National Rail Shakeup

[Kevo00]

I don't understand why accrual would help anything, or why amortisation is even relevant. The point is that no-one ever seems to ask the question 'what are the railways actually for'? We do not expect the motorways and roads to make a profit. They may do through tax, but those are general duties, not linked to the specific provision and maintenance of roads. As a society we expect to see the economic benefits of roads through their positive externalities, i.e in the 'real' economy. We generally under-estimate the negative externalities of roads, climate change, air quality, obesity, child health, noise etc etc. The railways seem to be expected to deliver these wider economic benefits and increasingly cover their costs.

Not that I'm arguing against proper accounting, or cost control. Which should happen, but transport policy is always political whether its plastic privatisation or not, and like housing, doesn't follow normal economic rules.

Railways inherently require organisation, as well as more careful planning than roads as they cannot easily traverse slopes. Building a railway also requires an investment in the stock to run on it. Similarly investment in already existing railways is not cheap. Amortisation (and depreciation of tangible assets) is relevant because most of the benefits of rail travel are long run, not short run - probably the railway builders of the nineteenth century would be amazed that we are still using the routes they built, based often on the original supporting infrastructure. This conflicts with the politician's view of the world; that everything must bring a return before the next election, or even the Whitehall 12 month planning cycle view. Railway managers should be left to run railways for the long run - as we have seen, politicians meddle and put in place disruptive re-organisations, while avoiding investment. Politicians also prefer 'big bang' projects like HS2 to incremental projects like capacity improvement on commuter routes, yet incremental projects usually benefit more of society. Of course there can never be no political involvement in running the railways - but the industry would be much better at matching capacity to demand if allowed to manage resources for itself, and allowed to pursue long run objectives.

[teccuk]

OK Kev. Cards on the table. What set-up do you think would work?

I'll admit to not really knowing. Out and out nationalisation into a monolithic monopoly doesn't seem like the best way forward. But then the profit motive needs removing, its irrelevant.

I'd go for 6-7 not for profit, publicly owned (or co-ops), big groups. Vertical integration of track and trains, regional pay negotiations, and controlled by local council's and Local Enterprise Partnerships and with the involvement of unions. Call me a hippy you want. Credit comes from the railways own pension funds, DfT capital investment, councils. Having a number of groups would highlight those groups that were inefficient or wasteful. Proper remuneration of management and staff would motivate efficiency. The lawyers, ROSCOs, and armies of loss adjusters would be shot at dawn (J/K!!!).

[orudge]

controlled by local council's

Eww. At least as far as roads are concerned, local councils tend to vary between "adequate" and "atrocious" when it comes to actually maintaining the road network to a standard fit for purpose (and no, building millions of speed bumps doesn't count for that!). Edinburgh Council is also the reason the trams have been such a fiasco; they just don't have the experience managing projects such as that. I somehow can't see that having a local council run a railway company would in any way be successful!

[teccuk]

Yeah you're probably right. But at least they are democratic institutions with a public service ethos. I'm thinking counties and unitary not district of course.

[61653]

I believe reverting to the 'British Rail(ways)' of old would probably contravene some sort of European law- at the very least there's a requirement for competition to be at least possible. Most EU member states have some degree of private sector involvement. Britain was one of the first to privatise the railways afaik, and the Major government messed it up big-time. I'm ideologically in favour of public ownership of infrastructure but if we are to accept that the private sector has a role to play, the Dutch or German models seem to not have the same pitfalls as the current situation in Britain: DB and NS have remained as both the infrastructure owners and as the principal operators, albeit with private operators winning contracts for some services. This model clearly doesn't frighten off the private sector, because the private operators in Germany and in Denmark include Keolis and Arriva (and did so prior to DB's takeover): the same companies that currently operate several of the British franchises. Clearly this model has also allowed the formerly state-owned companies to gain the strength to expand into other markets/countries, with both DB-Regio and NS/Abellio being the obvious examples. I remember flying from Dusseldorf to Munich on a 737 that was branded 'Deutsche BA' (guess what the BA stood for...), so just think- if the Tories had held fire and actually done a bit of research, commisioned reports etc, there could have been BR blue locomotives hauling freight across Germany to match the DB red ones over here!

[orudge]

I'm thinking counties and unitary not district of course.

Silly England with all their confusing levels of local government.

[Kevo00]

OK Kev. Cards on the table. What set-up do you think would work?

I'll admit to not really knowing. Out and out nationalisation into a monolithic monopoly doesn't seem like the best way forward. But then the profit motive needs removing, its irrelevant.

I'd go for 6-7 not for profit, publicly owned (or co-ops), big groups. Vertical integration of track and trains, regional pay negotiations, and controlled by local council's and Local Enterprise Partnerships and with the involvement of unions. Call me a hippy you want. Credit comes from the railways own pension funds, DfT capital investment, councils. Having a number of groups would highlight those groups that were inefficient or wasteful. Proper remuneration of management and staff would motivate efficiency. The lawyers, ROSCOs, and armies of loss adjusters would be shot at dawn (J/K!!!).

I disagree that the profit motive is inherently wrong, but I agree that short term incentives are a major problem. After all, we forget that the profit motive did pretty well at getting the railways built in the first place. Reinvestment of profit is also a very efficient form of finance - the present problem is that there is no incentive to reinvest profits made in the system.

I'd argue for 6-7 vertically integrated private firms or co-ops on 50 year leases of the system from the government from the government. I'd argue for keeping the present structure for freight, however (although the VI firms could compete on freight too). To avoid the short termism promoted by stock markets always looking for growth, equity to be held by employees, management and other stakeholders (season ticket holders to have first refusal; if not, the general public) and not publicly traded. Debt capital to be raised via lending markets, via 30-50 year debentures, perhaps with some DfT investment and council involvement. Public subsidy to be continued in some areas, but cross subsidy of socially desirable services could be promoted by corporation tax rebate, and local councils can play their part by sponsoring rail partnerships. Good management to be rewarded by substantial dividends further down the line - and perhaps the eventual sale of your stake upon retirement! Long term incentives to act as a carrot for good quality management.

I would avoid going too far down the council ownership route, because in many continental countries transfer of funding for local rail to local government has simply resulted in the introduction of buses to replace trains!

[oleinves]

sidetracking a bit,
found some old br and nse problem videos broadcasted by bbc back in the early 90s

BR documentary part 1/3
NSE inside story part 1

seems like these days everyone should be happier (though higher fares) about more on-time running

also, i prefer the government to hold the privatised railways as it is (though with better network rail management) but they should also look at the finances bit to avoid excessive subsidising etc.
unions should be kept away from anymore strikes about pay, they're also costing our economy money

[61653]

sidetracking a bit,
found some old br and nse problem videos broadcasted by bbc back in the early 90s

BR documentary part 1/3
NSE inside story part 1

seems like these days everyone should be happier (though higher fares) about more on-time running

also, i prefer the government to hold the privatised railways as it is (though with better network rail management) but they should also look at the finances bit to avoid excessive subsidising etc.
unions should be kept away from anymore strikes about pay, they're also costing our economy money

Gotta laugh at some of the statements in this documentary
"It'll be up to 5 years before newer, faster trains are running into Fenchurch Street": It was closer to 10 years!

"Crossrail, linking Liverpool Street and Paddington, won't be open until the mid-to late 90s": erm...

Also, that 'Networker' launch was a bit dated even for the early 90s. BR did some brilliant things when they were given the opportunity and resources, but my, they weren't half facepalm!

EDIT: Of interest also is Chris Green, a railwayman I've A LOT of time and respect for, claiming (spuriously I assume) that all NSE trains have been fitted with "black-boxes". I was under the impression that this was done far more recently- certainly it's only become mandatory in the last 5-6 years or so.

[Geo Ghost]

I remember watching the NSE documentary a while back. It's really an eye-opener to how badly things needed improving. Like a few people said, they weren't getting nearly enough funding to improve everything and the infrastructure. Almost like the government wanted NSE to fail in some respect.
Though on the other side of the coin, it's obvious there was some work being done to improve the railway but not nearly enough. As time went on, the services did improve! Even I remember what NSE and such was like when I was younger going around London and I know it wasn't as bad as things were on the NSE documentary. Not nearly in fact. Yes, things weren't perfect but comparing the two, there was a steady improvement over time.

I still strongly believe that the railways should never have been privatised. That was never the answer and just caused even more problems for the first few years - very costly ones.

One thing that REALLY annoys me about the documentary though is where some guy get's all pissy at the film crew and swipes at the mic and boom. I actually want to hit people who do that!

[Kevo00]

Anyone who thinks the old days were better should watch the Inside Story documentary. Great investigative filmmaking - compare that with the positive spin of today's 'The Tube'. One external factor has changed for the better since then, however - the IRA ceasefire in 1994 has meant fewer security threats.

Yes it is clear that the railways were slowly getting better - but it should never have been allowed to get that bad in the first place - and remember that at this time BR had just spent lots of money shaving three minutes off the journey time to York.

[61653]

One thing that REALLY annoys me about the documentary though is where some guy get's all pissy at the film crew and swipes at the mic and boom. I actually want to hit people who do that!

That guy annoyed me, too- But he's quite possibly dead now anyway...

[orudge]

What should then happen is that taxpayer support should (legaly) consist of 60-75% of the DFT budget, this company should take cntrol of the roads and introduce road charging (fully under their control), the road tax revenue would be used as a government subsidy for the roads.

Motorists already pay far, far more in the way of fuel duty and VED than gets spent on transport (or indeed roads). The government doesn't ring-fence budgets - if they did, we should have the best road network in the world!

Road charging would not go down well and is not generally a practical solution - as I say, motorists already pay more than just about anyone else in the world through fuel taxes.

[Geo Ghost]

I think what should happen is that all the TOCs, FOCs and ROSCOs should be taken over by Network Rail, then they will be renamed ti let say "Brit Rail"

But Network Rail is an infrastructure company - not an train operating company

[JamieLei]

then they will be renamed ti let say "Brit Rail"

Nah - they can't do that. BritRail is already something.

And it won't get your Pendolinos on your all stations to Peterborough either.

You want a return to the days of British Rail? Take a time machine, travel back to the 1970s and see how crappy the network was then.

[61653]

British Rail had it's good points (mainly that you knew it was genuinely incompetent rather than profiteering)... but it was always underfunded by successive governments, particularly during the 80s: that's why the wires on the ECML come down at the slightest hint of a breeze; and why we have Pacers!

[John]

British Rail had it's good points

Wasn't there a widespread belief at British Rail that it would all be fine if it weren't for those damn passengers?

[61653]

British Rail had it's good points

Wasn't there a widespread belief at British Rail that it would all be fine if it weren't for those damn passengers?

Maybe, but I've heard NHS workers joke about how everything would run smoothly if it weren't for the patients getting in the way- I'm sure A LOT of that is the gallows humour of the stressed workplace...

[Kevo00]

British Rail had it's good points

Wasn't there a widespread belief at British Rail that it would all be fine if it weren't for those damn passengers?

Maybe, but I've heard NHS workers joke about how everything would run smoothly if it weren't for the patients getting in the way- I'm sure A LOT of that is the gallows humour of the stressed workplace...

I guess it's classic Whitehall/Yes Minister style humour (isn't there an episode about a 'hospital' full of administrators?).

@Alan Fry. You do realise this company would end up rather road dominated, don't you? And a lack of commercial incentives would mean costs would simply balloon out of control - NR's cost structure is already notoriously out of touch with reality. As John Kay once said, 'the greatest of monopoly profits is a quiet life'.

Ultimately the issue is not increasing resources (i.e. money) for transport but how effectively those resources are used; you will only get results by giving people the incentive to allocate them efficiently. And I don't see the point of a forced wealth transfer from road to rail when 75% of journeys, for both passengers and frieght are already perfectly well served by road.

[JamieLei]

frankly I do not care about commercial incentives (in the transport sector)

Perhaps that's why no one takes you seriously?