British Railway Operations

[Murphy Siding]

I understand how the British have privatized their system now. The tracks are owned by one entity, and the trains by another. Can anyone explain, in layman's terms how this actually works? and is it working? Perhaps some of our forum members from over there could enlighten us. (Future Model-throttle back for a bit on this one-I know you're not British[:)]) Thanks

[Tulyar15]

Basically the tracks are owned by Network Rail who also set the timetables and crew the signal boxes ("Control Towers" I think you call them in America) , which charges the Train Operating Companies (TOCs) for using them. The rolling stock was sold to Rolling Stock Companies (ROSCO's) who lease the stock to the TOC's.But there are over 20 TOC's and the system has proved unwieldy. The thinking behind privitisation was a mish mash of different ideas. The purpose of separating infrastructure from operations was to try and provide a level playing field for competition. But when the last Conservative government found that no-one wanted to buy the TOC's for fear of having to face competition from "open access" operators it gave guarantees to the buyers of TOC's to limit compeition. (The passenger TOC's are effectively management contracts under which bidders bid to provide a certain minimum service for a specified period of years. The freight TOC's have more commercial freedom.) So very few open access operators have come along so far, and only one that operates passenger trains though another is applying for a licence to operate passenger trains.

The fragmentation of the British Rail network has pushed up costs as each company in the chain adds its profit margin on to the charges which are passed down the line (pun intended!) to the TOC's. Whilst the ROSCO's have invested in some new trains for the larger TOC's it is felt that their charges for older trains are excessive. As an example the 2-car class 158 diesel rail cars which British Rail bought in 1990 for £1million apiece are rented at about £500,000 per annum. In the case of Wales and Borders, whose current franchise holder has a 15 year franchise in place, will during the life of their franchise pay a total of £7.5 million for their class 158 DMU's which for trains that cost £1million is scandalous.

Ed Burkhardt was off the opinion that the access charges charged by Railtrack (the original infrasctuure owner, which has been replace by the 'not for profit' Network Rail) were excessive but since his departure the issue seems to have gone off the boil.

At this point I'd like to kill a popular myth. There's a widespread belief that the separation of infrasctructure and operations was forced on the UK by Brussels. Not so. EU directive 1991/440 merely states that state owned rail comapnies should produce separate accounts for infrasctructure and operations; it does not say anything about having to separate ownership.

The present Labour government seems to be trying to change things graduall rather than in one big bang. Railtrack has been effectively re-nationalised through the back door (Despite widespread support for renationalising the railways it remains a political no go area). The TOC's are being merged as franchises come up for renewal. But because of the greater cost of maintain the fragmented network there are widespread fears of line closures, particularly in SW England were the merger of the Wessex and Great Western TOC's may lead to service cuts. In Scotland and Wales the picture is more rosy as the devolved Parliaments there are funding a number of rail re-openings. They're even electrifying a few lines in Scotland, something that privitisation has killed in the rest of Britain.

In Northern Ireland, the Northern Ireland Railways remain as a vertical integrated state owned company, as is its neighbour Iarnrod Eireann, the Irish Republic's state owned system. After years of under investment the NI Parliament has authorised modernisation of the remaining network; a contrast to the 1950's and 1960's when it's decision to axe a number of cross border lines led to bad feelings in the Republic. The Dublin government has always supported its rail network, starting dieselisation several years before Britain. At the present time it has a modern fleet of GM built locos, a growing suburban electric network in Dublin and is buying new DMU's for rural passenger services and some inter city routes.

[daveklepper]

Thanks for the update. Do I gather that the Network as a whole is subsidized and still costs the taxpayers money? How is this handled? Or does it result in ca***o the Government? Do local authorities subisidies the service providers for commuter services? I understant some contract operators also run bus services. Do they compete internally, running buses and trains on the same routes? Are tickets interchangeable? What about a journey requiring two service providers? Has freight continued to shift from rail to road or is a return to rail in progress?

[owlsroost]

I'll try and explain...

1. 'Network Rail' owns, maintains and operates the infrastructure (tracks, stations, yards, signalling etc). This is (in all but name) a publicly owned company i.e. the UK government owns all the shares, and is the successor to Railtrack. Railtrack was a private company which went bankrupt (I was one of the many small shareholders in it).

2. Passenger train operations are run by private 'train operating companies' (TOC's) under franchise agreements i.e. the government offers a group of train services for tender, companies put in bids and eventually one is awarded the franchise. The size, length and style of these franchises varies a lot, but most of them involve some degree of subsidy from the UK taxpayer. There is a good list and map of TOC's here - http://www.nationalrail.co.uk/toc_list.html

There is also provision for 'open access' operators to apply for timetable paths to run trains on a purely commercial basis - there is only one actually doing this at present (Hull Trains), but there are other groups who are interested in this.

Most passenger stations are operated by a TOC (some of the really large stations are managed by Network Rail) but all sell tickets for other operators, and are legally required to be impartial when doing this.

3. Almost all passenger rolling stock is owned by leasing companies, and is usually 'dry' leased to the TOC's i.e. the TOC drives the trains and performs the routine maintenance, the leasing company is generally responsible for the heavy maintenance and refurbishment.

4. Freight trains are run on a commercial, 'open access' basis by various companies - EWS (mostly owned by CN) is the biggest - and freight is definitely one of the sucess stories of privatisation.

5. Timetable paths etc are agreed between the various TOC's, freight companies and Network Rail in an ongoing process (with the fallback of an independant Rail Regulator in the case of disputes), and then the train operators pay Network Rail for the use of the infrastructure. Network Rail controls the signalling system (equivalent of train despatching in the US) and hence the actual train running. There is a system of financial penalties/compensation if one TOC's trains delay another or Network Rail fouls up.

Generally the system works well (passenger numbers and freight traffic is well up compared to British Rail days) but is is costing the UK taxpayer a LOT more than before.

Hope that helps a little [:)]

Tony

[daveklepper]

Thanks. Mineta ought to take some lessons.

[owlsroost]

QUOTE: Thanks for the update. Do I gather that the Network as a whole is subsidized and still costs the taxpayers money? How is this handled? Or does it result in ca***o the Government? Do local authorities subisidies the service providers for commuter services? I understant some contract operators also run bus services. Do they compete internally, running buses and trains on the same routes? Are tickets interchangeable? What about a journey requiring two service providers? Has freight continued to shift from rail to road or is a return to rail in progress?

Pretty much all the subsidy comes from central government i.e. the taxpayers (and it's a lot of money - billions of pounds).

Generally train tickets are valid on any operator's trains. Some operators also sell cheaper tickets only valid on their trains, but this is a customer choice issue i.e. you can choose to pay less and live with the restrictions.

Operators who run both bus and train services can choose to integrate them or not - it's a commercial decision (and mostly they don't) but in the big cities you can normally buy tickets valid for unlimited travel on buses and local train/underground services within the urban area e.g. Travelcards in London

Freight has been one of the success stories of privatisation (up about 50% since 1996), but rail still only carries about 11% of the freight in the UK.

Tony

[Anonymous]

QUOTE: Originally posted by daveklepper

Thanks for the update. Do I gather that the Network as a whole is subsidized and still costs the taxpayers money? How is this handled? Or does it result in ca***o the Government? Do local authorities subisidies the service providers for commuter services? I understant some contract operators also run bus services. Do they compete internally, running buses and trains on the same routes? Are tickets interchangeable? What about a journey requiring two service providers? Has freight continued to shift from rail to road or is a return to rail in progress?

ok - fvrom a signaller and to add.....

1) It does cost the taxpayers money - roughly 5 times from the "deeply inefficent" BR days. NR is funded thru debt which is backed by the government; the train operators with few exceptions are funded through either central or local government (local in this case bing the welsh and scots). Remember that Britain is very very centralized in terms of finance. 90% of revenue and expenditure is based around the centre as a rough rule of thumb.

There are various franchises which pay a premium to the government - examples being GNER; Thameslink and Gatwick Express. However if they go bust they can just renegotiate the terms and as the govt sets the track access charges and the timetlable basically it goes in one pocket and out of the other. As my fellow Brits have mentioned; there are open access operators - Heathrow Express and Hull Trains. However they are at the whim of Network Rail - the amount of paths they want is tailored somewhat.

2) Do Local Authorities provide financing.......yes, they do. But remember - local authorities in the UK (except as provided above) jare very dependant on the centre for their cash - it is not a federal system unlike North America.

3) Barring 2 exceptions (Sea Containers and John Laing) - all the train operator companies in the UK are in the hands of bus companies. And yes they do provide competing services. I could rant about that for a long, long time but it is very late at night here.

4) Tickets are interchangable - unless company specific which are usually book ahead and single toc journey tickets. The law states that there must be impartial retailing. There is a system (previously known as ORCATS) which divides the ratio of ca***aken by the number of trains provided by a particular operator on that stretch of line.

5) Freight - yes and no. Britain may have been the first industrialized nation and it is rapidly becoming the worlds first post industrialized nation. The amount of freight lifted has basically hovered around the 100m tonnes (UK) mark for a few years now - give or take 10%. The amount of freight carried by distance has increased rapidly - mostly as the logistical supply chain has got longer. I see as a signaller two freight trains per week.

[Murphy Siding]

On the whole, it appears to me,that maybe this wasn't a big improvement over the old system? The freight business is picking up, but the passenger busines is requiring a lot of subsidy? Some of the similarities to our system are kind of spooky. And the part about the first post-industrialized nation rings loud and clear in our country too.

On a different note: one post mentions adding electrified lines. Where does Great Britain gets it's electricity from? Coal?Nuclear?Peat moss?

[Anonymous]

Murphy - let me know when I can weigh in on this.

[Murphy Siding]

FM : Go for it ! [^]

What did you think of the idea of starting a dedicated post for discussion of you know what?

[Anonymous]

Thanks.

I just wanted to know if it is possible to differentiate the subsidies Briti***axpayers shell out for the rail system between the passenger and freight aspects? Given that passenger is the main course for Network Rail, can it be said that the increased taxpayer output for Network Rail is mostly (if not all) predicated toward those passenger TOC's, while the increase in freight movements would suggest a net taxpayer gain (if indeed that freight has been taken off the highways or is new business that would not exist otherwise without the unique shipper access to the network)?

[owlsroost]

QUOTE: Where does Great Britain gets it's electricity from? Coal?Nuclear?Peat moss?

Coal, Nuclear, Natural Gas, some hydro power in Scotland, a small amount of wind power and imports of electricity from France (where it's mostly generated by nuclear energy). There is some use of peat in Ireland I believe.

Tony

[Tulyar15]

There's quite a lot of use of peat in Ireland. The Iri***urf Board (a state owned organisation) has an extensive network of narrow gauge railways with nearly 1000 miles of track and over 200 locos in use. These connect the peat bogs with the power stations. The more recent editions of the Oxford Publishing Co's Rail Atlas of Britain and Ireland show some of the larger networks. But they are in a state of constant flux, as peat extraction moves on, so do the tracks.

[owlsroost]

QUOTE: Given that passenger is the main course for Network Rail, can it be said that the increased taxpayer output for Network Rail is mostly (if not all) predicated toward those passenger TOC's

Yes - apart from a very few places, the vast majority of trains are passenger so it's this that drives the need for capacity in the system. There are direct government grants available to companies to encourage a shift of freight from road to rail (to pay towards the cost of installing rail facilties and subsidise operating costs on environmental grounds e.g. fewer trucks through small villages etc). I don't know if there is any direct overall rail freight subsidy, but to be honest it would probably not be very significant in relation to the passenger subsidies.

In terms of passenger numbers and freight handling, I'd say the system is successful - to the point where the problem is lack of track capacity in some places, not lack of passengers. The main problem we have now (costs) is something the industry is taking seriously - the costs have to come down to ensure a long term future for the railways in the UK, the politicians won't fund the current level of subsidy for ever. We will probably never get back to the cost levels of British Rail (too much has changed in the meantime) but they have to be reduced to realistic levels.

Tony

[daveklepper]

Cost reductions are possible by increased productivity, faster turn around of trains for better use of both equipment and personel, but how realistic is this? US railroads have reduced costs mostly by turning away unprofitable business, through abandonment of branch and secondary lines and simply raising rates, but this is a freight railroad approach and not applicable to the UK. Actually, Beecham and all, it was done already about as far as possible. Reducing manning on trains is one way, but will the Unions permit this? How much of the subsidy for British railways is really a form of welfare? In some cases, costs can be reduced by turning lines over to local authorities and running them as light rail, and some of this has been done already. But isn't this just a drop in the bucket? My prediction: Oil prices in the UK are going to escalate greatly in the future, and the UK has been extremely slow in adopting energy saving highway transportation (Hybrid technology, NOT the rediculous fuel cell Hydrogen scam), so the costs of driving will go up, and the railways will increase their ticket prices and/or the popularity of the subsidization will increase.

[Tulyar15]

Hopefully escalating oil prices will see more electrification. Whilst big projects like the East Coast Main Line electrification are unlikely, there's a lot of useful infilling schemes such as Leeds - York, Peterborough - Ely that could be done fairly cheaply and quickly which would increase productivity of electric trains.

[daveklepper]

Now THAT is a positive step! Yeah team!

[owlsroost]

Peterborough - Ely electrification makes little sense (other than as an occasional diversionary route), it's part of a largely east-west traffic axis which otherwise has virtually no electrification. Personally I'd go for Manchester - Preston - Blackpool and Glasgow - Edinburgh via Falkirk.

Tony

[owlsroost]

QUOTE: Cost reductions are possible by increased productivity, faster turn around of trains for better use of both equipment and personel, but how realistic is this? US railroads have reduced costs mostly by turning away unprofitable business, through abandonment of branch and secondary lines and simply raising rates, but this is a freight railroad approach and not applicable to the UK.
Actually, Beecham and all, it was done already about as far as possible. Reducing manning on trains is one way, but will the Unions permit this? How much of the subsidy for British railways is really a form of welfare? In some cases, costs can be reduced by turning lines over to local authorities and running them as light rail, and some of this has been done already. But isn't this just a drop in the bucket? My prediction: Oil prices in the UK are going to escalate greatly in the future, and the UK has been extremely slow in adopting energy saving highway transportation (Hybrid technology, NOT the rediculous fuel cell Hydrogen scam), so the costs of driving will go up, and the railways will increase their ticket prices and/or the popularity of the subsidization will increase.

It's not the direct costs of running trains that's the problem - it's mostly the increased costs of maintaining/renewing/upgrading the infrastructure compared to British Rail days.

As a few examples, some of this is down to increased health & safety related costs - e.g. it apparently takes longer now to set up/hand back a track posession so you get less work done during an overnight repair shift, some of it is because more work is done by private contractors (who have to make a profit), some of it is because perfectly good equipment that was used in BR days was deemed old-fashioned etc in the Brave New World of the privatised railway and so was replaced by new kit (supposedly cheaper and better because it came from outside the UK) that has proved more expensive and less reliable than the old stuff in some cases....

These issues are slowly being sorted out (Network Rail has now bought all routine maintenance back in-house, for example), and some of the money is going on repairing/upgrading stuff that BR should have done years ago but never had the money (sound familar in the context of the North East Corridor ?)

And yes, you're right, chopping off branch lines doesn't make that much difference to the overall system costs because most of the money is spent on the busy parts of the network - we found this out in the Dr. Beeching era

By the way, we can buy hybrid cars in the UK, but they are more expensive (and there are no government subsidies to encourage their use), and our normal cars are pretty economical anyway - they have to be, fuel costs 4 - 5 times the price it is in the US (which also why diesel powered cars are popular in Europe - they have better fuel economy, particularly in urban conditions).

You might find Roger Ford's 'Informed Sources' magazine column archive - http://www.alycidon.com/ALYCIDON%20RAIL/alycidon%20RAIL%20home.htm - interesting (but read the primer first - http://www.alycidon.com/ALYCIDON%20RAIL/Informed%20Sources%20Primer.htm - particularly the 'Boiling Frogs' section [:)] )

Tony

[Murphy Siding]

Tony : How does Network Rail recover the cost of rail line improvements? Are they able to raise rates,as needed to cover expenses,or is the rate they charge regulated by a government authority? Or, maybe the rates are negotiated on long term contracts?

Thanks

[owlsroost]

It's complicated (and it's changing slowly) - the rail regulator effectively sets the baseline of how much money Network Rail can have to maintain the existing network. NR then gets the actual money from the train operators via Track Access charges, some of which comes from the taxpayer via subsidies to the operators.

If an operator wants NR to upgrade something (e.g. higher speeds, track doubling etc) it can negotiate with NR to pay back the cost of this via increased Track Access charges - or it could just pay directly for it to be done (if it has a long enough franchise to make this viable).

EWS (the largest freight operator) has a long term Track Access agreement with NR covering the whole system which (as I understand it) is a large fixed cost per year plus incremental charges per train.

Tony

[Murphy Siding]

Tony: Is there typically only one TOC per section of track,which is owned and maintained by NR? Tulyar 15 notes that the TOC's were given guarantees to limit compettion. Didn't that defeat the purpose of seperating things to begin with? If EWS wanted to buy the lines to be able to maintain it, and run it more efficiently,wouldn't the government be hard pressed to say no?

[Anonymous]

Notwork Fail is funded through 5 yearly control periods. It used to be the regulator which determined the cash depending on a credible business plan from the company and then the treasury used to pay up. It had no option.

Now it is the dft/ government who are supposed to state what they want and what they will pay for and basically NR will design its business plan around that.

The train operators are monopolists in areas such as on secondary main lines and the branches. On the main lines there are a variety of train operating companies.

[owlsroost]

QUOTE: Didn't that defeat the purpose of seperating things to begin with?

You have to remember that the main purpose of rail privatisation was to get the industry's debts and future borrowings off the government's books. This wasn't how it was sold to the public by the politicians, but that's the reality. Since no one had tried to do this before on this scale (and they wanted to complete the process quickly before the next general election), real competition between operators was limited to make the franchises as attractive as possible to potential bidders.

QUOTE: If EWS wanted to buy the lines to be able to maintain it, and run it more efficiently,wouldn't the government be hard pressed to say no?

The problem with this is that (unless you placed the same legal requirements for open access on EWS) it would create a monopoly for EWS on those lines, and I don't think the politicians would wear that - and certainly the other operators (I assume) would strongly oppose it without their open access rights being protected.

In Railtrack days, EWS did propose taking over the maintenance of some freight-only lines but it never got anywhere - and I don't remember any recent proposals about this.

Tony

(Note that my comments/opinions about all this stuff just come from being an observer of the UK rail scene for over 30 years, a taxpayer, and ex-Railtrack shareholder - I've never worked in the industry so I don't have any inside knowledge [:)] )

[Murphy Siding]

The privatization got the industry's debts off the government's books by selling everthing to private concerns that have to depend on government subsidy? What incentive is there to invest in any of the TOC's or NR?

Thanks.

p.s. Which TOC does Thomas the Tank Engine work for?[:)]

[owlsroost]

QUOTE: What incentive is there to invest in any of the TOC's or NR?

This is a big issue for the TOC's with relatively short contracts - in some cases they have negotiated longer franchises in exchange for putting up money for improvements. Chiltern Railways ( http://www.chilternrailways.co.uk ) is a good example - they paid some of the cost of double-tracking part of their route from London Marylebone to Birmingham and for improvements at Marylebone in exchange for a much longer franchise period (so they can get a sensible return on the investment).

Also some TOC's don't receive subsidies (generally the ones running long distance services to/from London) and in the others there is quite often the possibility of more profits by carrying more passengers - which can justify investment if the numbers stack up. Quite often the investment is in conjunction with NR or a rolling stock leasing company, who then charge more to recover the money over time.

Tony

QUOTE: p.s. Which TOC does Thomas the Tank Engine work for?

The one run by the Fat Controller of course [:)]

[Murphy Siding]

Glad to hear that some of the TOC's can operate without subsidy. Again,that seems to mirror our rail system somewhat: long hauls into major markets are more profitable. Back to the TOC's: at the end of a contract, does the TOC then re-nogotiate a contract with NR? or are they then required to bid against other TOC's who might want in on the action? If the contract is not renewed,does the TOC just fold up the tent and go home? Thanks

[Anonymous]

QUOTE: Originally posted by Murphy Siding

Glad to hear that some of the TOC's can operate without subsidy. Again,that seems to mirror our rail system somewhat: long hauls into major markets are more profitable. Back to the TOC's: at the end of a contract, does the TOC then re-nogotiate a contract with NR? or are they then required to bid against other TOC's who might want in on the action? If the contract is not renewed,does the TOC just fold up the tent and go home? Thanks

At the end of the franchise periode the TOCs must rebid for there contract along with any other potential TOCs. As a recent exanple the Thameslike franchise holder lost out in there bid to renew there contract pretty early in the bidding process. When a TOC losses its contract the employent of most of the employes as well as the leases on the rolling stock get transfered to the new TOC. So yes they are required to rebid and if they don't get renewed they do fold up the tent and go home.

[Murphy Siding]

Would the new TOC that got the employees and equipment leases be required to honor the same wage scale and lease prices? or are they re-nogotiated at that time? To me, it sounds like the TOC would be not much more than a management team?


Thanks

[Anonymous]

I don't know exactly what happens to employee wages or rollingstock lease prices, fair to say that since the British Railways are Union I bet that the unions have a say in that. The observation that TOCs(Virgin West Coast) are little more then management companies has been made before.

If you are really interested in good analsys of British Rail check out the website of the British Rail Analsys Cristian Wolmar at www.christianwolmar.co.uk.