ECML franchise to be broucht back under Public Ownership

[E3109]

Like most things Ron, if the media tell their respective audiences that something's wrong because the editors say it is, most folk won't bat an eyelid and take it all as gospel.

 

Doesn't matter if it's the Guardian or the Mail, those who buy those papers also have a tendency to buying into their raison d'etre.

 

The longer I'm on this planet the more cynical I get and I'm sure many of us feel that way.

 

In my opinion the left vs right stuff is a false paradigm anyway, if you're being milked by the blues or milked by the Reds it's still the same result, you get shafted. It's like comparing 23.59 with 00.01, same thing really just the label differs.

 

Anyway sack this, off to bed!

Catch up later.

[E3109]

"......... and socialism inevitably leads to communism."      

Locking time for that sort of thinking.

Not sure whether you're being ironic or not, anyway catch up later.

[Mallard60022]

Not sure whether you're being ironic or not, anyway catch up later.

Me? Ironic? 

[rockershovel]

A propos Communism, the Italians and French both had quite strong Communist Party groups in their respective National Assemblies in the 20s (and 30s, in the French case). Both reappeared in some strength after 1945. The Germans suppressed Communism in the 1920s, anathematised it in the 1930s and haven’t shown much enthusiasm for it since 1945. The British have never shown much enthusiasm for it, other than hard-line extremists who flourished within the Trades Union movement after 1945 (particularly the NUM, which might account for the insularity remarked on elsewhere and the car industry.)

Edited May 25, 2018 by rockershovel

[rodent279]

What is this 'fragmentation ' you keep on about? Could you please explain what you actually mean and what actually results from it (assuming it actually exists as fragmentation?).

 

Having worked in the industry prior to, during and after privatisation I'd be very interested to learn how you identify it? From my viewpoint, working post privatisation for a train operator, and dealing with (and having to manage) the company's track access as part of my everyday tasks the big advantage I found was that we were protected by contracts, something which didn't exist in BR days. In BR days, doing over several years a very similar job in respect of freight trains, I was not protected by written contracts but was literally at the potential whim of 'somebody's' decision made on a basis which would not necessarily take my trains into account when deciding access (the word might be new but the process wasn't). In fact the advantages - as well as any downsides -started to become clear to me when I was involved in running table top exercises about how the privatisation model would work before it was finalised - as did some potential commercial advantages within the industry (one of which I did indeed later very fully exploit to the financial benefit of my employer, and on one occasion to the financial benefit of HMG).

 

So please explain this dastardly fragmentation and what it actually means?

I think what I meant by fragmentation is the splitting up of a single organisation into over a hundred separate legal and commercial entities, each with their own pound of flesh to extract, and each with their own hymn sheet. I can't see how that helps the end user-the only real winners I can see are the lawyers and accountants.

I don't think "privatisation" has been a disaster, clearly the railway has carried on doing it's job, in some areas with great success, and in others less so. I wonder if a simpler structure to the railway might have made scenarios like the ECML debacle less likely?

Another point is that the career structure under BR, where staff learnt and gained experience in a wide range of the business, seems to be a thing of the past now, and this has been touched on in other threads. BR surely had an interest in ensuring staff entering senior grades had experience across the business-with smaller organisations, split along business or functional lines, the scope for this must be less?

[locoholic]

What is this 'fragmentation ' you keep on about?  Could you please explain what you actually mean and what actually results from it (assuming it actually exists as fragmentation?).

 

Having worked in the industry prior to, during and after privatisation I'd be very interested to learn how you identify it?   From my viewpoint, working post privatisation for a train operator, and dealing with (and having to manage) the company's track access as part of my everyday tasks the big advantage I found was that we were protected by contracts, something which didn't exist in BR days.  In BR days, doing over several years a very similar job in respect of freight trains, I was not protected by written contracts but was literally at the potential whim of 'somebody's' decision made on a basis which would not necessarily take my trains into account when deciding access (the word might be new but the process wasn't).  In fact the advantages - as well as any downsides -started to become clear to me when I was involved in running table top exercises about how the privatisation model would work before it was finalised - as did some potential commercial advantages within the industry (one of which I did indeed later very fully exploit to the financial benefit of my employer, and on one occasion to the financial benefit of HMG).

 

So please explain this dastardly fragmentation and what it actually means?

Stationmaster, please could you explain why you, as a mere functionary, deserved the protection of written contracts for "your" trains?

 

Of course, what you perceived as a "whim" in BR days may have been someone else's carefully weighed decision. I'm sure that none of the decisions you made were perceived by others as whims. But then, as these things are by nature subjective, perhaps they were.

 

The process of contractualisation which you describe so enthusiastically means that numbers make the decisions, not individual managers, so no-one is to blame when something doesn't work. "Systemic failings" replace individual cock-ups until we reach today's situation, where the Train Operating Companies simply cannot operate a proper service. The only people who can defend the structure of the UK's rail system given the current shambles are those whose political ideology prevents them from admitting the truth.

[rockershovel]

I wouldn’t agree that “TOCs simply can’t operate a proper service” but what IS clear, is that the current system suffers from a lack of overall strategic vision, and that derives in significant part from (a) the conflicts of interest inherent in the resulting structure, and (b) the emphasis on resolving all issues in terms of deriving a profit from that activity.

[Hobby]

I wouldn't agree that there is no "overall strategic vision", there is one, the problem is that it is the vision of the DfT, not the railway.

[Barry O]

Through all of this there is a company who seems to be getting away with a carp service...Network Rail. There planning in some areas is poor and they cause big problems to the TOCs. Delays directly impinge on service availability. Haha anyone seen the head of Network Rail or the Mandarins in Daft stand up and say sorry for the disruption we have caused...err in true Civil Service fashion...no!

[jjb1970]

Through all of this there is a company who seems to be getting away with a carp service...Network Rail. There planning in some areas is poor and they cause big problems to the TOCs. Delays directly impinge on service availability. Haha anyone seen the head of Network Rail or the Mandarins in Daft stand up and say sorry for the disruption we have caused...err in true Civil Service fashion...no!

At the risk of being cynical I am convinced that the real purpose of the current structure of the railways is to allow government to take all the important decisions and to have a nationalised railway but with somebody else to take the blame whenever things go wrong. After all, why apologise if the system is intended to evade responsibility and shunt it onto nefarious private companies? After all, everyone knows that there is something inherently evil in the concept of private companies and that if only the railways were nationalised everything would be perfect. The really worrying thing is that a lot of politicians seem to be believing their own propaganda and forgotten that government already runs the passenger railway.

[rodent279]

At the risk of being cynical I am convinced that the real purpose of the current structure of the railways is to allow government to take all the important decisions and to have a nationalised railway but with somebody else to take the blame whenever things go wrong. After all, why apologise if the system is intended to evade responsibility and shunt it onto nefarious private companies? After all, everyone knows that there is something inherently evil in the concept of private companies and that if only the railways were nationalised everything would be perfect. The really worrying thing is that a lot of politicians seem to be believing their own propaganda and forgotten that government already runs the passenger railway.

At the risk of sounding like a smart@$$, I thought much the same thing when it all kicked off in the mid 1990's-it's an exercise in blame-shifting for the politicians.

[APOLLO]

It's behind a pay firewall (which I don't suscribe to) but the headline and first couple of sentences give you the gist

 

https://www.telegraph.co.uk/business/2018/06/03/rail-firms-line-1bn-losses-feared/

 

Brit15

[The Stationmaster]

Stationmaster, please could you explain why you, as a mere functionary, deserved the protection of written contracts for "your" trains?

 

Of course, what you perceived as a "whim" in BR days may have been someone else's carefully weighed decision. I'm sure that none of the decisions you made were perceived by others as whims. But then, as these things are by nature subjective, perhaps they were.

 

The process of contractualisation which you describe so enthusiastically means that numbers make the decisions, not individual managers, so no-one is to blame when something doesn't work. "Systemic failings" replace individual cock-ups until we reach today's situation, where the Train Operating Companies simply cannot operate a proper service. The only people who can defend the structure of the UK's rail system given the current shambles are those whose political ideology prevents them from admitting the truth.

 

The BR situation was very simple if there was a timetable conflict - be it for capacity or path - somebody had to decide which train got that path or timetable precedence.  That 'somebody' wasn't necessarily making a business decision based on the value of the traffic conveyed by that train but could be making an operationally sensible decision which could then be resolved for the 'loser' by making a beneficial decision to them elsewhere. Generally, but not always, such decisions tended to favour passenger trains and while I could, and still can't, see any reason for not favouring a Class 1 passenger train over everything else there could be sub-optimal decisions which might favour a Class 2 passenger train over a Class 6 freight train (which was actually faster over a particular stretch of railway than the Class 2 given priority over it).  

 

Generally we worked together as professionals to make the best use of of the infrastructure resources but it could, and sometimes did go the other way depending in many respects on who spoke the loudest.  I don't think any of the professional and experienced planners, particularly those of us with previous frontline operational experience, were inclined to work on whims but based all out decisions on facts - that was after all exactly what we were paid to do when we were in charge of planning offices and responsible for the decisions made by ourselves and our staff in respect of our trains.

 

In the privatised era the big change was that my trains were protected by contract, both in terms of access to the network and in terms of pathing and that extended to my contracted paths which I was not using.  If Railtrack as it then was, or another train operator, wanted to use part of or foul time one of my paths they could not do it without my say so.  As it happened in certain instances I did allow one other operator to foul one of my paths but it was on the strict understanding that his train would have to move when I needed the path.  If I had not been protected by contract the responsible Railtrack Timetable Office could have said to me 'you're not using the path and so & so wants it so we're giving it to him and you'll have to be fitted in however we can manage it when you decide you are going to start running that train'.  Thus I would have no protection whatever and when I did require to run that train I would have to be pathed through whatever white pace was available on the graph potentially breaking my planned working resulting in additional crewing costs and possibly even breaking train balances.  In other words without the protection of a contract an operator could potentially be exposed to additional costs which might even affect the viability of a particular train or working.

 

And don't forget that in BR days we were always under pressure to reduce cost and that increased in the sectorised era (1992 -1994) when it became far easier to identify costs to each particular sector and to sub-sectors within them.  Thus, for example, for the budget year 1993-94 I saved £1 million on my budget compared with the previous year because it had become far easier to identify what I was paying for bought-in services from other sectors.  That I could control but at that time I still didn't have protection of my paths although I had some agreements with other sectors etc - for example guaranteeing me two paths per hour between Reading and Acton once Crossrail became operational or guaranteeing my various paths that would be required for freights between Willesden and the Channel Tunnel.

 

Oh, and yes - they were my trains as I controlled their paths and the use of those paths to meet the requirements of my commercial colleagues.  As it happened following the 1994 reorganisation 'in readiness for privatisation' I moved back from the freight railway to the passenger railway but the contractual situation was no different.  Incidentally I was also a member, and latterly Deputy Chairman, of the committee which was responsible for resolving any timetabling disputes between operators (in those cases where the dispute could not be resolved by them/with Railtrack) so I do happen to have had a not inconsiderable amount of experience in this area.  As for your final paragraph I suggest you could not be further from the truth and it betrays your lack of knowledge of the real situation, particularly what has really happened that has resulted in the mess on GTR and Northern this month.

 

At the risk of sounding like a smart@$$, I thought much the same thing when it all kicked off in the mid 1990's-it's an exercise in blame-shifting for the politicians.

 

Actually although not his exact words that is very much how Roy Hattersley described in his address at a dinner held by the Railway Study Association.  He firmly expressed the view that most MPs would be glad to see an end to complaints 'about the railway' in their postbags - alas subsequent changes to the franchising system, among other things, have made his words sound rather hollow.  The reality is - as already expressed by others in various recent posts in the thread - that the rail network and passenger train services are now under even greater political/Civil Service control than they ever were in BR days

 

Edit to remove duplicated words in one sentence.

Edited June 3, 2018 by The Stationmaster

[jjb1970]

If politicians had any cajones they'd be saying something like "VTEC over bid and crashed, hey ho that's their commercial risk, but look at what a great deal tax payers got. We're a couple of hundred million quid up on the deal, that's not chump change, and the trains are still running, how about that!!".

Failure is a part of business and the concept of risk and reward an essential part of commerce. Business and the economy do not exist in a fixed reality and with pre-ordained results. The economy is a dynamic construct in constant change, as are businesses. Businesses thrive, businesses fail, the twin concepts of corporate success and failure are an inherent part of a functioning economy. I am mystified why high profile corporate failures are always presented as proof that the economy isn't working or that the private sector doesn't work.

Edited June 3, 2018 by jjb1970

[locoholic]

If politicians had any cajones they'd be saying something like "VTEC over bid and crashed, hey ho that's their commercial risk, but look at what a great deal tax payers got. We're a couple of hundred million quid up on the deal, that's not chump change, and the trains are still running, how about that!!".

Failure is a part of business and the concept of risk and reward an essential part of commerce. Business and the economy do not exist in a fixed reality and with pre-ordained results. The economy is a dynamic construct in constant change, as are businesses. Businesses thrive, businesses fail, the twin concepts of corporate success and failure are an inherent part of a functioning economy. I am mystified why high profile corporate failures are always presented as proof that the economy isn't working or that the private sector doesn't work.

For one thing, the rail industry is very, very far from being a free market, so any failure cannot simply be ascribed to poor management or any of the other reasons that a "normal" company might fail.

 

For another thing, it has been decided that the railways are sufficiently important to the national interest that they should not be allowed to simply fail and cease operating. The "high profile corporate failures" that have caused comment recently have been ones like Carillion and Virgin East Coast, where central or local government's involvement was central. No-one has used (say) the failure of Toys R Us as proof that capitalism is dead, so I'm not sure why you're mystified!

[jjb1970]

For one thing, the rail industry is very, very far from being a free market, so any failure cannot simply be ascribed to poor management or any of the other reasons that a "normal" company might fail.

 

For another thing, it has been decided that the railways are sufficiently important to the national interest that they should not be allowed to simply fail and cease operating. The "high profile corporate failures" that have caused comment recently have been ones like Carillion and Virgin East Coast, where central or local government's involvement was central. No-one has used (say) the failure of Toys R Us as proof that capitalism is dead, so I'm not sure why you're mystified!

 

But that's just it, the trains continue as before. So where's the problem? Really? VTEC bid too high, they lost out, we the tax payer are a couple of hundred quid up on the deal and the operation continues pretty much as before. If VTEC made a shed load of money out of it then I'd say good luck to them, if they lost then it was their risk. In a sense this is very much still management decision making, they took a risk on future revenue and based a bid on that forecasting, they got it wrong and paid the price. If you remove the consequence of failure then you end up with something worse.

[locoholic]

But that's just it, the trains continue as before. So where's the problem? Really? VTEC bid too high, they lost out, we the tax payer are a couple of hundred quid up on the deal and the operation continues pretty much as before. If VTEC made a shed load of money out of it then I'd say good luck to them, if they lost then it was their risk. In a sense this is very much still management decision making, they took a risk on future revenue and based a bid on that forecasting, they got it wrong and paid the price. If you remove the consequence of failure then you end up with something worse.

"Where's the problem?" How about the bidding process and franchise model becoming so expensive and hazardous that fewer and fewer companies even want to bid? Presumably when no-one at all wants to bid everyone will have to concede that the model is dead, and find a better, less wasteful way of running our railways?

 

And of course the "they" who pay the price when a franchisee fails are also the staff - it's not just some paper exercise played by a few financiers. Lots of real people are involved.

Edited June 3, 2018 by locoholic

[Clearwater]

"Where's the problem?" How about the bidding process and franchise model becoming so expensive and hazardous that fewer and fewer companies even want to bid? Presumably when no-one at all wants to bid everyone will have to concede that the model is dead, and find a better, less wasteful way of running our railways?

 

And of course the "they" who pay the price when a franchisee fails are also the staff - it's not just some paper exercise played by a few financiers. Lots of real people are involved.

If no-one wants to bid, the risks relative to the reward are too high, too skewed to the Government, then if Gov wants to relet a new concession, it will need to seek to transfer less risk or accept bidders making a higher margin. Letting a franchise is no different to any other commercial agreement or indeed selling a house. (If you price the latter too high, no-one pays. If a job doesn’t pay enough, people don’t want to do it etc etc). it’s just that you don’t normally see this dynamic play out in public in quite the same way.

 

It’s not a “paper exercise” - Virgin / Stagecoach has lost real money. Many millions. To try and trivialise in that way weakens your argument.

[Hobby]

And of course the "they" who pay the price when a franchisee fails are also the staff - it's not just some paper exercise played by a few financiers. Lots of real people are involved.

 

Apart from some middle management and perhaps the head honcho the staff are usually unaffected apart from the jibes from the travelling public, but we get them whether the Franchise is successful or not!

[jjb1970]

"Where's the problem?" How about the bidding process and franchise model becoming so expensive and hazardous that fewer and fewer companies even want to bid? Presumably when no-one at all wants to bid everyone will have to concede that the model is dead, and find a better, less wasteful way of running our railways?

 

And of course the "they" who pay the price when a franchisee fails are also the staff - it's not just some paper exercise played by a few financiers. Lots of real people are involved.

 

As Clearwater has pointed out, if perceived risk to the bidder is too high then either bids will be lower or companies won't see it as worth bidding and the government will have to adjust that balance or do something else. Franchises are no different to anything else, you will always find a buyer/bidder if the price is right, it is about finding a mutually agreeable balance which delivers the right value for both seller and buyer, if there are no bidders then you need to consider what you're asking for. That is no different to any other transaction.

 

A few years ago the system was broken because TOCs were making too much money and every greedy company in the world wanted a piece of the pie. Now the system is broken because some TOCs aren't making money and there are fewer bidders. That is hardly unexpected, if a franchise/concession market is seen as highly lucrative it attracts interest and inflates the cost to buy such a concession, that tends to result in a correction in the other direction and after a bit of fluctuation the market finds a balance. Either way, VTEC shows that in at least one key respect there is nothing wrong with the current model, whatever criticisms I have of it there will be no disruption to ECML services resulting from the failure of VTEC.

[Mike Storey]

In something I read recently (sorry, can't reference it), it would appear that "cap and collar", in some form, is likely to return in most new franchise negotiations. This places more risk with HMG if the TOC's predictions have been over optimistic, but more gain for HMG if TOC bids have been unduly pessimistic.

 

This was common in OPRAF days, but was derided for indirectly subisidising private companies, and for encouraging over-optimistic bids. However, the over-optimistic bids continued even when that protection had been mostly removed. The return of this suggests there is at last far greater recognition that external factors have much greater influence over demand for rail, than anything the industry can do, apart from major journey time or frequency improvements, which are well proven drivers of increased demand (primarily modal shift). In BR days, when all else remained the same, it was GDP growth which had the greatest influence. There is quite probably still a link there, as we are seeing demand decline, albeit slowly, as GDP growth has become depressed of late. Indeed, you can see the pattern repeated across many European railways, who are reporting record growth, as their economies have started to improve, after a decade or so in the doldrums.

 

I fear we are about to see a repeat of the late 1980's/early 90's, where several major improvements had arrived (albeit a little shakily in some cases) when the economy nosedived for a few years. The capacity, improved journey times and frequency were there, but not as many passengers, until the economy started to pick up again, followed by the incredible growth that carried on until quite recently. That recent growth could not be explained by GDP growth alone, nor by many actual improvements to journey times or frequencies (true in some routes, but growth was largely as strong in others). So the attempts to explain that growth have obscured the fundamental truth of the link to GDP in the past. If we cannot explain the record growth, across 20 plus years, adequately, how can we know what will happen to demand over time now?  I would not like to be making assumptions in any franchise bid now, without some form of safety net.

[rockershovel]

As Clearwater has pointed out, if perceived risk to the bidder is too high then either bids will be lower or companies won't see it as worth bidding and the government will have to adjust that balance or do something else. Franchises are no different to anything else, you will always find a buyer/bidder if the price is right, it is about finding a mutually agreeable balance which delivers the right value for both seller and buyer, if there are no bidders then you need to consider what you're asking for. That is no different to any other transaction.

 

A few years ago the system was broken because TOCs were making too much money and every greedy company in the world wanted a piece of the pie. Now the system is broken because some TOCs aren't making money and there are fewer bidders. That is hardly unexpected, if a franchise/concession market is seen as highly lucrative it attracts interest and inflates the cost to buy such a concession, that tends to result in a correction in the other direction and after a bit of fluctuation the market finds a balance. Either way, VTEC shows that in at least one key respect there is nothing wrong with the current model, whatever criticisms I have of it there will be no disruption to ECML services resulting from the failure of VTEC.

This is quite an important point.

 

I’m just going through one of those “pinch points” where I take a decision based on perceived return vs risk. Broadly speaking, I have a decision between two similar fields of work, onshore and offshore. The offshore work tends to pay around 3x the onshore, per day worked, but the higher number of days worked onshore produces a ratio of between 1.5 to 2:1 in terms of gross earnings overall in the year.

 

Excessive unreimbursed costs and lack of security in the onshore work, versus lack of total supply in the offshore work, need to be factored in.

 

I did think that I had resolved the balance for the current year, but issues of “magical thinking” (a rather splendid euphemism for what used to be known as “having too many conflicting goals and not enough attention to detail”) by management has brought a previously discounted offshore option, back into play. So, I’ll end up making my usual decision involving excessive levels of risk for insufficiently defined reasons... given that the defined outcome (total earnings versus total commitment) tend to end up fairly similar, it means that I make key choices without any real regard for the nature or desirability of either category of work, and in a fashion which relies upon accumulated experience over a period of decades and a lack of clear vision for the future.

 

It ALSO means that, upon closer examination, a high degree of control is exercised by the owners and controllers of the necessary fixed assets - who in turn, tend to have fairly stable longer-term strategies determined by high levels of involvement by governments which (1) regard those activities as worth supporting (2) tend NOT to be British...

 

It all sounds rather familiar....

Edited June 6, 2018 by rockershovel

[luckymucklebackit]

Well if the Virgin Branding went on this quick, it will come off equally quick!

 

https://www.youtube.com/watch?v=A1bcuWglugA&feature=youtu.be

 

Although I hear that they are just removing the Virgin logo and replacing with LNER logo (white initials on red rectangle).

 

Jim

[Mike Storey]

This is quite an important point.

 

I’m just going through one of those “pinch points” where I take a decision based on perceived return vs risk. Broadly speaking, I have a decision between two similar fields of work, onshore and offshore. The offshore work tends to pay around 3x the onshore, per day worked, but the higher number of days worked onshore produces a ratio of between 1.5 to 2:1 in terms of gross earnings overall in the year.

 

Excessive unreimbursed costs and lack of security in the onshore work, versus lack of total supply in the offshore work, need to be factored in.

 

I did think that I had resolved the balance for the current year, but issues of “magical thinking” (a rather splendid euphemism for what used to be known as “having too many conflicting goals and not enough attention to detail”) by management has brought a previously discounted offshore option, back into play. So, I’ll end up making my usual decision involving excessive levels of risk for insufficiently defined reasons... given that the defined outcome (total earnings versus total commitment) tend to end up fairly similar, it means that I make key choices without any real regard for the nature or desirability of either category of work, and in a fashion which relies upon accumulated experience over a period of decades and a lack of clear vision for the future.

 

It ALSO means that, upon closer examination, a high degree of control is exercised by the owners and controllers of the necessary fixed assets - who in turn, tend to have fairly stable longer-term strategies determined by high levels of involvement by governments which (1) regard those activities as worth supporting (2) tend NOT to be British...

 

It all sounds rather familiar....

 

Extremely good analogy!

[009 micro modeller]

Well if the Virgin Branding went on this quick, it will come off equally quick!

 

https://www.youtube.com/watch?v=A1bcuWglugA&feature=youtu.be

 

Although I hear that they are just removing the Virgin logo and replacing with LNER logo (white initials on red rectangle).

 

Jim

Is the slightly Stagecoach-like orange edge to the red patches deliberate, given their part ownership of VTEC?