one in Kent even mentions HS1 now, apart from how much faster it is to get to London.

 

Your defence of Dr Mawhinney is admirable, but I suggest you look at his voting record in parliament when it came to transport funding (or any social, health or other similar financial needs). His only redeeming feature, IMHO,was the interest he took in mental health care (not that I could find any evidence of him voting for additional funds for its provision). I do not recall multi-sided shouting matches. I just recall being shouted at, along with Stuart.

 

Of course commuters want an affordable seat on a reliable train. That's very easy to do. You just slow them all down and run dozens more, like an extended Northern Line. But if you want speed and an intensity of service to meet demand, that costs and is very difficult to mix with stopping trains and freights. I am sad that you are on here, clearly an interested and talented railway modeller, but that you cannot bring yourself to recognise the operating, financial and economic issues that surround them. A sort of Sodor perhaps?

[rockershovel]

Re #345, decommissioning risk! THERE’S a head scratcher. The project certainly seemed to cause Mrs May an abrupt change of heart ... nuclear power has always seemed to me, to be like railways in that there are just TOO MANY variables and risks to be able to account for them all.

 

The early years of railways were noted for spectacular financial collapses, but the railways DID get built and (by way of periodic state intervention, notably in 1923 and 1948) we still have them. The American transcontinental railroad project passed through various financial dramas, but Lincoln considered it so important to the nation that it was worth any price to achieve.

 

Come to that, we didn’t get proper drains until the State decided that the private sector simply couldn’t be allowed to control them any longer.

 

It does seem to me, that railways require a certain level of State control and overall strategic direction to function properly. Dutch railways are a case in point; a bit scruffy and definitely not fast, but they ARE cheap and they ARE quite a good way of getting around this fairly small country. We don’t seem to have that, and a lot of the reason seems to be that they are subject to excessive interference by people whose goals are unrelated to their function and don’t have any useful understanding of how they work.

[rockershovel]

Re #346, Peterborough station is undoubtedly much improved functionally. The once-abominable car park is now much better, and even the police go there occasionally!

 

The point about the Yaxley/Farcet Station illustrates my point, though. A classic example of a conflict of interest, promoted by people who stand to gain without actually having any involvement at all. It’s also (probsbly) relevant that due to successive boundary changes, Peterborough has TWO MPs, of different parties (Labour and Conservative) representing areas within its municipal boundaries, so it’s probsbly no wonder that there is no coherent rail policy.

Edited January 1, 2018 by rockershovel

[rockershovel]

Re #337, bang on about the arithmetic of costs and wages, see also my point about Pearl Assurance, who rather became the “poster boy” for this particular fallacy. Their office complex near the Showground has long since passed to other uses...

 

The LUL, ex-BR and Royal Mail employees on their free, or subsidised passes made a lot of use of Finsbury Park, too. They were also casualties of privatisation, in various ways, and greatly resented it.

 

The point about the fastest HST being 47 or 49 minutes is a bit of a red herring. They were much faster (15 to 30 minutes) than the WAGN trains, and you often couldn’t get a seat on THOSE either, particularly Northbound. Commuters absolutely hated the WAGN service, especially in its original incarnation. There was also the matter of Tube connections; in those days, you left platforms 1-8 and went straight down the stairs by the ticket hall, to the Rotunda; MUCH quicker than those suburban platforms (9-11), and all those minutes add up.

 

I commuted mainly from 1986 to 1992 and I have no recollection of ever paying a differentiated fare, at that time. On that basis, I avoided WAGN as far as possible.

[pete_mcfarlane]

Indeed, a lot of the criticisms of PFI are based on an apples and pears comparison and tend to compare the up front cost to acquire an asset with a lease arrangement which includes management and maintenance. Unless you know what is included in different prices quoted in these debates it is difficult to have an informed opinion.

In particular there's an assumption that the non-PFI 'pay up front' version of the project will be funded out of tax revenues. What will actually happen is that it will be funded by public borrowing, which incurs a cost. This cost is never mentioned in the comparisons.