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

[rockershovel]

You’re right on how the 73 oil crisis triggered the economics of oil production from the North Sea. However, your selective quoting ignores the wider point I was making that North Sea oil (and the prospect of it) materially cushioned the uk from the loss of other incone streams as traditional manufacturing declined. Looking at https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/676199/Table_11.11__June_2017_v2_.pdf

You can see the sharp increases from the late 70s onwards. I think these are nominal figures and from a quick search, total uk gov expenditure in 1980 was £104bn. Ie without these revenues, our economy would have been in a woeful state. The opening of the fields and the developments would have been forecastable from the mid 70s and would, I expect, have been taken into account in the structuring of public finances.

That’s right. The first oilfields were mostly proven by about 1973, but the economics weren’t viable prior to the Oil Crisis.

 

I don’t recall it being any particular secret, that oil revenues were propping up the economy in the 1970s and 1980s. It was much discussed among offshore workers at the time.

[Ron Ron Ron]

I don't know how much bid costs are (though a few hundred thousand sounds awfully low), but I'm sure it's not money that the likes of Stagecoach spend lightly - it will have to justify itself from the potential benefits.>>>>

 

 

I’d be surprised if bid costs were materially more than £1m per bidder. ......

......The tens of millions may also be for all bidders. 

 

 

It's between £5 & £10 million per bid ( i.e. for each bidder).

(Source - the Rail Delivery Group)

 

See post 532 above.

The bids for the aborted ICWC competition in 2012 were said to cost the prospective bidders a total about £40 million, of which Virgin/Stagecoach bid costs were reported as being somewhere around £14 million.

 

 

.

Edited February 9, 2018 by Ron Ron Ron

[jamie92208]

That’s right. The first oilfields were mostly proven by about 1973, but the economics weren’t viable prior to the Oil Crisis.

 

I don’t recall it being any particular secret, that oil revenues were propping up the economy in the 1970s and 1980s. It was much discussed among offshore workers at the time.

 

Yes I recall those dates.  I worked for BP for 8 months in 71 in a sort of gap year and I remember the excitement when the first oil from the Forties field arrived for analysis in the labs upstairs.  The Beeb invaded to film it all.

 

Jamie

[Bob Reid]

Was often the case up here when someone said they were "something" in Oil, they worked at the local chip shop!

 

Coming back directly to East Coast. I do wonder just how valuable and how much risk is involved is in running the East Coast franchise, and how much of that is based on an outdated assumption that having won it, you just cant fail to make money.

​Yes GNER¹ did work well - though most if not all of that "operational" success was done on the back of a well designed model ran by ICEC with an excellent team who had focussed for a long time on a relatively long and narrow route, with but one headquarters and three maintenance depots, all managed by a slim organisation and working with the then newest and fastest fleet on the network, albeit one of the smallest fleets.  Much of the increased passenger traffic was already in place (I'm afraid I'm not convinced by claims of massive increases in passenger traffic on the ECML since privatisation.  Perhaps over the Network as a whole yes, but even then)  There were signs very early on that capacity was going to be one of the biggest issues and as I'm no longer privilege to the revenue streams, either actual or forecast I wonder how much potential there really is?   East Coast was always considered the cherry ripe for picking and yet even within the first term a considerable amount of the cost was offset by the money generated by the regular failure of Railtrack to come up with their side of the bargain.

 

To cut a long story short.  22 years on, Is it really still the franchise of choice or has it really been subject to a badly managed slow decline?.  Just how good is the management these days? Are these forecast improvements just wishful thinking as a result of the once working model now bust by the DfT?

​Either way I fear we'll still be talking about it a the end of the next franchise term.

[rockershovel]

Yes I recall those dates.  I worked for BP for 8 months in 71 in a sort of gap year and I remember the excitement when the first oil from the Forties field arrived for analysis in the labs upstairs.  The Beeb invaded to film it all.

 

Jamie

I started working on the drilling floor in 1974, and the emphasis had definitely switched by then, to proving fields in detail within known outlines and looking towards actual production

[D854_Tiger]

Considering Virgin and Stagecoach are supposed to be on the naughty step it seems that hasn't stopped them getting another year's extension to their WCML franchise

[lmsforever]

But the WCML is run in very good way and is totally separate from the east thank goodness.

[Ron Ron Ron]

Considering Virgin and Stagecoach are supposed to be on the naughty step it seems that hasn't stopped them getting another year's extension to their WCML franchise

 

 

Technically speaking, if they hadn't been awarded the extension, then Virgin Trains (West Coast) would have stopped operating next month (March) as the previous contract runs out then.

That would have meant no ICWC train service until another operator could be appointed or a lengthy franchise bidding process had been gone through and another TOC awarded the franchise.

 

The DafT have firstly put off and subsequently, haven't been able to re-run the competition for this (ICWC) franchise.

Basically, the DafT are so far behind that several franchise renewals have been missed and extensions and contract awards are being used to keep the services operating on the relevant franchises.

 

Similarly the East Midlands franchise, which should have originally ended three years ago (March 2015), but has been extended to March this year (next month).

As the process to relet this franchise is running late, EMT have also been given another extension.

 

 

.

[roythebus]

Maybe the DaFT is suffering from the austerity government cuts and is short of staff to deal with such things? As people have been saying for the last couple of years they don't trust "experts".

 

It's about time the UK governments of whatever hue grew a pair and admitted they've been getting it wrong for many many years. Other countries don't seem to suffer from the "prototype" model of privytisation that we suffer from. They seem to have a much better model having learnt from our mistakes. I don't think wholesale nationalisation will be the answer though it could maybe solve a lot of the problems. the whole system is broke and needs to be fixed.

[great central]

Technically speaking, if they hadn't been awarded the extension, then Virgin Trains (West Coast) would have stopped operating next month (March) as the previous contract runs out then.

That would have meant no ICWC train service until another operator could be appointed or a lengthy franchise bidding process had been gone through and another TOC awarded the franchise.

 

The DafT have firstly put off and subsequently, haven't been able to re-run the competition for this (ICWC) franchise.

Basically, the DafT are so far behind that several franchise renewals have been missed and extensions and contract awards are being used to keep the services operating on the relevant franchises.

 

Similarly the East Midlands franchise, which should have originally ended three years ago (March 2015), but has been extended to March this year (next month).

As the process to relet this franchise is running late, EMT have also been given another extension.

 

 

.

EMT running until, most likely, August next year, been that many add ons and extensions I'm not even sure myself. I'll just put a different tie on the next day I suppose

[jjb1970]

Maybe the DaFT is suffering from the austerity government cuts and is short of staff to deal with such things? As people have been saying for the last couple of years they don't trust "experts".

 

It's about time the UK governments of whatever hue grew a pair and admitted they've been getting it wrong for many many years. Other countries don't seem to suffer from the "prototype" model of privytisation that we suffer from. They seem to have a much better model having learnt from our mistakes. I don't think wholesale nationalisation will be the answer though it could maybe solve a lot of the problems. the whole system is broke and needs to be fixed.

 

I think the original model was valid however what we have seen is increasing DafT interference combined with some woefully optimistic bids for the ECML franchise. The lesson I'd take isn't so much that the underlying principle is wrong but that it has been badly managed by government who basically seem to want to run the railways behind body armour provided by TOCs who take the blame for anything unpopular combined with some poor business decisions in some cases. My own view is that TOCs should be left to manage their franchises and to either succeed or fail, if they fail there are already mechanisms to ensure service is maintained.

[lmsforever]

Didnt John Major want a return to the big four ? I presume DAFT talked him out of this perhaps it would have worked out any thoughts?

[D854_Tiger]

Technically speaking, if they hadn't been awarded the extension, then Virgin Trains (West Coast) would have stopped operating next month (March) as the previous contract runs out then.

That would have meant no ICWC train service until another operator could be appointed or a lengthy franchise bidding process had been gone through and another TOC awarded the franchise.

 

The DafT have firstly put off and subsequently, haven't been able to re-run the competition for this (ICWC) franchise.

Basically, the DafT are so far behind that several franchise renewals have been missed and extensions and contract awards are being used to keep the services operating on the relevant franchises.

 

Similarly the East Midlands franchise, which should have originally ended three years ago (March 2015), but has been extended to March this year (next month).

As the process to relet this franchise is running late, EMT have also been given another extension.

 

 

.

 

 

A great argument for longer franchises really, the seven year ones aren't much use, as it is, and even less use if the DfT is going to need seven years every time it awards one.

[The Stationmaster]

A great argument for longer franchises really, the seven year ones aren't much use, as it is, and even less use if the DfT is going to need seven years every time it awards one.

 

Someone mentioned something the other day about Great Western and said that in some form or other First Group have been in command for the past 15 years (or will it be 15 years by the time the present contract expires?).  I haven't checked if that is correct but they've certainly been in the seat for around a decade according to my own photos.

[Ron Ron Ron]

First group have been involved in the post privatisation Great Western since the beginning, 22 years ago this month.

Originally as a 24.5% shareholder and then 2 years later, from March 1998, as the 100% owners of the franchise operator.

 

So, First have had the GW for 20 years and been involved with it for 22 years.

 

Ron

Edited February 10, 2018 by Ron Ron Ron

[Zomboid]

Someone mentioned something the other day about Great Western and said that in some form or other First Group have been in command for the past 15 years (or will it be 15 years by the time the present contract expires?). I haven't checked if that is correct but they've certainly been in the seat for around a decade according to my own photos.

Stagecoach had SWT for not far short of 20 years. Though it being split into two (?) shorter contacts means that any comparison with Chilterns long deal is pretty invalid, though as a regular commuter for quite a few of those, overall I was pretty impressed with what they achieved.

[rockershovel]

A serious, structural problem with the John Major privatisation was (and remains) its Thatcherite character - the belief that you can extract a profit from everything, and that there is no requirement for government to provide an overall strategy (thereby resolving the inherent conflict between the two).

 

This leads directly to the NEXT characteristic of Thatcherite thinking, that the primary purpose of management is to maximise short-term shareholder returns, among other things by asset-stripping. Investment, in this world-view, is a crime against shareholders, whose interests are both paramount, and entirely divorced from the operational business.

 

This has the great attraction, for a political class with little or no experience of actually managing productive businesses, and no commitment to anything outside their own interests, of creating the belief that they “know how it works”.

 

Hence the unrealistically short franchise periods, compared to the service lives of the required asset base.

[D854_Tiger]

A serious, structural problem with the John Major privatisation was (and remains) its Thatcherite character - the belief that you can extract a profit from everything, and that there is no requirement for government to provide an overall strategy (thereby resolving the inherent conflict between the two).

 

This leads directly to the NEXT characteristic of Thatcherite thinking, that the primary purpose of management is to maximise short-term shareholder returns, among other things by asset-stripping. Investment, in this world-view, is a crime against shareholders, whose interests are both paramount, and entirely divorced from the operational business.

 

This has the great attraction, for a political class with little or no experience of actually managing productive businesses, and no commitment to anything outside their own interests, of creating the belief that they “know how it works”.

 

Hence the unrealistically short franchise periods, compared to the service lives of the required asset base.

 

 

Without getting too political it was the Labour party that was most keen on the seven year franchise.

 

I seem to remember when Branson was first approached with the seven year concept he basically rejected it and the response from the Tory government, at the time, was well tell us what you would be interested in.

 

All the franchise models that have worked best have been the long term ones but it seems the control freak civil service (who rarely know best) just don't like these things.

 

What we need is a transport minister interested in standing up to them but they don't come along very often, even though the DfT seems to provide an endless number of excuses for them to do so.

[Ron Ron Ron]

Stagecoach had SWT for not far short of 20 years. .....

 

 

21 and a half years.

From Feb 1996 to Aug 2017.

 

.

['CHARD]

Technically speaking, if they hadn't been awarded the extension, then Virgin Trains (West Coast) would have stopped operating next month (March) as the previous contract runs out then..

 

Don't think so, it would have ceased in March 2019. I have the DfT's Rail Franchise Schedule on my desk (always!), and the December 2016 issue already showed the 2019 end date.  This extension is for a further year to March 2020.

[62613]

A serious, structural problem with the John Major privatisation was (and remains) its Thatcherite character - the belief that you can extract a profit from everything, and that there is no requirement for government to provide an overall strategy (thereby resolving the inherent conflict between the two).

 

This leads directly to the NEXT characteristic of Thatcherite thinking, that the primary purpose of management is to maximise short-term shareholder returns, among other things by asset-stripping. Investment, in this world-view, is a crime against shareholders, whose interests are both paramount, and entirely divorced from the operational business.

 

But Mrs. Thatcher, and Ronald Rayguns, were both disciples of Friedrich Hayek and Milton Friedman, no? The ideas they espoused definitely weren't theirs. 

[lmsforever]

It seems we will be talking about another franchise problem soon,Wales  there are real government toppling problems on the way this will make the ECML small fry.

[Ron Ron Ron]

Don't think so, it would have ceased in March 2019. I have the DfT's Rail Franchise Schedule on my desk (always!), and the December 2016 issue already showed the 2019 end date.  This extension is for a further year to March 2020.

 

 

Thanks for that.

I got the March 2018 date from Stagecoach Group's own website.

 

Regards

Ron

 

 

.

[D854_Tiger]

It seems we will be talking about another franchise problem soon,Wales  there are real government toppling problems on the way this will make the ECML small fry.

 

Yes but which government will be toppling.

 

I'm guessing our government will extract maximum mileage blaming that other party, what runs the other government, and for whom the railways have been elevated to become one of their key cornerstone polices.

 

Like they did, so successfully, over the plight of NHS Wales that had you suspecting they might even have played a part in engineering it.

[The Stationmaster]

A serious, structural problem with the John Major privatisation was (and remains) its Thatcherite character - the belief that you can extract a profit from everything, and that there is no requirement for government to provide an overall strategy (thereby resolving the inherent conflict between the two).

 

This leads directly to the NEXT characteristic of Thatcherite thinking, that the primary purpose of management is to maximise short-term shareholder returns, among other things by asset-stripping. Investment, in this world-view, is a crime against shareholders, whose interests are both paramount, and entirely divorced from the operational business.

 

This has the great attraction, for a political class with little or no experience of actually managing productive businesses, and no commitment to anything outside their own interests, of creating the belief that they “know how it works”.

 

Hence the unrealistically short franchise periods, compared to the service lives of the required asset base.

 

However that is not correct as a hypothesis for the basis of UK rail privatisation.  It was seen by its inventors and proponents as offering a number of things -

 

1. (the good old mantra) that being private it would be more efficient than a nationalised industry - that of course is debatable.

2. The Treasury (or to be more correct some of those from there who were involved in the detail) saw it as partly a way of saving money going into rail but far more importantly a way of channeling rail infrastructure investment more effectively BUT they accepted that initially, and probably for a decade or more it would actually cost more than BR.  They certainly didn't see it as a major way of raising money through the sale of franchises.

3. It was seen very much as a way of improving the efficiency of engineering work and reducing its cost by bringing in experienced civil engineering contractors and this was one of the most important parts in teh view of those involved.

4. There was no particular idea of short term franchises or indeed of 'giving profits to private enterprise'. the only ideas they had was making sure that Branson got something, anything, because he was seen as an incredible entrepreneur and that Sherwood was kept out - seems they were off the mark on both points.

5. The track authority was seen as a better way of funding infrastructure with a more clearly identified cost base and funding channelled via the franchised operators paying access fees.

 

So in reality the real ideas, apart from Major actually wanting to privatise something so that he could claim Maggie's heritage, was rather different from the perception of many people.  And what those actually involved in working out how it would be done were coming up with ideas and proposals which were even further removed from 'Daily Mail' or 'Daily Worker' headlines.  how do I know - I ran table top exercises with many of those who were actually doing the detail work, from the Franchising Director designate through to Treeasury staff and their advisors. 

 

Where did it go wrong?

A. Flogging off the track authority to a bunch of sharks who sucked out all the money intended in the model to go on infrastructure upgrading and maintenance.

B. Not getting the desired results on engineering work efficiency,  and

C. Subsequent political interference with the original Regulator and Franchising Director structure plus the length of franchises.