ukclique > railway

losborne74 (14.07.2017, 12:53)
Thinking about the very populist policy of rail renationalisation, I can't help but feel that those on the left have missed a very serious issue that makes it expensive and difficult to do, at least entirely.

Whilst migrating franchises back to public sector operation as they expire looks reasonably easy, what on earth is meant to happen with the rolling stock leasing companies? The amount of money that's floating about in this sector is astronomical, and the financial deals they have must be ridiculously complex. Presumably most new builds of stock are purchased from builders with long-term finance deals that result in them being paid for over their expected life-cycle, with repayments coming from leasing charges etc. I'm not entirely sure how it works, but the ROSCOs own assets that are worth billions in leasing charges over their projected lifecycles, and how on earth can you renationalise something that's worth so much money? It seems prohibitively expensive, so until a new way of acquiring rolling stock can be devised, all existing stock will probably have to remain under private sector ownership until it ends up being withdrawn, which in some cases could be many decades away.

Has anyone actually worked this one out, or costed it up? I doubt it.
Stephen Allcroft (14.07.2017, 13:28)
It was not in the Labour Party Manifesto and I have not heard of anybody actually suggesting it.
Graeme Wall (14.07.2017, 13:30)
On 14/07/2017 12:28, Stephen Allcroft wrote:
> It was not in the Labour Party Manifesto and I have not heard of anybody actually suggesting it.


You've not hear Mick Cash or Jeremy Corbyn on the subject lately then?
Recliner (14.07.2017, 13:37)
Graeme Wall <rail> wrote:
> On 14/07/2017 12:28, Stephen Allcroft wrote:
>> It was not in the Labour Party Manifesto and I have not heard of anybody
>> actually suggesting it.

> You've not hear Mick Cash or Jeremy Corbyn on the subject lately then?


No, they've only poposed to take over franchises as they expire. They've
not suggested nationalising the ROSCOs. They've also not suggested
nationalising any part of the freight business, nor the train builders. So
they're not proposing to recreate BR.
Recliner (14.07.2017, 13:38)
<losborne74> wrote:
[..]
> will probably have to remain under private sector ownership until it ends
> up being withdrawn, which in some cases could be many decades away.
> Has anyone actually worked this one out, or costed it up? I doubt it.


No need to, as they don't propose to nationalise the ROSCOs.
R. Mark Clayton (14.07.2017, 13:44)
On Friday, 14 July 2017 12:30:51 UTC+1, Graeme Wall wrote:
> On 14/07/2017 12:28, Stephen Allcroft wrote:
> > It was not in the Labour Party Manifesto and I have not heard of anybody actually suggesting it.

> You've not hear Mick Cash or Jeremy Corbyn on the subject lately then?


Indeed, but rolling stock could be towed off through the channel tunnel out of jurisdiction!

BTW I noticed that Jeremy "Caracas" Corbyn managed to find his seat on Eurostar!
Graeme Wall (14.07.2017, 13:45)
On 14/07/2017 12:37, Recliner wrote:
> Graeme Wall <rail> wrote:
> No, they've only poposed to take over franchises as they expire. They've
> not suggested nationalising the ROSCOs. They've also not suggested
> nationalising any part of the freight business, nor the train builders. So
> they're not proposing to recreate BR.


Cash wants full renationalisation, I assume that would include the
ROSCOs. I doubt whether Corbyn has thought it through that far, he may
not realise the TOCs don't own the trains.
NY (14.07.2017, 14:06)
<losborne74> wrote in message
news:6038
[..]
> have to remain under private sector ownership until it ends up being
> withdrawn, which in some cases could be many decades away.
> Has anyone actually worked this one out, or costed it up? I doubt it.


More to the point, has anyone worked out the relative cost of a complex
relationship of many companies all doing business with each other (and
making a margin on each transaction) compared with having one big company
that is one big profit centre and so mostly does business with itself and
works at-cost.

When everyone was moaning about privatisation of the rail industry in the
1990s, my concern was not whether British Rail was in pubic or private hands
but whether it was one big company or lots of smaller companies, with the
extra costs that a lots-of-companies structure has. Also because it allows
for wasteful demarcation disputes and problems of responsibility that get
forgotten about because neither side can agree who is responsible - which
was thought to be one of the issues at the Potters Bar crash: was it
Railtrack or the private contractor that should have inspected and tested?

And why do I care? Be cause it's *my* train fares that pay for this
inefficient structure!
losborne74 (14.07.2017, 14:19)
On Friday, 14 July 2017 13:06:19 UTC+1, NY wrote:

> When everyone was moaning about privatisation of the rail industry in the
> 1990s, my concern was not whether British Rail was in pubic or private hands
> but whether it was one big company or lots of smaller companies, with the
> extra costs that a lots-of-companies structure has. Also because it allows
> for wasteful demarcation disputes and problems of responsibility that get
> forgotten about because neither side can agree who is responsible - which
> was thought to be one of the issues at the Potters Bar crash: was it
> Railtrack or the private contractor that should have inspected and tested?
> And why do I care? Be cause it's *my* train fares that pay for this
> inefficient structure!


Yeah, this is something that struck me immediately as soon as the model that Major went for became clear. There were now so many different organisations involved that all had to make a profit, that there would be loads of money inefficiently sloshing about in the system. It takes a huge amount of effort to keep it all going and it's hardly the model of efficiency.

Even if you did return franchises to public ownership, you'd need to do much more than that to start re-integrating everything, hence I question whether it's worth even bothering. The current setup is far from ideal, but at least it has now settled down and generally works (with a few notable exceptions). Given that safety is now better than ever, and that working arrangements between different parties are now pretty good, I question whether another major upheaval is what the railway needs.

I do think we have a successful railway in *spite* of privatisation rather than because of it, and I do think fewer franchises would be a wise idea, but I'm not too fussed on who owns what, as long as they're competent.
rob499 (14.07.2017, 14:35)
On Friday, 14 July 2017 12:45:10 UTC+1, Graeme Wall wrote:
> On 14/07/2017 12:37, Recliner wrote:
> Cash wants full renationalisation, I assume that would include the
> ROSCOs. I doubt whether Corbyn has thought it through that far, he may
> not realise the TOCs don't own the trains.
> --
> Graeme Wall
> This account not read.


I would be most surprised if the Labour Party didn't understand the ownership of the rolling stock, they were in power for a substantial period after the Major government set up the existing structure.

I agree that the cost of nationalising rolling stock ownership is prohibitive. Not only would the owners want a pretty good price for selling their assets, they would also be looking for compensation for lost profits. Much ofthis stock is now being leased on long term maintenance deals, so it's notjust capital costs that need to be considered.

The ROSCOs don't just own the rolling stock, they're responsible for periodic maintenance and a number of safety-related roles. These functions would also need to find new homes if the rolling stock was to be nationalised.

Any incoming Labour government would have to look at what they could affordat a time when international pressure will be to bring the public accountscloser to a balance and prioritise accordingly. One of the great attractions of bringing the TOCs into public ownership is that it's essentially free.. Money for spending on the railways is always going to be in competition with that financial black hole, the NHS (black hole because it sucks matter in from surrounding space!), plugging the pot hole that's just ripped a wheel off your car and benefits for the disadvantaged.

Rob.
Recliner (14.07.2017, 14:46)
On Fri, 14 Jul 2017 05:19:01 -0700 (PDT), losborne74 wrote:

>On Friday, 14 July 2017 13:06:19 UTC+1, NY wrote:
>Yeah, this is something that struck me immediately as soon as the model that Major went for became clear. There were now so many different organisations involved that all had to make a profit, that there would be loads of money inefficiently sloshing about in the system. It takes a huge amount of effort to keep it all going and it's hardly the model of efficiency.
>Even if you did return franchises to public ownership, you'd need to do much more than that to start re-integrating everything, hence I question whether it's worth even bothering. The current setup is far from ideal, but at least it has now settled down and generally works (with a few notable exceptions). Given that safety is now better than ever, and that working arrangements between different parties are now pretty good, I question whether another major upheaval is what the railway needs.
>I do think we have a successful railway in *spite* of privatisation rather than because of it, and I do think fewer franchises would be a wise idea, but I'm not too fussed on who owns what, as long as they're competent.


Larger franchises may sound like a good idea, but all the evidence is
that smaller, simpler TOCs actually work much better.

The fragmented railway does cost more to operate, but the private TOCs
have almost certainly grown the business faster than a nationalised
railway would have done. Once the early TOCs realised that there
wasn't much opportunity to cut costs (to improve profits) while still
operating their committed services, they became adept at growing
revenue instead.

BR was good at cost control, but presided over long-term decline; the
private TOCs don't have much opportunity to cut costs, as most aren't
under their control. It's NR that spends the big sums, and is also by
far the most wasteful part of the railway. The best way to make
British railways work better would be to find a way of privatising NR
that didn't resemble Railtrack, which was set up primarily as a
property business. The new integrated East West Rail may find such an
opportunity.
Robert (14.07.2017, 15:43)
On 2017-07-14 12:35:46 +0000, rob499 said:

> On Friday, 14 July 2017 12:45:10 UTC+1, Graeme Wall wrote:
> I would be most surprised if the Labour Party didn't understand the
> ownership of the rolling stock, they were in power for a substantial
> period after the Major government set up the existing structure.


I'm not sure that many of the current leaders of the Labour Party were
around then - apart from the Jeremy - and if they were they were not in
positions of influence.

It's called 'loss of corporate memory'... :-)
[..]
> plugging the pot hole that's just ripped a wheel off your car and
> benefits for the disadvantaged.
> Rob.


I agree with all the rest!
Robert (14.07.2017, 15:57)
On 2017-07-14 12:06:20 +0000, NY said:

[..]
> should have inspected and tested?
> And why do I care? Be cause it's *my* train fares that pay for this
> inefficient structure!


It has been repeatedly shown that large monolithic nationalised
industries frequently have the wrong incentives placed before them by
their owners and as a result tend to ossify and lose market share. BR
is a classic example - it was asked to run railways at minimum cost. As
a result it lost market share for passengers and freight both
relatively and absolutely over the period of its existence. It only
started to become commercially succesful when it started to behave like
a commercial company and split itself up into the 'sectors' and then
set up profit centres within these sectors.

In other words it did exactly what you are complaining about.

(And the Potters Bar crash was not so much to do with inspection and
testing - the rail was scheduled for replacement - but the contractor
getting access to the tracks to do the work.).
Roland Perry (14.07.2017, 16:20)
In message <5ef3cb79-15bd-4a0c-97f7-1840a3566038>, at
03:53:07 on Fri, 14 Jul 2017, losborne74 remarked:

>Thinking about the very populist policy of rail renationalisation, I
>can't help but feel that those on the left have missed a very serious
>issue that makes it expensive and difficult to do, at least entirely.


You've fallen for the spin that delivering re-nationalisation of the
railways is the Labour Party's objective here. Rather than getting
elected.
Roland Perry (14.07.2017, 16:23)
In message <uoydnZW7CYYlLvXEnZ2dnUU78L3NnZ2d>, at
13:06:20 on Fri, 14 Jul 2017, NY <me> remarked:
>More to the point, has anyone worked out the relative cost of a complex
>relationship of many companies all doing business with each other (and
>making a margin on each transaction) compared with having one big
>company that is one big profit centre and so mostly does business with
>itself and works at-cost.


The entire cost of the TOCs doing their admin is a drop in the ocean
compared to wages of the operational staff, leasing and track access
charges. And the TOCs run virtually at-cost anyway: 2.5% margin at the
last reckoning.

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