Breaking up network rail

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Discussion

saaby93

Original Poster:

32,038 posts

177 months

Tuesday 6th December 2016
quotequote all
It's in the news about allowing companies to run the trains and the track
http://www.bbc.co.uk/news/business-38201570

http://www.bbc.co.uk/news/business-38212467

How will that work when there are various train companies running trains over one piece of track - who will own it?

Isnt the present system working reasonably well? Certainly better than the days of Railtrack


Stedman

7,212 posts

191 months

Tuesday 6th December 2016
quotequote all
I think it will be a clusterfk

sidicks

25,218 posts

220 months

Tuesday 6th December 2016
quotequote all
saaby93 said:
It's in the news about allowing companies to run the trains and the track
http://www.bbc.co.uk/news/business-38201570

http://www.bbc.co.uk/news/business-38212467

How will that work when there are various train companies running trains over one piece of track - who will own it?

Isnt the present system working reasonably well? Certainly better than the days of Railtrack
I think the Unions are against it.

Which suggests the idea does have some merit...

Yertis

18,015 posts

265 months

Tuesday 6th December 2016
quotequote all
I'm sure railway people will be along in a bit to correct me, but the kind of vertical integration suggested seems to make a lot more sense than the present crazy scheme. Odd, though, that if followed through in general we'd end up with the same kind of fragmented system we had 100 years ago.

gooner1

10,223 posts

178 months

Tuesday 6th December 2016
quotequote all

Stedman said:
I think it will be a clusterfk
What makes you think the unions are against it

Yertis

18,015 posts

265 months

Tuesday 6th December 2016
quotequote all
The leader of the RMT was on R4 this morning railing against the proposals, usual arguments, whole lot should be renationalised etc.

djc206

12,240 posts

124 months

Tuesday 6th December 2016
quotequote all
Yertis said:
The leader of the RMT was on R4 this morning railing against the proposals, usual arguments, whole lot should be renationalised etc.
It's an interesting viewpoint wanting to be renationalised. I dare say that when the govt subsequently tried to enforce pay freezes or tiny rises and attacks on the pensions as it has with the rest of the public sector they'd cry murder, it's my understanding that currently they have it pretty good.

Podie

46,630 posts

274 months

Tuesday 6th December 2016
quotequote all
Railway investment appears to be cyclical. There is a major accident, and money gets plowed in to improving things. Then we have a period with no incident, and it's all about saving money... until the next accident.

legzr1

3,843 posts

138 months

Tuesday 6th December 2016
quotequote all
Podie said:
Railway investment appears to be cyclical. There is a major accident, and money gets plowed in to improving things. Then we have a period with no incident, and it's all about saving money... until the next accident.
Not far from the truth and there were very real reasons for Railtrack being disbanded and taken back under control.

The obvious 'experts' anti-anything Union will ignore/gloss over that naturally as £ > life.

gooner1

10,223 posts

178 months

Tuesday 6th December 2016
quotequote all
Yertis said:
The leader of the RMT was on R4 this morning railing against the proposals, usual arguments, whole lot should be renationalised etc.
Ah,missed that.

sparks85

332 posts

174 months

Tuesday 6th December 2016
quotequote all
Podie said:
Railway investment appears to be cyclical. There is a major accident, and money gets plowed in to improving things. Then we have a period with no incident, and it's all about saving money... until the next accident.
Investment and operating budgets for NR are set by the Government every 5 years (Control Period) and the amount invested has risen period on period since NR was formed out of Railtracks ashes.

The process of focusing on the end customer (the traveling passenger) has merit as the current arrangement is as follows. The rail industry is a very opaque and complex set up which the general public struggle to understand. Pay attention at the back!

NR owns, maintains and operates the infrastructure (track, power, signalling, civils etc) receiving funding from the Government in 5 year cycles as noted above. The amount of funding is a split of public money and revenue generated by NR through a number of sources such as leases, commercial income etc. Train companies (TOCs) operate a franchise to run trains on behalf of the Government - they receive ticket income plus a Government subsidy to ensure their income from the franchise does not fall beneath or tip over pre-agreed limits. The TOCs pay NR a track access charge to run a train path. If that train is delayed for reasons down to NR, such as signalling issues, overrunning engineering works etc, then NR has to pay the TOC compensation (Schedule 4) to a pre-agreed limit. This compensation varies from small per minute fees for a remote branch line to huge fees for main commuter lines. This compensation is theoretically intended to allow the TOC to compensate the travelling passengers (delay repay).

There is a variation on the franchise which is a concession - the TOC is paid a flat fee to run a certain service level and ticket revenues are retained by the Government. This is how the Southern arrangement currently operates.

TOC's paying for track access on independently owned infrastructure is necessary for a number of reasons. Railtrack failed due to the extremely high cost of maintaining, operating and investing in the infrastructure whilst desperately attempting to turn a profit. Corners were cut in order to turn a profit and that is what lead to the Potters Bar disaster. Any arrangement where safety must be maintained on such a huge scale whilst making profit for shareholders was doomed to failure. Keeping the assets and train services run separately also meets EU competition legislation, and ensures multiple TOC's can run paths over the same track - encouraging 'competition.' Sadly in practice this last point is extremely weak as opportunities to run competing services are virtually nil, so any TOC pretty much has a monopoly as passengers generally have no realistic alternative for travel.

What the latest developments are a hamfisted attempt at, is trying to remove the negotiation that goes on between the TOCs and NR for engineering access, which is a lengthy and costly process where both sides negotiate the amount of compensation the TOC's receive in exchange for letting NR undertake maintenance and upgrades to the infrastructure. By making the TOCs responsible, the Government is probably trying to simplify this process, reduce the compensation involved and improve the engineering access made available, which will supposedly manifest itself in better/smarter upkeep of the network and hence a more reliable train service.

However the elephant in the room is that in order for the TOC's to take on this responsibility, they will have to determine their exposure to the cost of maintaining and improving the network. This exposure will manifest itself in a request for huge amounts of funding from the Government to ensure that responsibility pays off. So the Government (and by rights the public) will pay the TOCs more than is already paid to NR, for the same level of infrastructure upkeep. Or the funding remains at the current level and less is spent on the upkeep because a proportion needs to be diverted to profits.

This is particularly important to understand - after decades (30+ years) of under investment the current infrastructure really is hanging on for dear life. Yes, there's new glamour projects like Crossrail, Thameslink etc but these are a drop in the ocean compared to the size of the rail network. The efforts over the past decade as funding has risen have kept the network running and safe (which is the primary objective) but only treading water. This is compounded by the fact passenger numbers have hugely risen so more and more is being asked of the same network. The amount of funding provided to NR might seem like a huge amount but its impossible to escape the fact that maintaining such a huge range of assets is incredibly expensive, and without the network in place the country would grind to a halt.


djc206

12,240 posts

124 months

Tuesday 6th December 2016
quotequote all
Interesting post Sparks thanks.

I have a couple of question though.

If I've understood correctly you say currently that when NR wants to let's say dig up a section of track and replace it that they basically go to the TOC's and say we want to do this and then negotiate compensation in theory to be fed back to the TOC's customers and provide rail replacement buses etc?

So if I've understood that correctly if TOC's become responsible for the assets they're running their trains on surely the govt is hoping that any engineering works are carried out in a more sympathetic manner to schedules but also in a more expeditious manner since drawing out any works or causing any major disruption would only hurt the TOC's pockets and profits. The compensation system would disappear although grants for works may well remain presumably.

Now anyone with an ounce of sense knows that this approach would obviously lead to a lack of long term investment much the same way as with 4-5 year parliamentary terms no long term projects ever get adequately funded and pushed through in the U.K. Why would TOC's bung a load of shareholders money in to something when they could well lose their contract in just a few years but there is a solid argument that the short term works would be carried in a more sympathetic to business and therefore commuters fashion no?

One would also imagine that by cutting out the middle man that is NR you could save money in the presumably drawn out negotiations process? Given that NR is handsomely subsidised even if only to a level that ensures the network is treading water surely that money if given straight to the TOC's would be more efficiently utilised since they have to turn a profit. Basically I'm asking in this paragraph in a drawn out fashion how much waste you think there is in NR? This includes how well paid and pensioned NR staff are versus the future contracting costs that the TOC's would pay. Is this a sneaky way of slashing pay and conditions for railway workers (who are according to many on this page well remunerated at present)?

Yipper

5,964 posts

89 months

Tuesday 6th December 2016
quotequote all
Network Rail currently has ~£42 billion of debt and headed for ~£50 billion by 2020. Some of its infrastructure is approaching 200 years-old. This new initiative looks like yet another layer of bureaucracy and faux-competition and is unlikely to make even the slightest dent in that giant debt mountain.

sparks85

332 posts

174 months

Wednesday 7th December 2016
quotequote all
What makes you think the TOC would get the engineering work completed any quicker? The TOCS earn more from compensation that they would by operating the rail service!

NR might not be as efficient as it could be, however its improved greatly in the past 5 years or so and there has been an unprecedented level of effort aimed at further improvement at all levels in the past two years or so. Basically as everyone belatedly realises how important the railways are. A private sector co might be more efficient overall but remember that effort is focused on turning a profit. NR can spend every single penny it makes or is given back on the railway.

Cutting our NR and funding the TOCs directly achieves very little, aside from channelling money to profits rather than where it needs to be spent.





djc206 said:
Interesting post Sparks thanks.

I have a couple of question though.

If I've understood correctly you say currently that when NR wants to let's say dig up a section of track and replace it that they basically go to the TOC's and say we want to do this and then negotiate compensation in theory to be fed back to the TOC's customers and provide rail replacement buses etc?

So if I've understood that correctly if TOC's become responsible for the assets they're running their trains on surely the govt is hoping that any engineering works are carried out in a more sympathetic manner to schedules but also in a more expeditious manner since drawing out any works or causing any major disruption would only hurt the TOC's pockets and profits. The compensation system would disappear although grants for works may well remain presumably.

Now anyone with an ounce of sense knows that this approach would obviously lead to a lack of long term investment much the same way as with 4-5 year parliamentary terms no long term projects ever get adequately funded and pushed through in the U.K. Why would TOC's bung a load of shareholders money in to something when they could well lose their contract in just a few years but there is a solid argument that the short term works would be carried in a more sympathetic to business and therefore commuters fashion no?

One would also imagine that by cutting out the middle man that is NR you could save money in the presumably drawn out negotiations process? Given that NR is handsomely subsidised even if only to a level that ensures the network is treading water surely that money if given straight to the TOC's would be more efficiently utilised since they have to turn a profit. Basically I'm asking in this paragraph in a drawn out fashion how much waste you think there is in NR? This includes how well paid and pensioned NR staff are versus the future contracting costs that the TOC's would pay. Is this a sneaky way of slashing pay and conditions for railway workers (who are according to many on this page well remunerated at present)?

djc206

12,240 posts

124 months

Wednesday 7th December 2016
quotequote all
Surely if the compo is greater than the revenue then when they no longer get compo they'd need to up the game to ensure they disrupt fewer services or they'd end up out of pocket? I'm not saying they would or even could because I don't know anything about the industry I'm just trying to rationalise the thinking behind this whole plan. I'm not supporting the idea btw just intrigued by it.

Rick101

6,959 posts

149 months

Wednesday 7th December 2016
quotequote all
Silly idea. If they want one person in charge, renationalise it.
Will end up being far more complex and expensive.
There is also a serious risk of safety being compromised for profit.

anonymous-user

53 months

Wednesday 7th December 2016
quotequote all
the railway and network is stuck in the past. there are so many jobs for life brigade it is embarrassing how behind the private sector is it.

network rail should be broken up, there are private companies that can do a better job for less as well as make a profit. the problem is how will it all be paid for, at the end of the day rail prices will go up, there are too many companies involved in the whole process.

it is a mess and probably take 20 years to unravel.

valiant

10,066 posts

159 months

Wednesday 7th December 2016
quotequote all
djc206 said:
Surely if the compo is greater than the revenue then when they no longer get compo they'd need to up the game to ensure they disrupt fewer services or they'd end up out of pocket? I'm not saying they would or even could because I don't know anything about the industry I'm just trying to rationalise the thinking behind this whole plan. I'm not supporting the idea btw just intrigued by it.
It's got Chris Grayling behind it (who makes Liz Truss look competent). For that reason alone it's going to be one huge clusterfk where the fare payer/tax payer comes off worse.

We've been here before. Once the private companies see how much they have to put in to run a viable, safe service they will start to cut back on staffing, maintainance or future enhancements in order to make a buck or run it into the ground and then hand it back. See Railtrack,Metronet, et all.

djc206

12,240 posts

124 months

Wednesday 7th December 2016
quotequote all
valiant said:
It's got Chris Grayling behind it (who makes Liz Truss look competent). For that reason alone it's going to be one huge clusterfk where the fare payer/tax payer comes off worse.

We've been here before. Once the private companies see how much they have to put in to run a viable, safe service they will start to cut back on staffing, maintainance or future enhancements in order to make a buck or run it into the ground and then hand it back. See Railtrack,Metronet, et all.
Sounds about right

V8Matthew

2,675 posts

165 months

Wednesday 7th December 2016
quotequote all
The Spruce goose said:
the railway and network is stuck in the past. there are so many jobs for life brigade it is embarrassing how behind the private sector is it.

network rail should be broken up, there are private companies that can do a better job for less as well as make a profit. the problem is how will it all be paid for, at the end of the day rail prices will go up, there are too many companies involved in the whole process.

it is a mess and probably take 20 years to unravel.
It has been found in the past that turning a profit from railway maintenance is harder than it looks, which is partly what led to the falling standards of IMCs that resulted in tragedy. As a result, private companies will be much more wary of taking on maintenance, there is far better money in major renewals & project work. (Yes, you could argue that renewals are considered maintenance of the rail system, but I'm referring more to cyclical maintenance).