Saturday, December 30, 2006

GNER: completely crazy

Your humble Devil has been riccocheting around the sights of London with the lovely Trixy, and is only now catching up on some of his notes from previously; please frgive the superanuated nature of a few of the following posts.

First, I have written about GNER before; it is, generally, a very good train operator, plying an efficient, friendly and—provided that you book a small while in advance—remarkably well-priced service up and down the east coast line between London and Scotland.

Furthermore, this route is almost unique in that it is not subsidised by the government, i.e. us, at all: indeed, GNER are paying a considerable amount of money to the government to run the route. So it was inevitable, I suppose, that this should happen.
The UK government has asked train firm GNER to surrender its £1.3bn-franchise on the main London to Edinburgh route.

GNER has faced financial woes since the London bombings, as passenger numbers dipped, power prices rose and Network Rail's compensation payments declined.

As a result it would not have been able to meet the terms of the franchise, which involved paying hundreds of millions of pounds to the government.

Brilliant, absolutely brilliant! Have you noticed that the government is attempting to tax the shit out of car drivers in an attempt to get more people onto public transport? And have you noticed that public transport is actually rather pricey?

The government attempts to keep regulating prices for transport routes; it hands out subsidised travel and free bus passes for the needy, etc. Has it ever occurred to the fuckers that one way of keeping prices down would be not to charge companies milions of fucking quid to run a damn route?

Further, contrast the treatment of GNER with that of Virgin (who run the West Coast route).
Meanwhile, the West Coast mainline is operated by Virgin who have just benefitted from a massive hidden subsidy in the recent line upgrade.
The top speed of the Pendolino was 110mph until the West Coast Main Line upgrade was completed.

The upgrade involved re-laying about 1,000 miles of track along the route in the last three years.

The first stage in the route improvement programme involved an upgrade of the section between London and Manchester, enabling trains to travel at up to 125mph.

The upgrade cost £7.9 billion. And, having spent that vast sum of money, the trains can now travel 15 miles per hour faster than they could before.

So, for every 1 mile per hour increase in speed, the taxpayer has shelled out £5.3 million quid. Anyone think that that is good value for money?

Quite apart from that massive hidden subsidy, Virgin's main subsidy has doubled over the life of its franchise.

So, Virgin Rail consumes massive amounts of money and gets to keep its franchise: GNER, which pays massive amounts of money to the government, loses its franchise. Does anyone see an inconsistancy here?
The government has invited new bidders for the route franchise.

Go on, Virgin: have a bite at the cherry! There's nothing like a good monopoly for increasing profits!
It is not yet clear whether GNER and its parent company, Sea Containers, will bid for the contract, though a spokesman for GNER suggested it was likely.

Sea Containers recently sought protection from its creditors under US bankruptcy law.

Whoops! But GNER is still solvent (just about). The government could renegotiate the contract so that, amongst other things, all of that rolling stock will not have to be repainted at vast cost (which will, inevitably, be passed onto us through higher prices and through our taxes in the form of subsidies).
"The government made it clear that rail operators that fall into financial difficulty should expect to surrender the franchise and not receive financial support," said Transport Secretary Douglas Alexander.

"To do otherwise could set the precedent that we are willing to bail out operators at extra cost to the taxpayer."

I'm sorry, Douglas, you fucking knobhead; does that apply to car manufacturers in marginal constituencies to, you hypocritical cunt. Does that also apply to Virgin Rail?

God, these people are such useless bastards, they really are.


Anonymous said...

I entirely agree - although GNER knew when they bid for the franchise that £1.3 billion was impossible to pay. But if they hadn't bid this, then they would have lost it to a new operator. I'm glad they kept it, because they've done a good job. It's not in the public interest to disrupt a successful service. The DfT should let a good company get on with running a good service.

Tom said...

Nice to see more people looking at what's going on on the railways - rail nuts like myself thought we were on our own round here. I occasionally have to hijack Blairwatch to let out the anger.

GNER did know what they were getting into (although the guff about unfair competition from startup open-access operators is hardly the capitalist spirit), but it's slightly wide of the mark to say they have no subsidy - the line they run on was fully modernised (at remarkably low cost compared to the West Coast, but that's well-established efficient public ownership for you) by BR in 1991.

GNER thus took over a modern, fast, well-equipped, profitable service and have done a great job in keeping it going, despite two bad fatal accidents caused by someone else's negligence. They met their match in the insane bureaucrats at DfT Rail ('there is your enemy, there are your guns').

Virgin's position is somewhat more difficult, since the line did need a fair bit of investment, but unlike GNER they had the foresight to sign a watertight contract with Railtrack (now inherited by Network Rail) that was unmeetable. This has dangled over any attempts to bring them under control. GNER, merely trying to make a living and provide a good service, had no chance.

Repainting trains is quite cheap, actually, most modern ones are painted white or grey and have big vinyl stickers on with the livery. When they move operators or change the livery (which is quite frequent for some types) a quick unpeel of the old and slap on the new one and voila. This ease of relivery does have the unfortunate effect of encouraging liveries that look like a late night reveller has been sick down the side, however.

If no one's taken it, I bag the 2005 Railways Act as my subject for the next Little Red Book.

Anonymous said...

What Tom said.

Also, the subsidy/payment profile does not mean what you think it does. Under Railtrack, all government subsidies for rail were paid via the train operating companies; now, the government pays the lions' share of rail subsidies directly to Network Rail.

This means that track access costs have fallen, and hence that rail groups like GNER, First Great Western and SWT *appear* to be making a large contribution to the Treasury but actually aren't.

The only place where track access charges haven't fallen is on the West Coast Main Line - instead, they've risen to reflect the cost of the modernisation, meaning that Virgin pays far more per km travelled than GNER.

So Virgin's net position isn't radically different from GNER's - the money is just shuffled around differently.

John B

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