Rail Privatisation - a real horror story.

[JohnV]

Have a read of this folks - be prepared to be shocked.

http://www.theguardian.com/commentisfre ... ors-profit

[greenglade]

Personally I take little notice of papers that are bias to one party or another no matter who they support.. this paper is a labour supporter and I think most remember what a mess they made of things.

Pete

[Andy W]

I am no fan of the current structures (despite working in them) but this was a poor article with a bit of voodoo research done by the arch-anti privatisation academics who also did something on rail for the TUC earlier this year.

The profit per capital employed ratio is bunkum because TOCs are thinly capitalised vehicles, deliberately so because it is almost impossible for such bodies to get finance to invest in items they do not own or they do not have rights to use over the remaining life of that asset. This type of TOC was a deliberate ploy when the structure was devised to get round this major issue.

TOCs are set up to be mainly revenue account "vehicles" and any investment normally has to be baked into the initial bid and funded by the returns generated over the relatively short lifetime of the franchise. Owning groups tend to be thinly capitalised as well so substantial funding off their balance sheet is usually a non-starter.

Profit on revenue turnover is a far better measure of how well the TOCs are doing. A look at annual parent company fees per TOC wouldn't go amiss either!

The DfT still calls the shots on every franchise so the TOCs are a bit of an artificial construct in order to get Revenue account costs off the Governments books as well as ensuring the Treasury doesn't subject them to yearly changes like they did with BR. I personally doubt whether the Treasury would have allowed the railways to grow over the last few years if BR had still been in being so there has been an argument for them but not as strong as ATOC would have you believe.

But whether it is cost effective to continue with this system is debateable. The degree of control the DfT still has over the TOCs rather begs the question of what value they are when "leakage" of public money through delivery structures (both private and public) should be ruthlessly minimised.

That for me is the real debate.

[Trestrol]

Did you know that the LNER proposed a similar arrangement to what we have today as an alternative to nationalization in 1947. The big four would continue to run trains with the state controlling the infrastructure.

[strang steel]

No, I didn't know that.

However I do think that a publicly controlled Loco & Rolling Stock company might have been a better idea, because the problems of private finance for stock with an unkown future utilisation would have been by-passed by maybe using government bonds, and more long term planning which had been a good part of BR (I am thinking mostly of the cascade programme).

[Coronach]

Personally I take little notice of papers that are bias to one party or another no matter who they support.. this paper is a labour supporter and I think most remember what a mess they made of things.

Pete

What's the difference between them, Pete? I can't see any. There hasn't been a good PM in the UK since Attlee. The big Westminster parties all sold their souls to The City long ago. Not one of them has any vision beyond the next election and maintaining a snout in the trough; paid for of course by ordinary folk like us.

The Westminster system has succinctly failed to develop any kind of coherent transport strategy in any case and I have no faith in their ability to organise anything as complex as a paper round. They're far too busy playing 'Divide and Rule', whilst carrying out the biggest 'Distraction Theft' in history, whilst blaming everybody else for they chaos they and their backers created.

Dave.

[PinzaC55]

Personally I take little notice of papers that are bias to one party or another no matter who they support.. this paper is a labour supporter and I think most remember what a mess they made of things.

Pete

What's the difference between them, Pete? I can't see any. There hasn't been a good PM in the UK since Attlee. The big Westminster parties all sold their souls to The City long ago. Not one of them has any vision beyond the next election and maintaining a snout in the trough; paid for of course by ordinary folk like us.

The Westminster system has succinctly failed to develop any kind of coherent transport strategy in any case and I have no faith in their ability to organise anything as complex as a paper round. They're far too busy playing 'Divide and Rule', whilst carrying out the biggest 'Distraction Theft' in history, whilst blaming everybody else for they chaos they and their backers created.

Dave.

Wow, that is exactly what I would have posted.

[brsince78]

I can't help but think that they missed a trick by not creating BR PLC as a single entity. People might argue that this would have created a monopoly. But a monopoly of what? Rail is just one of a number of means of travel. The organisation that Bob Reid Mk1 set up on vertically integrated principles in the late 80s / early 90s lacked two things; the ability to raise capital and the freedom to spend it's own money. i.e. without government interference.

[Coronach]

It appeared to work well for BT so perhaps you have a point.

Dave.

[PinzaC55]

And yet Lloyds TSB has been split into Lloyds and TSB due to a directive from Europe. York used to have 2 Lloyds TSB branches but now if I go to the TSB and withdraw cash the ATM doesn't give me my balance as it used to. How are they able to justify a privatised, near monopoly Royal Mail ?

[Coronach]

Royal Mail's lucrative operations will be cherry picked by the privateers, leaving the loss making aspects to be paid for by the citizens through taxation. Privatise the profit; socialise the losses.

[Mickey]

Deleted

[Andy W]

The cynical amongst us saw the PRDC being built with that nice road connection down to the North Circular for all their artics and we all wondered what the real game might be.

It didn't take too long to find out.

[strang steel]

Back around 1999-2001 Railtrack as it was then before becoming Network Rail had the Royal Mail contract to carry mail on the railways, they then went and built a HUGE combined Royal Mail/railway depot at Willesden in north west London and fitted out a fleet of red livered DMUs


<snip>

To be honest i was glad when Railtrack 'lost the contract' and the mail went back on the roads but what a waste of money building the HUGE combined Royal Mail/railway depot at Willesden and also fitting out a fleet of Royal Mail DMUs

EMUs Micky. Class 325.

They do still operate so the money was not totally wasted.

Some of the private rail companies have contracts with Royal Mail for movement of mail between London and Scotland, and they can be seen on the WCML most days.

There was talk of one set running up the ECML as well, but I don't know if this has happened yet.

[1H was 2E]

The cynical amongst us saw the PRDC being built with that nice road connection down to the North Circular for all their artics and we all wondered what the real game might be.

It didn't take too long to find out.

On the opposite side of the WCML there's (or was) a Heinz factory. Heinz were allowed around 1971 to buy railway land on the promise of sending traffic by rail. The building they erected was very large and square, with one track to it that passed through a door. I recall that, when it was built, they had a trial with a 'Supervan' (45t Cov AB) but that was it. Passing recently, I noticed the door was bricked up.
It seemed an unusual arrangement to have only one track into such a large building if the purpose of that building was solely to load rail traffic.
In the mid '70s us (?cynical) clerks in freight marketing regarded it as an example of how easily commercial firms could hoodwink our management. Obviously the PO learned from Heinz how to get land with great access to the road network cheaply.