Railways

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El Pollo Diablo
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Railways

Post by El Pollo Diablo » Mon Sep 14, 2020 10:47 am

Rumour this morning that Shapps is going to announce the permanent nationalisation of train operators this week.

Apparently the Williams report - commissioned with the instruction from Grayling that it was not, under any circumstances, to say that nationalisation was a good idea - is being rewritten as we speak to say that nationalisation is a good idea
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Re: Railways

Post by Bird on a Fire » Mon Sep 14, 2020 11:23 am

That's interesting (and, to be honest, pretty surprising if true - pandemic testing has to be done by the private sector, of course, but let's renationalise transportation :| ).

Obviously the devil will be in the details, but what do you think? From what I've read over the years (mostly from you, so I apologise if this is totally garbled!), one issue with TOCs is getting things done quickly, for instance forcing them to add wifi to trains had to wait until contract renewal. Plus there's a lot of expense because NR has to pay the TOCs whenever doing works affects services, and presumably there's a lot of works coming up (electrification, signalling, and a huge load of climate adaptation on the horizon).

It might also help that a higher proportion of public money will be going into service provision rather than to shareholders (who are often overseas, and in general I expect don't often use cattle-class commuter services).

In general it should simplify the chain-of-command and messaging: public transport is a public service run with public subsidy, and therefore it's under direct democratic control via the government. I think that's an important angle as the UK tries to decarbonise the economy.
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Re: Railways

Post by science_fox » Mon Sep 14, 2020 11:25 am

Is this a good thing or bad thing? Does it mean more money, or less, or better or worse efficiency of spending what money there is? preventing trainfare being hived off as profits to companies not paying ukl tax is probably a good thing, but I'm not sure lined Tory-chums' backpockets is any better (if that's what's happening).

In general, I'm not in favour of castigating governments that listen to the evidence and change policy accordingly (U-turn if you want to), but arbitary swings in policy for fads are perhaps less worthy of protecting.

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Re: Railways

Post by El Pollo Diablo » Mon Sep 14, 2020 11:28 am

I mean, I'll believe it when I see it, frankly, but if the Tories are doing it, that's (a) ruddy suspicious and (b) something they'll probably balls up no end, because of who is doing it.

As you say, the devil will be in the details. I do support renationalisation for lots of reasons but acknowledge some of its drawbacks. What this might well not mean is reintegration - one railway company to rule them all is unlikely at this stage, I'd say. I don't expect Network Rail to start running trains, becoming British Rail 2.0.

So yeah. I dunno. Shareholders aren't a large outlay for TOCs at the moment, to be honest, so there's not a huge amount gained there, but the savings on contractual issues should be good. Certainly not having expensive franchise bidding processes will help.

Hmm.
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Re: Railways

Post by El Pollo Diablo » Mon Sep 14, 2020 11:31 am

science_fox wrote:
Mon Sep 14, 2020 11:25 am
Is this a good thing or bad thing? Does it mean more money, or less, or better or worse efficiency of spending what money there is? preventing trainfare being hived off as profits to companies not paying ukl tax is probably a good thing, but I'm not sure lined Tory-chums' backpockets is any better (if that's what's happening).

In general, I'm not in favour of castigating governments that listen to the evidence and change policy accordingly (U-turn if you want to), but arbitary swings in policy for fads are perhaps less worthy of protecting.
It remains to be seen whether it's good or bad, at this stage. If everything becomes renationalised then no one's back pockets are getting lined. It doesn't necessarily mean more money or less either - history shows us that Tory governments often get bored of such dull escapades as sufficiently funding critical national infrastructure, but the money has been rolling into Network Rail in the last ten years, so maybe not. Long term, though, that's more of a risk. But then again, the bulk of the railway's money comes from passengers now, rather than government subsidy.
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Re: Railways

Post by jimbob » Mon Sep 14, 2020 11:34 am

Bird on a Fire wrote:
Mon Sep 14, 2020 11:23 am
That's interesting (and, to be honest, pretty surprising if true - pandemic testing has to be done by the private sector, of course, but let's renationalise transportation :| ).

Obviously the devil will be in the details, but what do you think? From what I've read over the years (mostly from you, so I apologise if this is totally garbled!), one issue with TOCs is getting things done quickly, for instance forcing them to add wifi to trains had to wait until contract renewal. Plus there's a lot of expense because NR has to pay the TOCs whenever doing works affects services, and presumably there's a lot of works coming up (electrification, signalling, and a huge load of climate adaptation on the horizon).

It might also help that a higher proportion of public money will be going into service provision rather than to shareholders (who are often overseas, and in general I expect don't often use cattle-class commuter services).

In general it should simplify the chain-of-command and messaging: public transport is a public service run with public subsidy, and therefore it's under direct democratic control via the government. I think that's an important angle as the UK tries to decarbonise the economy.
It makes sense if you realise that Johnson is not a conservative. He's a populist. It'd be a shiny distraction as well
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Re: Railways

Post by Bird on a Fire » Mon Sep 14, 2020 11:44 am

He does seem to have a somewhat sincere (or at least sustained) interest in public transport - e.g. the Boris bikes and no-more-bendy-buses when he was the Mayor of London.

I'm not sure I quite buy that it's all his idea though - Cummings must be on board* too, for instance.
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Re: Railways

Post by El Pollo Diablo » Mon Sep 14, 2020 12:12 pm

I think it's honestly just not possible to do anything else. They've literally run out of road. Track. I mean track.
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Re: Railways

Post by Bird on a Fire » Mon Sep 14, 2020 12:21 pm

The more living abroad I've done, the more I've realised how unusual the UK's model of privatisation is. Railways are so close to a natural monopoly that trying to have multiple different competing service providers seems pretty daft even if you accept the necessity of privatising train operations in general.

The commonest model seems to be a single company, generally wholly or majority owned by the government, which would seem to remove a lot of the specific problems in the UK system.

The train service is pretty good in the UK, though. Lots of trains all day, lots of stations, mostly basically on time. OTOH they're pretty expensive and can be crowded. So I hope that whatever comes next manages to keep all the good points, while smoothing over the difficulties that must be at least equally annoying to the people running the trains as to the people sitting on them ;)
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Re: Railways

Post by Aitch » Mon Sep 14, 2020 12:37 pm

There's an interesting suggestion, which I think I basically agree with, in the current issue of Rail...
Barry Doe wrote: I feel that the only way forward is to get the running of our railways back into the hands of first-rate managers who can take total control, who don't have to seek the permission of the DfT for anything other than obtain a general remit and Treasury budget, and who are then left to get on with it.
Doubt it'll happen - where will we get 'first-rate managers' from?

This Twitter thread from the same issue is mildly amusing, if you're a bit of a spotter...
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Re: Railways

Post by El Pollo Diablo » Mon Sep 14, 2020 12:42 pm

Aitch wrote:
Mon Sep 14, 2020 12:37 pm
There's an interesting suggestion, which I think I basically agree with, in the current issue of Rail...
Barry Doe wrote: I feel that the only way forward is to get the running of our railways back into the hands of first-rate managers who can take total control, who don't have to seek the permission of the DfT for anything other than obtain a general remit and Treasury budget, and who are then left to get on with it.
Doubt it'll happen - where will we get 'first-rate managers' from?
People always say that, but (a) it isn't going to happen, fo sho, (b) said managers are more likely to be brown-nosing empire-builders than talented, (c) there'll be an inevitable reorganisation after four years and (d) it relies on the treasury to be kind open-hearted fellows, and that isn't going to happen either.
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Re: Railways

Post by El Pollo Diablo » Mon Sep 14, 2020 12:42 pm

Not that I'm cynical or anything.
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Re: Railways

Post by Bird on a Fire » Mon Sep 14, 2020 12:49 pm

El Pollo Diablo wrote:
Mon Sep 14, 2020 11:28 am
I mean, I'll believe it when I see it, frankly, but if the Tories are doing it, that's (a) ruddy suspicious and (b) something they'll probably balls up no end, because of who is doing it.

As you say, the devil will be in the details. I do support renationalisation for lots of reasons but acknowledge some of its drawbacks. What this might well not mean is reintegration - one railway company to rule them all is unlikely at this stage, I'd say. I don't expect Network Rail to start running trains, becoming British Rail 2.0.

So yeah. I dunno. Shareholders aren't a large outlay for TOCs at the moment, to be honest, so there's not a huge amount gained there, but the savings on contractual issues should be good. Certainly not having expensive franchise bidding processes will help.

Hmm.
I somehow missed this before - thanks. I hadn't considered the distinction between reintegration and renationalisation, which seems important.
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Re: Railways

Post by Aitch » Mon Sep 14, 2020 3:35 pm

El Pollo Diablo wrote:
Mon Sep 14, 2020 12:42 pm
Aitch wrote:
Mon Sep 14, 2020 12:37 pm
There's an interesting suggestion, which I think I basically agree with, in the current issue of Rail...
Barry Doe wrote: I feel that the only way forward is to get the running of our railways back into the hands of first-rate managers who can take total control, who don't have to seek the permission of the DfT for anything other than obtain a general remit and Treasury budget, and who are then left to get on with it.
Doubt it'll happen - where will we get 'first-rate managers' from?
People always say that, but (a) it isn't going to happen, fo sho, (b) said managers are more likely to be brown-nosing empire-builders than talented, (c) there'll be an inevitable reorganisation after four years and (d) it relies on the treasury to be kind open-hearted fellows, and that isn't going to happen either.
Not to mention (e) The treasury will be staffed with people who know nothing about running a railway and so (f) will assume the budget estimates are a piss-take because we all know that if you know nothing about something it must be easy and cheap. Plus (g) The government (either colour) will hate giving up control and therefore (h) halfway through the budget period will cut the budget.
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Re: Railways

Post by nekomatic » Tue Sep 15, 2020 8:55 pm

Bird on a Fire wrote:
Mon Sep 14, 2020 11:23 am
It might also help that a higher proportion of public money will be going into service provision rather than to shareholders
Since he’s not here I feel obliged to channel bobrayner with the reminder that shareholders are people* who lend companies capital in return for dividends, so if you can’t raise the capital you need to buy or build stuff by issuing shares you have to borrow it and pay interest instead.

Which is not to say that one method may not be better than the other sometimes, usually or always, but it’s not as simple as shareholders just creaming off a load of money which would otherwise stay in the company to buy shinier trains with comfier seats and nattier moquette.

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Re: Railways

Post by El Pollo Diablo » Wed Sep 16, 2020 8:03 am

The shareholders don't really buy stuff unless they're absolutely forced to by the government, though. That's why that system doesn't really work.
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Re: Railways

Post by lpm » Wed Sep 16, 2020 8:42 am

nekomatic wrote:
Tue Sep 15, 2020 8:55 pm
Bird on a Fire wrote:
Mon Sep 14, 2020 11:23 am
It might also help that a higher proportion of public money will be going into service provision rather than to shareholders
Since he’s not here I feel obliged to channel bobrayner with the reminder that shareholders are people* who lend companies capital in return for dividends, so if you can’t raise the capital you need to buy or build stuff by issuing shares you have to borrow it and pay interest instead.
Cost of capital is cheaper for government/government entities than for private companies.

The govt 30-year borrowing rate is currently 0.77%. The Weighted Average Cost of Capital for a stable utility (Thames Water say) is around 8%.
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Re: Railways

Post by dyqik » Thu Sep 17, 2020 2:29 pm

Bird on a Fire wrote:
Mon Sep 14, 2020 12:21 pm
The commonest model seems to be a single company, generally wholly or majority owned by the government, which would seem to remove a lot of the specific problems in the UK system.
This is even the US model for passenger services, with Amtrak owned by the Federal government, and commuter rail systems owned by municipalities and tendered out to a single operator (Keolis for Boston's MBTA Commuter Rail).

Although the tracks they run on are owned by a set of different private and public entities - e.g. Pan-Am Freight owns and controls the commuter rail lines west of Boston, until you get closer in.

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Re: Railways

Post by Martin_B » Tue Sep 22, 2020 5:15 am

El Pollo Diablo wrote:
Mon Sep 14, 2020 11:28 am
I mean, I'll believe it when I see it, frankly, but if the Tories are doing it, that's (a) ruddy suspicious and (b) something they'll probably balls up no end, because of who is doing it.

As you say, the devil will be in the details. I do support renationalisation for lots of reasons but acknowledge some of its drawbacks. What this might well not mean is reintegration - one railway company to rule them all is unlikely at this stage, I'd say. I don't expect Network Rail to start running trains, becoming British Rail 2.0.

So yeah. I dunno. Shareholders aren't a large outlay for TOCs at the moment, to be honest, so there's not a huge amount gained there, but the savings on contractual issues should be good. Certainly not having expensive franchise bidding processes will help.

Hmm.
Is it that the TOCs are currently all owned by Boris's and Cummins's mates, and so they can buy them back by essentially giving their mates huge sums of money, which hopefully they will then shell reasonable proportions into Boris's and Cummins's pockets as consultancy fees when they get ousted?

Or are they playing a longer game, nationalising the railways and then in a few years time selling them off again to their mates (cheaply)?
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Re: Railways

Post by El Pollo Diablo » Tue Sep 22, 2020 6:26 am

So, the rumours turned out not to be true, ultimately. They aren't renationalising permanently, they're continuing the emergency phase and ending franchising. Franchising is being replaced with a concessions model. See here for details. This is currently in operation, I think, in a few areas such as London overground, where the TOC runs the trains but doesn't get any ticket revenue. It's a safe place to be, and easy, but doesn't offer much in the way of profit. (Q: so why bother doing it privately then?)

I could be wrong, but there doesn't seem to be much difference between the old way of doing things and the new one, at least from the perspective of passengers. Business-wise, again the details need to be seen. Franchising required a really heavy amount of forecasting, business planning and prediction of various factors, such as how much passenger numbers would grow and how much the rail infrastructure would cause delays. Getting any of these significantly wrong meant some TOCs got into trouble and had to stop early. The government would also direct the TOCs as to what investment they wanted to see - new trains, Wi-Fi, etc. Typically, they'd pay for it as well. The bidders would say what extra services they wanted to run as well.

Private sector investment in the railway was relatively minimal, despite what John Major's government thought in the 90s. So maybe this is more of a "sit down and shut up" model from the DfT? I don't know. Some guff there about getting closer to NR but again I'll believe that when I see it. "Putting Passengers First", from an NR perspective, has meant a f.cking godawful reorganisation that's gone on for two years, draining the morale of almost everyone who's come across it. Whether passengers finish first is another matter - there aren't many of them at the moment so it's hard to tell.

In terms of the Tories, the laughable thing is that they could've been accused back in the day of feeding money to their mates, but these days that's far from true simply because British ownership of TOCs has dropped to Arsenal levels of national representation. Arriva (DB - Chiltern, CrossCountry), Abellio (Dutch - Scotrail, East Midlands, Greater Anglia), Trenitalia (30% of Avanti, c2c), Keolis (French - 35% of Govia, 60% of TfW), Mitsui & Co (Japanese - 40% of Greater Anglia, 15% of West Mids), MTR (Hong Kong - 30% of South Western), Jr East (Japan, 15% of West Mids trains) all have involvement in running British trains.

British companies involved still are First Group (70% of Avanti, GWR, 70% of South Western, TransPennine), Serco (Caledonian Sleeper, 100%), Go-Ahead Group (65% of Govia, run Gatwick Express, Southern, Great Northern and Thameslink, plus Southeastern), and Amey (40% of TfW).

Obviously, a big British player there is FirstGroup, but stagecoach, national express, virgin and others have all exited the scene, whilst the government run the Northern and ECML franchises. The others are only partial involvement or small franchises. So there may be some lining of pockets but there isn't really much opportunity for it any more. Maybe that's why they're changing the model?
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