Train nationalisation

It occurs to me that this could be more expensive. I don’t know the figures and would be grateful to anyone who does. But think it through for a bit.

Under the old system there were some companies that needed subsidies. And others that coughed up for the privilege of running a franchise.

Under the new there will be a 2% of turnover fee for running something. There will be no payments into the Treasury for running a franchise. The subsidies will have to stay.

So, “profits” will disappear, there’s just the 2% of turnover to be had for the private companies. And whatever profits those cash flow positive franchises had will now go to the Treasury.

So, for this to be a financial net positive for the Treasury the profits flowing in – from people paid a flat percentage of turnover recall, so with no incentive to stamp upon costs – have to be greater than that 2% fee.

Who thinks that’s going to be true over time?

15 thoughts on “Train nationalisation”

  1. If that’s correct, there’s no incentive for management to stand up to union demands. Increase wages and the bill goes to the taxpayer, but a strike would hit turnover which reduces the company’s profits.

  2. So they’re going to go back to not giving a shit about weekend service, then? Instead of making a big chunk of every £8.40 ticket to Bath, trying encourage more people on, they’re going to get 16p a ticket?

    Rail privatisation was overrated, but that was one of its upsides. There were incentives for train operators to try and work harder to get weekend travellers as they could make more money from what they’d already coughed up for.

    That said, I think rail is going to need Beeching 2 after Covid. Who cares about travelling by train when the roads and car parks are half empty?

  3. Bloke on M4 said:
    “I think rail is going to need Beeching 2 after Covid. Who cares about travelling by train when the roads and car parks are half empty?”

    Don’t worry, they’ll just shaft us with extra charges for taking the car in to towns.

  4. RichardT,

    “If that’s correct, there’s no incentive for management to stand up to union demands. ”

    Most of that is nothing to do with the rail companies. That’s pretty much centrally renegotiated.

    The government should really be playing this hard with the rail unions. They’ve had years of being able to blackmail high salaries by holding commuters to ransom, and well, that’s gone. I was looking at how long it takes to get to a client near Holland Park, and there’s 5 minutes between driving and train times now. Good luck getting me to cough up for a standard return. Even with congestion charge and parking, I’m looking at £60 less.

  5. If you can find somewhere to park in Holland Park, BoM4, you have my admiration. I was paying £80 a week for a parking space in Latimer Grove for nothing.

  6. If I’m paid by a percentage of turnover, what in the world is my incentive to create a profit – rather than to create as large a turnover as possible?

    Instead of being incentivized to look for efficiencies I’m now incentivized to keep costs as high as possible.

  7. If I’m paid by a percentage of turnover, what in the world is my incentive to create a profit – rather than to create as large a turnover as possible?

    Instead of being incentivized to look for efficiencies I’m now incentivized to keep costs as high as possible.

    It’s almost as if politicians have no idea how the real world works

  8. Bloke in Spain,

    “If you can find somewhere to park in Holland Park, BoM4, you have my admiration. I was paying £80 a week for a parking space in Latimer Grove for nothing.”

    In reality, I’d probably drive to Ealing and then jump on a tube. The point is, there’s no traffic from here to Ealing now. All those big delays, like around Reading, Maidenhead, Slough, M25 and the end of the M4 are gone according to Google Maps. Weekday mornings are like Saturday mornings.

    Comparison of travel options…

    Train:
    Return Bus to the station: £4
    Train to London: £142
    Tube Tickets: £6
    TOTAL: £152

    Car:
    Petrol for 80 miles return: £30
    Congestion Charge: £15
    Parking at Ealing: £10
    Tube Tickets: £6
    TOTAL: £61

    Saving:£90+

  9. “£30 for 80 miles, Mr on M4?

    Are you running a supercharged 1930s Bentley?”

    £30 for 80 miles return, or 160 miles. And I’m being a little conservative there.

  10. Bloke in North Dorset

    BoM4,

    You should really use the AA all up running costs which are probably nearer 80p per mile or the HMRC allowance of 45p per mile to get a better comparison.

    Of course they don’t count the utility of being in your own car.

  11. BiND,

    “You should really use the AA all up running costs which are probably nearer 80p per mile or the HMRC allowance of 45p per mile to get a better comparison.”

    But if you already own the car, it’s more like 20p/mile. The other 60p is all the fixed ownership costs like financing/leasing, insurance, tax, servicing. Those numbers are also based on owning a car from new for 3 years.

    If you’re without a car and thinking of getting one, it’s worth applying that. My car failed its MOT last week and I’m doing so few miles right now, I’m living without. Not worth me spending £200+/month. Cheaper to use the (slightly more expensive) local shop, slightly slower buses, take a cab home from the cinema.

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