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Actually they are because unlike shareholders who cares more about dividends then efficiency and service levels the government have stakeholders who care about

Actually they are because unlike shareholders who cares more about dividends then efficiency and service levels the government have stakeholders who care about efficiency and service levels.

midasuni 5y ago
Hahahahaha Oh wait you’re serious. Let me laugh even harder. Efficiency leads to profits and thus dividends. The government cares more about politics than efficiency. Look the the problems southern have had because the government insisted on getting rid of guards - they effectively nationalised southern (GTR) years ago because they refused to let the private sector run it how they wanted. Compare with chiltern who converted the Chiltern line from a service about to shut down under the government in the 80s to a leading toc massively increasing service and options
- Reason077 5y ago
  Chiltern Railways were great, and were one of the few TOCs that genuinely competed for passengers against other railways, as Chiltern, Virgin (now Avanti) and London Midland (now West Midlands / London Northwestern) all operated competing services between London and Birmingham. Back in the day, Chiltern had express peak-time services to Birmingham which were only marginally slower than Virgin's high speed trains. But Chiltern was much cheaper and would serve you a cooked breakfast and proper espresso coffee at your seat - in standard class!
  - daverol 5y ago
    The white paper extols their open data promise which will allow (for example) "Personalised travel offers, like free coffee when a service is delayed"
- squiggleblaz 5y ago
  I don't get this kind of argument. Efficiency doesn't mean a good service. It means to minimise the costs in meeting your contractual requirements. It's not unusual for a company to be set up specifically to bid for a government contract since they're so lucrative and so hard for the government to respond to: a very profitable approach is to compete for a contract and then offer the shittiest service for which you are not subject to penalties. In some cases the senior management of reputable public transport service providers with decades of service provision have basically just upped and left the country before the contract is even through. The free market certainly provides benefits, but there needs to be some meaningful recourse to removing your custom while the provider depends on it. Otherwise, it's simply not a free market at all, no matter the circumstances that surrounded the bidding process.
pydry 5y ago
The government already had to care about that. They were losing votes to promises of nationalisation under Corbyn in 2017. This looks like an attempt to present a kind of Potemkin nationalisation to mollify the anger of people with £1k+ season tickets and cement their hold on voters drawn away from Starmer in the last election (who meekly dumped rail nationalisation as a policy).
- Stranger43 5y ago
  But they could do nothing about it because of the arms length principle, putting things under government control shortens the chain of responsibility. This measure might be too little to really matter but the fact is that when you don't have an market(and for passenger rail you kind of don't) outsourcing operations to for-profit organisations provide nothing but a venue to funnel cash out of the system to private shareholders. When there is an functioning market that is not tied to an government backed/guaranteed service it does make sense to subcontract work to private enterprise, but unless the government contracts represent a relatively minor portion of the subcontractors revenue and the subcontractor don't have more then say 20% market share, there is no functioning market, so all you end up with is an mercantilist structure of public risk and private profits if you still insist on pushing the task to private enterprise.
  - adamcstephens 5y ago
    I also question whether outsourcing is cheaper too. Once you add in all the overhead in managing the contracts and contractors, plus the profit for the companies, I struggle to see how this is a better deal for government (and by extension the taxpayer).
JI00912 5y ago
Removing the incentive to make profit does not create incentives to improve efficiency and service. The government has no such incentives.
- eertami 5y ago
  >does not create incentives to improve efficiency and service. I'm going to go out on a limb here, and guess you've never used the for-profit rail services of the UK then. (I know this is quite snarky, but to elaborate, there is no incentive for the TOCs, because a operating a stretch of railway line doesn't have any competition. You don't need to be efficient or give good service because customers do not have an alternative choice of train they can use.)
- dvdkon 5y ago
  Yes, they do, campaigning on a program of better services and then not delivering anything is very much against career politicians' interests.
  - jokethrowaway 5y ago
    The timeframe for changes is so long that this has zero chances of affecting any politician's career
    - dvdkon 5y ago
      Yes, but they're still judged for their actions, so they'll lose voters if they do nothing or take actions that will be widely criticised by the press.
  - dageshi 5y ago
    This was part of the reason why a lot of previously nationalised stuff was privatised in the first place. MP's would get people complaining to them about the quality of their phone lines from BT for example. It all moves in cycles, I could well imagine the same situation happening again in 20 years.
- 5y ago
mnd999 5y ago
It would certainly simplify the structure. At the moment it's all contracts and metrics and fines and lawyers when things go wrong. Perhaps the end to the ultimate metric for whether operators get fined or not being whether trains are on time which leads to bizarre situations like trains switching platforms at the last minute and leaving empty due to all the passengers being on the wrong platform.
- scaryclam 5y ago
  And getting flat out cancelled when it's cheaper to take that hit than try to get passengers to where they're going in spite of the delays.
bluGill 5y ago
When the government will take away your franchise in a few years - as just happened here - that is the only sane thing to do. Shareholders aren't stupid enough to invest in something long term unless their investment will have a return. Companies invest when there is a long term profit from the investment that makes it worth it. With governments all over the world having a history of nationalizing railroads, there is no rail investment that can be made with a time-frame beyond 7 years - and rail is up front expensive enough you need a lot more than a 7 year time frame on most investments. Most of the railroads in the US were funded by 150 year bonds. (your history class talked about the government giving railroads 10 miles of land on each side of the track - but that was only a few routes in the west that got that, most rail in the east the railroads had to buy the land at market price). I assume most of the rest of the world was similar.
- iudqnolq 5y ago
  Companies don't deserve free bailouts. If they go bankrupt the government can reasonable expect something for paying their debts.

Actually they are because unlike shareholders who cares more about dividends then efficiency and service levels the government have stakeholders who care about efficiency and service levels.

midasuni 5y ago

Hahahahaha Oh wait you’re serious. Let me laugh even harder. Efficiency leads to profits and thus dividends. The government cares more about politics than efficiency. Look the the problems southern have had because the government insisted on getting rid of guards - they effectively nationalised southern (GTR) years ago because they refused to let the private sector run it how they wanted. Compare with chiltern who converted the Chiltern line from a service about to shut down under the government in the 80s to a leading toc massively increasing service and options

Reason077 5y ago
Chiltern Railways were great, and were one of the few TOCs that genuinely competed for passengers against other railways, as Chiltern, Virgin (now Avanti) and London Midland (now West Midlands / London Northwestern) all operated competing services between London and Birmingham. Back in the day, Chiltern had express peak-time services to Birmingham which were only marginally slower than Virgin's high speed trains. But Chiltern was much cheaper and would serve you a cooked breakfast and proper espresso coffee at your seat - in standard class!
- daverol 5y ago
  The white paper extols their open data promise which will allow (for example) "Personalised travel offers, like free coffee when a service is delayed"
squiggleblaz 5y ago
I don't get this kind of argument. Efficiency doesn't mean a good service. It means to minimise the costs in meeting your contractual requirements. It's not unusual for a company to be set up specifically to bid for a government contract since they're so lucrative and so hard for the government to respond to: a very profitable approach is to compete for a contract and then offer the shittiest service for which you are not subject to penalties. In some cases the senior management of reputable public transport service providers with decades of service provision have basically just upped and left the country before the contract is even through. The free market certainly provides benefits, but there needs to be some meaningful recourse to removing your custom while the provider depends on it. Otherwise, it's simply not a free market at all, no matter the circumstances that surrounded the bidding process.

pydry 5y ago

The government already had to care about that. They were losing votes to promises of nationalisation under Corbyn in 2017. This looks like an attempt to present a kind of Potemkin nationalisation to mollify the anger of people with £1k+ season tickets and cement their hold on voters drawn away from Starmer in the last election (who meekly dumped rail nationalisation as a policy).

Stranger43 5y ago
But they could do nothing about it because of the arms length principle, putting things under government control shortens the chain of responsibility. This measure might be too little to really matter but the fact is that when you don't have an market(and for passenger rail you kind of don't) outsourcing operations to for-profit organisations provide nothing but a venue to funnel cash out of the system to private shareholders. When there is an functioning market that is not tied to an government backed/guaranteed service it does make sense to subcontract work to private enterprise, but unless the government contracts represent a relatively minor portion of the subcontractors revenue and the subcontractor don't have more then say 20% market share, there is no functioning market, so all you end up with is an mercantilist structure of public risk and private profits if you still insist on pushing the task to private enterprise.
- adamcstephens 5y ago
  I also question whether outsourcing is cheaper too. Once you add in all the overhead in managing the contracts and contractors, plus the profit for the companies, I struggle to see how this is a better deal for government (and by extension the taxpayer).

JI00912 5y ago

Removing the incentive to make profit does not create incentives to improve efficiency and service. The government has no such incentives.

eertami 5y ago
>does not create incentives to improve efficiency and service. I'm going to go out on a limb here, and guess you've never used the for-profit rail services of the UK then. (I know this is quite snarky, but to elaborate, there is no incentive for the TOCs, because a operating a stretch of railway line doesn't have any competition. You don't need to be efficient or give good service because customers do not have an alternative choice of train they can use.)
dvdkon 5y ago
Yes, they do, campaigning on a program of better services and then not delivering anything is very much against career politicians' interests.
- jokethrowaway 5y ago
  The timeframe for changes is so long that this has zero chances of affecting any politician's career
  - dvdkon 5y ago
    Yes, but they're still judged for their actions, so they'll lose voters if they do nothing or take actions that will be widely criticised by the press.
- dageshi 5y ago
  This was part of the reason why a lot of previously nationalised stuff was privatised in the first place. MP's would get people complaining to them about the quality of their phone lines from BT for example. It all moves in cycles, I could well imagine the same situation happening again in 20 years.
5y ago

mnd999 5y ago

It would certainly simplify the structure. At the moment it's all contracts and metrics and fines and lawyers when things go wrong. Perhaps the end to the ultimate metric for whether operators get fined or not being whether trains are on time which leads to bizarre situations like trains switching platforms at the last minute and leaving empty due to all the passengers being on the wrong platform.

scaryclam 5y ago
And getting flat out cancelled when it's cheaper to take that hit than try to get passengers to where they're going in spite of the delays.

bluGill 5y ago

When the government will take away your franchise in a few years - as just happened here - that is the only sane thing to do. Shareholders aren't stupid enough to invest in something long term unless their investment will have a return. Companies invest when there is a long term profit from the investment that makes it worth it. With governments all over the world having a history of nationalizing railroads, there is no rail investment that can be made with a time-frame beyond 7 years - and rail is up front expensive enough you need a lot more than a 7 year time frame on most investments. Most of the railroads in the US were funded by 150 year bonds. (your history class talked about the government giving railroads 10 miles of land on each side of the track - but that was only a few routes in the west that got that, most rail in the east the railroads had to buy the land at market price). I assume most of the rest of the world was similar.

iudqnolq 5y ago
Companies don't deserve free bailouts. If they go bankrupt the government can reasonable expect something for paying their debts.