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brilliant stuff if it's true

Network Rail is planning to "renationalise" the railways by taking
control of stations and owning new rolling stock, according to senior
railway executives.

Under proposals submitted to the Rail Regulator last month, Network
Rail has suggested it could take control of the management of major
stations across Britain, including Newcastle, York and Oxford, while
taking over the maintenance of the rest of the 2,500-strong portfolio.

The state-backed network operator wants to take back control of
stations and enter the rolling stock leasing business. At the same
time the government-funded body is proposing to use its debt, which is
backed by the state, to go into competition against the banks to fund
the financing of new trains.

For the rest of the article, go to:

http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2007/05/06/cnrail06.xml
 

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Is the the non renewal of the TOC's contracts, with their services taken over by Network Rail, prevented by politics, money or both?
 

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Reading that article it sounds like the current train companies are in a bit of a tizz as it will reduce there nice little earners. Take all the rolling stock back under Network rail that way we can invest in the railways rather than give a nice pocketful of profits to the banks & companies that own the rolling stock presently.
 

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Seems a reasonable idea, might help to inject a bit of realistic pricing into the market. Not sure why the stations need nationalising but I'm non too bothered. Something has needed doing about the ROSCO market for a very very long time!
 

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brilliant stuff if it's true

Network Rail is planning to "renationalise" the railways by taking
control of stations and owning new rolling stock, according to senior
railway executives.

Under proposals submitted to the Rail Regulator last month, Network
Rail has suggested it could take control of the management of major
stations across Britain, including Newcastle, York and Oxford, while
taking over the maintenance of the rest of the 2,500-strong portfolio.

The state-backed network operator wants to take back control of
stations and enter the rolling stock leasing business. At the same
time the government-funded body is proposing to use its debt, which is
backed by the state, to go into competition against the banks to fund
the financing of new trains.

For the rest of the article, go to:

http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2007/05/06/cnrail06.xml

I shall wait to see what they say about this in Modern Rail. While government finance is cheaper. I'll be quite sceptical aboyut the business acumen that resides in the Department of Transport.
 

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do me bad things
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Telegraph said:
A senior executive at a train operating company, who asked not be named, said: "This is creeping nationalisation. The train operating company community is very resistant to what Network Rail is proposing.
Shock horror!! :D
 

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Seems a reasonable idea, might help to inject a bit of realistic pricing into the market. Not sure why the stations need nationalising but I'm non too bothered. Something has needed doing about the ROSCO market for a very very long time!
The probably want to nationalise the stations just because they're now realising what a nice little money earner they are from renting out shops, offices etc. in them.
 

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Telegraph said:
A senior executive at a train operating company, who asked not be named, said: "This is creeping nationalisation. The train operating company community is very resistant to what Network Rail is proposing.
So the train operators are against this too, surely they would be the ones to gain from it? - unless they suspect wider nationalisation.... or if the article actually means ROSCO instead of train operator (as in TOC?)
 

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From the various articles I've read in Modern Rail, it is clear that the Department of Transport is convinced that they are paying too much for trains. This has been rumbling on for a couple of years.

First the DOT said that they were being overcharged by 10%. An article analising this claim showed pretty much that they had pulled this figure out of the air and they had no evidence to show for it. A threatened refferal to the OFT seems to have fizzled away as the ROSCO's were able to put up a pretty robust defence.


The analysis in the magazine is that there is not much fat actually in the contracts. Its the government that has specified train standards with lots of new safety standards (slam doors gone, crush zones) and disabled toilets etc. Lease rates are decided by the age of the train and the expected remaining life of the train. Brand new trains cost more to rent than old trains.
British Rail had lots of old trains ergo.... Other facters that determine cost are franchise length, the longer the franchise, the less you have to pay per year as their is less uncertainty about whether these trains are going to be rented out. In some cases the problems this creates has been got around by making it a condition that new franchisees have to take on the new trains leased by previous franchises.

A lot of the recent problems on the railways are of the departments on making. The recent **** up with the new FGW franchise out of Paddington. People wondered how FGW could afford to pay such a good premium to run the Railway. While it was not announced at the time it soon became rapidly apparant that reason was they were no longer going to lease as many trains and were introducing swinging custs to rural services. In fact it was the DOT that specified how many trains they should lease.

The East coast mainline rail franchise is another example of desperation of accepting the highest bidder with no thought as to whether it was sustainable.

The Reason SWT were able to afford such a huge premium on their new franchise. They have swapped some of their lovely new trains and are going to retain the Jupitor units that had proved unreliable in the past. Removing first class from the inner suburban trains and the most controversial of all has only recently been announced. Cheap day tickets to London will no longer start after 09.30, instead a new range of tickets will fall between the full price and cheap day. This is 'to better manage demand in the shoulder peaks'.

Thameslink announced a few months ago that cheap days would no longer be valid in the evening peak out of London.

The old Treasury method of controling rail demand by rising prices is creeping back in.
 

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I think they are right as in effect it is the taxpayer that is giving a direct subsidy to the banks who own the rolling stock companies. These banks are over charging yet creaming off millions from the state.

This is not a competitive market but a cartel.
 

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I read somewhere that the current system costs the government more that when BR was in operation. There is something so wrong about that. Can anyone explain why they dont pull the plug on the ROSCOs and TOCs? It must be political because it makes economic sense. Would also be popular with the public I think!
 

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I read somewhere that the current system costs the government more that when BR was in operation. There is something so wrong about that. Can anyone explain why they dont pull the plug on the ROSCOs and TOCs? It must be political because it makes economic sense. Would also be popular with the public I think!
The ROSCO's carry a hugh amount of debt. That was their purpose! :bash:

If you pull the plug, somebody has to assume that debt. :eek:hno: :) :eek:hno:

This debt is the last thing that the Treasury wants to assume, so who will they give it too this time? :poke: :lol: :lol:
 

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Discussion Starter · #14 ·
so how do the ROSCOs make huge operating profits if they have huge amounts of debt? id be interested to hear what debt they have given they are making over 20% profit. i would argue if they do have debt, it has been deliberately engineered as a tax loss write off and partly to stop the govt reabsorbing them.
 

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Operating profits are generated by annual cash flow, some of which is also used to pay of the long debt associated with financing the purchase of the trains. The ROSCO's are owned by banks who are fairly smart about generating profits from their debt. My point is the Department of the Treasury does not want to have to assume the long term debt from financing the pruchase of trains as it would then show up on the Treasury books not the bank's books.
 

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Discussion Starter · #16 ·
would you say the ROSCOS deliberately keep this debt in place to insure they arent taken over by the govt? sounds like a good fail-safe to me.
i think the trick is for the govt to set up their own ROSCO and use it to purchase trains with, leaving the current ones with plenty of debt and old rolling stock!
 

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Network Rail could just as well be a government ROSCO as it is already an off-the-books vehicle for railway debt, even though the ultimate gaurantor is HM Treasury.
 

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About time, long live good old BR! It was never really dead, just in a Conservative-induced coma-like state!
 

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would you say the ROSCOS deliberately keep this debt in place to insure they arent taken over by the govt? sounds like a good fail-safe to me.
The ROSCO's, like any other bankers, keep the debt in place to increase their return on investment with more interest payments. Its not a plot, its just standard business practise.

i think the trick is for the govt to set up their own ROSCO and use it to purchase trains with, leaving the current ones with plenty of debt and old rolling stock!
I am no expert on UK government accounting but I have read enough commentary about the Treasury's concern that Network Rail debt's could be considered a government debt. Thus I believe that the Treasury will fight tooth and nail to keep the ROSCO's because that is definitely NOT government debt even while suggesting that they are making too much profit.
 
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