UK Rail finances

[seaviewer]

Railway productivity and finance crops up during discussions re the current disputes. I wondered if any useful background information could be gleaned by exploring how finances have changed over the last 40 years. Armed with the 1978 Annual report of the BRB and ORR data for 2018/19 (before Covid chaos) some interesting conclusions emerge. I scaled up 1978 monies by CPI before comparing with 2018. I found:-


2018/9 revenue up by a factor 2.6
Expenditure up by factor 2.4
Passenger journeys up by factor 2.4
passenger km up by factor 2.2
Employees down by 44%
total employee costs up 3%
expenditure per employee up 86%
employee costs/total spend was 27% in 2018, down from 61% in 1978
Employee costs per journey down by 57%
Income per passenger km up 16%

This last figure suggests that costs to the passenger have risen slightly ahead of inflation.

Accuracy not guaranteed!
I have no connection with the railways, government, or any political party.

Spreadsheet attached. Bouquets and brickbats welcome!

 

[Master29]

I suppose if we are looking at a 40+ year period we would be looking at cultural changes perhaps more than short term changes. Just my opinion rather than what may be factual.

 

[seaviewer]

I suppose if we are looking at a 40+ year period we would be looking at cultural changes perhaps more than short term changes. Just my opinion rather than what may be factual.

I am not quite sure what you mean by cultural changes. One of the key changes in the stats is the rise in passenger numbers, which started around 1980. Was this a reaction to increasing road congestion?

 

[Dr Hoo]

The nature of the rail industry has changed out of all recognition since 1978. For example freight has 'declined' to a small proportion of activity and parcels have effectively disappeared. A significant proportion of staff were engaged in these activities so I am not clear that it is meaningful to look at all employee costs and relate them just to passenger journeys.

Wasn't Freightliner outside BR in 1978? Brought back under the Transport Act 1978, for 1979 I thought.

It is not clear how you are comparing major aspects of expenditure such as investment (especially in enhancements) or interest on debt and other financing costs.

Many activities undertaken by in-house employees in 1978 are now undertaken by contractors and I am far from certain that the latest ORR figures have captured these numbers.

 

[seaviewer]

The nature of the rail industry has changed out of all recognition since 1978. For example freight has 'declined' to a small proportion of activity and parcels have effectively disappeared. A significant proportion of staff were engaged in these activities so I am not clear that it is meaningful to look at all employee costs and relate them just to passenger journeys.

Wasn't Freightliner outside BR in 1978? Brought back under the Transport Act 1978, for 1979 I thought.

It is not clear how you are comparing major aspects of expenditure such as investment (especially in enhancements) or interest on debt and other financing costs.

Many activities undertaken by in-house employees in 1978 are now undertaken by contractors and I am far from certain that the latest ORR figures have captured these numbers.

Your first point is a fair one, but my revenue and employee data for 1978 are for the passenger business only, so Freightliner is not included (your second point).
The 1978 railways account includes a £50M "Provision for replacement of passenger assets" which partially answers your third point.
Cannot speak for ORR, but their "Industry expenditure" should surely include contractor costs?

 

[Master29]

I am not quite sure what you mean by cultural changes. One of the key changes in the stats is the rise in passenger numbers, which started around 1980. Was this a reaction to increasing road congestion?

A distinct possibility. Since we are talking of a fairly long term review here issues possibly like congestion on the roads. Population increases/decreases in various areas. There are more. Dr Hoo makes some good points

 

[Dr Hoo]

Could @seaviewer post a link to the relevant ORR (and possibly Network Rail) statistics for 2018/19? I am struggling to find all the figures.

I presume that the 1978 figures are from a hard copy of the BR Annual Report? The Gourvish official Business History of BR has some of them but not all.

 

[seaviewer]

Could @seaviewer post a link to the relevant ORR (and possibly Network Rail) statistics for 2018/19? I am struggling to find all the figures.

I presume that the 1978 figures are from a hard copy of the BR Annual Report? The Gourvish official Business History of BR has some of them but not all.

1978. Data from BR annual report, yes. Some 2018/19 data from network rail annual report, rest from ORR. Latter especially, table 2.13, “franchised train, operator and network rail, income and expenditure in 2018-19”. There is also a summary (I think) “rail industry finance“, not to hand at the moment (computer shut down)

 

[Dr Hoo]

1978. Data from BR annual report, yes. Some 2018/19 data from network rail annual report, rest from ORR. Latter especially, table 2.13, “franchised train, operator and network rail, income and expenditure in 2018-19”. There is also a summary (I think) “rail industry finance“, not to hand at the moment (computer shut down)

Thanks.

The ORR data tables don't seem to want to open on my computer as they are .ods files. (Yes, I know that there are supposed to be workarounds but I am not very techie.)

The 'summaries' are just that - not detailed.

 

[Larkhall]

The ORR data tables don't seem to want to open on my computer as they are .ods files. (Yes, I know that there are supposed to be workarounds but I am not very techie.)

While this is not the native format of Excel, it should still be able to open it (had some degree of support since Excel 2007). My suggestion is try forcing Excel to open it from File -> Open within Excel.

 

[seaviewer]

Thanks.

The ORR data tables don't seem to want to open on my computer as they are .ods files. (Yes, I know that there are supposed to be workarounds but I am not very techie.)

The 'summaries' are just that - not detailed.

I will create pdfs of relevant Orr pages but won’t be able to do so b4 thur pm. Sorry!

 

[Clarence Yard]

1978 to virtually now is an odd comparator. I would have thought it would have been more useful to compare 1994 to now, as 1978 to 1994 saw a sharp reduction in wages staff levels in all businesses.

For example, total BR drivers went from 26176 to 14455, Guards from 11737 to 6688 and station/yard staff from 33460 to 12150. My source is Gourvish (the 1974-97 volume) p488 - Appendix G.

 

[Wyrleybart]

1978 to virtually now is an odd comparator. I would have thought it would have been more useful to compare 1994 to now, as 1978 to 1994 saw a sharp reduction in wages staff levels in all businesses.

For example, total BR drivers went from 26176 to 14455, Guards from 11737 to 6688 and station/yard staff from 33460 to 12150. My source is Gourvish (the 1974-97 volume) p488 - Appendix G.

Agree "CY". It would also be interesting to see how the Train(wo)man concept of October 1988 allowed BR to recruit footplate staff from the guard role - more for freight and general roles than passenger depots. A large number of guards became Trainman "D" - effectively the dual role of guard and secondman and were eligible to apply for driver positions (passed man) footplate role. The balance of guards who were not successful in the assessment became Trainman "G" and ultimately groundstaff

 

[Krokodil]

1978 to virtually now is an odd comparator. I would have thought it would have been more useful to compare 1994 to now, as 1978 to 1994 saw a sharp reduction in wages staff levels in all businesses.

For example, total BR drivers went from 26176 to 14455, Guards from 11737 to 6688 and station/yard staff from 33460 to 12150. My source is Gourvish (the 1974-97 volume) p488 - Appendix G.

I'd like to see a graph showing those figures (and the current ones) over time.

 

[seaviewer]

1978 to virtually now is an odd comparator. I would have thought it would have been more useful to compare 1994 to now, as 1978 to 1994 saw a sharp reduction in wages staff levels in all businesses.

For example, total BR drivers went from 26176 to 14455, Guards from 11737 to 6688 and station/yard staff from 33460 to 12150. My source is Gourvish (the 1974-97 volume) p488 - Appendix G.

The choice of 1978 was quite simply because I had a copy of the BR annual report and accounts. I was simply curious to find out how things have changed. I wasn't trying to prove anything.
You have indicated one reason why employee costs rose ahead of inflation, although it has been suggested that privatisation has also played a role.
I attach a PDF file with the key statistics that I promised Dr Hoo

 

[Dr Hoo]

I attach a PDF file with the key statistics that I promised Dr Hoo

Thanks. (Not studied yet.)

 

[43066]

The choice of 1978 was quite simply because I had a copy of the BR annual report and accounts. I was simply curious to find out how things have changed. I wasn't trying to prove anything.
You have indicated one reason why employee costs rose ahead of inflation, although it has been suggested that privatisation has also played a role.
I attach a PDF file with the key statistics that I promised Dr Hoo

Thread is titled “UK Railway Finances” but it sounds like you’re only interested in staff costs - how about costs in other areas? Rolling stock leasing costs over the last few decades, for example and other infrastructure associated costs.

It’s worth remembering that staff today are utilised far more intensively than they were during BR days - for example flexible rostering and myriad other changes to working practices have been introduced since the 1970s. So higher cost will reflect higher productivity, and the fact that far more professionalism is now expected - drug and alcohol policy, rigorous investigations following incidents etc. again very different to the 1970s.

Accuracy not guaranteed!
I have no connection with the railways, government, or any political party.

Spreadsheet attached. Bouquets and brickbats welcome!

I have a sneaking suspicion this is intended to be another “traincrew are overpaid and lazy” thread….

 

[Clarence Yard]

No, I don’t think so - it’s understanding the cost base and how it has moved during that time.

Rolling Stock is a difficult area as in 1978 the costs that are now ROSCO costs will be found in the rail business itself as well as in BREL. The maintenance/overhaul split is also very different - for example a routine C4 engine or gearbox change on a DMU is separately organised (and costed) these days. On an old BR DMU that was done as a routine item on the maintenance budget.

 

[43066]

Rolling Stock is a difficult area as in 1978 the costs that are now ROSCO costs will be found in the rail business itself as well as in BREL. The maintenance/overhaul split is also very different - for example a routine C4 engine or gearbox change on a DMU is separately organised (and costed) these days. On an old BR DMU that was done as a routine item on the maintenance budget.

It may be “difficult”, but those were still costs affecting the railway, so any thread purporting to discuss “UK railway finances” is incomplete without them.

I would also question how informative or useful it really is to draw comparisons with the 1970s in just about any area these days. The world has changed in so many ways that it’s almost always going to be apples with oranges.

Is it really any more relevant than comparing today’s costs with those of the 1870s?

 

[seaviewer]

Thread is titled “UK Railway Finances” but it sounds like you’re only interested in staff costs - how about costs in other areas? Rolling stock leasing costs over the last few decades, for example and other infrastructure associated costs.

It’s worth remembering that staff today are utilised far more intensively than they were during BR days - for example flexible rostering and myriad other changes to working practices have been introduced since the 1970s. So higher cost will reflect higher productivity, and the fact that far more professionalism is now expected - drug and alcohol policy, rigorous investigations following incidents etc. again very different to the 1970s.




I have a sneaking suspicion this is intended to be another “traincrew are overpaid and lazy” thread….

Absolutely not. Indeed, I show that employee costs per journey have come down significantly since 1978. Average cost per employee has indeed gone up, but the discussion earlier suggests that this is probably due to the shift between types of worker. I also pointed out that passenger income per kilometre has only increased by 16% since 1978. It's very difficult to get a handle on a lot of other costs such as the ones you mention at the beginning.