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Train Franchises - Vehicles for profit?

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jondf
jondf  72473 forum posts
15 Aug 2012 - 8:00 AM

It seems Virgin's lost out to First Group over the running of the West Coast Mainline. Is it one troughing company replacing another, one wonders? And the government mouthpiece trumpets "improvements for passengers, with more seats and plans for more services". Really? So what was happening with the previous operator? And why - or so it seems - have passengers had to put up with below standard service that will somehow right itself under another private operator?

http://news.uk.msn.com/uk/articles.aspx?cp-documentid=250913736

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mdpontin
mdpontin  96016 forum posts Scotland
15 Aug 2012 - 8:43 AM

More likely another 'National Express' fiasco - an unrealistically low bid to oust the incumbent, then a realisation that they can't run the service on the money they've budgeted. What's the chances of another 'nationalised' rail company in a year or two - probably with a snappy name like...um....West Coast!

mikehit
mikehit e2 Member 45766 forum postsmikehit vcard United Kingdom9 Constructive Critique Points
15 Aug 2012 - 9:17 AM

I don't know what the motives were for cutting the Virgin contract but it seems to be that the new company is paying more into the government coffers. A shame really because depsite the complaints about the work schedule for updating the west coast line, people seemed in general to be happy with what Virgin were doing.


Quote: So what was happening with the previous operator?

You've seemingly provided your own answer in your next sentence...Wink


Quote: And why - or so it seems - have passengers had to put up with below standard service

I am not sure people can describe exactly what 'standard service' is - it is one of those nice woolly terms but ask people what it is they actually want and they get all vague. And then ask them to pay for that 'standard' and you will see quite a different reaction again. The much-lauded French system is creaking badly because of the amount of (government) money it requires which indicates how much these things cost.

I do, however, agree with your cynicism about the claim that another private operator will put it right. Virgin made it quite clear about three years ago that they were hesitating to introduce the new-fangled engines/carriages precisely because the government could whip away the franchise at any time for any reason whatsoever and so it has proved. I am sure the new company will be even less willing to invest in rolling stock given the amount they have paid.

Last Modified By mikehit at 15 Aug 2012 - 9:22 AM
thatmanbrian
15 Aug 2012 - 9:29 AM

I think the public need to be educated in economics. Trains are exceedingly expensive to run and maintain and improve. Despite government money, taxpayer money and rail fares themselves, railways the world over all loose money.

We have to decide if we want a railway. If so, do we want national coverage regardless of economics? Or just the profitable routes? Is it a public service or a business? Should train fares reflect the TRUE cost or should the government use taxpayers money (even those who don't use trains) to subsides the fares?

I'm amazed how many people ignore such things and just whinge about high fares or poor service. A reality check is what's needed.

thewilliam
15 Aug 2012 - 10:22 AM

Just why did G4S win the contract for security at the Oly**ic Ga**s?

Government departments have a long history of choosing inappropriate contractors. Plus ça change!

JackAllTog
JackAllTog e2 Member 53469 forum postsJackAllTog vcard United Kingdom58 Constructive Critique Points
15 Aug 2012 - 10:27 AM

Regular long distance train journeys are surely only taken by people who can expense the massive fares as to a business. Or are on a sufficiently high salary to not worry about the thousands of pounds a year spent in travelling.
Occasional long distance train journeys for visiting people and places are really expensive - it seems cheaper to hire a car for a day, or better still get on a coach. Are we all paying mostly for subsidised business travel?

In my opinion long distance trains routes mostly help businesses and the affluent to move around the country - whist this may help inject some funding into local economies how is it that everybody is taxed for what mostly seems like a business privilege!

I'm a daily shorter (30-40mins) commuter from the home counties to London and recognise that keeping London working is important but this does mean that to transport the workforce into businesses in London means more tax for all - could/should we be less London centric if we did would be need more even train services around the country.

lobsterboy
lobsterboy Site Moderator 1013937 forum postslobsterboy vcard United Kingdom13 Constructive Critique Points
15 Aug 2012 - 10:35 AM

I do always wonder what possible reason a company that has been given a 13year contract has to improve the service, as long as they meet the letter of the contract there is very little incentive for them to do any more than the minimum needed to keep the contract.

robthecamman
15 Aug 2012 - 10:39 AM

its not a service its a rip off.wonder wat there bonuses are

mikehit
mikehit e2 Member 45766 forum postsmikehit vcard United Kingdom9 Constructive Critique Points
15 Aug 2012 - 11:15 AM


Quote: Just why did G4S win the contract for security at the Oly**ic Ga**s?

Government departments have a long history of choosing inappropriate contractors. Plus ça change!

G4S won the Games contract based on providing 2,000 security people as per LOCOG's request and G4S were an appropriate contractor.Late 2011, LCOG then realised they needed 10,000 security staff (how the hell did they get it that wrong) and G4S said 'no problem'. That was the first big mistake - the next one was that no-one at LOCOG was responsible for vendor ovesight to make sure the vendors were doing what they promised and that was the second (and to my mind, worse) big mistake.
Yes, G4S screwed up by accepting the expanded contract but LOCOG showed their incompetence as well.

mikehit
mikehit e2 Member 45766 forum postsmikehit vcard United Kingdom9 Constructive Critique Points
15 Aug 2012 - 11:17 AM


Quote: Its not a service its a rip off.wonder wat there bonuses are

In what way is it a rip-off? Just interested...

mikehit
mikehit e2 Member 45766 forum postsmikehit vcard United Kingdom9 Constructive Critique Points
15 Aug 2012 - 11:23 AM


Quote: I do always wonder what possible reason a company that has been given a 13year contract has to improve the service, as long as they meet the letter of the contract there is very little incentive for them to do any more than the minimum needed to keep the contract.

I think the real problem is that the government gets involved at all. It is either a private enterprise or it is not - and the company should be judged by the regulator as to whether they company is providing the service that was in their franchise agreement, and not lose it based on how much the new guys will pay the government.
You only need to look at when the government too railtrack out of the private sector: the Government disbadned them because they were too expensive and so were 'poor value' yet they paid twice as much to seed the new organisation than RailTrack had been asking for as a support payment. Total and utter political incompetence

lobsterboy
lobsterboy Site Moderator 1013937 forum postslobsterboy vcard United Kingdom13 Constructive Critique Points
15 Aug 2012 - 11:27 AM


Quote: the company should be judged by the regulator as to whether they company is providing the service that was in their franchise agreement, and not lose it based on how much the new guys will pay the government.

But then, once you got the contract as long as you complied with the agreement then you would keep the franchise for ever. And what would your incentive be to provide a better/ more innovative service ?

thatmanbrian
15 Aug 2012 - 11:44 AM

Remember how rail contracts work. Virgin or First may bid £30 billion or whatever but no money changes hands. They just issue a bond in that amount. They then have a free hand to run the railway and at the end of the year they decide how much to pay the government depending upon their profits. In return the government pay a subsidy to them each year to keep the cost of tickets low (-ish). The train company income is from fares and a proportion of that is put aside for infrastructure investment (billions) and rolling stock etc. The contract includes a clause allowing the company to cancell early if their sums were wrong so they then don't have to honour their £30b bond. All very silly and typical accounting smoke and mirrors. For instance on paper the government "have" £30b to play with over the course of the contract but of course they don't really, but it goes into their accounts so looks good in the Budget. Crazy.

mikehit
mikehit e2 Member 45766 forum postsmikehit vcard United Kingdom9 Constructive Critique Points
15 Aug 2012 - 12:19 PM


Quote: the company should be judged by the regulator as to whether they company is providing the service that was in their franchise agreement, and not lose it based on how much the new guys will pay the government.
But then, once you got the contract as long as you complied with the agreement then you would keep the franchise for ever. And what would your incentive be to provide a better/ more innovative service ?

And that is the skill in writing the franchise agreement. Planning for infrastructure projects can be decades in advance and if the regulator can remove a service for ill-defined reasons then that will stop the company investing in projects that will not come to fruition for the longer period.
Unfortunately the government is notoriously incompetent at negotiating contracts because of political expediency.

mikehit
mikehit e2 Member 45766 forum postsmikehit vcard United Kingdom9 Constructive Critique Points
15 Aug 2012 - 12:22 PM


Quote: Remember how rail contracts work. Virgin or First may bid £30 billion or whatever but no money changes hands. They just issue a bond in that amount. They then have a free hand to run the railway and at the end of the year they decide how much to pay the government depending upon their profits. In return the government pay a subsidy to them each year to keep the cost of tickets low (-ish). The train company income is from fares and a proportion of that is put aside for infrastructure investment (billions) and rolling stock etc. The contract includes a clause allowing the company to cancell early if their sums were wrong so they then don't have to honour their £30b bond. All very silly and typical accounting smoke and mirrors. For instance on paper the government "have" £30b to play with over the course of the contract but of course they don't really, but it goes into their accounts so looks good in the Budget. Crazy.

And that is part of the problem. It seems to me the government is looking at return on investment while the train operator and the public are pressures to look at quality of service. Unfortunately the government's need for money wins out.

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