Train companies in £40m legal action against the Government

“Just for interest here are a few uncomfortable figures to back up what I have been saying.
Despite receiving over £200million in revenue support payments from the taxpayer in 2011 First Great Western trains recorded a loss of over £50million on revenue of £813million.Since then of course the situation has deteriorated even further to the point where First Group has decided to exercise its contractual right to terminate the franchise 3 years early in order to avoid £800million of premium payments due in the final 3 years of the franchise.The 10 year Great Western franchise premium payment profile starting in 2006 were "back loaded".ie the premiums slowly cranked up year on year with most of payback for taxpayers who heavily subsidized the early years coming in the final 3 years of a 10 year franchise.So what First Group cleverly achieved for their shareholders by terminating the franchise early was a heads we win tails you the taxpayer loose scenario.
First Group tried exactly the same "back loading" tactic recently when they bid for the now aborted West Coast main line franchise which was stopped when Virgin cried foul and therein lies the big problem for government in any future rail franchising.How do get the private sector to accept what is a big financial risk longer term in these austere finacial times while at the same time balancing future risks to the taxpayer if things go wrong as has happened on First Great Western Trains.
Personally I think there has and is still something fundamentally "unhealthy" about First Groups relationship with this government regards rail franchising especially when you look at their overall record on running FGW trains.They cant seem to do no wrong despite the fact that they are turning the far south west into the ass end of the Great Western franchise donkey.”

“My previous reference "then as other franchises expire bring them all back under one roof and finish with the wasteful and discredited rail franchise system" was not necessarily advocating re-nationalisation but merely emphasising that it would be a more efficient use of increasingly scarce public resources to have say the Inter-city component back under one roof as in Japan.

http://tinyurl.com/ajjh4uo

When comparing rail privatisation to the former British Rail the big financial negative is the massive cost inflating pressures that now exist in running our present fragmented railway system with its numerous money absorbing "black hole" interfaces between companies all of which are cemented together by expensive legal contracts.The result is a vastly more expensive way than British rail was at Privatisation to provide for the nations railway needs for taxpayers and passengers alike.Privatisation was supposed to free the railways from the control of the dead hand of the treasury instead the railways are becoming ever more addicted to the public purse.Had BR had access to the same levels of public funding that have been squandered on our privatised railway and their shareholders we would could of had BR's 155mph capable electric tilting advanced passenger trains operating to Plymouth by now instead of British Rails excellent but nearly 40 year old HST diesel trains that are still operated by FGW from Plymouth to London Paddington.What we have ended up with is not really privatisation as in Electric/Gas/telecom's etc but a public/private hybrid where the profit has been privatised but the debt has been nationalised.ie Network Rails £27billion public debt and revenue support payments for struggling Train Operating Companies like FGW/South West trains etc.But of course we are where we are and there is no going back.The challenge is to simplify and therefore reduce the costs of our inefficient and fragmented privatised railway structure and that means putting as much as possible of this structure back together into a more financially viable form like they have had in Japan since their railways were first privatisated in 1989.The present rail set up is simply not politically sustainable for the countries taxpayers or passenger in these austere cost cutting times where public funding elsewhere is being slashed to the bone even on front line services.The government is therefore now treading on very thin ice on this one.”

“I find it odd that people think the answer is to put the DfT in control of the railways again, the people who messed this up in the first place.
The real solution is just to operate an open access system. Network rail charge the real infrastructure costs to the train operators who can run on whatever part of the network they like. If there are parts that need subsidising then the operators can put in their bids and the lowest wins.”

“@hstmtu4000. There are certainly problems with the franchising structure, but the cause of the recent problems is the DfT not the train operators. The DfT messed up the WCML bidding because they couldn't add up properly, and they are now in such a mess that they've scrapped the Great Western bidding half way through the process. The bidders are obliged to go to enormous expense in developing their bids, and they have a good case for compensation from an incompetent Government department.”

“If Branson's still sulking at losing the rail contract, he could sport a few bob to buy the airport and play with that instead”

“There is now far more taxpayers money going into the rail network in real terms than there ever was in BR days. The former Inter City sector ran without subsidy (and made a profit)but the rest had the Public Service Obligation Grant to fall back on. Todays railway is run for the shareholders but is full renationalisation the answer? East Coast is run by Directly Operated Railways (in other words its publicly owned), but they have amongst the worst punctuality figures in the UK.
The main issue with the railways in Britain is that there are far too many people running franchises who havent got the foggiest idea how to run a rail company. Chiltern Railways (Bham to London Marylebone) is amongst the best, run by ex BR Managers. Most of the others are run by people straight out of university with no prior experience.”

“That should read "BR Inter-city was recieving no taxpayer subsidy"”

“The fact is as a country in very difficult financial times taxpayers cant really afford to continue propping up these wasteful taxpayer supported rail companies anymore with money that specially here in the south west is desperately needed for new trains and upgraded infrastructure not filling shareholders pockets.Just let the Governments own DOR (directly Operated railways) operate FGW like its has the East Coast main line now for several years and then as other franchises expire bring them all back under one roof and finish with the wasteful and discredited rail franchise system.BR inter-city was certainly not perfect but no where near as bad compared to the present inefficient shambles which is costing passengers and taxpayers alike big time.When originally privatised BR was recieving no taxpayer subsidy and was profitable.In addition Network rail who own the rail infrastructure,a so called government owned "not for profit company" is effectively already nationalised along with its £27billion debt.The only thing getting in the way of common sense now is political dogma and the private greed of rail companies.Sadly what we wil end up getting is probaly another government bodge -up leaving passengers and taxpayers even more out of pocket in order to keep their big business friends happy again.”