Would full privatisation work?

[whole diary]

[devonexpress]

The current franchise model is to say the least poor, franchise operators try to keep cost low by refurbishing stock instead of buying new(mainly due to the short amount of time to recoup the costs).


So my question is, would a full privatisation model(pre:1947) work in the current time?

If each area's where to be returned to their original form, GWR^▸ (Great Western Railway), LNER^» (London North Eastern Railway - about), SR^‡(resolve), LMS^▸ (London Midland Scottish - 1923 to 1948), with each franchise merging into the specific company once the contract had expired.  Network Rail being split between all four companies, and then merging into each, with a small section left a outsourcer for the measurement trains and other equipment etc. And the leasing companies being axed and each train company taking ownership of their stock.  And the company shares could be 60:40 (40% shareholders/stock market), (60% - 10% staff shares, with the remaining 50% being owned by the company, and managed by a board of directors employed by the company)

Myself, I believe this would work, here's why:
1) It would take all cost off the taxpayer funding the railway
2) Where as currently the Dft makes decisions on infrastructure, the individual train company could, and work it around the best time possible, meaning that overcrowding, delays etc would be more short term than long term issues.
3) More investment could be made, as it could be recouped over the full working life of the train by that train company.
4) It would also allow the swapping of trains during the change over from franchising, meaning a more concise fleet could be achieved.
5) With the train company running the infrastructure as well as the train service, decisions could be made easier than the current model which sees the Dft telling Network Rail who manage the timetables, and hand them over to the franchise.



I would love to know your thought on this, could it ever work? Would it reduce cost long term?  Or is it to impractical and expensive.

[Electric train]

The current franchise model is to say the least poor, franchise operators try to keep cost low by refurbishing stock instead of buying new(mainly due to the short amount of time to recoup the costs).


So my question is, would a full privatisation model(pre:1947) work in the current time?

If each area's where to be returned to their original form, GWR^▸ (Great Western Railway), LNER^» (London North Eastern Railway - about), SR^‡(resolve), LMS^▸ (London Midland Scottish - 1923 to 1948), with each franchise merging into the specific company once the contract had expired.  Network Rail being split between all four companies, and then merging into each, with a small section left a outsourcer for the measurement trains and other equipment etc. And the leasing companies being axed and each train company taking ownership of their stock.  And the company shares could be 60:40 (40% shareholders/stock market), (60% - 10% staff shares, with the remaining 50% being owned by the company, and managed by a board of directors employed by the company)

Myself, I believe this would work, here's why:
1) It would take all cost off the taxpayer funding the railway
2) Where as currently the Dft makes decisions on infrastructure, the individual train company could, and work it around the best time possible, meaning that overcrowding, delays etc would be more short term than long term issues.
3) More investment could be made, as it could be recouped over the full working life of the train by that train company.
4) It would also allow the swapping of trains during the change over from franchising, meaning a more concise fleet could be achieved.
5) With the train company running the infrastructure as well as the train service, decisions could be made easier than the current model which sees the Dft telling Network Rail who manage the timetables, and hand them over to the franchise.



I would love to know your thought on this, could it ever work? Would it reduce cost long term?  Or is it to impractical and expensive.

No ........ not in the old big four companies, most if not all of the competing routes have gone, BR^▸ (British Rail(ways)) were driven down that path by Government to cut costs and become efficient.

If the national network as it stands to day were to be vertically integrated  ie a TOC^▸ (Train Operating Company) became the infrastructure operator they would always give preference to their trains over other TOC and FOCs^▸ (Freight Operating Company) irrespective of what legislation was put in place there would always be loop holes.
 
Certainly the franchise system is not working very well, Government departments are just not very good at efficient contracts and procurement     

The tax payer is paying less and less this has been successive Government policy for the last 20 odd years that's why the fares are so high, however there is still a large input of public money hence the Government will have a say in how it is used so pile on layers of bureaucracy because the railways have to justify what it does to you and me the tax payer or at least that's what the suits in the ministry say.

MPs^▸ (Member of Parliament) have never forgiven or trusted the railways ever since since William Huskisson MP was run over on the 15 September 1830

[ellendune]

I think if it were done it would not be right to assume that the 1923 geographical split would be right for today as there was duplication of routes within companies and it might be better to change the boundaries to promote competition.  

Regarding your specific statements:

1) It would take all cost off the taxpayer funding the railway

It is not clear to me how this proposal reduces costs to the industry as a whole. It might reduce the money passsed between a TOC^▸ (Train Operating Company) and NR^» (Network Rail - home page), but that does not reduce the industry's costs.  

2) Where as currently the Dft makes decisions on infrastructure, the individual train company could, and work it around the best time possible, meaning that overcrowding, delays etc would be more short term than long term issues.

The costs of the railway come from government of the fare box. As I understand it at present the fare box pays to operate the current railway and the government pays for improvements.  Unless fares are to go up therefore, government will still be involved in decisions on improvements.  

Please also remember that most of the improvements in the 1930's were financed by low interest government loans to promote employment.  

3) More investment could be made, as it could be recouped over the full working life of the train by that train company.

Yes it could, but the same could be said of longer franchises.  Chiltern has demonstrated the benefit of long franchises.  

4) It would also allow the swapping of trains during the change over from franchising, meaning a more concise fleet could be achieved.

In GWR^▸ (Great Western Railway) the franchise boundary and the proposed company would be the same so there would be no change.

5) With the train company running the infrastructure as well as the train service, decisions could be made easier than the current model which sees the Dft telling Network Rail who manage the timetables, and hand them over to the franchise.

There might be some improvement here, but I am not sure there would be as much benefit as people claim.

Other questions to be answered are:

What would happen to cross country routes? Most of these routes would go across several companies. Look at a pre-war timetable and many of these services were not as good as they are now.

Would there be damage to the freight sector where many of the flows would be across company?

Would open access still be allowed?  Arguably this has stimulated companies to introduce new services to areas that were previously poorly served.  

[devonexpress]

No ........ not in the old big four companies, most if not all of the competing routes have gone, BR^▸ (British Rail(ways)) were driven down that path by Government to cut costs and become efficient.

If the national network as it stands to day were to be vertically integrated  ie a TOC^▸ (Train Operating Company) became the infrastructure operator they would always give preference to their trains over other TOC and FOCs^▸ (Freight Operating Company) irrespective of what legislation was put in place there would always be loop holes.
 
Certainly the franchise system is not working very well, Government departments are just not very good at efficient contracts and procurement     

The tax payer is paying less and less this has been successive Government policy for the last 20 odd years that's why the fares are so high, however there is still a large input of public money hence the Government will have a say in how it is used so pile on layers of bureaucracy because the railways have to justify what it does to you and me the tax payer or at least that's what the suits in the ministry say.

MPs^▸ (Member of Parliament) have never forgiven or trusted the railways ever since since William Huskisson MP was run over on the 15 September 1830

You seem to miss understand what I said about a train company becoming the infrastructure manager.  It would only be for the routes they operate i.E  GWR^▸ (Great Western Railway) would managed GWR territory.

The competing routes could easily be introduced, and what is to stop the government giving loans as and where needed, instead of buying a brand new fleet of Japanese bullet trains, or proposing a very expensive high speed train line to Birmingham, it could have let the train company buy the trains and reopened the Paddington to Birmingham Snow Hill line, which would only need redoubling on the New North Mainline and a few other places such as High Wycombe, along with some speed improvements, to match that of the West Coast!

[grahame]

So my question is, would a full privatisation model(pre:1947) work in the current time?

...

I would love to know your thought on this, could it ever work? Would it reduce cost long term?  Or is it to impractical and expensive.

Interesting question.   I'll let others answer - I'll just pop up up and say "welcome to the forum, devonexpress".

[devonexpress]

To Reply

I think if it were done it would not be right to assume that the 1923 geographical split would be right for today as there was duplication of routes within companies and it might be better to change the boundaries to promote competition.  

 So what your saying is that brining back the New North Mainline and having a faster Paddington to Birmingham to connect with CrossRail & Heathrow Express would be a bad thing???



Regarding your specific statements:

It is not clear to me how this proposal reduces costs to the industry as a whole. It might reduce the money passsed between a TOC^▸ (Train Operating Company) and NR^» (Network Rail - home page), but that does not reduce the industry's costs.  

 I did not say reduce cost to the industry, I said the taxpayer meaning that train companies would recoup investment from fares, as well as other sources such a freight etc.

The costs of the railway come from government of the fare box. As I understand it at present the fare box pays to operate the current railway and the government pays for improvements.  Unless fares are to go up therefore, government will still be involved in decisions on improvements.  

We're not on about the present system, I am talking about an old 1930s model, which is used abroad and works well! If the railway company manages the railway, it is removed from government control, unless planning permission is needed.

Please also remember that most of the improvements in the 1930's were financed by low interest government loans to promote employment.  

Yes it could, but the same could be said of longer franchises.  Chiltern has demonstrated the benefit of long franchises.

  Yes but think how much more could be done if the company owned all the tracks and stations.

In GWR^▸ (Great Western Railway) the franchise boundary and the proposed company would be the same so there would be no change.

Once again, I am talking old railway boundaries, so the franchise companies would include Chiltern, Arriva Trains Wales, GWR, London Midland so actually that includes class 172s, 168's and the DVT^‡(resolve) sets.

5) With the train company running the infrastructure as well as the train service, decisions could be made easier than the current model which sees the Dft telling Network Rail who manage the timetables, and hand them over to the franchise.

There might be some improvement here, but I am not sure there would be as much benefit as people claim.

Other questions to be answered are:

What would happen to cross country routes? Most of these routes would go across several companies. Look at a pre-war timetable and many of these services were not as good as they are now.

Would there be damage to the freight sector where many of the flows would be across company?

Would open access still be allowed?  Arguably this has stimulated companies to introduce new services to areas that were previously poorly served.  

Considering that the original GWR had an agreement with LMS^▸ (London Midland Scottish - 1923 to 1948) to run summer services from Manchester to Plymouth, im sure that Crosscountry could continue under an agreement, possibly imposed on companies by the government. Considering that the freight sector would be exactly the same as XC^▸ (Cross Country Trains (franchise)) nothing would probably change, but possible the railway companies could take over their own section.
Bare in mind that in 1930s, competition to be the best, actually improved services, these days their is budget airlines, cars all to be competed with, so I can't see the need for open access.

[onthecushions]

I don't think that there has ever been full privatisation. Government has always legislated for routes, safety, charges, service standards etc. It has also interfered in company structures preventing or enforcing mergers.

A truly private competitive model is only possible if an industry is at 2/3 capacity, i.e it has about 50% excess available for competition. Only a hungry lion hunts. That's why we can't have competitive railways, hospitals, schools etc - they'd have base costs 50%  higher than a planned system.

If the truth is told, our present system is pretty good. It could be better if the TOC^▸ (Train Operating Company)'s and NR^» (Network Rail - home page) reported to a strategic BR^▸ (British Rail(ways)) plc, with power to direct better practice and reporting to DfT^» (Department for Transport - about).

A regional system would only end up with the GWR^▸ (Great Western Railway) reinstalling the broad gauge and nationally, 25 different types of Pandrol clip.

OTC

[grahame]

I don't think that there has ever been full privatisation. Government has always legislated for routes, safety, charges, service standards etc. It has also interfered in company structures preventing or enforcing mergers.

Even in Victorian time, railways were built under acts of parliament and safety systems which started from very little became regulated.   Perhaps the "Wild West" in the USA was the prime example of an unregulated private railway system - but that's from hearsay and not from personal knowledge.    The light railways act ( https://en.wikipedia.org/wiki/Light_Railways_Act_1896 ) was - as I understand it - a mechanism to allow less regulated railway construction - "more private" if you like.  To my knowledge, just one such railway (partially) remains as part of the UK^▸ (United Kingdom) national network today, but a number of others have made it into the heritage railway fold and operate under light  railway orders.

Perhaps "fullest privatisation" - the extreme position - would be the entire network using the heritage ethos.   From personal experience, that would mean £10 return fares for a distance of less that 3 miles each way, turning up at the station and finding a "no trains today" sign bacuse of a stock failure, and turning away potential customers who arrived at the station because there were too many people (that's a report from the last couple of days).   The 'good' companies would make sure the worst excesses didn't happen - the bad would take advantage, and the short-termism might prevail.   I recall some refranchising at the end of the SRA^» (Strategic Rail Authority - about) (Strategic Rail Authority) era which was harsh on regional and local lines. Without even that safety net it's not hard to envisage significant loss of stations - and indeed a number of lines - across the South West.   It could have been a "new Beeching Axe".

[ellendune]

I don't think that there has ever been full privatisation. Government has always legislated for routes, safety, charges, service standards etc. It has also interfered in company structures preventing or enforcing mergers.

Even fares were controlled to some extent (1d per mile parliamentary trains).

For freight they were deemed "common carriers" (untill as late as the 1960's) which meant if I understand it correctly they had to carry anything at a fixed rate per ton mile (regardless of whether it was coal, milk or gold watches).  This was OK until there was competition from unregulated road hauliers who could pick off the best loads and undercut the railways. 

A truly private competitive model is only possible if an industry is at 2/3 capacity, i.e it has about 50% excess available for competition. Only a hungry lion hunts. That's why we can't have competitive railways, hospitals, schools etc - they'd have base costs 50%  higher than a planned system.

That's a really good insight.  I hadn't thought of it, but now you mention it is obvious. 

With the cost of capital, most improvements would not be justified on commercial grounds alone so would need government grants so capacity would not increase. 

If the truth is told, our present system is pretty good. It could be better if the TOC^▸ (Train Operating Company)'s and NR^» (Network Rail - home page) reported to a strategic BR^▸ (British Rail(ways)) plc, with power to direct better practice and reporting to DfT^» (Department for Transport - about).

I think that's about it, but politicians will always want to meddle. 

A regional system would only end up with the GWR^▸ (Great Western Railway) reinstalling the broad gauge and nationally, 25 different types of Pandrol clip.

Despite the obvious economic advantage of standardisation that is the way it tends to go.

[Electric train]

No ........ not in the old big four companies, most if not all of the competing routes have gone, BR^▸ (British Rail(ways)) were driven down that path by Government to cut costs and become efficient.

If the national network as it stands to day were to be vertically integrated  ie a TOC^▸ (Train Operating Company) became the infrastructure operator they would always give preference to their trains over other TOC and FOCs^▸ (Freight Operating Company) irrespective of what legislation was put in place there would always be loop holes.
 
Certainly the franchise system is not working very well, Government departments are just not very good at efficient contracts and procurement     

The tax payer is paying less and less this has been successive Government policy for the last 20 odd years that's why the fares are so high, however there is still a large input of public money hence the Government will have a say in how it is used so pile on layers of bureaucracy because the railways have to justify what it does to you and me the tax payer or at least that's what the suits in the ministry say.

MPs^▸ (Member of Parliament) have never forgiven or trusted the railways ever since since William Huskisson MP was run over on the 15 September 1830

You seem to miss understand what I said about a train company becoming the infrastructure manager.  It would only be for the routes they operate i.E  GWR^▸ (Great Western Railway) would managed GWR territory.

The competing routes could easily be introduced, and what is to stop the government giving loans as and where needed, instead of buying a brand new fleet of Japanese bullet trains, or proposing a very expensive high speed train line to Birmingham, it could have let the train company buy the trains and reopened the Paddington to Birmingham Snow Hill line, which would only need redoubling on the New North Mainline and a few other places such as High Wycombe, along with some speed improvements, to match that of the West Coast!

I did not miss your point    There very few routes that are solely single train company operated (Isle of Wright and a few main land branch lines) all principle and secondary routes have at least freight or the potential for freight to operate over them, a vertically integrated route the TOC would give priority to their trains even if allowing other operators on their infrastructure was built into the sale any future train paths would be come subject to contractual negotiations.

If for instance the whole of the Western were sold to the First Group would they

• Be willing to pay full market price of the land and assets
  Take on the full liability of the debt
  

[ellendune]

I think if it were done it would not be right to assume that the 1923 geographical split would be right for today as there was duplication of routes within companies and it might be better to change the boundaries to promote competition.  

 So what your saying is that brining back the New North Mainline and having a faster Paddington to Birmingham to connect with CrossRail & Heathrow Express would be a bad thing???

That is not what I meant.  I think that 4 was too few.  There was no-longer competition between MR^▸ (Midland Railway) and LNWR^▸ (London North Western Railway) on many routes and GCR^» (Gloucester - next trains) and GNR of other routes.  There were more examples in the Southern. 

Regarding your specific statements:

It is not clear to me how this proposal reduces costs to the industry as a whole. It might reduce the money passsed between a TOC^▸ (Train Operating Company) and NR^» (Network Rail - home page), but that does not reduce the industry's costs.  

 I did not say reduce cost to the industry, I said the taxpayer meaning that train companies would recoup investment from fares, as well as other sources such a freight etc.

If the government is no longer paying some of the costs either the costs have to come down or fares have to go up unless there is a huge increase in capacity that can be paid for out of the farebox with a large profit.  I doubt that as most improvement schemes need to factor in social costs to get a positive CBA. 

Yes it could, but the same could be said of longer franchises.  Chiltern has demonstrated the benefit of long franchises.

  Yes but think how much more could be done if the company owned all the tracks and stations.

Up to a point but in the end the Oxford line has been funded on NR's credit card as agfter the crash, Chiltern could not raise the capital.

Edited to correct quotes

[devonexpress]

Since it only seem to be two members commenting, and seem to be very opposed to the idea, lets just have a little think...

Heathrow Airport - private, infrastructure, day to day running all managed by a private firm, yet it can still afford to improve things.

British Airways - Has a brand new fleet of 787's, A380s & A350's mostly funded by bank loans which BA^» (British Airways - about) pay off over the lifetime of the aircraft.


So lets customise this for the railways...

For example GWR^▸ (Great Western Railway) -  (franchises GWR, Arriva Trains Wales, Parts of London Midland & Chiltern)

Somebody put that First Group would buy it, but did I ever mention that?? No.

I clearly stated that a new company would be formed, 60% company owned, 40% shareholder owned.

Since the current franchise GW^▸ (Great Western) franchise has to pay £68 million to government from 2015 - 2019, what if that was directly pumped back into the railways (i.e it never leaves)  instead of going to the Government who then give it to Network Rail.  Any surplus could be either government loaned or bank loaned and paid off over 30 to 40 years.

The current model has to much bureaucracy, for example, the franchise TOC^▸ (Train Operating Company) can paint a station, only up to the stairwell height, anything above the stairwell (canopies, buildings etc) have to be painted by Network Rail, at another date, and a different time.

If full privatisation was to happen the RC(Railway Company) could do it all in one go.

[grahame]

So my question is, would a full privatisation model(pre:1947) work in the current time?

I do note that you are suggesting various effects - but the ultimate question is what would be your objectives of the changes?
Efficiency? Social? Political? Changing the slope to the playing field to help other transport modes? To create profitable companies?

What sort of fare and service levels would you like to see?  What size of network?  What (if any) guarantees of any services at all running beyond the short term?   What level of profit is reasonable if you have a totally private company?  I'm noting that your quoted example (Heathrow) is private rail and charges £2 per mile for journeys, no off-peak - is that OK /expected as a general rate? Would you be suggesting that local, regional or national government in any form might purchase service levels, or leave it all completely to the free market?

[IndustryInsider]

The current franchise model is to say the least poor, franchise operators try to keep cost low by refurbishing stock instead of buying new(mainly due to the short amount of time to recoup the costs).

It seems an interesting time to make that statement given the two recent franchise awards of Northern Rail and East Anglia have gone to bidders who have promised to buy very significant numbers of brand new trains, and we also have a significant amount of new rolling stock arriving on the Greater Western franchise - not to the mention the large fleets for Thameslink, Crossrail, Scotrail and SWT^▸ (South West Trains) now arriving.

By contrast, the one long term franchise, Chiltern, (aside from the 4 Class 172s in 2011) has only introduced cascaded Class 170s (reclassified 168/3s) and very old (but very well refurbished) Mk III carriages in recent years.

[ChrisB]

Don't forget that the Mark IIIs werea Wrexham & Shropshire efurb, not Chiltern - they just fell lucky when the former went bust...