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

[TheSignalEngineer]

After all this surely it is clear that anything involving government involvement ends up stuffed.

Just ask anybody in the NHS, all of the good people in there deserve better.

Back in 1977 Enoch Powell wrote a biography of Joseph Chamberlian in which he commented 

 

“All political lives, unless they are cut off in midstream at a happy juncture, end in failure, because that is the nature of politics and of human affairs.”

 

The same could also be said of political doctrines and those put in charge of organisations which are politically controlled like Network Rail.

[pete_mcfarlane]

If it is as simple as planned revenue not appearing because infrastructure upgrades didn't happen, then surely the solution is to ask future franchise bidders to provide some kind of tiered payment plan? Start with a baseline level of payment based ont he current infrastructure, with the Government only getting the additional payments if the upgrades are delivered. 

[The Stationmaster]

GNER didn’t work

National Express didn’t work

Virgin Trains/Stagecoach didn’t work

 

When do you think it’ll dawn on someone that the model doesn’t work?

 

I don't think it's necessarily a question of the model not working but more, especially in the case of the ECML, a matter of those who control the model being too ambitious in what they exopect of it and being too greedy when looking at bids.  Typically Civil service attitude in reverse to their normal way of going for the cheapest bid without thinking through the implications.

 

And don't forget that on its original franchise GNER did work - very well from a passenger viewpoint in my experience.  it was only on the re-bid for the second franchise (and after the abolition of the Director of Rail Franchising) that Civil Service greed and traditional thinking got involved and led to a succession of franchise failures.  That doesn't mean the model is wrong - but points more to the fact that those charged with operating it aren't very good at their jobs.

[Ron Ron Ron]

I don't think it's necessarily a question of the model not working but more, especially in the case of the ECML, a matter of those who control the model being too ambitious in what they exopect of it and being too greedy when looking at bids.  Typically Civil service attitude in reverse to their normal way of going for the cheapest bid without thinking through the implications.

 

And don't forget that on its original franchise GNER did work - very well from a passenger viewpoint in my experience.  it was only on the re-bid for the second franchise (and after the abolition of the Director of Rail Franchising) that Civil Service greed and traditional thinking got involved and led to a succession of franchise failures.  That doesn't mean the model is wrong - but points more to the fact that those charged with operating it aren't very good at their jobs.

 

 

This is precisely the whole root of the problem and this particular franchise's history of failure.

 

Even if the expected infrastructure improvements had been and were to be delivered on time, as a layman, I strongly suspect that the premium payments were set far too high.

Look at the recent history.

EC under DOR were able to return approx. £1 billion to the DafT or Treasury. The equivalent of premium payments.

Not withstanding a growth in passenger traffic, an increase in services and improved yields; it just doesn't seem plausible that VTEC could increase those returns by more than three times (from £1 billion to £3.3 billion) over 7 years.

 

Had the premiums been set at a more realistic figure, say £1.5 billion, with an additional windfall provision if that figure was significantly exceeded, then this whole debacle would not have arisen.

According to last summer's financial report, VTEC were on track to bring in something like £1.5 to £2 billion for the taxpayer over the term of the franchise.

Although that flagged up that they were falling well short of their target, it was clear VTEC would be able to operate profitably, given more realistic commitments on premium payments.

 

To date they've paid around £800 million to the taxpayer, but suffered a £200 million loss to their own company in doing so.

To put it in simplistic terms, had they only been committed to pay £600 million over the same period, then VTEC would be breaking even.

 

 

 

.

Edited February 6, 2018 by Ron Ron Ron

[4630]

Mark Carne has announced his retirement;

 

https://www.networkrail.co.uk/feeds/mark-carne-to-retire-from-network-rail/

[Bob-65b]

I don't think it's necessarily a question of the model not working but more, especially in the case of the ECML, a matter of those who control the model being too ambitious in what they exopect of it and being too greedy when looking at bids.  Typically Civil service attitude in reverse to their normal way of going for the cheapest bid without thinking through the implications.

 

And don't forget that on its original franchise GNER did work - very well from a passenger viewpoint in my experience.  it was only on the re-bid for the second franchise (and after the abolition of the Director of Rail Franchising) that Civil Service greed and traditional thinking got involved and led to a succession of franchise failures.  That doesn't mean the model is wrong - but points more to the fact that those charged with operating it aren't very good at their jobs.

 

Unfortunately my time and relative dimension in space machine is in for a service or I'd have go at going back and awarding it all to Brian Burdsall & Co. - These days though it's a different ball game - where the ball was once round, it's now only suitable for rugby!

 

 

[Grovenor]

Mark Carne has announced his retirement;

 

https://www.networkrail.co.uk/feeds/mark-carne-to-retire-from-network-rail/

No mention of the GW electrification, or indeed any electrification, among his accomplishments!

Regards

[Ken.W]

I

The debits on Mark Carne's scorecard are building up at a greater rate than the credits.  Perhaps time for him to fall on his sword, unless Graylng does the deed?

 

Grayling do the deed? Erm, the Transport Minister who, in his first week in office, car-doored a cyclist, reportedly left the scene, and took him all his time to even apologise. Don't hold your breath for that one

[Grovenor]

EC under DOR were able to return approx. £1 billion to the DafT or Treasury. The equivalent of premium payments.

Actually the equivalent of company profits plus premium. So the franchisee had to increase that by even more to cover the premium and their profit.

Regards

[Ron Ron Ron]

Actually the equivalent of company profits plus premium. So the franchisee had to increase that by even more to cover the premium and their profit.

Regards

 

 

Which they (VTEC) were easily doing until the inevitable happened.

They were bringing in more than EC did by a considerable margin, said to be some 30% higher per month.

 

 

.

[Ken.W]

You are right Bob, but the competing bids for the franchise would have all been in the same ballpark, all dancing to the same DfT and Treasury looney tune.

Non of the participants can escape blame here.

If either of the other two final bidders, First Group or Keolis/Eurostar had won the ICEC franchise, I've no doubt the outcome would have been pretty much the same.

 

.

 

Not so sure about that, wasn't it reported at the time that VTEC had bit considerably more that the competition?

 

In this case, Virgin East Coast bid, they should be held to their contract subject to any liabilities of NR for not delivering track upgrades. As somebody else has pointed out, in this case nobody comes out of it looking good.

As I understand it, VTEC did attempt to re-negociate the franchise on the basis that the failure to complete the planed route upgrades meant they would be unable to increase the service levels as required to be able to carry the increase in passengers required to meet the franchise forecasts, and it was DaFT that decided instead to terminate the franchise early Edited February 6, 2018 by Ken.W

[lmsforever]

Some interesting posts and we seem to agree that its a mess that needs radical change as a way of sorting the diabolical ways of NR and Daft  but will government want to see blame heaped on its own people and lose face.

[Bob-65b]

Knowing how confidential the bids were the first time round (everyone knew their small part of it) where very few knew the actual total bid content I do wonder how much of the information in the public domain is purely speculative guesswork when things go wrong. I would certainly be surprised if no contingency had been built in to the bid and made clear to the DfT at the outset to cover the likes of failure of an external supplier to meet their end of the bargain.

[The Stationmaster]

Mark Carne has announced his retirement;

 

https://www.networkrail.co.uk/feeds/mark-carne-to-retire-from-network-rail/

 

It would appear from his comments that Chris Grayling lives on a different planet from reality let alone some of his own past pronouncements.  It strikes me - from direct and bitter experience - that NR is now further removed from the end customers of the industry than it has ever been and its organisation is increasingly reflecting such remoteness and disinterest.

[caradoc]

What exactly were the promised route upgrades that Network Rail has failed to carry out, and why has this failure occurred ? Was there a guaranteed timescale within which these improvements were to be completed ? The only issue I can recall is the grade-separated junction north of Peterborough, which AFAIK has been delayed by planning issues.

 

Given that Virgin East Coast does not at present have enough stock for its current service, having to regularly hire an HST from East Midlands Trains, when and how would it be able to introduce the enhanced service that would apparently transform its financial performance ?

[Glorious NSE]

What exactly were the promised route upgrades that Network Rail has failed to carry out, and why has this failure occurred ? Was there a guaranteed timescale within which these improvements were to be completed ? The only issue I can recall is the grade-separated junction north of Peterborough, which AFAIK has been delayed by planning issues.

 

Given that Virgin East Coast does not at present have enough stock for its current service, having to regularly hire an HST from East Midlands Trains, when and how would it be able to introduce the enhanced service that would apparently transform its financial performance ?

 

Dates for the service ramp-ups were publically announced by the government as May 2019 and May 2020

http://maps.dft.gov.uk/east-coast/

 

As well as Werrington, there's also four tracking south of Peterborough, six tracking on the approach to Kings Cross (and platform mods to match), plus power supply upgrades to handle more trains, fewer of which are diesel and which are likely to be 'thirstier' than the 80s electrics currently in use.

 

Quantity of trains is not an issue as VEC should have received new trains by then, the initial plan was to then retain and refurb some of the 225 sets to expand the fleet size to use the extra paths.

 

 

 

 

 

 

Edited February 6, 2018 by Glorious NSE

[D854_Tiger]

... I don’t doubt that Grayling will be quite content to lay the blame wherever it can be laid, to keep it off his own doorstep, but that only begs further questions. What is the value (outside the Westminster bubble, that is) of of either replacing one failure with another, or putting a successor in an equally untenable position? If NR’s goals were not achievable, either because they were unrealistic or because funding was with-held, why was this?

 

Surely, the whole point of free market capitalism and why it works is that there should be the risk and consequences of failure.

 

Those that want a system without failure and risk are effectively arguing either for crony capitalism or, more likely, a state run operation that never takes risks or ever suffers the consequences for failure for which we need look no further than Network Rail.

 

They have just failed to deliver an electrification program spectacularly, with no consequences for a massive overspend, bad publicity or seemingly without the bleeding obvious question being put to all the Communists out there (whose track record on failure has only ever been to redefine the concept by squaring it) as to why on earth we should want even more of it.

 

I'm no great fan of UK railway privatisation and would freely admit to its shortcomings but surely a return to nationalisation would be a cure that's worse than the disease.

 

There are a great deal of positives that have come out of rail privatisation the answer surely is to refine the current system to best eliminate the negatives but would remind everyone that when a franchisee decides to pull out (fails) the state receives huge penalty payments and when the franchise succeeds the state is delivered a premium. 

 

What's not to like about that for the taxpayer, Virgin and Stagecoach took a risk and (not for the first time in either case) it has backfired, well that's the nature of the game, some you win some you lose, and, thus far, they have honourably met all the terms and conditions from their side of the contract.

 

The DfT must now meet its terms and conditions for its failure and truth will always out, in the end, the state will not be able to hide from their failure by attempting to scapegoat private companies because our mostly sophisticated electorate are not stupid and neither are they fodder for snake oil salesman (on all sides of the political spectrum) that would dare to treat them as if they are.

[D854_Tiger]

Dates for the service ramp-ups were publically announced by the government as May 2019 and May 2020

http://maps.dft.gov.uk/east-coast/

 

As well as Werrington, there's also four tracking south of Peterborough, six tracking on the approach to Kings Cross (and platform mods to match), plus power supply upgrades to handle more trains, fewer of which are diesel and which are likely to be 'thirstier' than the 80s electrics currently in use.

 

Quantity of trains is not an issue as VEC should have received new trains by then, the initial plan was to then retain and refurb some of the 225 sets to expand the fleet size to use the extra paths.

 

 

 

 

 

 

 

Virgin needed electrification power upgrades in order to run its proposed new timetable, achieve its projected revenues and hence improved premium payments to the DfT.

 

I believe those upgrades have now been put back as a consequence of the delays to GW electrification.

 

Putting aside the issue of whether Virgin/Stagecoach had over egged it and were never going to meet their commitments, even without those NR delays, at the very least they do deserve a renegotiation and, from the DfT's perspective, they have to be very careful to do so as they are also on the hook for massive penalties not to mention what could be extracted through the courts.

[pete_mcfarlane]

They have just failed to deliver an electrification program spectacularly, with no consequences for a massive overspend, bad publicity or seemingly without the bleeding obvious question being put to all the Communists out there (whose track record on failure has only ever been to redefine the concept by squaring it) as to why on earth we should want even more of it.

Those who should be asking questions in Parliament about the NR failures seem to be too busy telling their supporters (for the 7657th time) about their plans to magically fix everything through nationalisation to actually do their job of holding the the Government to account over real problems. 

[D854_Tiger]

I don't think it's necessarily a question of the model not working but more, especially in the case of the ECML, a matter of those who control the model being too ambitious in what they exopect of it and being too greedy when looking at bids.  Typically Civil service attitude in reverse to their normal way of going for the cheapest bid without thinking through the implications.

 

And don't forget that on its original franchise GNER did work - very well from a passenger viewpoint in my experience.  it was only on the re-bid for the second franchise (and after the abolition of the Director of Rail Franchising) that Civil Service greed and traditional thinking got involved and led to a succession of franchise failures.  That doesn't mean the model is wrong - but points more to the fact that those charged with operating it aren't very good at their jobs.

 

 

There is a very long history of over ambition on this railway, seemingly due to the E in ECML being confused with a W.

[Dava]

"Those that want a system without failure and risk are effectively arguing either for crony capitalism or, more likely, a state run operation that never takes risks or ever suffers the consequences for failure for which we need look no further than Network Rail."

 

It seems to me that crony capitalism is pretty much what we have now, given the continuing sweetheart deals enjoyed by Virgin & Stagecoach on the WCML and Stagecoach on East Midlands Trains. Personally I think they should not be allowed to bid for future franchises. Labour advocates the state control option. Franchises can work well, witness Chiltern Rail and the first GNER contract. But there is a danger in ORR putting too many eggs in the basket of one franchisee [stagecoach] such a that they become an over mighty near-monopoly operator on Anglo-Scottish routes and when they fail [lets not mention Crapbillion today] it's a big mess to clear up.

 

Dava

[D854_Tiger]

It seems to me that crony capitalism is pretty much what we have now, given the continuing sweetheart deals enjoyed by Virgin & Stagecoach on the WCML and Stagecoach on East Midlands Trains.

 

Indeed, but that is entirely down to a failure to get their act together down at the DfT and NR.

 

Which seems to me to be as good a reason as there is as to why they should not be granted an even bigger stage.

[meil]

May I just point out that the railways are already nationalised. That is the assets are owned by the state. The owner (us) chooses to run their assets by granting concessions to private companies.

 

The state is therefore responsible for properly letting those concessions. My short period working in the public sector teaches me that they are uniquely incapable of doing such a thing.

[4630]

May I just point out that the railways are already nationalised.

 

 

That's not entirely accurate.

 

A significant chunk of the rolling stock is 'owned' by private sector companies (or whoever provided their finance - mostly major banks).

 

With the exceptions of Direct Rail Services (DRS) and DB Cargo, the freight companies are private sector companies.

[Glorious NSE]

That's not entirely accurate.

 

A significant chunk of the rolling stock is 'owned' by private sector companies (or whoever provided their finance - mostly major banks).

The rolling stock is by it's nature transient - you wouldn't say that BR was not a nationalised railway because it leased rolling stock. (Which it did...)