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Old 18th May 2018, 02:08 AM   #1
Information Analyst
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Third private train operator fails to run major British rail route

Yes another triumph for the glorious private sector!

BBC News: Why has East Coast Mainline hit the buffers again?

"For the third time in just over a decade the government has called a halt to the East Coast Main Line rail franchise.

Transport Secretary Chris Grayling says it will be run by his department until 2020 after which it will be in the hands of a public-private partnership."

In summary:

British Rail: 1948-1996 [from nationalisation until privatisation]
Great North Eastern Railway: 1996-2005 [original seven-year franchise extended to nine]
Great North Eastern Railway: 2005-2007 [stripped of second seven-year franchise]
National Express East Coast: 2007-2009 [defaulted on ten-year franchise]
East Coast: 2009-2015 [re-nationalised; run profitably until re-privatised]
Virgin Trains East Coast: 2015-2018 [eight-year franchise terminated]
London and North Eastern Railway: 2018-????? [DfT-appointed "operator of last resort": Arup Group, Ernst & Young, and SNC-Lavalin]

Effectively, in all three cases, the private operators bid more than the profits that the line generated for them. In the second and third cases, the government accepted obviously unrealistic overbids, despite past experience.

Last edited by Information Analyst; 18th May 2018 at 03:44 AM.
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Old 18th May 2018, 02:28 AM   #2
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Originally Posted by Information Analyst View Post
Yes another triumph for the glorious private sector!

BBC News: Why has East Coast Mainline hit the buffers again?

"For the third time in just over a decade the government has called a halt to the East Coast Main Line rail franchise.

Transport Secretary Chris Grayling says it will be run by his department until 2020 after which it will be in the hands of a public-private partnership."

In summary:

British Rail: 1948-1996 [from nationalisation until privatisation]
Great Northern Railway: 1996-2005 [original seven-year franchise extended to nine]
Great Northern Railway: 2005-2007 [stripped of second seven-year franchise]
National Express East Coast: 2007-2009 [defaulted on ten-year franchise]
East Coast: 2009-2015 [re-nationalised; run profitably until re-privatised]
Virgin Trains East Coast: 2015-2018 [eight-year franchise terminated]
London and North Eastern Railway: 2018-????? [DfT-appointed "operator of last resort": Arup Group, Ernst & Young, and SNC-Lavalin]

Effectively, in all three cases, the private operators bid more than the profits that the line generated for them. In the second and third cases, the government accepted obviously unrealistic overbids, despite past experience.



But it must work. Ideologically speaking, privatisation is better (apparently). In the case of the railways, it's clearly reality that's wrong, so if we just keep doing the same thing over and over again, it'll all work out eventually.


Who made the most money out of this?
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Old 18th May 2018, 03:13 AM   #3
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Originally Posted by 3point14 View Post
Who made the most money out of this?


If I had to guess I'd go for one of the Big Four accountancy firms, they always do very well out of consultancy fees in these affairs.
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Old 18th May 2018, 03:19 AM   #4
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Originally Posted by Information Analyst View Post
Yes another triumph for the glorious private sector!

BBC News: Why has East Coast Mainline hit the buffers again?

"For the third time in just over a decade the government has called a halt to the East Coast Main Line rail franchise.

Transport Secretary Chris Grayling says it will be run by his department until 2020 after which it will be in the hands of a public-private partnership."

In summary:

British Rail: 1948-1996 [from nationalisation until privatisation]
Great Northern Railway: 1996-2005 [original seven-year franchise extended to nine]
Great Northern Railway: 2005-2007 [stripped of second seven-year franchise]
National Express East Coast: 2007-2009 [defaulted on ten-year franchise]
East Coast: 2009-2015 [re-nationalised; run profitably until re-privatised]
Virgin Trains East Coast: 2015-2018 [eight-year franchise terminated]
London and North Eastern Railway: 2018-????? [DfT-appointed "operator of last resort": Arup Group, Ernst & Young, and SNC-Lavalin]

Effectively, in all three cases, the private operators bid more than the profits that the line generated for them. In the second and third cases, the government accepted obviously unrealistic overbids, despite past experience.
GNER not GNR
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Old 18th May 2018, 04:05 AM   #5
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Originally Posted by Lothian View Post
GNER not GNR
D'oh. Not sure how I messed that, given how much time I spent at King's Cross listening to the announcements referring to "Gee-en-yar" trains....

Of course, it does ad insult to injury a bit, when old rail acronyms get resurrected, as we now have with the two LNERs!
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Old 18th May 2018, 04:37 AM   #6
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A quick back-of-the-envelope calculation with the numbers from the article.

Virgin/Stagecoach paid 3.3bn for an 8-year franchise. That's 1.2bn in the 3 years they've been operating. In total they ran a 200mn loss, which means that, excluding the franchise payments, they made a 1bn profit, that's 350mn/year.

Why doesn't the government run such a profitable line itself?
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Old 18th May 2018, 09:12 AM   #7
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Originally Posted by ddt View Post
A quick back-of-the-envelope calculation with the numbers from the article.

Virgin/Stagecoach paid 3.3bn for an 8-year franchise. That's 1.2bn in the 3 years they've been operating. In total they ran a 200mn loss, which means that, excluding the franchise payments, they made a 1bn profit, that's 350mn/year.

Why doesn't the government run such a profitable line itself?

Don't be ridiculous.

Everyone knows publicly owned railways are impossible. This is why France has terrible railways but British railways are the fastest and most efficient in the world!
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Old 18th May 2018, 09:24 AM   #8
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Originally Posted by Hubert Cumberdale View Post
Don't be ridiculous.

Everyone knows publicly owned railways are impossible. This is why France has terrible railways but British railways are the fastest and most efficient in the world!
Well that's obvious, I mean this whole thread is about how whenever this rail line is in public hands it loses money and has to be bailed out by the private sector who make it profitable again only to be renationalised for ..reasons.. only to fail again, isn't it?

Wait.. What????
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Old 19th May 2018, 12:59 AM   #9
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Originally Posted by ddt View Post
A quick back-of-the-envelope calculation with the numbers from the article.

Virgin/Stagecoach paid 3.3bn for an 8-year franchise. That's 1.2bn in the 3 years they've been operating. In total they ran a 200mn loss, which means that, excluding the franchise payments, they made a 1bn profit, that's 350mn/year.

Why doesn't the government run such a profitable line itself?
As I noted (although it may not have been as clear as it could have been), it did between 2009 and 2015, running it as "East Coast" via the wholly government-owned company Directly Operated Railways.
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Old 19th May 2018, 01:12 AM   #10
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Originally Posted by 3point14 View Post
But it must work. Ideologically speaking, privatisation is better (apparently). In the case of the railways, it's clearly reality that's wrong, so if we just keep doing the same thing over and over again, it'll all work out eventually.


Who made the most money out of this?
This is what really bugs me - an adherence to an ideologically inspired policy. Wish we could have a new party "The Pragmatist Party" - with a strapline of "We do what works".

If privatisation works best at delivering whatever it is we want to deliver let's privatise it, if state ownership works best let's use that and all the variations between.

Sticking to something that repeatedly does not deliver what it is meant to do is simply stupidity.
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Old 19th May 2018, 02:20 AM   #11
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Originally Posted by Darat View Post
This is what really bugs me - an adherence to an ideologically inspired policy. Wish we could have a new party "The Pragmatist Party" - with a strapline of "We do what works".

If privatisation works best at delivering whatever it is we want to deliver let's privatise it, if state ownership works best let's use that and all the variations between.

Sticking to something that repeatedly does not deliver what it is meant to do is simply stupidity.
But then you'll have the same divisions over what the aim of 'what works' is. Is an endeavour successful because it serves the end user or because it generates profit?
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Old 19th May 2018, 02:32 AM   #12
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Originally Posted by P.J. Denyer View Post
But then you'll have the same divisions over what the aim of 'what works' is. Is an endeavour successful because it serves the end user or because it generates profit?
But at least then it would be upfront! I think it is highly unlikley we shall ever see The Prags gaining power...
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