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Rami
August 15 2012, 01:10:37 PM
So it seems Virgin lost their contract to run the West Coast rail line in the UK (see: http://www.bbc.co.uk/news/business-19264614). Now I realise this is quite country specific so for those of you who are interested in general but not familiar with the situation I'd advise reading up a bit on the UK rail sector state of affairs (e.g. read http://en.wikipedia.org/wiki/History_of_rail_transport_in_Great_Britain).

This recent event opens the question as to what should be done with the UK rail sector. Anyone living here knows how expensive it is, how bad services can get (especially in the southeast) and in general how outdated the services feel.

In my opinion Virgin did a fab job of managing their line. Their coaches were more modern, their wifi actually worked (not even mentioning that they actually HAVE wifi) and their prices were not exuberant. On the flip side, FirstGroup have a record of screwing up the line, overbidding on franchises and then walking away when the balance sheet doesn't work out.

Should there be a drive towards re-nationalisation? Should the franchise process be altered or packaged more strictly? What do non-UK people think about the UK rail system (and your own experiences if you've used it) and what countries run it better/best?

Myself, I think privatisation can work if it's run Virgin style, but it doesn't look to be going that way (unless they bid on others and win for once). The main point going for nationalisation is that managing networks from a single source can reduce costs on maintenance as you can roll everything out across a single network. But why not privatise the entire network as a whole to a single company, as competition is a non-factor here.

It is also irksome that the main focus of the government, and obviously the franchisees themselves, is profitability rather than providing a good service.

Warpath
August 15 2012, 01:20:20 PM
Whilst I agree with the privatisation in principle, there have been many reasons why it has failed abysmally. The only long term hope for the UK rail service is to nationalise again. Trouble is that we are skint. If you look at the billions ploughed into the rail service over the years by the tax payer, they could have replaced the vast majority of the lines and rolling stock. Instead of this a large amount of it has gone in inflated fee's, dividends and seemingly backhanders..

definatelynotKKassandra
August 15 2012, 02:45:21 PM
1. UK train privatisation was structured in a completely retarded manner.
2. It also brought big benefits

Those benefits are now done, now we're stuck with the legacy of the retardation.

IMO.

elmicker
August 15 2012, 02:48:17 PM
Did it really bring any benefits? Ticket prices have soared, but so has the government subsidy, while the quality of the service hasn't substantially improved, and the government is still the one saddled with the bill for rolling stock purchases and major infrastructure projects. Nationalise the whole bloody lot of it to be honest.

Smuggo
August 15 2012, 02:52:24 PM
Big benefits for shareholders and CEOs of train operating companies, big pile of shit for everyone else.

NoirAvlaa
August 15 2012, 02:57:54 PM
Virgin are p. good at running the trains. If you shop around you can get a decent price and the train isn't a mouldy, overcrowded, out-dated peice of crap. Unlike the guys taking over.

elmicker
August 15 2012, 03:07:38 PM
First really are fucking terrible. I've never seen them run more than 3 carriages on the york->leeds->manchester->liverpool run, despite it being one of the busiest commuter lines in the country. The only TOC i've encountered that are consistently worse are Northern, whose trains feel like buses from the late eighties.

NoirAvlaa
August 15 2012, 03:19:34 PM
First really are fucking terrible. I've never seen them run more than 3 carriages on the york->leeds->manchester->liverpool run, despite it being one of the busiest commuter lines in the country. The only TOC i've encountered that are consistently worse are Northern, whose trains feel like buses from the late eighties.

Basically this. Northern are the only ones that run from my station into Liverpool and I've yet to get one that looks like it's from the 90s, nevermind "modern". They even have wooden ladders strapped by the door that don't exactly look like they're the most reliable climbing devices anymore.

Tafkat
August 15 2012, 03:20:59 PM
First are absolute shite, and you'd have thought that the G4S olympics fiasco would've taught the tories that one cannot automatically assume that the lowest (well, in this case, highest...) bidder will deliver an acceptable product.

Smegs
August 15 2012, 07:56:13 PM
It's the Tories .... they ARE corrupt. If they can cheap out on anything and make a few bob for themselves whilst they are at it, that's what they go for. Unfortunately there isn't an alternative as all the other parties are just as bent. Which leads to the end user getting fucked as per usual.

Re-nationalisation would be great IF the government, who ever that may be, could appoint a hard working and focussed management team (which it wont due to the 'old boys' club), a good hard working and focussed workforce (which it can't due to trade unions) and can afford it ( ..... lol).

Face it. Our national rail system is on a road to becoming a rich persons travel choice, where only those on inner city wages will be able to commute or the alternative is old rolling stock, poor infrastructure and investors laughing all the way to the banks once more. :(

.... /bitter

Warpath
August 15 2012, 08:02:13 PM
It's the Tories .... they ARE corrupt. If they can cheap out on anything and make a few bob for themselves whilst they are at it, that's what they go for. Unfortunately there isn't an alternative as all the other parties are just as bent. Which leads to the end user getting fucked as per usual.

Re-nationalisation would be great IF the government, who ever that may be, could appoint a hard working and focussed management team (which it wont due to the 'old boys' club), a good hard working and focussed workforce (which it can't due to trade unions) and can afford it ( ..... lol).

Face it. Our national rail system is on a road to becoming a rich persons travel choice, where only those on inner city wages will be able to commute or the alternative is old rolling stock, poor infrastructure and investors laughing all the way to the banks once more. :(

.... /bitter


Labour were just as bent when in power and did nothing to sort the problems out, and as far as the workforce goes, the only way you would have any hope is to effectively bankrupt the whole rail system and shut it down, spin it all off into a state owned but effectively privatised company and re-employ the staff on non union contracts to fuck over people like Bob Crow..

elmicker
August 15 2012, 08:06:11 PM
Re-nationalisation would be great IF the government, who ever that may be, could appoint a hard working and focussed management team

The TOC that has put the most into the government's coffers in the past year is East Coast. Entirely through coincidence this is the only TOC that is state-owned.

It is, of course, going to be re-privatised in just a few months.

Lallante
August 16 2012, 09:19:53 AM
I know quite a lot about this topic as I've worked on train deals.

First's approach is essentially to "backload" a lot of the big payments to government and investment in infrastructure to the end of the contract, and make very optimistic assumptions about passanger growth. Then, when the assumptions are proven false, they plead "lower passenger numbers than expected" and escape having to make those payments to government or that investment in infrastrucure.

That they can keep doing this is symptomatic of our most markets now following the huge consolidation that has occured over the last 30 years. Most markets (e.g. "Rail Service Companies") only have 3 - 5 big players left in them, all smaller entities having been bought up and merged in. This means the government CANT tell a company to fuck off for past discretions without seriously undermining competition. This means companies keep getting away with heinous performance. This is the exact corrolary of too-big-to-fail in the banking sector.

The solution for rail, much as I hate to say it, is renationalisation. The wider solution across the economy is VASTLY stricter rules on competition. Do not permit a merger that will result in one entity controlling more than, say, 7 or 8% of a market, and make companies with more than 15% of a market be forced to split up (a la microsoft). If you dont want draconian rules on this, simply have some kind of escalating taxation system or play with public procurement rules.

Kanv
August 16 2012, 09:41:07 PM
We have a privatised train system here in southeast rooland. The government fines the operator for having a certain % late, so often you hear an announcement saying sorry M8s, this train is now skipping all stations and going to the end of the line direct, get off and get a different one.

Lallante
August 17 2012, 08:58:00 AM
We have a privatised train system here in southeast rooland. The government fines the operator for having a certain % late, so often you hear an announcement saying sorry M8s, this train is now skipping all stations and going to the end of the line direct, get off and get a different one.

Haha thats a good one.

The UK version of that trick is complicated by the fact that "late" is measured by reference to the schedule defined by the train operator. As a result a train between London and Bristol (one of the main lines in the country) now officially takes 15 minutes longer than it did in 1900 under steam power (!!!!!!)

Smuggo
August 17 2012, 09:01:33 AM
We have a privatised train system here in southeast rooland. The government fines the operator for having a certain % late, so often you hear an announcement saying sorry M8s, this train is now skipping all stations and going to the end of the line direct, get off and get a different one.

Haha thats a good one.

The UK version of that trick is complicated by the fact that "late" is measured by reference to the schedule defined by the train operator. As a result a train between London and Bristol (one of the main lines in the country) now officially takes 15 minutes longer than it did in 1900 under steam power (!!!!!!)

Didn't there used to be a thing where cancelled trains didn't count and then you'd randomly get trains being cancelled for no apparent reason when congestion had caused busy lines to get backed up?

Lallante
August 17 2012, 10:02:06 AM
We have a privatised train system here in southeast rooland. The government fines the operator for having a certain % late, so often you hear an announcement saying sorry M8s, this train is now skipping all stations and going to the end of the line direct, get off and get a different one.

Haha thats a good one.

The UK version of that trick is complicated by the fact that "late" is measured by reference to the schedule defined by the train operator. As a result a train between London and Bristol (one of the main lines in the country) now officially takes 15 minutes longer than it did in 1900 under steam power (!!!!!!)

Didn't there used to be a thing where cancelled trains didn't count and then you'd randomly get trains being cancelled for no apparent reason when congestion had caused busy lines to get backed up?

Cancelled trains do count but towards a different metric - by cancelling a train you can run the ones behind faster and therefore make up "late" time for 5-6 journeys while cancelling only 1

Sacul
August 17 2012, 10:18:43 AM
Knowing a bit about the UK train service and a lot about NL i can say they are pretty much the same in model and thus retardation. As Lall pointed out the biggest motivator in privatization back in the '90s was competition and cost reduction under neo-con rulesets but there is hardly any competition left over here aswell and we are now down to 3 train operators in the entire country. With one of them having 70% control. Competition my ass its just a private monopoly.

On the running on time bit we just had a nice little media upset over here as it became publicly known that the train companies actually monitor themselfs with respect to running on time which makes for a whoping 80% on time rate. Anybody who rides a train like I attleast a few times a week will know its absolutely bullshit and if 50% run on time its a good day. Nevermind when its autumn and we have leafs on the tracks, or winter and there is 2 cm of snow or above 25 degrees celcius......the list goes on and on.

I dont think nationalisation would help a lot over here because the problem isnt so much the management style as it is the people in charge who seem to be complete halfwits, incompetent in managing communications, acurate weather forecast (the amount of times we have a weather alarm and hence reduced train traffic makes you think we live in hurricane ally USA) or even something as simple as a summer time table which for this year is set at a staggering 9 weeks with the first 2 having basicly nobody on holiday and the schools were also still in session and the last week where all holidays are allready over and school allready started again. In those weeks the train is nothing but a cattle wagon.
Roads arent a better alternative in the conglomorate area of Rotterdam, The Hague, Amsterdam and utrecht either, congestion congestion congestion.

NoirAvlaa
August 17 2012, 10:28:13 AM
Knowing a bit about the UK train service and a lot about NL i can say they are pretty much the same in model and thus retardation. As Lall pointed out the biggest motivator in privatization back in the '90s was competition and cost reduction under neo-con rulesets but there is hardly any competition left over here aswell and we are now down to 3 train operators in the entire country. With one of them having 70% control. Competition my ass its just a private monopoly.

On the running on time bit we just had a nice little media upset over here as it became publicly known that the train companies actually monitor themselfs with respect to running on time which makes for a whoping 80% on time rate. Anybody who rides a train like I attleast a few times a week will know its absolutely bullshit and if 50% run on time its a good day. Nevermind when its autumn and we have leafs on the tracks, or winter and there is 2 cm of snow or above 25 degrees celcius......the list goes on and on.

I dont think nationalisation would help a lot over here because the problem isnt so much the management style as it is the people in charge who seem to be complete halfwits, incompetent in managing communications, acurate weather forecast (the amount of times we have a weather alarm and hence reduced train traffic makes you think we live in hurricane ally USA) or even something as simple as a summer time table which for this year is set at a staggering 9 weeks with the first 2 having basicly nobody on holiday and the schools were also still in session and the last week where all holidays are allready over and school allready started again. In those weeks the train is nothing but a cattle wagon.
Roads arent a better alternative in the conglomorate area of Rotterdam, The Hague, Amsterdam and utrecht either, congestion congestion congestion.

Fuck, until that last sentence I thought you were talking about the UK. Glad to know we're not the only ones that have trains that can't run over a few leaves.

Smuggo
August 17 2012, 10:59:19 AM
On the running on time bit we just had a nice little media upset over here as it became publicly known that the train companies actually monitor themselfs with respect to running on time which makes for a whoping 80% on time rate. Anybody who rides a train like I attleast a few times a week will know its absolutely bullshit and if 50% run on time its a good day. Nevermind when its autumn and we have leafs on the tracks, or winter and there is 2 cm of snow or above 25 degrees celcius......the list goes on and on.

Problem with these stats is they base them on the whole day, but at busy times in the morning and afternoon is when you get the worst fucking delays, but they make up their on-time record during the daytime and late evening when there's not as many trains running and not as many people on them.

Devec
August 17 2012, 12:32:45 PM
Knowing a bit about the UK train service and a lot about NL i can say they are pretty much the same in model and thus retardation. As Lall pointed out the biggest motivator in privatization back in the '90s was competition and cost reduction under neo-con rulesets but there is hardly any competition left over here aswell and we are now down to 3 train operators in the entire country. With one of them having 70% control. Competition my ass its just a private monopoly.

On the running on time bit we just had a nice little media upset over here as it became publicly known that the train companies actually monitor themselfs with respect to running on time which makes for a whoping 80% on time rate. Anybody who rides a train like I attleast a few times a week will know its absolutely bullshit and if 50% run on time its a good day. Nevermind when its autumn and we have leafs on the tracks, or winter and there is 2 cm of snow or above 25 degrees celcius......the list goes on and on.

I dont think nationalisation would help a lot over here because the problem isnt so much the management style as it is the people in charge who seem to be complete halfwits, incompetent in managing communications, acurate weather forecast (the amount of times we have a weather alarm and hence reduced train traffic makes you think we live in hurricane ally USA) or even something as simple as a summer time table which for this year is set at a staggering 9 weeks with the first 2 having basicly nobody on holiday and the schools were also still in session and the last week where all holidays are allready over and school allready started again. In those weeks the train is nothing but a cattle wagon.
Roads arent a better alternative in the conglomorate area of Rotterdam, The Hague, Amsterdam and utrecht either, congestion congestion congestion.

Fuck, until that last sentence I thought you were talking about the UK. Glad to know we're not the only ones that have trains that can't run over a few leaves.

Right a bit off topic but here goes my interpretation of the dutch railway system.

The situation is somewhat different though but the result is just as terrible. In the Netherlands you have the Nederlands Spoorwegen (NS, Dutch Railways) and ProRail. Some other places down north there are other competitors but the majority of the trains you will see in the major metropolitan areas are owned and operated by the NS.

As a move of privatisation ProRail was created several years ago, which was meant to maintain the rails while the NS kept operating the trains. Of course because they became two different companies the lack of communication between them has caused quite a few problems, mostly due to great incompetence. Two years ago, for example, around winter time the switches of the tracks froze solid because the hardware was not equipped with heaters and it just stopped functioning. Meaning an almost week of no trains or few trains. To add to insult, it wasn't that cold, it was barely -5 degrees Celsius.

However both companies are getting flak of the media constantly because of many reasons. ProRail being bad at maintaining the rails, NS having lots of train delayed and making terrible decisions. One of the latest being that when they ordered the new trains for short travel connection, they suppressed the buying cost by scrapping the toilets. Of course this lead to lots of anger after it became public knowledge, the provided solution was a pee bag which could be filled in the conductor's compartment. Which obviously led to more outrage and well you know the deal.

It is not just that the rails are poorly maintained, the trains are mostly from the 70's or 80's (although they do work they are really outdated), the trains are rarely on time and the prices keep going up each year, but that both ProRail and NS make a complete ass of themselves whenever confronted by the media. So what you are left with is a management that is deemed incompetent every year and public dismay. So far the semi-privatisation of a company that controls the majority of the train network and has an absolute monopoly has been a disaster.

Personally I do see how privatisation could work, but this would require several competing companies which we don't have. There is only one and it has nobody to keep it on it's toes, the fact that numbers about the delays have now been completely made up has been the latest in a run of terrible.

Lallante
August 17 2012, 02:19:34 PM
There are very few examples of natural monopolies in which privatisation has worked or provided any of its purported benefits.

kzig
August 17 2012, 06:46:31 PM
We have a privatised train system here in southeast rooland. The government fines the operator for having a certain % late, so often you hear an announcement saying sorry M8s, this train is now skipping all stations and going to the end of the line direct, get off and get a different one.

Haha thats a good one.

The UK version of that trick is complicated by the fact that "late" is measured by reference to the schedule defined by the train operator. As a result a train between London and Bristol (one of the main lines in the country) now officially takes 15 minutes longer than it did in 1900 under steam power (!!!!!!)

Didn't there used to be a thing where cancelled trains didn't count and then you'd randomly get trains being cancelled for no apparent reason when congestion had caused busy lines to get backed up?

Cancelled trains do count but towards a different metric - by cancelling a train you can run the ones behind faster and therefore make up "late" time for 5-6 journeys while cancelling only 1

Don't forget the sudden snowfall around 30th November 2010, when network rail imposed an emergency timetable on all the train operators. Massive, widespread disruption for 2-3 days was thus excluded from the crucial statistics that trigger the penalty clauses which would otherwise have forced the operators to cut the prices of their season tickets the following year. In the case of Southeastern, one of the worst affected, I believe this brought them ~0.04% over the minimum threshold.

elmicker
August 17 2012, 10:25:36 PM
Of course because they became two different companies the lack of communication between them has caused quite a few problems

Count yourself lucky, privatisation of rail in the UK has directly caused over 50 deaths.

Devec
August 17 2012, 11:09:17 PM
Of course because they became two different companies the lack of communication between them has caused quite a few problems

Count yourself lucky, privatisation of rail in the UK has directly caused over 50 deaths.

Wanting to know more crew, checking in.

elmicker
August 18 2012, 12:24:50 AM
In order of descending severity, crashes that can be directly attributed to corporate negligence as a consequence of profit-driven privatisation

The Paddington Crash (http://en.wikipedia.org/wiki/Ladbroke_Grove_rail_crash), 31 fatalities, October 1999. Could have been prevented if the now-mandatory "Automatic Train Protection" system had been in place. It had been rejected on the basis of cost shortly after privatisation. Further, a key problem was identified with the recently privatised body responsible for rail maintenance, Railtrack. Whenever signals on a line are involved in incidents where drivers pass a red light, they were supposed to be reviewed by railtrack. Railtrack formed in 1994 and between then and the accident, despite a number of these running-the-red-light incidents, no such review had been held. The lack of reviews had been flagged up by two internal audits within Railtrack without response.

Potters Bar (http://en.wikipedia.org/wiki/Potters_Bar_rail_accidents#2002), 7 fatalities, May 2002. Railtrack had been partially re-nationalised shortly prior to this crash, but was still contracting out all maintenance work to external engineering firms, usually the lowest bidder. Inevitably, poorly maintained points on the track led to the crash. After that, all track maintenance was brought in-house to Network Rail and in the ten years since then there has been only one fatal accident on operational trains not involving a level crossing.

Southall (http://en.wikipedia.org/wiki/Southall_rail_crash), 7 fatalities, September 1997. Exact same cause and sequence of events as Paddington. Train on the West Coast Main Line runs a red light and crashes, due to a combination of lack of proper protections, flawed training and incompetent management, particularly in the communication between the various rail companies.

Hatfield (http://en.wikipedia.org/wiki/Hatfield_rail_crash), 4 fatalities, October 2000. The end for the for-profit rail maintenance company Railtrack. The now all-too-familiar story of low quality track maintanence subcontracted out to the lowest bidder yet again causing deaths. In the aftermath of this, the public simply ran out of patience with Railtrack and the company was renationalised. In the weeks and months following the crash, it was revealed that Railtrack effectively had no idea whatsoever what state the railways were in. Everything, most notably the ex-British Rail engineering staff, was subcontracted and subcontracted beyond any comprehension, leaving Railtrack, when questioned how many potential Hatfields were possible on the British rail network actually stating that they had no idea and no way to find out.

Watford (http://en.wikipedia.org/wiki/Watford_rail_crash), 1 fatality, August 1996. Yet again a driver on the West Coast Main Line running a red light with dire consequences. One might be tempted to blame the drivers, but this happened time after time in the aftermath of privatisation, and it could have been prevented.

You can probably find a few more, but that'd be stretching things, and I'm sure you get the idea.

Of course such accidents are not the reserve of the private sector, many comparable accidents happened pre-privatisation, but you will really struggle to find such frequent shocking examples of criminal, profit-driven mismanagement and incompetence in the modern, say, post-1980 British Rail, and you'll note the almost complete cessation of railway accidents (excepting those caused by cars on the tracks) after the renationalisation of Railtrack into Network Rail and Network Rail's abandonment of the subcontracting process.

untilted
August 18 2012, 03:01:07 PM
There are very few examples of natural monopolies in which privatisation has worked or provided any of its purported benefits.

can you name a few?

----------

the catch-22 of privatization:
in cases where privatisation likely will bring a benefit, as corrupt/incompetent government/bureaucracy run the business into the ground, a privatization will likely also be a failure because of the same corrupt/incompetent government/bureaucracy.
but if you got competent and efficient government/bureaucracy, why would you want to privatize in the first place?

Max Teranous
October 3 2012, 08:21:13 AM
http://www.guardian.co.uk/uk/2012/oct/03/west-coast-rail-contract

So, the entire West coast mainline deal has been binned due to flaws in the process. Apparently civil servants didn't evaluate the risks between the different bids correctly:


The Dft said it found evidence of significant flaws as its officials were gathering evidence in preparation for legal proceedings.

These flaws stem from the way the level of risk in the bids was evaluated. Mistakes were made in the way in which inflation and passenger numbers were taken into account, and how much money bidders were then asked to guarantee as a result.

This has put a halt on all rail franchises in progress, set off 2 enquiries and it means rerunning the auction for the west coast mainline and probably others. Oh and it will probably will cost the taxpayer a shedload of cash in compensation, rerunning auctions etc to boot.

Ironically, calls for privatisation would mean putting the running of the entire thing in the hands of those who've just completely fucked this up !

Max 8-)

Smuggo
October 3 2012, 08:28:54 AM
Ironically, calls for privatisation would mean putting the running of the entire thing in the hands of those who've just completely fucked this up !


I'm not sure how that's any worse than the current fuckups who run the railways.

Lallante
October 3 2012, 10:59:29 AM
To be fair this should be seen as cautiously good news for taxpayers and train users, as the existing winning bid was the worst train company promising something literally ludicrous.

The two independent enquiries may actually result in some positive changes too.

Aurora148
October 3 2012, 06:12:02 PM
Predicting that First Group's bid was completely unsustainable/everything Virgin said was true, and this is a cackhanded way of the government saving face rather than allow the court case to expose the evidence.

TheManFromDelmonte
October 3 2012, 06:47:34 PM
They've got some civil servants suspended too, which given the news recently about mandarins blocking minster projects implies some interesting things.

C4 news were saying there are chinese walls and a whole big secrecy set up due to EU rules for this kind of thing. Whatever screwup there was must be pretty big, we'll get the answer soon I think.

elmicker
October 3 2012, 09:20:34 PM
They've got some civil servants suspended too, which given the news recently about mandarins blocking minster projects implies some interesting things.

Not particularly. Most postwar governments have had some sort of showdown with the civil service over their constant intransigence. Even Blair with his "sofa government", with a team of spads giving directions to permanent secretaries, didn't win that war. A coalition government on the ropes doesn't stand a chance.

Besides, they're really two separate issues. The government is annoyed by the civil service always tending towards the status quo and putting a lot of effort into pushing policy in that direction regardless of what their minister directs. This is an instance of civil servants not following their own standardised procedure. In the world of public service that's a cardinal sin. You can basically do whatever the fuck you like as long as it is documented and within procedure. Tick those two boxes and you can do no wrong. Deviate from procedure and your career is over.

Lallante
October 4 2012, 06:38:27 PM
Predicting that First Group's bid was completely unsustainable/everything Virgin said was true, and this is a cackhanded way of the government saving face rather than allow the court case to expose the evidence.

wat? They conceded that what Virgin said was true by non-contesting the JR.

definatelynotKKassandra
October 4 2012, 07:26:21 PM
Predicting that First Group's bid was completely unsustainable/everything Virgin said was true, and this is a cackhanded way of the government saving face rather than allow the court case to expose the evidence.

wat? They conceded that what Virgin said was true by non-contesting the JR.


Eh, they conceded that Virgin were right in saying they hadn't followed their own procedures properly so the bids hadn't been evalutaed properly. That's not quite the same thing - they specifically stated that there was nothing 'wrong' with First's bid.

Phrixus Zephyr
October 6 2012, 08:42:32 AM
There is a very interesting thread about this on the SA forums started by someone who works for National Rail. One of the things he pointed out was that Government subsidies going to various companies have been less than the profit those companies have made in a given year, leading many to wonder why we are subsidising them at all.

Paradox
October 6 2012, 08:44:55 AM
If they weren't subsidising them wouldn't the companies put the prices up to even higher levels?

elmicker
October 6 2012, 09:27:50 AM
If they weren't subsidising them wouldn't the companies put the prices up to even higher levels?

No, prices are set by the government.

Service levels are also set by the government. The track is owned and maintained by the government. The rolling stock is owned by the government.

The train operating companies simply exist to sign off staff timesheets and skim off the top of what is in every other respect the public's property.

Smuggo
October 6 2012, 09:31:46 AM
If they weren't subsidising them wouldn't the companies put the prices up to even higher levels?

No, prices are set by the government.

Service levels are also set by the government. The track is owned and maintained by the government. The rolling stock is owned by the government.

The train operating companies simply exist to sign off staff timesheets and skim off the top of what is in every other respect the public's property.

Yeah, they're basically pointless. The whole system is a fucking joke.

Lallante
October 8 2012, 12:12:56 PM
Predicting that First Group's bid was completely unsustainable/everything Virgin said was true, and this is a cackhanded way of the government saving face rather than allow the court case to expose the evidence.

wat? They conceded that what Virgin said was true by non-contesting the JR.


Eh, they conceded that Virgin were right in saying they hadn't followed their own procedures properly so the bids hadn't been evalutaed properly. That's not quite the same thing - they specifically stated that there was nothing 'wrong' with First's bid.

The only reason the errors in the risk weighting mechanism came to light is because First's bid is so incredibly poorly conceived that it should never have been shortlisted let alone selected. The whole thing revolves around how incredibly risky for the government having all the franchise payments heavily weighted to the last few years of the franchise and dependent on highly optimistic passanger numbers actually is.

This will be confirmed when, on the new bidding round, First's bid looks completely different from its original one.

Lallante
October 8 2012, 12:18:59 PM
If they weren't subsidising them wouldn't the companies put the prices up to even higher levels?


The train operating companies simply exist to sign off staff timesheets and skim off the top of what is in every other respect the public's property.

This is pure unmitigated bullshit.

I have a LOT of criticism for the way the UK train sector works, and I genuinely believe it should largely be re-nationalised, but this is just lies. The train companies have huge discretion in the rolling-stock infrastructure, timetables, pricing, staffing etc.

The track ownership and maintenance is split off and performed by Network Rail, a statutory corporation limited by guarantee. This is NOT the same as state owned (its complicated but it is essentially a free-standing entity ultimately backstopped by the government but with large autonomy and the government doesnt actually "own" it).

The rolling stock is owned by three entirely private entities, largely private equity and banks, and is run for profit.

Whether this is a good system is questionable (it isn't) but saying that the government effectively does everything and the private sector just creams profits off the top is a lie, plain and simple.

Al Simmons
October 8 2012, 02:16:31 PM
You said it yourself, it's backstopped by the government, i.e. if it all goes tits up the government is footing the bill, not the rail companies.

Lallante
October 8 2012, 03:55:41 PM
You said it yourself, it's backstopped by the government, i.e. if it all goes tits up the government is footing the bill, not the rail companies.

I think you are getting confused here.

1. Train operating companies (TOCs) - e.g. Virgin, Great Western - Run the rail services for a given franchise - Privately owned and not fundamentally backstopped by the government

2. Rollingstock operating companies (ROSCOs) - e.g. Angel Trains, HSBC Rail - Own the rollingstock and lease to the TOCs - Privately owned and not fundamentally backstopped by the government

3. Infrastructure company - Network Rail - owns and maintains the track and other rail infrastructure - private company limited by guarantee, guarantee given by Government.

Only the 3. one, i.e. Network Rail, has explicit government backing. That doesn't mean the government cant choose to bail out struggling ROSCOs or TOCs, but its under no obligation to do so (and realistically, it probably wont, and when it does the effect is a total loss for the TOC shareholders, essentially nationalisation-in-insolvency)

Phrixus Zephyr
October 8 2012, 04:07:18 PM
This is the OP from the SA thread. It seemed relevant to the last few posts and largely mirrors what Lallante just said.


Welcome posters old and new to a thread about the railway. More specifically the British railway and the sorry state of affairs it's currently left in.

Since it's auspicious beginnings with Robert Stephenson and his 'Rocket' running over and killing a Member of Parliament in 1830, the British railway network has had many ups and downs. A product of the worst excesses of Victorian laissez-faire (before producing the 19th Century equivalent of the dot-com crash), the system has had many shake ups, reorganisations and changes.

In 1948, Clement Attlee (aka Britain’s greatest Prime Minister) nationalised the rotting carcass of the 'Big 4', which were the remainder of the privatised British railway network as they stood post-war into British Railways, starting what would be four and a half decades of government mismanagement, balls ups and bad decisions which would eventually lead to the government of one John Major killing off British Rail with the Railways Act 1993.

This remains, perhaps, the worst decision he ever made.

Since privatisation, the British taxpayer now funds the railway to the tune of 5 times more than it used to do under British Rail. Add to this fares which have jumped inordinate amounts (being linked to RPI, we have recently seen fare increases of 8%) such that travelling by train was stated to be a 'rich man’s toy' by the Secretary of State. It is little wonder that renationalisation of the railway remains perhaps the most popular topics amongst the electorate of the UK that goes against the current political grain (and isn't racist).

Much of this stems from the insanity of the privatised railway network, here is a diagram:

http://i.imgur.com/OcxXP.png

The worst part? This diagram of the jumble sale of conflicting interests, little oversight and private profit over public need is much simplified compared to the actual industry.

So, for those not so familiar with the way this madness is run, let's do a run down of the major player in the British Railway system.


The Department for Transport

The DfT are the central government organisation responsible for the railway network. They have oversight of all other forms of transport too (hence the name) but with regards to the railway they are perhaps most known for overseeing the franchising agreements which form the British railway.

These are the contracts signed with private companies to run certain services on certain lines, and are probably where our problems start. The DfT is generally formed of civil servants, economists and very few actual railway people so the actual understanding of the industry by the department which runs it is fairly negligible. There are good people who work for the DfT, but they are so outweighed that the might as well not work there.

Most recently, they released the 'McNulty Report', an investigation into why the industry was costing so much compared to railway companies on the continent. “Realising the Potential of GB Rail” as it is more formally titled is not a thrilling read, however if you do manage to slog through the hundreds pages you will be struck with one solid conclusion: the Executive Summary and the Conclusion in no way represent the actual body of the report.

If the railway rumour machine is to be believed, the DfT took issue with the report which basically exposed the weakness of privatisation, mostly the employment and funding of hundreds of lawyers and largely superfluous staff to argue over contract disputes, which is a major money sink for the industry as every private interest fights against everyone else and the state-backed Network Rail to try and maximise profits, while nobody is really acting in the best spirit of the passengers. However, the report instead concluded (despite evidence in the report to the contrary) that there were too many staff and they were paid too much. As a railway employee, I and my bank balance can categorically argue against the latter assertion at least.


Railtrack and Network Rail

Railtrack are such a maligned company in British politics that they are now used as a go-to example of bad privatisation by the press. Yes, you did read that correctly.

Railtrack became what is known as the Infrastructure Manager at privatisation. They owned everything that wasn't rolling stock and the staff that went with it, a divorce of train and track far above and beyond the EU mandate that supposedly asked for it. This separation leads to many, many problems, but Railtrack itself is perhaps the biggest failing of privatisation.

Crash after crash, budget overrun to budget overrun of the 1990s-2000s can be assigned to the piss poor decisions of Railtrack. Believing that railways weren't actually that complicated (I am doing a Masters Degree in Railway Engineering and can confirm that they are), rather just another business, Railtrack wrote its own death warrant. Failing to understand the industry they were led up the garden path by companies who claimed they could implement moving block signalling (still not implemented anywhere in the world properly) on the busiest line in the UK, that privatised maintenance based on contracts would continue the safety culture of the railway (the dead of Hatfield and Potters Bar rail disasters, of course, beg to differ) and that money was the best driver in an industry where safety critical decisions taken every day could kill people was a sensible idea.

Unsurprisingly, this spectacular bunch of imbeciles failed.

Labour, despite being elected on a promise to renationalise the British Railway network in 1997, managed to almost fulfil a manifesto promise in 2002 when it handed the control of the infrastructure of British Rail to Network Rail, a 'not for dividend' company backed by the British state (full disclosure at this point, they are my current employers). NR ever since has been fighting to bring the industry back to a level of respectability, and has in some quarters managed, but they are in many ways an island in a sea of poo poo. Current movements within the company hint that due to being far too good at actually getting poo poo done compared to private industry their monopoly will be smashed to let the free market rule once more.

This is paranoid speculation on my part, but it is not too unlikely, particularly given the current bunch of arseholes we've got in government.


The Train/Freight Operating Companies
Train Operating Companies are the guys who actually run the trains you sit in when you come to Britain. They are all private interests, generally run by companies who made their money during the bus deregulations of the 1980s, with First and Stagecoach being the two biggest players.

Let it not be said that the TOCs have not made improvements since taking over from BR. However, inevitably, these improvements are mostly cosmetic. Railway station bogs no longer resemble an open sewer, staff all have very nice new professional uniforms and many trains have had fairly cosmetic overhauls; but never let this detract from the fact that you are now a customer, not a passenger.

For most 'customers', this has seen an aggressive campaign to capture fares (anyone who has had to deal with the unreasonable Revenue Protection Officers of the railway will attest to this) and a borderline contempt for people who travel. There are always hilarious platitudes made about the fact that there are cheap rail fares available, but only if you don't travel at time when everybody else is (thus, writing off every 9-5 worker in the UK), but generally the privatised companies act exactly as you would expect from companies who have a captive market who literally cannot leave. Prices go up and people simply cannot chose to move to other modes of transport.

The biggest bugbear for most people is that companies are not competing in the way that free-market adherents want because it's not possible. While you may be able to theoretically be able to take three competing services from London to Birmingham, it in reality is not done. The price structure and pathing of trains means that the competition is now who travels on what services rather than the quality of services themselves. HS2, which I broadly support, will only make this worse, with social classes forced onto certain services simply by price.


Rolling Stock Leasing Companies (ROSCOs)
The great scam of the British railway is built on a fallacy of a free market and nowhere is this more prevalent than the ROSCOs. Certain trains will only work in certain places, no good taking a third rail train to Scotland, as they only work south of the Thames. Diesel trains have massive maintenance and fuel costs compared to electrics, so no need to use them where there are overhead wires. No use taking a high-speed electric train on the West Coast Main Line, as they won’t be able to get up to 125mph due to the cant unless they can tilt.

These guys have a stranglehold on the industry, and their reasons for existence are increasingly dubious. Dickheads of various stripes have claimed that new trains would not have come into existence without the ROSCOs, point to the failures of crappy Pacer trains of the late 1980s and the much ballsed up Intercity Express Programme as to why we need private industry to drive new train development.

WRONG. While the tilting Pendolinos are perhaps the crème of the crop, they represent a technology that was developed and trialled by BR 30 years previously. We are literally buying our own poo poo back off other people.

While I cannot quote any sort of survey, any sensible person who has been in a BR Mark 3 or 4 coach vs. a 'modern' Voyager stock will tell you that the latter had terrible leg room, inadequate luggage space and while the underfloor diesel engines may give your arse a nice shuffle, the ride comfort is nothing compared to the older stock.


Not mentioned in the above diagram, but perhaps the biggest players of all: the Railway Trades Unions

The railway is broadly covered by three specialist trade unions (with some areas covered by the Unison and other broad brush unions): the Rail, Maritime and Transport Union (RMT), the Transport Salaried Staffs Association (TSSA, my union), and the Associated Society of Locomotive Engineers and Firemen (ASLEF).

Born in the fire and blood of the late 19th Century, the modern railway unions are perhaps the most powerful unions which still operate in modern Britain, with the ability to bring the country to a complete standstill with relative ease. The RMT are the new bogeymen of British trade unionism, with their leader Bob Crow being regarded as an enemy of the British industry.

This is perhaps most evident in the fact that the RMT have been successfully growing their membership across the industry, particularly targeting low paid manual jobs like train cleaners and forming up unions to fight back. Big Bob is a hate figure in the press but despite that is perhaps the most successful union leader in modern history. The inevitable showdown between him and the government will by the new Miners Strike (whether it'll be the 1974 or the 1986 version is yet to be seen).

The TSSA are the white collar union who were always sold to staff on the basis of not being the more militant National Union of Railwaymen (the precursor of the RMT). However, the assaults on staff have meant they have taken a more hard line stance and have been coordinating strike action with the RMT on London Underground with major effect. There were talks of merging the two into one union but ideological differences prevailed and it fell through. Generally the represent the skilled technical, middle management and project staff.

ASLEF is perhaps the best example of a powerful craft union in the country, as it is exclusively for train drivers. Doing incredibly well out of privatisation by playing ignorant potential employers off each other like a fiddle they have elevated train driving to likely the best paid blue collar profession in the UK. Holding powerful sway over the railway network, they generally get what they want before it comes to industrial action and are more off the radar than the RMT, but no less militant. Perhaps their greatest contribution to society in recent memory is getting a member booted out of the union for being in the BNP (a fascist party) for not conforming to the values of the organisation.

So is it all a mass of crap?

Yes and no. The structure of the railway industry is so imbecilic that even a minimal amount of scrutiny shows what a pile of shite it is, however, this is an industry that is never far from public conscious and is undergoing a major resurgence in investment. After being basically starved in the hopes it would die through the 1980s and 1990s, rail has done the opposite, now carrying more people and running more trains than any other time (despite the network being half the size it was in the 1960s).

Eurostar, despite a shaky start, has basically destroyed short haul flights from London to Paris / Brussels and high speed is the new buzz word of the British railway. Announced this year, we are about to start design and construction of our first proper high speed link from London to Birmingham, before continuing to the north, This is a topic that has been analysed to death (not least, by me, here: http://demandnothing.org/high-speed...nal-investment/) so we won't talk about it too long.

However, there are other things afoot. We are about to see the electrification of the Great Western Main Line, from London to Cardiff, over the next 8 years, with the first electric services starting to run as soon as 4 years from now. This is a huge programme of investment, constituting many changes to quite old systems. Simultaneously we are seeing the installation of the European Train Control System, an interoperable signalling system which is to be standard across Europe as a driver of commerce (supposedly). While we have already seen Level 2 ETCS rolled out in the UK, it was on a comedy branch line and a real hash was made of it, second and third times should be fairly less painful, with the ETCS being overlaid on the existing system rather than simply replacing it.

Operations on this will start on the north-south Thameslink route through London and on the Great Western Main Line by ~2016, then followed by the East Coast Main Line soon afterwards.

Though much delayed, we will eventually see the High Speed Train, perhaps one of the greatest engineering achievements of British Rail, finally retired and replaced with the Intercity Express Programme trains (or the Hitachi SuperExpress to give it the name that nobody calls it).
Rail is making a comeback, being dragged kicking and screaming into the 21st Century, but despite high levels of excitement in the industry as it resurges, nothing changes the fact that privatisation has put back all these achievements by about 10 years.

British Rail was not a perfect company, and suffered greatly from inadequate, short-term and short sighted budgets, from hostile governments and a huge level of internal industrial hostility between powerful unions and grumpy management that held it back. However, it can be said that no matter how bad BR was sometimes, it somehow managed to be very good at simply getting poo poo done. Like the NHS, it worked with tight budgets to provide a highly efficient service that was value for money for the taxpayer.

Perhaps the most laughable anecdote I have heard about privatisation was that when the 'dynamic business focused leaders' of Railtrack et al took over from BR management was that they looked everywhere to cut back and reorganise to make the running of the railway more efficient. They simply couldn't because no profit motive can drive efficiency quite like a government budget and the looming fear of being privatised.

In conclusion: Bring Back British Rail (or modern equivalent form)

Source (http://forums.somethingawful.com/showthread.php?threadid=3483456)

definatelynotKKassandra
October 8 2012, 04:53:05 PM
You're undoubtedly right about that, of course. But it is a useful fiction for some to pretend (un public at least) that it's all down to some civil servants messing up a spreadsheet.

Lallante
October 8 2012, 05:14:51 PM
Thank Phrixus - that detailed post basically completely agrees with everything I've said in this thread and in our previous arguments about what went wrong on privatisation

Pattern
October 8 2012, 06:50:22 PM
Is there a common thread about certain services that make them, for want of a better phrase, incompatible with, a sustainable or useful form of capitalism?
I have a suspicion that any service that requires a huge amount of real-estate (or perhaps, any finite, difficult to reuse resource) makes it ripe to the type of abuse (price gouging, cartels, quality freefall etc) that we all hate.

definatelynotKKassandra
October 8 2012, 06:56:48 PM
Google 'natural monopoly'. Nit quite the same thing, but very closely related.

elmicker
October 8 2012, 10:03:01 PM
The track ownership and maintenance is split off and performed by Network Rail, a statutory corporation limited by guarantee. This is NOT the same as state owned (its complicated but it is essentially a free-standing entity ultimately backstopped by the government but with large autonomy and the government doesnt actually "own" it).

But let's face it, at the end of the day it's the taxpayer's. If it went tits up, who'd foot the bill? The taxpayer. It's happened more than once just in my memory.


The rolling stock is owned by three entirely private entities, largely private equity and banks, and is run for profit.

In theory, yes. In practice the biggest owner of rolling stock is (or soon will be) the government, as every major rail project in recent history has seen the DfT directly purchasing the stock rather than going through roscos. Crossrail, thameslink, hs2, intercity-express, all government owned rolling stock. Even where the purchases are in theory made by private entities they're done to the government's tune. It's not like your TOC can just go and ask your friendly neighbourhood ROSCO for a hundred extra units, it's all done at the strategic level by the DfT.

Lallante
October 9 2012, 09:37:12 AM
Is there a common thread about certain services that make them, for want of a better phrase, incompatible with, a sustainable or useful form of capitalism?
I have a suspicion that any service that requires a huge amount of real-estate (or perhaps, any finite, difficult to reuse resource) makes it ripe to the type of abuse (price gouging, cartels, quality freefall etc) that we all hate.

The key elements of the problem are this:

Natural Monopoly as Kkassandra said. You can't have two seperate high speed trainlines from London to Birmingham, its not feasible. You can't even have two trains going at the same time.

Non-economic goals. You want a reliable train service even to small stations that are not economical to visit (i.e. the cost of running the service is more than the additional ticket revenue.). This means you need to "staple" the unprofitable routes to the profitable ones.

Huge infrastructure costs. Rail and rollingstock inherently needs huge intermittant capital investment. The problem is the periodicity for such investment (and, correspondingly, its size) is 20 - 30 years. If a company (including a government owned company) isn't able to plan over 20-30 years (and be sure of its income over that period), it cant commit to the huge investment needed upfront. Chronic short-termism and lack of large one-off investment capital was the key problem facing British Rail (the nationalised train co). The whole point of 10 year franchises is to make it easier to invest as you have -some- security, but still the biggest projects aren't going to recoup their investment in that period.

Competition - this ties into the first point, but also relevant is the very limited number of companies with the expertise and resources to actually run a train line, or rolling stock company. There simply isnt that much competition BECAUSE there aren't that many franchises - IF you have a company of 1000s of people (e.g. say Virgins westcoast service) that doesnt win a franchise you have no choice but to make everyone redundant and shut down. There is therefore a HUGE barrier to entry, and its basically impossible to compete for a line unless you already run another line.

Lallante
October 9 2012, 10:04:09 AM
The track ownership and maintenance is split off and performed by Network Rail, a statutory corporation limited by guarantee. This is NOT the same as state owned (its complicated but it is essentially a free-standing entity ultimately backstopped by the government but with large autonomy and the government doesnt actually "own" it).

But let's face it, at the end of the day it's the taxpayer's. If it went tits up, who'd foot the bill? The taxpayer. It's happened more than once just in my memory.
Thats true of every large entity providing vital infrastructure in the UK, whether it be a bank, a power generation company, a transport company or a water company.

Saying in Rails case that this means "taxpayers are the ones taking the risk" is bollocks - the private entity takes the risk, and the taxpayer only steps in once the shareholders (including, the management) are completely ruined. This means for all but the most abject disasters, the risk is solely on the private sector. For those abject disasters the government steps in in order to maintain the essential public service, but you cant really view this as a bailout as the shareholders lose everything, the management lose most (they are almost always largely compensated in shares/options), and the government ends up with a valuable asset. Same goes for the banks to be quite honest. People whinge about "bailouts" that actually will make taxpayers a tidy profit in the long run if managed correctly.


In theory, yes. In practice the biggest owner of rolling stock is (or soon will be) the government, as every major rail project in recent history has seen the DfT directly purchasing the stock rather than going through roscos. Crossrail, thameslink, hs2, intercity-express, all government owned rolling stock. Even where the purchases are in theory made by private entities they're done to the government's tune. It's not like your TOC can just go and ask your friendly neighbourhood ROSCO for a hundred extra units, it's all done at the strategic level by the DfT.
This is just wrong.
Intercity-express, for example is actually designed, built and maintained from by a ROSCO (Agility). The government just does the procurement! The design, construction and maintenance risks (i.e. all the relevant risks for a ROSCO) are all taken by the ROSCO. The government merely ensures the trains will get used.
Even if what you were saying is true (it isn't), ICE, Crossrail, Thameslink, HS2 taken together are still only a TINY fraction of the rolling stock in use in the UK.
Angel trains, just one ROSCO, owns 37% of all trains used in the UK. There are 2 other large ROSCOs.
Train procurement is a very very infrequent process - trains last decades.

Zeekar
October 9 2012, 10:35:01 AM
Bank bailouts have never been profitable themselves , its simply the cost of a failed banking system would be much higher. But that doesn't mean the current way of bank bailouts in UK is the proper one.

Dirk
October 9 2012, 05:38:05 PM
Is there a common thread about certain services that make them, for want of a better phrase, incompatible with, a sustainable or useful form of capitalism?
I have a suspicion that any service that requires a huge amount of real-estate (or perhaps, any finite, difficult to reuse resource) makes it ripe to the type of abuse (price gouging, cartels, quality freefall etc) that we all hate.


Any infrastructure project doesn't work with capitalism because having two of them is neither realistic, feasible or actually cost effective for the consumer. Enter a government regulator to ensure the system doesn't break down yet reasonably priced.

All fine in theory until regulatory systems are built on top of regulatory systems and you end up with a complex mesh of governments, companies, consumer groups and regulators and nobody (most importantly the public) has no idea where the money is going from one day to the next.

I work for a electricity networks company that has a similar relationship with the govt/ofgem and I actually think its became so complicated its become the worst of both worlds. Money is being skimmed off as profit because its privatised but the regulation and work involved in keeping the govt happy, and now the risk of the govt making rash 'win election' decisions is killing the cost savings that being privatised should bring. The regulators are also hilariously bad at setting targets that encourage short-termism that will undoubtedly cost more money in the long run.

Lallante
October 9 2012, 06:35:25 PM
Is there a common thread about certain services that make them, for want of a better phrase, incompatible with, a sustainable or useful form of capitalism?
I have a suspicion that any service that requires a huge amount of real-estate (or perhaps, any finite, difficult to reuse resource) makes it ripe to the type of abuse (price gouging, cartels, quality freefall etc) that we all hate.


Any infrastructure project doesn't work with capitalism because having two of them is neither realistic, feasible or actually cost effective for the consumer. Enter a government regulator to ensure the system doesn't break down yet reasonably priced.

All fine in theory until regulatory systems are built on top of regulatory systems and you end up with a complex mesh of governments, companies, consumer groups and regulators and nobody (most importantly the public) has no idea where the money is going from one day to the next.

I work for a electricity networks company that has a similar relationship with the govt/ofgem and I actually think its became so complicated its become the worst of both worlds. Money is being skimmed off as profit because its privatised but the regulation and work involved in keeping the govt happy, and now the risk of the govt making rash 'win election' decisions is killing the cost savings that being privatised should bring. The regulators are also hilariously bad at setting targets that encourage short-termism that will undoubtedly cost more money in the long run.

What? The UK's electricity market actually works pretty damn well and is considered one of the most liberalised and competative in the world.

It has too few players nowadays but apart from this what are your specific issues?

Dirk
October 9 2012, 10:09:20 PM
What? The UK's electricity market actually works pretty damn well and is considered one of the most liberalised and competative in the world.

It has too few players nowadays but apart from this what are your specific issues?


Meh, you're probably right. Doesn't stop us from being current public enemy number one though. That's kind of my point, as even when we may actually be liberalised/competitive the system and public perception is such that they think they're being gouged. Main issues we have in the industry (from a networks perspective) is either

a) Being given targets to meet that allow us to spend money from ofgem but in completely the wrong area - e.g. replace 100 transformers in the next five years because of load increase, but in reality we really want to replace worn assets, but can only replace 10 of them - money goes wasted

b) Current targets run over a 'price control period' that lasts five years. Through various levels of management etc. this has turned into us looking at the business over five year periods although our assets are typically designed for 40-50 years of life. For example, when presented with a 50 year old asset that I can refurbish for £75,000 giving it a (sometimes) 5 year life enhancement or replace for £200,000 giving me 50 years I will always, always be told to refurbish as our targets last for 5 years and if we have to come back in 5 years time then thats fine because we'll have another target in 5 years that allows us to spend more money. Long term it costs everybody more.


e - forgot to add, having to bloody report all of our expenditure down to pennies to ofgem so they know what we're spending on what. Nobody needs that level of detail.

It wouldn't be an issue if it wasn't for the fact that Joe Fitter who puts up pylons for a living now has to attempt to do sums to calculate how much each pylon costs. He is useless at sums (that's not an issue) but because he now has to calculate exactly how much each one costs he's spending less time actually building the things. Kind of a simplistic example, but basically ofgem sometimes doesn't factor into it's demands and calculations to time/cost spent satisfying those decisions.

Smuggo
October 10 2012, 09:00:32 AM
You work for National Grid Dirk? My brother is a linesman for them.

Lallante
October 10 2012, 09:53:51 AM
Or possibly one of the distribution Cos? ManWeb?

Dirk
October 10 2012, 04:51:34 PM
Or possibly one of the distribution Cos? ManWeb?

Sse, my job is 50/50 distribution/transmission. Currently sitting in thurso overlooking the north coast. It's very pretty but Christ having to work here...