Virgin / Stagecoach to hand back the East Coast franchise

Discussion in 'transport' started by agricola, Nov 29, 2017.

  1. agricola

    agricola a genuine importer of owls

    A380 likes this.
  2. Sprocket.

    Sprocket. No matter where; of comfort no man speak..

    It should never have been re-privatised in the first place. It was actually making a profit before it went to Virgin.
    More taxpayers hard earned contributions going into a rich man’s pockets.
  3. teuchter

    teuchter je suis teuchter

    As ever it's not really about nationalised vs privatised, but botched and muddled long term transport policy.

    Also, the proposed arrangement here is more complex than the thread title implies (VTEC will not "hand back" the franchise; they'll remain involved under a new arrangement), and we don't yet know the full details.
  4. teuchter

    teuchter je suis teuchter

    The EC franchise always makes a "profit". A profit still goes to DfT when it's in private hands. The question is how much, and how to fairly compare between different periods when each has different externalities.
  5. mauvais

    mauvais change has become unavoidable

    Why not? You've talked about this previously and the thrust of it, though I may be misinterpreting you, seems to be that you believe there is no clear difference in terms of cost to the taxpayer between DOR and various private incarnations. If so, I'd like to see the evidence for this.
  6. Bahnhof Strasse

    Bahnhof Strasse Free the Sepsis Six!

    Can we un-ban bungle please?
    Badgers, T & P and farmerbarleymow like this.
  7. editor

    editor Taffus Maximus

    Fucking wankers. How much money has been lost to the railways because of these fuckers pocketing profits?

  8. teuchter

    teuchter je suis teuchter

    Yes, it doesn't appear to me that there's clear evidence either way. I don't find strong evidence that it cost the taxpayer less during the DOR period. I also don't find strong evidence that it cost the taxpayer more.

    As ever it's difficult to prove the non-existence of something (in this case, strong evidence either way). If anyone can show me good evidence that it cost the taxpayer significantly less during the DOR period, in a way that's transferable/scalable beyond the particular circumstances of that operation, then I'm totally prepared to change my view. The financing of the railways is massively complicated and if anyone can untangle it in a better way than I've managed to do myself, I would be very interested to see this.

    What frustrates me is that every time this question comes up, someone says something about how it made a "profit" when it was quasi-nationalised, and everyone nods and tuts, but actually this information doesn't tell us anything useful. Because EC always makes a "profit". It was also the case under BR, I believe, when they accounted for things in this way, sector by sector. They used this "profit" to "subsidise" other sectors which made a "loss". The same effectively happens now, with some franchises paying a premium to government, and others receiving payments.

    Network Rail, which is now nationalised, needs a subsidy. Therefore you could say it makes a "loss". But that in itself doesn't tell us anything meaningful about the nature of its ownership and the implications for cost to the taxpayer. Just like DOR making a "profit" doesn't in itself tell us anything meaningful about the nature of its ownership and the implications for cost to the taxpayer.
  9. Sprocket.

    Sprocket. No matter where; of comfort no man speak..

    You are easily frustrated teuchter.
  10. Gromit

    Gromit International Man of Misery

    There's not enough facepalm emojis and gif on the entire internet for me to comment on this fully.

    They took something that worked and couldn't help themselves they just had to go and break it because private is better. Is it fuck.
  11. teuchter

    teuchter je suis teuchter

    Better than easily swallowing simplistic narratives because, well, it's easy.
  12. tim

    tim Well-Known Member

    It's shameful the way you lot pick on some accident-prone homeless guy like this.


  13. agricola

    agricola a genuine importer of owls

    They are handing the franchise back - Grayling didn't say that the new arrangement he wants to replace it with would automatically include them (he implied it would be put out to tender).
  14. mauvais

    mauvais change has become unavoidable

    I've no doubt that railway financing is complex, and can be further obfuscated with discussions about subsidy. However it would seem a reasonable base assumption, Occam's razor and all, to suspect that introducing a for-profit private operator increases the cost to the taxpayer because, the detective in me exclaims, it has to make its private profit.

    You could counter this by demonstrating that the private sector has e.g. some greater set of efficiencies or relationships that enables its profits to be drawn entirely from cost savings, but this is demonstrably not the case in many PFI contracts, and it seems a reasonable default position to very much doubt it applies here.
  15. Dogsauce

    Dogsauce Lord of the Dance Settee

    It certainly cost this taxpayer a lot more - Leeds to London was £13 for the cheapest advance fare under DOR, and quite easy to get hold of if not travelling on a Friday. Branson immediately raised it to £14.50 (more than 10% increase) and it also suddenly seemed impossible to get the cheapest tickets - I was having to pay £22 or so each way for the next tier of pricing, so nearly twenty quid down on a return trip. That's capitalism's 'magic money tree' for you delivering higher payments to the government- straight out of my pocket.
    muscovyduck and Bahnhof Strasse like this.
  16. Dogsauce

    Dogsauce Lord of the Dance Settee

    Anyhow, the government's vertical integration strategy is just a sly way of trying to break up and privatise Network Rail, because of bullshit free market idealism. Expect costs to increase as different franchises fight over the limited pool of specialist staff that know how things work. Expect fragmentisation of safety standards and the kind of value engineering that gave us Potter's Bar and Hatfield. You always get a shit deal with this lot.
  17. teuchter

    teuchter je suis teuchter

    They are not handing back the franchise now. The franchise was originally agreed to run to 2023. Now it will run to 2020, after which it will be replaced by a new arrangement which will be put to tender as you say. Because the duration of the franchise is being shortened by the DfT, the terms for the remainder of it have to be renegotiated but VTEC will continue to operate it for another 3 years.

    To say that VTEC are "handing it back" is misleading. The decision to shorten the franchise is made by the DfT. I'm aware of this being in the context of VTEC not making as much money as expected but it's also in the context of Network Rail / the DfT not upholding their end of the deal, with infrastructure upgrades having been delayed. There's obviously an incentive for both sides to renegotiate the terms. I'd rather know what those renegotiated terms are, before jumping to conclusions about "bailouts" and so on.
  18. teuchter

    teuchter je suis teuchter

    Given that you've moved to talking about reasonable default assumptions about what is likely to be the case, rather than evidence of what actually is/was the case, can I take it that you also see no strong evidence either way, in the case of DOR operating the EC franchise?

    With regard to your points - yes private operators have to include the cost of taking their profit, although it would technically be more accurate to say that their bid for the franchise is an estimate of the cost of providing the franchise requirements whilst also managing to take a profit. There's no guarantee that they do actually take the profit (see Abellio/Scotrail). But as I understand it the margins on average are pretty tight, around 2%. In the bigger picture I don't think that's such a big deal. Even if it's true that private operators offer zero advantage in efficiency and so on.

    We don't see shock headlines that say "private operator increases cost to taxpayer by 2%".

    Maybe renationalising all the franchises would save 2% on the cost of running the railways. But in terms of sorting out transport policy generally why prioritise such fiddling about with small change when it's not going to resolve any of the big problems?

    We've just had a budget where fuel duty for motorists is frozen yet again. Government policy is to increase the proportion of the cost of running the railways that is paid by passengers. Meanwhile, to decrease the amount that motorists pay towards running the road network and all of the other societal costs that spring from it. And instead of talking about this - the important stuff - people trot out ill-informed lines about how a temporarily nationalised franchise made a profit. So what, basically.
  19. Dogsauce

    Dogsauce Lord of the Dance Settee

    Branson's problem is that he still thinks his brand is worth a shit. Having done a reasonably good job of running an airline he thought that the social capital from that could be transferred to running a popular railway operation, which despite some bold ideas at the offset (increased frequency, clockface timetables) soon came up against the realities of a much more regulated and physically constrained operation. After 20 years of fuck ups and struggle nobody can muster enthusiasm for his red trains and whatever shitty famous designer uniforms he sticks the staff in. It's worth nothing.

    I don't think there is anything new that private sector operators can bring to franchises - the only efficiencies they seem to offer is squeezing staff wages. Only the open access operators are developing new services and creating new markets, but often they're opposed by franchises to defend losing a share of general fare money on common parts of the route.
    Rosemary Jest, muscovyduck and oryx like this.
  20. Crispy

    Crispy The following psytrance is baṉned: All

    The rolling stock leasing business is a much bigger deal when it comes to costs, as far as I can tell. (disclaimer: have not really looked into it; this is a 3rd hand opinion)
  21. Pickman's model

    Pickman's model Every man and every woman is a star

    if he had a boil on his face he'd be the spitting image of a well-known urbanite
    tim likes this.
  22. teuchter

    teuchter je suis teuchter

    Yes, that I think was one of the conclusions of one of those reports into costs in the current system.
  23. Dogsauce

    Dogsauce Lord of the Dance Settee

    Anyway, as far as east coast goes it's preposterous that the Leeds-Colton electrification has been delayed/cancelled as that offered the opportunity for a much improved Leeds-London service, trains would no longer need to reverse at Leeds and missing Wakefield out from every other train would save a few minutes on journeys (don't know why they don't do this under the existing set-up). Diversions due to engineering or incidents would be much less disruptive. Electrifying this missing link of about 15 miles with no tunnels and only a handful of bridges to raise would be in the tens of millions only, yet like most big schemes outside London it's been kicked into touch for now.
    Sprocket. likes this.
  24. teuchter

    teuchter je suis teuchter

    Latest on this:

    Chris Grayling Admits East Coast Rail Franchise Has Collapsed

  25. OzT

    OzT Online early mornings when at work ....

    I know it's called Virgin East Coast, but the major owner is actually Stagecoach, which lost SWT last year.

    And I know I am biased, but SWT ran so so so much better than SWR now, and even against other TOCs. But losing SWT I fear may also hinder East Coast developments as revenue to Stagecoach has been cut.

    I really feel it would have worked better if the goverment had not wanted SWR to win the contract and Stagecoach kept SWT and brought out Virgin on the East Coast, then that line would have ran better.
  26. teuchter

    teuchter je suis teuchter

    I don't think stagecoach would have used any revenue they'd still be gaining from SWT to effectively subsidise the east coast operation. In any case, as I understand it the amount of profit franchisees make is pretty small relative to the running costs/turnover.
  27. davesgcr

    davesgcr Reading books

    Something like 3 to 4 %

    The problem is cost - leasing / Network Rail getting over £4 BN in network grants , the ridiculous contract interfaces , "project management" , etc etc. Course BR managed its own risks and did most things in house with a much wider and flexible remit , hardly touched by the DfT (apart from the latters cruel funding strategy and desire to shut most of the rural railway down every now and then)
  28. teuchter

    teuchter je suis teuchter

    Yes, the DfT seems to make strategic decisions that previously would have been made within BR. And doesn't always make a very good job of it.

    But also is operating in a very different world from that which BR was running in.
  29. davesgcr

    davesgcr Reading books

    Well said ...
  30. OzT

    OzT Online early mornings when at work ....

    I wasn't on about the revenue if SWT had kept running for Stagecoach, more the man management of the company and the relatively efficient, certainly both compared with SWR currently, running of the trains.

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