Two tales on one train franchise

Guess who:

After five years in public ownership, in which it was one of only two train franchises to make a positive contribution to the UK Exchequer, paying a total of £1 billion to the Treasury during that period, it was let to Virgin and Stagecoach.

I am aware that these two companies are meant to pay a significant sum for the privilege of operating this route.

Well, yes, as I say:

That capitalists are pledging to give the government £3.3 billion over 8 years, the public sector organisation gave the government £1 billion over 5.

Clearly the better deal for the public is to have the capitalists running it. Might not be the better deal for those in receipt of a union paycheque but who gives a fuck about them?

46 thoughts on “Two tales on one train franchise”

  1. Er, how is it a good thing when a state-owned enterprise contributes to the Treasury? The whole point of state ownership is that it offers the best deal for the public because it’s not corrupted by the profit motive. But if it’s giving excess money back to the state, it’s clearly not offering the public the best deal, is it? We’re supposed to celebrate that they’re overcharging?

  2. ‘profit motive’.

    Well, that’s the thing. It’s a motive.

    If you tell me that no matter how hard I do or don’t work, I’ll get paid the same, you might find I don’t work very hard.

    Over on Ritchie’s site, professional toady Mark C is confused by the whole idea of industries not being owned by the state.

    I’m guessing he models his ideal economy on somewhere like the old USSR which was of course a great example of how great things are when the state owns them all and that nasty profit motive is removed.

  3. Reading Ritchie’s various posts has been bizarre today. Ritchie’s take on rail nationalisation/privatisation is that the State can do it better and cheaper, particuarly as it can borrow at costs that are “almost negligible”. In another post he is determined to fight against Europe becomnig a “cridtors’ paradise”.
    But then we get to his post on pensions and discover he invests (his word) in a private defined contributions scheme. Suddenly a very different Ritchie emerges. A Ritchie who is outraged at the appallingly poor returns he is making and at the lack of an explanation for it. And who demands the managers of the fund are accountable AND SHOULD BE APPROPRIATELY QUALIFIED. Now when it was RBS, or Northern Rock or the Co-op, well he thought non-bankers were the way ahead. And he wants peoples’ pensions invested in government or local authority schemes where the costs of capital are “almost negligible”. Curiously though he seems to have a slightly different view when it’s his money!

  4. @Ironman:

    That pension fund rant is ridiculous.

    Almost all of the information he demands is already available from the fund managers. It’s just that most people don’t ask for it, so it’s not sent out as a matter of course in order to save costs.

    Also, why does he want to know how old his fund manager is? Is he advocating some kind of age discrimination?

    And I don’t know what his rant about getting back 20% less than his statement is about. Perhaps his IFA managed to hoodwink him when he took out his pension (difficult, I know) and there are high commission charges to recoup if Ritchie pulls out early. Otherwise, I am baffled

    Jeez, he is an idiot.

  5. It isn’t the profit that nationalised East Coast made (less than promised) but the appalling service. Just look at the Complaints data on the OfRail website: one year it accounted for 25% of *all complaints across the whole network*

  6. Re the idea the state can borrow at costs that are “almost negligible”. On that basis you might well think the state should run everything…after all, if it can finance it cheaper than a risky corporation, what could go wrong?

  7. ….the state can borrow at costs that are “almost negligible”….

    What are Venezuealan bonds trading at nowadays?

  8. John77

    I see you have induced a vision of the future. Complain against a private operator and.your claim is justified. C plain again a nationalised railway and you have no idea.of the complications involved in running a railway. It becomes complicated once it is in public ownership.

  9. S2,

    Yup. The best way of doing it is sorta what we do now – set conditions of the franchise and then lease it to the highest bidder. Then get them to try and make as much money from it as they can.

  10. The man is a mentalist. There really needs to be a much wider dissemination of the ignorance and inconsistency he displays on such a regular basis, rather than letting the prat attempt to dictate the narrative.

    He has published countless rants imploring the government to force pension funds to invest a percentage of their assets in debt to fund ‘Green QE’.

    He also regularly tells his acolytes that Government and Government agencies can at present borrow for diddly squat because rates are so low.

    And now he thinks pension fund returns are too low. What does he really would happen to pension funds who were forced to buy virtually zero yield bonds to fulfil his ‘Green QE’ fantasies ?

    Candidly, I wear my banning as badge of honour.

  11. You must have been really offensive to be banned from his site worzel. He let my comment through no problem.

  12. I fully expect mine to go through too. He’s quite reasonable if you don’t set out to aggravate him.

  13. @ Ray Buckton
    Pointing out that he is lying is deemed really offensive (especially when you quote him to do so).

  14. @ GlenDorran
    If you have really effective capital controls, as Murphy would, then the state can borrow at negligible costs until the rich run out of money. Murphy is in his mid-50s and doesn’t look nearly as slim as I do although I am more than 25% overweight, so he probably expects to die in comfort before the state runs out of money.

  15. ‘You must have been really offensive to be banned from his site worzel’

    ‘He’s quite reasonable if you don’t set out to aggravate him.’

    I’m sorry for the confusion. I was referring to Richard Murphy’s Tax Research Blog.

  16. Sebastian Weetabix

    ahh… Happy days. Remember when Sid Weighell was replaced by Jimmy Knapp? There was a proper trades unionist. No one outside East Ayrshire could understand a fucking word.

  17. From genius Howard Reed

    ‘It may well be that people were complaining to East Coast because they thought that a nationalised rail operator would be more likely to respond to complaints, whereas with the private operators they simply didn’t bother. Many’s the time I’ve thought about contacting (e.g.) Abellio Greater Anglia, but then thought: why bother? They don’t care anyway. Perhaps a self fulfilling prophecy I know….’

    Words fail etc.

  18. @ Max
    I am trying: “Since Pensions are not an inter-generational transfer of wealth but the conversion of acquired wealth into a relatively secure income, what can I say?
    I think that you want to re-phrase that.”

  19. SQ2 has it. Handing money back means it’s making a profit (for values of profit that occur after massive subsidy). Making a profit is evil in leftopia because it means they are charging the punter (particularly lefties on business trips) more than cost. Really, have you seen the price of first class tickets in the UK?

    Incidentally, a linguistic comment. Anyone else remember that under The Evil Thatch, throwing money at roads was investment, throwing money at the railways running was subsidy.

  20. BiG: Yeah, they all do that, spending they like is investment and spending thy don’t is waste or subsidy or something else. It got so over-used at one stage that I thought Brown would visit his local and choose to “invest” in a pint of Landlord’s. And guess what? Balls is still at it, surprise surprise.

  21. @ BiG
    The reason that throwing money at the railways was subsidy was that zilch was spent on investment, it all went on over-paying the BR employees (including the utterly redundant fireman/stoker on diesel and electric locomotives).
    As a young Actuary (so not especially poor) I made a habit of taking a coach when I went home to visit parents because I just could not get the economics of a train ticket and a coach ticket to make sene. British Rail were so massively overcharging that it bugged me.

  22. The thing that never made sense to me was why are coaches, which share the public highway with 44 ton artics etc. allowed to be tin cans with picture windows; while trains, which have a private way and negligible chance of collision, are made from tons of best steam engine quality pig iron? Surely modern trains should be all plastics and alloys?

  23. ‘Really, have you seen the price of first class tickets in the UK?’

    Oh yes. Full fare 1st on Virgin between Euston and the North West is £400-plus.

    The only people I know who regularly use peak-time first class rail are civil servants.

  24. I see that Ritchie’s refusal to engage with us trolls didn’t last long. I did think as soon as his pathetically low numbers sank in he would start to let us back on and then pretend he had a popular blog.
    An interesting little side show developed last night (all dleted). He insisted a couple of times that East Coast paid tax (meaning CT) to the Treasury whilst privatised operators did not. So what about SSE? Proud owner of the Fair Tax Mark. Surely it paid tax? Delete, delete, delete.
    Interesting propostion: “We’re no longer engaged in tax avoidance. Because we make losses and don’t need to play for a while” “Thank you. That explains and clarifies. Here’s your Fair Tax Mark and let’s not mention that you’re actually, ahem, a taxpayer.”
    Am I way off the mark here?

  25. 77,

    > I made a habit of taking a coach when I went home to visit parents because I just could not get the economics of a train ticket and a coach ticket to make sene. British Rail were so massively overcharging that it bugged me.

    Especially given the quality of service. I too switched from trains to coaches to and from university because the trains simply made no sense.

    East Coast line, London to Aberdeen, passes through four major Scottish university towns, all of which have been there since before the invention of the steam engine. And yet, three times a year, the service was completely buggered by the completely unexpected and surprising end-of-term exodus. They could have laid on an extra train and filled it. They could have stuck a couple of extra guard’s vans on for the luggage. Instead, they would simply sell the same reserved seats twice (mine was once memorably double-booked with Courtney Pine), then the staff would react with shock and anger that all these bastard passengers were overloading their train. You’re standing in the aisle or sitting on your suitcase for a six-hour journey, listening to frankly abusive messages over the tannoy telling the bastard passengers that they are not allowed to clog up the aisles with their luggage and if they don’t sort it out the luggage will be thrown onto the platform at the next station and left there. The inadequate guard’s van was literally full to the brim, and they would throw its entire contents into a big pile on the platform at every station, wait for the bastard passengers (or whoever) to take what they wanted, then throw it all back into the van. And this was about 140 quid back in the early Nineties.

    So I started getting the overnight coach from Dundee. Comfortable, polite staff, about a sixth of the price, and only took about an hour longer.

    Max,

    > It may well be that people were complaining to East Coast because they thought that a nationalised rail operator would be more likely to respond to complaints, whereas with the private operators they simply didn’t bother.

    That really is brilliant. I assume Reed didn’t notice the recent report into the NHS which concluded that it is precisely their circle-the-wagons response to complaints that is their problem and recommended that they start reacting like the private sector does instead.

    Are the people now saying that the state sector responds brilliantly to customers the same people who were so derisive of John Major’s Passengers’ Charter, which introduced the then novel idea that British Rail should have some actual service standards?

  26. S2
    Was that pre- or post-privatisation? My experience with GNER London-Durham leg in that start/end of term period wasn’t that bad – yes the trains were rammed, but no-one threatened to detrain your kit.

  27. John77, took the wife to London by train for a week, ticket price was over a hundred pounds between us and was the cheapest ticket available – outside peak hours etc.
    A few years later went with some friends after privitisation to London, similar time only there were four of us this time. And paid half the price.
    Yes, four of us could go for half the price had previously paid for 2 people.
    The train was fuller this time round but no problems with seats and to be honest was a much more pleasant ride. Newer carriage with seats that were not so hard on my back.

    Have travelled on the train many times since then, rarely any problems and usually cheap enough to travel.

  28. What bugs most about Howard Reed ‘ s comment is that this purveyor of unsubstantiated assertion, based upon his prejudice, passes himself off as an economist. Landman Economics picks up gigs from the TUC amongst others. The claims thay litter his ‘reports ‘ on, for example, the living wage must now be viewed with the highest skepticism.
    Likewise his contribution to my dense with Ritchie on restriction of movement of labour
    Colin Hines has claimed that free movement of labour is a neoliberal plan to keep down the workers. I noted that this could only be effected by reducing wage rates; this must be what Hines meant. Up pops Reed to scream that – I swear his tone was pure outrage – there was “no evidence” that this occurred. I responded that the assertion formed the very basis of Hines’ opinion. One of these friends was correct; the other simply making baseless assertion. Can you believe Murphy decided to block me at thay point! At just the point his friends were being undressed in public.
    Of the two and having seen what we’ve now seen, I’ll go with Colin Hines, national socialist thay he is.

  29. The thing that never made sense to me was why are coaches, which share the public highway with 44 ton artics etc. allowed to be tin cans with picture windows; while trains, which have a private way and negligible chance of collision, are made from tons of best steam engine quality pig iron? Surely modern trains should be all plastics and alloys?

    The chassis of a train needs to be strong as it is effectively a link in a chain which is being pulled. The rest of a train carriage is as flimsy as a coach.

  30. That’s a rather partial account Tim W. You forgot to mention that East Coast was renationalized in 2009 when National Express, faced with mounting losses, walked away from its commitment to pay £1.4bn for the franchise over eight years.

    Apparently public sector ownership has turned the franchise round. It’s obviously unfair to compare the last five years, starting with a loss-making business, with the next eight years, starting with a profitable business.

  31. TomJ,

    Sorry, thought it was obvious I was talking about British Rail.

    Martin Davies,

    > Yes, four of us could go for half the price had previously paid for 2 people.

    I just bought some tickets the other day for the whole family to go from London to Diss, and couldn’t believe it. In fact, I didn’t believe it at first, assuming that the price being quoted was per person. It is flabberghasting that some idiots are still claiming that BR was better value. What fucking definition of value are they using?

    PaulB,

    > Apparently public sector ownership has turned the franchise round. It’s obviously unfair to compare the last five years, starting with a loss-making business, with the next eight years, starting with a profitable business.

    Good to know. Let’s all remember that next time someone discusses nationalising something that’s doing perfectly well, or the performance of a private firm trying to take over the provision of some NHS function.

  32. Ironman

    Question for you – do you feel Mark Crown has yet surpassed Andrew Dickie for ‘moron of the year’ or is the jury still out? – reading Crown’s comments is like experiencing ‘Life on Mars’ for real…….

  33. Van Patten

    I’m still not convinced that Mark isn’t simply a genius satirist..;)

    I’m probably completely wrong, but sometimes his performance is just “too good”, if that makes sense… Odd little gems thrown in here or there that seem to drift straight over.

    Mind you, I frequently wonder that in reverse for a few interesting characters on here! It can be a fine line between a bit of fun, exaggeration and parody…

  34. @ PaulB
    When National Express walked away paying DfT over £70m to do so it was because the DfT flatly refused to renegotiate the contract: NX’s proposal was for a reduction in the £1.4bn it had to pay the Treasury or for it to pay £100m to exit the contract, but Lord Adonis refused that so it ended uppaying £70-odd million instead.
    It is undoubtedly the case that the state-owned company turned things round – from good to bad. NX put tens of £millions into improving the service and customer satisfaction improved remarkably compared to its earlier period of management by a state-owned company. After the franchise was taken back into public ownership customer satisfaction slumped.

  35. John77: your concern about the rate of complaints received by East Coast would be more convincing if you could bring yourself to mention that Virgin, which (with Stagecoach) has taken over the franchise, has a much higher rate of complaints.

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