GBR - there is no cunning plan

Post by Tweed
I’ve just been reading the latest edition of Rail (edition 1025, page 56)
about Great British Railways. The article appears to have interviewed a
number of insiders, most staying anonymous. The upshot seems to be that
there isn’t a plan as yet and everything is up for discussion with various
turf wars going on. The timescale for sorting it all out appears to be 3 to
4 years. In the meanwhile things will just keep muddling along. It’s not
very inspiring.

I said there wasn't a plan.

--
Graeme Wall
This account not read.

Recliner

2024-12-29 14:45:41 UTC

I said there wasn't a plan.

There's a notion of how to plan to create a plan. It's unlikely that GBR will be fully up and running before the end of
this government's likely term ends.

Roland Perry

2024-12-29 16:43:52 UTC

On Sat, 28 Dec 2024 17:24:44 +0000, Graeme Wall

I said there wasn't a plan.

There's a notion of how to plan to create a plan. It's unlikely that
GBR will be fully up and running before the end of this government's
likely term ends.

What a shambles! But interesting that it apparently isn't just a case of
merging OLR and Network Rail and finding a "Fat Controller" to preside
over it.

--
Roland Perry

Tweed

2024-12-29 17:09:33 UTC

On Sat, 28 Dec 2024 17:24:44 +0000, Graeme Wall

I said there wasn't a plan.

There's a notion of how to plan to create a plan. It's unlikely that
GBR will be fully up and running before the end of this government's
likely term ends.

What a shambles! But interesting that it apparently isn't just a case of
merging OLR and Network Rail and finding a "Fat Controller" to preside
over it.

What’s worse is what the article had to say about fare/ticketing reform.
The anonymous insider implied it is happening by stealth. Fares are either
heading to being set by extended contactless zones, or by an extension of
the new LNER method. The latter is basically any fare they care to make up
(otherwise known as Advances) capped only by an egregiously priced Anytime
fare.

Recliner

2024-12-29 21:53:39 UTC

On Sat, 28 Dec 2024 17:24:44 +0000, Graeme Wall

I said there wasn't a plan.

There's a notion of how to plan to create a plan. It's unlikely that
GBR will be fully up and running before the end of this government's
likely term ends.

What a shambles! But interesting that it apparently isn't just a case of
merging OLR and Network Rail and finding a "Fat Controller" to preside
over it.

Fare rises, where they can get away with them, are inevitable, but must
inevitably be stealthy. They obviously don’t want the first visible effect
of ‘nationalisation’ to be higher fares.

Theo

2025-01-01 10:40:59 UTC

I said there wasn't a plan.

There's a notion of how to plan to create a plan. It's unlikely that GBR will be fully up and running before the end of
this government's likely term ends.

Does the guiding mind have a guiding mind? Until that point, with nobody in
charge of the process or with powers to make progress, it seems like it'll
just plod along with nobody really driving things.

There were rumours Alex Hynes (DG Rail Services Group at the DfT) is tipped
to be head of GBR, but does he have powers to do so? Does it need
parliamentary legislation?

Theo

Recliner

2025-01-01 11:32:36 UTC

Post by Theo

I said there wasn't a plan.

There's a notion of how to plan to create a plan. It's unlikely that GBR
will be fully up and running before the end of
this government's likely term ends.

Does the guiding mind have a guiding mind? Until that point, with nobody in
charge of the process or with powers to make progress, it seems like it'll
just plod along with nobody really driving things.
There were rumours Alex Hynes (DG Rail Services Group at the DfT) is tipped
to be head of GBR, but does he have powers to do so? Does it need
parliamentary legislation?

Yes, legislation is required, and planned. Until then, there’s currently a
Transition Team doing the analysis and prep work for an integrated
organisation, to be replaced by a Shadow GBR in the Spring. It will have a
temporary chair, Laura Shoaf, and will probably be in existence for several
years. In fact, it will probably take longer to bring GBR into existence
than it did to dismember BR.

https://www.modernrailways.com/article/shoaf-chair-shadow-great-british-railways

One ironic development is that the passenger railway is likely to become
more privatised in the next couple of years of Labour government than the
Tories managed in 25 years, as it appears likely that a number of new open
access operators will commence operation. These are truly private sector
operators, unlike the franchises, which were always under DfT ownership and
control.

Freight is also moving more to the private sector, as the nationalised DBF
fades away in the UK, with the private Freightliner and GBRf taking its
market.

There are some looming conflicts with GBR, as the freight industry is
afraid of being squeezed out, particularly by the devolved regional
passenger railway authorities which don’t like freight paths running
through places like Manchester, taking up paths that they want for their
local passenger services.

What will result is far from the integrated railway that existed before BR
was split up. GBR will control all the tracks, but many (perhaps even most)
of the regional passenger railways are already, or will be, devolved to
local control, while some longer distance passenger services, and all
freight services are private, operated by multiple companies. And GBR will
own no rolling stock, which is all privately owned.

So, in effect, GBR will just be NR operating some, perhaps a minority, of
the trains. One wag suggested that it might more accurately be described as
Lesser English Railways.

Roland Perry

2025-01-02 14:44:14 UTC

Post by Recliner
One ironic development is that the passenger railway is likely to become
more privatised in the next couple of years of Labour government than the
Tories managed in 25 years, as it appears likely that a number of new open
access operators will commence operation. These are truly private sector
operators, unlike the franchises, which were always under DfT ownership and
control.

That'll come as news to people like Sea Containers and John Laing Group.

--
Roland Perry

Recliner

2025-01-02 15:54:29 UTC

That'll come as news to people like Sea Containers and John Laing Group.

No, they knew perfectly well what you’ve never understood about the UK rail
passenger franchises.

So what investments did they make? What did they actually own? How much
capital did they deploy? How much capital was at risk? What freedom did
they have to vary the schedule or prices in line with market demand?

Roland Perry

2025-01-03 11:37:07 UTC

That'll come as news to people like Sea Containers and John Laing Group.

No, they knew perfectly well what you’ve never understood about the UK rail
passenger franchises.

I'd rather hoped we could start the New Year without your cracked-record
ad-homs. Oh well.

Post by Recliner
So what investments did they make? What did they actually own? How much
capital did they deploy? How much capital was at risk? What freedom did
they have to vary the schedule or prices in line with market demand?

Enough, and I think you were always a great fan of Chiltern and the way
they poured lots of funds into re-inventing that flow.

--
Roland Perry

Recliner

2025-01-03 12:10:11 UTC

That'll come as news to people like Sea Containers and John Laing Group.

No, they knew perfectly well what you’ve never understood about the UK rail
passenger franchises.

I'd rather hoped we could start the New Year without your cracked-record
ad-homs. Oh well.

Stop proudly showing off your ignorance and I’ll stop commenting on it.

Enough, and I think you were always a great fan of Chiltern and the way
they poured lots of funds into re-inventing that flow.

As you surely know, Chiltern and its parent company poured in none of their
own funds. Any building work they did or commissioned was paid for by NR,
which obviously owns any assets that were created or enhanced. NR is
recovering that investment through facility and track access charges on the
line.

When Chiltern’s long period operating that line comes to an end, the
government won’t have to pay anything for any transferred assets, as Arriva
and its predecessors made no investments in the line, and own nothing. It
was always wholly owned by the government (after the demise of Raiktrack),
and has always been a nationalised railway since BR was formed; only the
operation of it was temporarily sub-contracted out, initially with quite a
lot of flexibility, but latterly none. The trains, of course, are owned by
ROSCOs, though there might have been a period when DB owned some of the Mk
3 carriages.

Adrian Shooter was unusually smart at devising cost-effective enhancements
to the Chiltern routes, and getting the government (and Value Retail?) to
fund them. He was also the first to order a new fleet of trains after the
privatisation hiatus, but of course it wasn’t Chiltern or M40 Trains
funding them. Sadly, that creativity dried up after he retired, and it
became just another Arriva operator.

Roland Perry

2025-01-04 11:15:44 UTC

That'll come as news to people like Sea Containers and John Laing Group.

No, they knew perfectly well what you’ve never understood about
the UK rail passenger franchises.

I'd rather hoped we could start the New Year without your cracked-record
ad-homs. Oh well.

Stop proudly showing off your ignorance and I’ll stop commenting on it.

Alternatively you could desist from flaunting your own ignorance
regarding what things I understand. And if you insist on digging the
hole deeper, use less abusive language.

Enough, and I think you were always a great fan of Chiltern and the way
they poured lots of funds into re-inventing that flow.

"Chiltern Railways is a serial investor in its rail services.
Since privatisation we have leveraged investment of over £600m in all
aspects of our operation, using a range of different models. It may
assist the committee to understand a little more about how those models
work:

Trains: where we have more than doubled the number of trains in our
fleet. We have used two models to finance this investment:

Shareholder capital: with which we purchased a fleet of surplus Mark 3
coaches and refurbished them to a very high modern standard. We now use
30 of these vehicles on our London to Birmingham route; and

ROSCO finance: in which a ROSCO pays for a fleet of new trains, or a
refurbishment programme, and is remunerated over time for that
investment by Chiltern paying a higher monthly rental charge.

New Stations: we have opened Warwick Parkway and Aylesbury Vale Parkway
as brand new stations. Two different financing models were used:

Shareholder capital: for Warwick Parkway station. Our then shareholders
using money borrowed from a bank paid for the new station, and took the
risk that the uplift in revenue earned by Chiltern would over time
remunerate the loan and turn a profit - which it has

A Special Purpose Company: for Aylesbury Vale Parkway station which was
built using finance from and is owned by a subsidiary of John Laing plc,
constituted as a special purpose company. Chiltern pays an annual
lease charge to the special purpose company which over time
remunerates their investment. Chiltern takes the risk that the farebox
revenue which comes from the new passengers which use the station is
sufficient to cover the lease payments.

I should add that in these two examples there was also a degree of
funding provided by the public sector to pay for some complimentary non
rail infrastructure around bus interchanges and approach roads.

Infrastructure enhancement: we have leveraged considerable investment
into the Chiltern route infrastructure with the purpose of reducing
journey times, improving performance and expanding capacity. Most
notably in September 2011 we reduced the London to Birmingham Chiltern
route rail journey time by 20 minutes with a £130m investment called
Evergreen 3 Phase 1. This was by preceded by similar earlier schemes
which amongst other things built two new platforms at our London
Marylebone station and the brought back into use two derelict terminal
platforms at Birmingham Moor Street station. Our most commonly used
method to finance these investments has been the Investment Framework
model.

In the Investment Framework model a scheme promoter such as ourselves
devises a scheme and uses money drawndown from Network Rail to pay
the capital cost of the works. The capital cost is then amortised,
usually over 30 years, and an interest rate (currently 4.93%) applied.
This creates an annual Facility Charge which the scheme promoter pays to
Network Rail for 30 years[2]. After 30 years, Network Rail’s capital
and interest outlay has been remunerated by the promoter. To
elaborate: in the case of our Evergreen 3 Phase 1 investment, Chiltern
takes the risk that the farebox revenue brought by the additional
passengers we carry as a consequence of the 20 minute journey time
reduction is sufficient to repay about £12m per year to Network Rail in
Facility Charge. In this model, Network Rail’s role is to provide the
finance and earn the rate of return permitted by ORR - Network Rail does
not take any risk on the performance of the investment; this lies with
Chiltern.

HLOS Schemes: where DfT decides that it wishes to purchase an output
from the railway for policy or macro economic reasons. For example,
DfT has decided it wishes to purchase capacity for 1,000 extra
passengers to arrive in the London Marylebone morning peak. The money
for the investment is provided by Network Rail in the form of a RAB
addition, meaning that ultimately DfT pays the financing cost of the
investment via its support of Network Rail’s debt. Chiltern, whilst
not funding the investment, plays a direct role in ensuring its
efficiency and success by working jointly with Network
Rail to devise the most appropriate actual investment to deliver the
DfT’s objective, then co-operate with Network Rail who deliver the
work. These cases are suitable for application of the ORR mechanism
for train operators to share in any cost reduction which can be secured
as a result of their constructive engagement."

A rather different picture, you must agree?

--
Roland Perry

Recliner

2025-01-04 11:56:34 UTC

That'll come as news to people like Sea Containers and John Laing Group.

No, they knew perfectly well what you’ve never understood about
the UK rail passenger franchises.

I'd rather hoped we could start the New Year without your cracked-record
ad-homs. Oh well.

Stop proudly showing off your ignorance and I’ll stop commenting on it.

Alternatively you could desist from flaunting your own ignorance
regarding what things I understand. And if you insist on digging the
hole deeper, use less abusive language.

Enough, and I think you were always a great fan of Chiltern and the way
they poured lots of funds into re-inventing that flow.

Those were the Mk 3 carriages I mentioned, owned by DB, and leased to
Chiltern (but probably not for much longer).

Post by Roland Perry
ROSCO finance: in which a ROSCO pays for a fleet of new trains, or a
refurbishment programme, and is remunerated over time for that
investment by Chiltern paying a higher monthly rental charge.

So, just like every TOC.

Post by Roland Perry
New Stations: we have opened Warwick Parkway and Aylesbury Vale Parkway
Shareholder capital: for Warwick Parkway station. Our then shareholders
using money borrowed from a bank paid for the new station, and took the
risk that the uplift in revenue earned by Chiltern would over time
remunerate the loan and turn a profit - which it has.

Actually, Warwick Parkway is owned by Warwickshire County Council.

Post by Roland Perry
A Special Purpose Company: for Aylesbury Vale Parkway station which was
built using finance from and is owned by a subsidiary of John Laing plc,
constituted as a special purpose company. Chiltern pays an annual
lease charge to the special purpose company which over time
remunerates their investment. Chiltern takes the risk that the farebox
revenue which comes from the new passengers which use the station is
sufficient to cover the lease payments.
I should add that in these two examples there was also a degree of
funding provided by the public sector to pay for some complimentary non
rail infrastructure around bus interchanges and approach roads.
Infrastructure enhancement: we have leveraged considerable investment
into the Chiltern route infrastructure with the purpose of reducing
journey times, improving performance and expanding capacity. Most
notably in September 2011 we reduced the London to Birmingham Chiltern
route rail journey time by 20 minutes with a £130m investment called
Evergreen 3 Phase 1. This was by preceded by similar earlier schemes
which amongst other things built two new platforms at our London
Marylebone station and the brought back into use two derelict terminal
platforms at Birmingham Moor Street station. Our most commonly used
method to finance these investments has been the Investment Framework
model.
In the Investment Framework model a scheme promoter such as ourselves
devises a scheme and uses money drawndown from Network Rail to pay
the capital cost of the works. The capital cost is then amortised,
usually over 30 years, and an interest rate (currently 4.93%) applied.
This creates an annual Facility Charge which the scheme promoter pays to
Network Rail for 30 years[2]. After 30 years, Network Rail’s capital
and interest outlay has been remunerated by the promoter. To
elaborate: in the case of our Evergreen 3 Phase 1 investment, Chiltern
takes the risk that the farebox revenue brought by the additional
passengers we carry as a consequence of the 20 minute journey time
reduction is sufficient to repay about £12m per year to Network Rail in
Facility Charge. In this model, Network Rail’s role is to provide the
finance and earn the rate of return permitted by ORR - Network Rail does
not take any risk on the performance of the investment; this lies with
Chiltern.
HLOS Schemes: where DfT decides that it wishes to purchase an output
from the railway for policy or macro economic reasons. For example,
DfT has decided it wishes to purchase capacity for 1,000 extra
passengers to arrive in the London Marylebone morning peak. The money
for the investment is provided by Network Rail in the form of a RAB
addition, meaning that ultimately DfT pays the financing cost of the
investment via its support of Network Rail’s debt.

Exactly

Post by Roland Perry
Chiltern, whilst
not funding the investment, plays a direct role in ensuring its
efficiency and success by working jointly with Network
Rail to devise the most appropriate actual investment to deliver the
DfT’s objective, then co-operate with Network Rail who deliver the
work. These cases are suitable for application of the ORR mechanism
for train operators to share in any cost reduction which can be secured
as a result of their constructive engagement."
A rather different picture, you must agree?

No, it’s exactly what I said.

All of those track/station investments were paid for by NR, which owns
them. The only risk that the TOC owners took would whether the higher costs
of using the improved infrastructure would be more than covered by higher
revenues. This is exactly the same as any TOCs that took advantage of NR
track investments to run faster and/or more services, for example VTWC. In
the end, the DfT owns all the assets (apart from rolling stock) and takes
the risk.

Chiltern is somewhat unusual in that it’s the only passenger operator over
quite a bit of its route network. It therefore took an unusually close
interest in optimising the track layout to suit its services. But it was
still NR that ultimately paid for the work and owns the assets (apart from
the Council). When the Chiltern contract ends, the DfT won’t have to buy
anything off Arriva.

Tweed

2025-01-04 12:04:53 UTC

That'll come as news to people like Sea Containers and John Laing Group.

No, they knew perfectly well what you’ve never understood about
the UK rail passenger franchises.

I'd rather hoped we could start the New Year without your cracked-record
ad-homs. Oh well.

Stop proudly showing off your ignorance and I’ll stop commenting on it.

Alternatively you could desist from flaunting your own ignorance
regarding what things I understand. And if you insist on digging the
hole deeper, use less abusive language.

Enough, and I think you were always a great fan of Chiltern and the way
they poured lots of funds into re-inventing that flow.

Those were the Mk 3 carriages I mentioned, owned by DB, and leased to
Chiltern (but probably not for much longer).

So, just like every TOC.

Actually, Warwick Parkway is owned by Warwickshire County Council.

Exactly

No, it’s exactly what I said.
All of those track/station investments were paid for by NR, which owns
them. The only risk that the TOC owners took would whether the higher costs
of using the improved infrastructure would be more than covered by higher
revenues. This is exactly the same as any TOCs that took advantage of NR
track investments to run faster and/or more services, for example VTWC. In
the end, the DfT owns all the assets (apart from rolling stock) and takes
the risk.
Chiltern is somewhat unusual in that it’s the only passenger operator over
quite a bit of its route network. It therefore took an unusually close
interest in optimising the track layout to suit its services. But it was
still NR that ultimately paid for the work and owns the assets (apart from
the Council). When the Chiltern contract ends, the DfT won’t have to buy
anything off Arriva.

Pre Covid, didn’t TOCs have to offer a financial bond? The inability to
maintain this was what did for Sea Containers on the ECML. So they were
risking something?

Recliner

2025-01-04 12:29:34 UTC

That'll come as news to people like Sea Containers and John Laing Group.

No, they knew perfectly well what you’ve never understood about
the UK rail passenger franchises.

I'd rather hoped we could start the New Year without your cracked-record
ad-homs. Oh well.

Stop proudly showing off your ignorance and I’ll stop commenting on it.

Alternatively you could desist from flaunting your own ignorance
regarding what things I understand. And if you insist on digging the
hole deeper, use less abusive language.

Enough, and I think you were always a great fan of Chiltern and the way
they poured lots of funds into re-inventing that flow.

Those were the Mk 3 carriages I mentioned, owned by DB, and leased to
Chiltern (but probably not for much longer).

So, just like every TOC.

Actually, Warwick Parkway is owned by Warwickshire County Council.

Exactly

No, it’s exactly what I said.
All of those track/station investments were paid for by NR, which owns
them. The only risk that the TOC owners took would whether the higher costs
of using the improved infrastructure would be more than covered by higher
revenues. This is exactly the same as any TOCs that took advantage of NR
track investments to run faster and/or more services, for example VTWC. In
the end, the DfT owns all the assets (apart from rolling stock) and takes
the risk.
Chiltern is somewhat unusual in that it’s the only passenger operator over
quite a bit of its route network. It therefore took an unusually close
interest in optimising the track layout to suit its services. But it was
still NR that ultimately paid for the work and owns the assets (apart from
the Council). When the Chiltern contract ends, the DfT won’t have to buy
anything off Arriva.

Pre Covid, didn’t TOCs have to offer a financial bond? The inability to
maintain this was what did for Sea Containers on the ECML. So they were
risking something?

Yes, that was their only direct financial risk. In effect, that bond was to
cover the DfT’s unbudgeted costs in hurriedly taking over a vacated
franchise, and finding a new operator. Of course, there was also the risk
that they would lose money on the franchise, if premium payments exceeded
operating profits, which was happening at GNER.

The additional indirect risk they were threatened with was that if they
walked away from one loss-making franchise, they might be banned from
bidding for any new franchises or extensions to their other franchises. It
meant that companies like First or Stagecoach had to accept losses on some
franchises in order to stay in the game. Examples included SWR, TPE and
VTEC.

Pre-COVID, there were a number of loss-making franchises, and the
government reflected this when it took them over: operators of loss-making
franchises had to pay the DfT for the privilege of the government takeover.

Roland Perry

2025-01-05 08:07:43 UTC

Post by Recliner
One ironic development is that the passenger railway is likely
to become more privatised in the next couple of years of Labour
government than the Tories managed in 25 years, as it appears
likely that a number of new open access operators will commence
operation. These are truly private sector operators, unlike the
ownership and control.

That'll come as news to people like Sea Containers and John Laing Group.

No, they knew perfectly well what you’ve never understood about
the UK rail passenger franchises.

I'd rather hoped we could start the New Year without your cracked-record
ad-homs. Oh well.

Stop proudly showing off your ignorance and I’ll stop commenting on it.

Alternatively you could desist from flaunting your own ignorance
regarding what things I understand. And if you insist on digging the
hole deeper, use less abusive language.

Enough, and I think you were always a great fan of Chiltern and the way
they poured lots of funds into re-inventing that flow.

Those were the Mk 3 carriages I mentioned, owned by DB, and leased to
Chiltern (but probably not for much longer).

So, just like every TOC.

That doesn't change a thing.

Actually, Warwick Parkway is owned by Warwickshire County Council.

I'd be surprised if they lied in their evidence to the committee.

Exactly

No, it’s exactly what I said.
All of those track/station investments were paid for by NR, which owns
them. The only risk that the TOC owners took would whether the higher costs
of using the improved infrastructure would be more than covered by higher
revenues. This is exactly the same as any TOCs that took advantage of NR
track investments to run faster and/or more services, for example VTWC. In
the end, the DfT owns all the assets (apart from rolling stock) and takes
the risk.
Chiltern is somewhat unusual in that it’s the only passenger operator over
quite a bit of its route network. It therefore took an unusually close
interest in optimising the track layout to suit its services. But it was
still NR that ultimately paid for the work and owns the assets (apart from
the Council). When the Chiltern contract ends, the DfT won’t have to buy
anything off Arriva.

Pre Covid, didn’t TOCs have to offer a financial bond? The inability to
maintain this was what did for Sea Containers on the ECML. So they were
risking something?

That's right. They were in effect guaranteeing the annual premium
payments, even if the line ran into an unexpected operating loss.

--
Roland Perry

Recliner

2025-01-05 11:47:20 UTC

Post by Recliner
One ironic development is that the passenger railway is likely
to become more privatised in the next couple of years of Labour
government than the Tories managed in 25 years, as it appears
likely that a number of new open access operators will commence
operation. These are truly private sector operators, unlike the
ownership and control.

That'll come as news to people like Sea Containers and John Laing Group.

No, they knew perfectly well what you’ve never understood about
the UK rail passenger franchises.

I'd rather hoped we could start the New Year without your cracked-record
ad-homs. Oh well.

Stop proudly showing off your ignorance and I’ll stop commenting on it.

Alternatively you could desist from flaunting your own ignorance
regarding what things I understand. And if you insist on digging the
hole deeper, use less abusive language.

Enough, and I think you were always a great fan of Chiltern and the way
they poured lots of funds into re-inventing that flow.

Those were the Mk 3 carriages I mentioned, owned by DB, and leased to
Chiltern (but probably not for much longer).

So, just like every TOC.

That doesn't change a thing.

Actually, Warwick Parkway is owned by Warwickshire County Council.

I'd be surprised if they lied in their evidence to the committee.

It might have been true initially, but all privately financed fixed assets
created or enhanced were transferred to the public sector. Presumably the
DfT didn’t want a former franchisee holding a successor franchise to
ransom. It wanted the end of a franchise to be a clean break, with no
continuing involvement by the former parent company, hence the preference
that all assets be in the public sector, or other independent bodies such
as ROSCOs or train manufacturers. It also took a dim view of Stagecoach
owning a ROSCO.