Why does this current U.K. Government hate rail so much.

[yorksrob]

This is of course the problem with having built up a fairly low-paying economy. Both political parties are equally responsible for this. With budgets now squeezed unsustainably, it’s a case of what’s easier to cut. As you say, start cutting in-work benefits and it will affect lifestyles people have become accustomed to which are beyond their self-sustaining means. Same with the way it’s now regarded as “bad” to raise interest rates. The railway is simply way down the queue compared to all this. Add in that the current crop of senior Conservative politicians seem to despise and look down upon the population, and here we are.

Ideally the Government should be using railway fares to bring down inflation while generating economic activity.

 

[dk1]

It’s a can’t live with them, can’t live without them attitude from most British governments I find. Keeps us all interested.

 

[yorksrob]

This is a government who are demanding the removal of free WiFi from trains “to save money”, despite such equipment being a) of minuscule cost and b) probably required for operation of the train anyway.

Yes, that caught my eye as well.

This point is prescient - the current government are ideologically opposed to the government holding large amounts of assets. Therefore buying trains outright goes straight against their principles. Similar to when they forced NR to sell off the railway arches.

It is a half-witted and stupid ideological obsession, and those who hold it shouldn't be left alone in charge of a cutlery draw, let alone the country.

 

[zwk500]

Ideally the Government should be using railway fares to bring down inflation while generating economic activity.

How, precisely, does it use rail fares to bring down inflation?

It is a half-witted and stupid ideological obsession, and those who hold it shouldn't be left alone in charge of a cutlery draw, let alone the country.

A fine point extremely well made!

 

[deltic]

Its good to see such an open minded discussion on this topic!

 

[Ken H]

Really? I didn’t have CAF, Bomardier (the successor company to BREL) and Siemens down as East Asian.

But even buying from a specialist manufacturer, there’s no reason not to buy outright rather than tie yourself down into a 30-year lease agreement like we have done with Hitachi.



Borrow it. Government borrowing is always cheaper than commercial borrowing. And from a balance sheet perspective nothing has changed- you’ve borrowed £100m for a train and you’ve got a £100m train on your asset inventory. No different to a mortgage in that respect.

If the country can afford to pay leasing costs, it can afford to pay borrowing costs. And borrowing costs will always end up cheaper than leasing costs- the government is paying cheaper interest rates and isn’t paying the ROSCO’s profit margin and risk margin.

In a similar sector with similar high-value long-life assets, there is a reason why Ryanair purchase their planes outright rather than leasing them. And there’s a reason why Ryanair are performing better than airlines who lease their fleet.

Labour, with PFI, proved long-term build-lease-and-maintain contracts always end up in disaster. So what do the Tories do for the railways?

Leasing expenditure goes down on the profit and loss as its not seen as capex. Borrowing to buy is capex. The treasury thinks you need to keep public borrowing under control. Thats why trains are leased. To keep them off governments balance sheet.

 

[Ken H]

One huge issue now is that construction raw materials, like timber, stone and concrete, are suffering price rises well above the headline inflation rate. That makes NR spend more expensive. No idea how you resolve that.

 

[yorksrob]

How, precisely, does it use rail fares to bring down inflation?

The Government can't do a lot about imported inflation in the immediate term, however it can do something about inflation in the industries it has some control over - bus fares are one example. This is what the experimental fares in continental Europe are all about.

A fine point extremely well made!

Thankyou !

 

[Pinza-C55]

They hate public services and they hate unions. Nothing has changed since the Beeching days with the Tories.

The Tories were replaced by Labour in 1964 and they carried on with the closures.
The Tories privatised the railways in 1996 but the very next year Labour carried on with privatisation in their 13 years of government.

 

[gazzaa2]

The Tories were replaced by Labour in 1964 and they carried on with the closures.
The Tories privatised the railways in 1996 but the very next year Labour carried on with privatisation in their 13 years of government.

I was talking about the Tories. It's not always easy to reverse things other governments have caused - look at Brexit. It's not always an endorsement of it.

Although I wish New Labour had reversed more of the Thatcherite rhetoric and policy, rather than continue it. Our energy bills might not be so high and our waters full of sewage.

 

[A0wen]

You are probably right about the Tories winning - the have all the levers and media support to push their case.

Didn't Labour initiate the HS2 project? And the West Coast Modernisation Project.

Bit in bold - they did, however whoever had won the 1997 General Election would have had to do so. Don't forget Virgin had won the West Coast franchise effective January 1997 part of which was to introduce 140mph tilting trains to improve journey times - it was understood Railtrack as was would have to deliver the infrastructure upgrades. So if the infrastructure works hadn't been approved Virgin would have been able to sue for breach of contract - and let's be honest, it wouldn't have looked good for the govt.

So whilst Prescott was the minister holding the pen at the time the works started, it was very much "agreed in principle" long before him.

 

[Sm5]

Unfortunately everyone is to blame.

Railways have never been profitable in several decades.
Staff striking are hurting their own industry.
DfT is cutting back to meet unobtainable targets.
Government is to blame for not investing whilst in a multi year union dispute, saying theirs no money.
Passengers are to blame for buying new cars during covid and working more from home.

Adjustment is painful, but railways are going to need to shrink considerably yet… at somepoint lines will need to close.

When they say the UK economy will shrink by 5.5% because of Brexit… this is what it means in day to day life.. less trains, less track, less stations, less staff mitigated by price rises where it can be inserted.

 

[JamieL]

Adjustment is painful, but railways are going to need to shrink considerably yet… at somepoint lines will need to close.

Which ones?

 

[A0wen]

Unfortunately everyone is to blame.

Railways have never been profitable in several decades.
Staff striking are hurting their own industry.
DfT is cutting back to meet unobtainable targets.
Government is to blame for not investing whilst in a multi year union dispute, saying theirs no money.
Passengers are to blame for buying new cars during covid and working more from home.

Adjustment is painful, but railways are going to need to shrink considerably yet… at somepoint lines will need to close.

Bit in bold - that's not correct. Car sales fell and the global chip shortage strangled new car supply as well. You only needed to look at the escalation of used car prices in late 2019 to see that.

And the working from home has lead to a number of people returning their PCP cars and buying something older and cheaper on the grounds they don't need a 'newish' car for the reduced mileage they are covering.

 

[A0wen]

Ideally the Government should be using railway fares to bring down inflation while generating economic activity.

An economic impossibility. Rail fares are such a small % age of the economy it would make absolutely no difference to inflation even if they were zero.

If leasing trains is such a panacea, how come railway companies largely avoided it in the 150+ year run up to Privatisation ?

I would say that no government had the ingenuity to create the market, so it didn’t exist

The design and engineering skills that have grown in the region have fundamentally changed the economics. Hitachi built plenty of A-Trains for its own domestic market before pitching it to the UK.

There seems to be a view that leasing is some 'new fangled' device dreamt up in the last 10-20 years by post Thatcher governments to take assets off the government books. To disabuse that a bit, it's worth noting that the National Bus Company had subsidiaries which were using leasing back in the late 1970s when it was both nationalised and under a Labour government. The best example I can find at the moment was London Country who took on new AEC Reliances for Green Line work, leased from Kirby Central in 1977.

The point about Hitachi though is a fair one - they built up their domestic market before looking for export markets. The reason for going with leasing with the likes of Hitachi or Siemens more recently has also been that they've offered a "full package" of both the rolling stock, it's support and maintenance. By having the manufacturer responsible for the maintenance, the manufacturer is more likely to agree higher standards of availability because they can ensure the maintenance is carried out to their specification - whereas if you have a different 3rd party undertaking the maintenance, when there's a problem, there's the inevitable argument about whether it's been properly maintained. To an extent some of that was the problem with BR on the early diesels where there were arguments with manufacturers about reliability and the manufacturers arguing it was poor BR maintenance that was the cause.

 

[Ken H]

Bit in bold - that's not correct. Car sales fell and the global chip shortage strangled new car supply as well. You only needed to look at the escalation of used car prices in late 2019 to see that.

And the working from home has lead to a number of people returning their PCP cars and buying something older and cheaper on the grounds they don't need a 'newish' car for the reduced mileage they are covering.

I WFH. Have since may 2018. When i was commuting i was for ever paying for car services and tyres. Now its a service every 2 years and the odd tyre. WFH must have hit car repair places badly.

WFH was starting to happen. All the restrictions did was to show it was a viable way to work, so it took off big time. And you cant put guiness back in the bottle!

 

[Pinza-C55]

I was talking about the Tories. It's not always easy to reverse things other governments have caused - look at Brexit. It's not always an endorsement of it.

Although I wish New Labour had reversed more of the Thatcherite rhetoric and policy, rather than continue it. Our energy bills might not be so high and our waters full of sewage.

If you dislike one political parties policies then you should be able to suggest an alternative. My own view is that in reality both parties when elected have little difference and are happy to carry on with the policies of the previous lot.

 

[A0wen]

If you dislike one political parties policies then you should be able to suggest an alternative. My own view is that in reality both parties when elected have little difference and are happy to carry on with the policies of the previous lot.

To an extent, the first year or so after a change of government there are relatively few changes which since budgets will have been set for spending and projects / programmes of work are in flight is the correct thing to do. You can't simply throw on the brakes and do a 180 reversal setting off in the opposite direction.

Adjustment is painful, but railways are going to need to shrink considerably yet… at somepoint lines will need to close.

Which ones?

There are a few candidates - the Conwy Valley (though I doubt the Welsh Assembly will do that, even if it was significantly washed out again). Barton on Humber branch, should it ever need significant spending, I'd also say Whitby has to be a contender as well, especially as the bus to Middlesbrough is quicker than the train already. Stourbridge Town - once the PPMs reach end of life.

 

[yorksrob]

An economic impossibility. Rail fares are such a small % age of the economy it would make absolutely no difference to inflation even if they were zero.





There seems to be a view that leasing is some 'new fangled' device dreamt up in the last 10-20 years by post Thatcher governments to take assets off the government books. To disabuse that a bit, it's worth noting that the National Bus Company had subsidiaries which were using leasing back in the late 1970s when it was both nationalised and under a Labour government. The best example I can find at the moment was London Country who took on new AEC Reliances for Green Line work, leased from Kirby Central in 1977.

The point about Hitachi though is a fair one - they built up their domestic market before looking for export markets. The reason for going with leasing with the likes of Hitachi or Siemens more recently has also been that they've offered a "full package" of both the rolling stock, it's support and maintenance. By having the manufacturer responsible for the maintenance, the manufacturer is more likely to agree higher standards of availability because they can ensure the maintenance is carried out to their specification - whereas if you have a different 3rd party undertaking the maintenance, when there's a problem, there's the inevitable argument about whether it's been properly maintained. To an extent some of that was the problem with BR on the early diesels where there were arguments with manufacturers about reliability and the manufacturers arguing it was poor BR maintenance that was the cause.

In terms of the first point, using rail fares to hold down inflation is clearly and evidently not an impossibility as other countries in Europe are doing just that (and we are doing on the buses). Admittedly, it should be part of a package of measures that encourage domestic economic activity.

In terms of leasing, yes this has been going on for ages elsewhere, but for the rail industry, it is indeed a newfangled Majorite wheeze.

 

[A0wen]

In terms of the first point, using rail fares to hold down inflation is clearly and evidently not an impossibility as other countries in Europe are doing just that (and we are doing on the buses). Admittedly, it should be part of a package of measures that encourage domestic economic activity.

In terms of leasing, yes this has been going on for ages elsewhere, but for the rail industry, it is indeed a newfangled Majorite wheeze.

Bit in bold - it is not an anti-inflationary measure - it will make absolutely no difference to the inflation figures, because it's too insignificant in itself to make any difference.

 

[yorksrob]

Bit in bold - it is not an anti-inflationary measure - it will make absolutely no difference to the inflation figures, because it's too insignificant in itself to make any difference.

There will be an element of how inflation is calculated in different countries, however I'm pretty sure that train fares are included in the UK calculation so such a measure will have a direct effect on inflation.

 

[A0wen]

There will be an element of how inflation is calculated in different countries, however I'm pretty sure that train fares are included in the UK calculation so such a measure will have a direct effect on inflation.

According to the ONS https://www.ons.gov.uk/economy/infl...onsumerpriceinflationbasketofgoodsandservices Transport comprises of 7% of the total inflation figure.

i.e. if the inflation rate is 10% - the items which comprise it add up to 100% - Transport is 7% of that.

And Transport comprises:

07.1 Purchase of Vehicles

07.1.1A New Cars -New petrol/diesel cars, New electric/hybrid cars

07.1.1B Second-Hand Cars

07.1.2/3 Motorcycles and Bicycles – Motorcycles, Bicycles, E-bike



07.2 Operation of Personal Transport Equipment

07.2.1 Spare Parts and Accessories

07.2.2 Fuels and Lubricants

07.2.3 Maintenance and Repairs - Car service, Labour charge for vehicle repairs, Exhaust fitting in fast fit auto centre, Wheel alignment in fast fit auto centre, Roadside recovery services, Car wash

07.2.4 Other Services - MOT test fees, Vehicle excise duty, Driving lesson fees, Driving test fees, Car park charges, Airport parking charges, Self-drive car and van hire charges, Road tolls



07.3 Transport Services

07.3.1 Passenger Transport by Railway, National rail fares by ticket type, for example, peak, off-peak and advance, London transport fares, Other underground/metro fares, Euro Tunnel fares

07.3.2 Passenger Transport by Road, Bus fares, Minicab fares, Coach fares, Taxi fares, Charge for home removals, Self-storage fees

07.3.3 Passenger Transport by Air - Air fares

07.3.4 Passenger Transport by Sea and Inland Waterway - Various ferry and sea fares

 

[Pinza-C55]

To an extent, the first year or so after a change of government there are relatively few changes which since budgets will have been set for spending and projects / programmes of work are in flight is the correct thing to do. You can't simply throw on the brakes and do a 180 reversal setting off in the opposite direction.




There are a few candidates - the Conwy Valley (though I doubt the Welsh Assembly will do that, even if it was significantly washed out again). Barton on Humber branch, should it ever need significant spending, I'd also say Whitby has to be a contender as well, especially as the bus to Middlesbrough is quicker than the train already. Stourbridge Town - once the PPMs reach end of life.

Labour had 6 years from 1964 till 1970 when Ted Heath's government took over, and 13 years when Blair's Labour took over in 1997 - 2010. That wouldn't qualify as slamming on the brakes

 

[chorleyjeff]

TBF it's not exclusive to rail, they don't spending too much on schools or the NHS either.

But saying that, it is a bit of a myth that the Government hates anything, it's just that the pot of money is limited. I know with the Arts Council England, they have to make tough decisions for each funding round so there will be winners and losers.

The NHS will never have enough money.

 

[A0wen]

The NHS will never have enough money.

There is some truth in that - I recall watching Question Time in the late 1980s and the late Liberal peer, Nancy Seear was one of the panellists. The inevitable "NHS is in crisis" line was being peddled and Seear turned around and said words to the effect of "The NHS has *always* been in crisis". I seem to recall she went on to observe there's always the demand to spend more and more on it.

 

[Irascible]

The NHS has been wrecked by far too many years of ideological meddling, and currently back-door privatisation. Let's see where the money is actually going before we pour more money into it, but it's going to take a change of government to do that. It would be lovely if they'd give the NAO some real teeth too.

Unfortunately my immediate family & most of my family friends have been ground down by years of "helpful tinkering" in the NHS. At a base level units are incredibly efficient with their budget, when you start going up the pyramid a bit is when yoiu start finding leaks.

Hmm.

 

[yorksrob]

According to the ONS https://www.ons.gov.uk/economy/infl...onsumerpriceinflationbasketofgoodsandservices Transport comprises of 7% of the total inflation figure.

i.e. if the inflation rate is 10% - the items which comprise it add up to 100% - Transport is 7% of that.

And Transport comprises:

07.1 Purchase of Vehicles

07.1.1A New Cars -New petrol/diesel cars, New electric/hybrid cars

07.1.1B Second-Hand Cars

07.1.2/3 Motorcycles and Bicycles – Motorcycles, Bicycles, E-bike



07.2 Operation of Personal Transport Equipment

07.2.1 Spare Parts and Accessories

07.2.2 Fuels and Lubricants

07.2.3 Maintenance and Repairs - Car service, Labour charge for vehicle repairs, Exhaust fitting in fast fit auto centre, Wheel alignment in fast fit auto centre, Roadside recovery services, Car wash

07.2.4 Other Services - MOT test fees, Vehicle excise duty, Driving lesson fees, Driving test fees, Car park charges, Airport parking charges, Self-drive car and van hire charges, Road tolls



07.3 Transport Services

07.3.1 Passenger Transport by Railway, National rail fares by ticket type, for example, peak, off-peak and advance, London transport fares, Other underground/metro fares, Euro Tunnel fares

07.3.2 Passenger Transport by Road, Bus fares, Minicab fares, Coach fares, Taxi fares, Charge for home removals, Self-storage fees

07.3.3 Passenger Transport by Air - Air fares

07.3.4 Passenger Transport by Sea and Inland Waterway - Various ferry and sea fares

Since you've just demonstrated that train fares feed directly into national inflation statistics, I don't see what point you're trying to make.

 

[HSTEd]

Since you've just demonstrated that train fares feed directly into national inflation statistics, I don't see what point you're trying to make.

They feed in, but the weighting is absolutely tiny.

I very much doubt the inflation index is going to be significantly effected whatever happens to train fares.

 

[A0wen]

Since you've just demonstrated that train fares feed directly into national inflation statistics, I don't see what point you're trying to make.

@HSTEd summed it up.

But it basically debunks your claim that rail fares can be used to "hold down inflation".

 

[Ken H]

They feed in, but the weighting is absolutely tiny.

I very much doubt the inflation index is going to be significantly effected whatever happens to train fares.

Isnt the justification for the £2 bus fare to reduce the cost of living, i.e cut inflation? Is that working?