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B412 - Railways Bill 2012

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    (Original post by Morgsie)
    There is also a competition process for rolling stock. This is is the current system.

    There should be some DfT involvement/oversight.
    Am i correct in assuming that this competition process requires us to allow European companies to bid?
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    (Original post by Rakas21)
    Am i correct in assuming that this competition process requires us to allow European companies to bid?
    Rail procurement: Yes European companies are allowed to bid.
    Also with regards to Franchise Bids
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    (Original post by Morgsie)
    There has to be Accountability and Transparency with regards to Network Rail.

    You fail to mention Franchise payments, Premiums and Cap and Collar support
    The accountability of all franchisees will be covered in another bill (happy to work with you on that on a cross party basis provided my leadership has no objection).

    Will do some more research on those and changes will be covered in the second reading.
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    (Original post by Rakas21)
    That does not mean in this case that we cannot generate competition.

    While it is true that the state must essentially own most infrastructure and invest in new railways and trains, allowing private sector railway operators to run services after paying an access fee to the DFT means that we have extra capacity where it is needed (the private sector will only want services on the busiest lines), gives more choice to the consumer (why get on a rust bucket when you can get on a brand new train) and also means that there will be a greater amount of offers available to the consumer in terms of price.

    In this case all the natural monopoly means is that we cannot allow the private sector to have full control.
    You misunderstand the premise of a natural monopoly. The minimum efficient scale is such that there is room for only one firm to fully exploit all of the available internal economies of scale associated with the industry. Whatever good intentions this Bill may have, there cannot be more than one efficient provider of a good. In this situation, competition might actually increase costs and prices.
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    I think you want longer franchises! Six years still seems like an invite for companies to... Get in. Strip Assests! Get out. They're not going to invest in buying more carriages. By the time the order comes through they'll probably only be bale to make us of the carriages for 2 years max and that's assuming they make the order straight away and take all six years.

    Although I think the rail network has to change we will still see large regularity capture. The regulars all worked for the rail companies so they're not only good pals, but they have their pension invested in the companies stock. It's not hard to see why regulators may help out their old friends.
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    (Original post by Rakas21)
    Current regulation limits the level of average price increases on each franchise. While there is a danger that an open access rail operator could decide to charge stupid amounts, this would be counter-productive given that passengers could continue to use the franchised rail operator. The more likely scenario is that open access rail operators would charge around the same amount as the franchisee.

    When you say through the DFT do you mean that the DFT buys them as current which causes long delays in getting new stock or do you simply mean that the company can pay out of their own pocket as i propose but just has to have the DFT order it?
    the DfT should decide exactly what trains are allowed to be purchased, based on the supply available from the UK market. Regional operators, when wanting new trains, can apply to the DfT for said trains - the DfT then purchases them from the manufacturers and cancels out the additional cost of buying at home rather than abroad through a system of subsidies - these subsidies will pay for themselves through the sheer benefit of keeping the necessary production industries in Britain. Once the British industries are again thriving, the system can be phased out - the companies will be in a position to compete with foreign rivals.
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    (Original post by The Phelps)
    I think you want longer franchises! Six years still seems like an invite for companies to... Get in. Strip Assests! Get out. They're not going to invest in buying more carriages. By the time the order comes through they'll probably only be bale to make us of the carriages for 2 years max and that's assuming they make the order straight away and take all six years.

    Although I think the rail network has to change we will still see large regularity capture. The regulars all worked for the rail companies so they're not only good pals, but they have their pension invested in the companies stock. It's not hard to see why regulators may help out their old friends.
    I suggested 15 year Franchises

    The Office of Rail Regulation is the Regulatory Body which is mainly Civil Servants.
    http://www.rail-reg.gov.uk/server/show/nav.1197
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    (Original post by Morgsie)
    I suggested 15 year Franchises

    The Office of Rail Regulation is the Regulatory Body which is mainly Civil Servants.
    http://www.rail-reg.gov.uk/server/show/nav.1197
    My bad I skim read. This won't be approved of by the public though. They see privatisation as a total fail which may be correct (I think train privatisation was.)but no-one has seen what a state railway in these times would look so it's easy to assume the grass is greener on the states side.

    What will we do if they don't meet targets? Giving the companies a fine isn't really going to make them cost efficient. Threatening to take the contract of them won't work as not everyone can afford to by a railway and run it as a business. I don't see how the targets can be effectively enforced.

    I don't suppose you have any government reports on whether the privatisation of gas or electricity was beneficial to society?
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    (Original post by Stricof)
    You misunderstand the premise of a natural monopoly. The minimum efficient scale is such that there is room for only one firm to fully exploit all of the available internal economies of scale associated with the industry. Whatever good intentions this Bill may have, there cannot be more than one efficient provider of a good. In this situation, competition might actually increase costs and prices.
    I see your fear however regulation is in place to limit the average price across the franchise, in order to capture passengers open access rail operators will need to compete in terms of price with the franchise operators.

    Grand Central is an example of this whereby they offer very competitive prices.
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    (Original post by The Phelps)
    I think you want longer franchises! Six years still seems like an invite for companies to... Get in. Strip Assests! Get out. They're not going to invest in buying more carriages. By the time the order comes through they'll probably only be bale to make us of the carriages for 2 years max and that's assuming they make the order straight away and take all six years.

    Although I think the rail network has to change we will still see large regularity capture. The regulars all worked for the rail companies so they're not only good pals, but they have their pension invested in the companies stock. It's not hard to see why regulators may help out their old friends.
    What do you mean strip assets?

    I would consider nine years as a maximum but no more otherwise we risk having Virgin, First and Stagecoach as the only companies being able to afford the franchises.

    There are cases of companies prepared to buy trains even now, i remember that First Great Western and First Transpennine Express have both tried to buy new trains but were prohibited by the last RL Labour government.

    I see Morgsie has commented on the regulator.
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    (Original post by Rakas21)
    What do you mean strip assets?

    I would consider nine years as a maximum but no more otherwise we risk having Virgin, First and Stagecoach as the only companies being able to afford the franchises.

    There are cases of companies prepared to buy trains even now, i remember that First Great Western and First Transpennine Express have both tried to buy new trains but were prohibited by the last RL Labour government.

    I see Morgsie has commented on the regulator.
    Strip Assests - I mean they will sell all the carriages dirt cheap to another train operator just before their contract ends. This way they've provided the service they have offered and then cash in by selling anything valuable before handing what's left of the rail network back to the government to hand out in another contract.

    They were probably stopped because the railway is around 50% subsidy. So they're essentially saying to the government can you afford to buy 50% of whatever we purchase?
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    (Original post by The Phelps)
    My bad I skim read. This won't be approved of by the public though. They see privatisation as a total fail which may be correct (I think train privatisation was.)but no-one has seen what a state railway in these times would look so it's easy to assume the grass is greener on the states side.

    What will we do if they don't meet targets? Giving the companies a fine isn't really going to make them cost efficient. Threatening to take the contract of them won't work as not everyone can afford to by a railway and run it as a business. I don't see how the targets can be effectively enforced.

    I don't suppose you have any government reports on whether the privatisation of gas or electricity was beneficial to society?
    The public see prices as more expensive but from what i have seen they do not think that the service has gotten worse (there was a newspaper poll a year or two ago).

    I think you also need to be aware that what the government calls privatization with state regulation is in effect a nationalized franchise system (the DFT still owns 90% of infrastructure). Nationalization would lead to lower prices and slower rises however if anything the service would get worse and the taxpayer would get less value for money. What would happen to open access operators, would you buy them which would mean that the transport bill is higher or simply cancel these services which would reduce capacity on the busiest lines. Would National Rail increase efficiency, no. The reason for its inefficiency has been almost complete monopoly over the past decade.

    Nationalization of the UK railways simply provides short term gain to the consumer at the expense of long term pain for the taxpayer (ironically the consumer).

    If targets are not met then they lose the franchise and the bidding process starts again.
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    (Original post by Rakas21)
    The public see prices as more expensive but from what i have seen they do not think that the service has gotten worse (there was a newspaper poll a year or two ago).

    I think you also need to be aware that what the government calls privatization with state regulation is in effect a nationalized franchise system (the DFT still owns 90% of infrastructure). Nationalization would lead to lower prices and slower rises however if anything the service would get worse and the taxpayer would get less value for money. What would happen to open access operators, would you buy them which would mean that the transport bill is higher or simply cancel these services which would reduce capacity on the busiest lines. Would National Rail increase efficiency, no. The reason for its inefficiency has been almost complete monopoly over the past decade.

    Nationalization of the UK railways simply provides short term gain to the consumer at the expense of long term pain for the taxpayer (ironically the consumer).

    If targets are not met then they lose the franchise and the bidding process starts again.
    With the Government stepping in and running the Franchise until a new bidder is found, National Express East Coast is an example.
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    (Original post by The Phelps)
    Strip Assests - I mean they will sell all the carriages dirt cheap to another train operator just before their contract ends. This way they've provided the service they have offered and then cash in by selling anything valuable before handing what's left of the rail network back to the government to hand out in another contract.

    They were probably stopped because the railway is around 50% subsidy. So they're essentially saying to the government can you afford to buy 50% of whatever we purchase?
    In the case of the franchisee this would be prohibited.

    Each franchise is sold with x amounts of trains and carriages which they hand back to National Rail at the end of the franchise period.

    The trains are still owned by the government and the franchisee must provide a minimum service so they are unable to sell carriages.

    In this case they said they would buy them outright. As i recall they were rejected because if the franchise were to be revoked or they were outbid then First would have been able to transfer the carriages to another of their franchises leading to reduced capacity on the previous franchise.

    This is what one of my points addresses in committing the DFT to match any rail operator buying new trains as the rail operator will be able to respond to changes in demand faster than the DFT would normally procure.
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    (Original post by Morgsie)
    With the Government stepping in and running the Franchise until a new bidder is found, National Express East Coast is an example.
    Yes although in this example i believe they have decided to wait for the contract to expire in 2014 whereas i would prefer the bidding process to start the following year.
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    (Original post by Rakas21)
    The public see prices as more expensive but from what i have seen they do not think that the service has gotten worse (there was a newspaper poll a year or two ago).

    I think you also need to be aware that what the government calls privatization with state regulation is in effect a nationalized franchise system (the DFT still owns 90% of infrastructure). Nationalization would lead to lower prices and slower rises however if anything the service would get worse and the taxpayer would get less value for money. What would happen to open access operators, would you buy them which would mean that the transport bill is higher or simply cancel these services which would reduce capacity on the busiest lines. Would National Rail increase efficiency, no. The reason for its inefficiency has been almost complete monopoly over the past decade.

    Nationalization of the UK railways simply provides short term gain to the consumer at the expense of long term pain for the taxpayer (ironically the consumer).

    If targets are not met then they lose the franchise and the bidding process starts again.
    How do you explain successes in countries like France where the system is very far away from including competition, yet still very effective in terms of both cost and innovation? A privatised rail network is just a poor man's alternative to proper state investment in infrastructure. This is one issue where throwing money at the problem can solve it.
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    (Original post by Rakas21)
    Yes although in this example i believe they have decided to wait for the contract to expire in 2014 whereas i would prefer the bidding process to start the following year.
    Yes, True

    This is not the first time this happened, the Strategic Rail Authority took over the Kent Franchise in 2003
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    (Original post by JPKC)
    the DfT should decide exactly what trains are allowed to be purchased, based on the supply available from the UK market. Regional operators, when wanting new trains, can apply to the DfT for said trains - the DfT then purchases them from the manufacturers and cancels out the additional cost of buying at home rather than abroad through a system of subsidies - these subsidies will pay for themselves through the sheer benefit of keeping the necessary production industries in Britain. Once the British industries are again thriving, the system can be phased out - the companies will be in a position to compete with foreign rivals.
    Competition law states that European companies would be able to bid as well. Should you wish to change this then you are more than welcome to create such a bill.

    I am reluctant to support additional subsidies.

    While i agree that they should allow the DFT to manage the procurement the franchise companies and open access rail operators should be allowed to order new trains at will if they are prepared to pay for them as they can respond to changes in demand relatively quickly.
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    (Original post by JPKC)
    How do you explain successes in countries like France where the system is very far away from including competition, yet still very effective in terms of both cost and innovation? A privatised rail network is just a poor man's alternative to proper state investment in infrastructure. This is one issue where throwing money at the problem can solve it.
    The French success is due to the fact that the railways are newer (some UK lines are among the oldest in the world) and the government invested in high speed railway much earlier.

    This bill does not propose to decrease government investment (infact i would support an increase) however in terms of efficiency and cost to the taxpayer the current and proposed model is the better one.
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    (Original post by JPKC)
    How do you explain successes in countries like France where the system is very far away from including competition, yet still very effective in terms of both cost and innovation.
    The French system is far from perfect, don't glamourise it as I can assure you that you will be disappointed if you use the system
Updated: February 26, 2012
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