I’m writing this having just returned from an early morning press trip from St Pancras to Ashford and back in a Class 395. Inside it’s a conventional commuter train. Compared with a Eurostar you notice the noise level in tunnel and the ride is obviously a compromise between 140 mile/h on HS1 and Network Rail’s normal
Meanwhile the July Informed Sources has three chunky pieces of analysis of matters of considerable moment.
‘Cap & collar’ revenue sharing and support has been written into franchise agreements since 2004. But what I haven’t done up to now, since it wasn’t an issue, has been to work out what the ‘collar’ is worth in the real world.
Both cap (sharing) and the collar (support) are based on the same symmetrical bands above and below the revenue line forecast in the franchise agreement. Within plus or minus 2%, the operator keeps the gain or bears the pain. Below 98% or above 102% DfT and the
In the column I have assumed a franchise with a revenue profile based on 10% compound growth and a turnover of £500 million in the year before the collar becomes effective. But in the first year of the collar there is zero revenue growth.
These are simple calculations, but the results are instructive. Broadly, once revenue falls below 94% of target, the taxpayer picks up around two thirds of the deficit. And obviously, with every year of zero growth, the shortfall, and the cost of support increases. Is the collar cheaper than letting franchises go bust or hand in the keys? I’m not sure, but the gut feel is ‘yes’.
A Parliamentary Question tabled by Lord Bradshaw, has produced a list of the cap & collar status of each franchise, which is also published in this month’s column.
Another table (I warned you it was chunky) lists the break points in the replacement franchises. These occur in the final year or two of a franchise, when DfT Rail has the option to terminate or extend to full term. But this also gives TOCs the right to hand the keys back penalty free.
A couple of graphs show how the combination of the collar and break points has influenced the financial engineering of franchise revenue lines – including the creative use of ‘back ending’.
I also update the collar status of various TOCs. This includes DfT Rail taking Stagecoach to the High Court over an ambiguity in the franchise agreement.
In the case of NXEC DfT Rail really needs to war-game its options instead of repeating Dalek-like ‘we do not renegotiate – terminate them’. My wild card is for DfT to offer to bring forward the collar by two years to December 2009 and see if NEG is really committed to rail.
No one else in the railway press seems to get down into the nuts and bolts of smart cards. Perhaps because it’s an acronym dense environment where herds of misconceptions roam untrammelled by facts, let alone reality.
This month’s development is that DfT and Transport for
So, hoorah for progress, then? Well not quite.
DfT and TfL agreed back in May 2006 that DfT would fund ITSO/Oyster compatibility - known as ITSO on Prestige (IoP). Expected cost then was ‘around £19m’. Under the same deal, TfL undertook to fund the extension of Oyster PAYG to national rail stations in its Zones 1-6. The start date for this is now January 2010. But that is still more of an aspiration than a date in a schedule for some TOCs.
Meanwhile the £19 million for IoP ha suffered cost inflation. It is now £56.7m. And that’s before annual running costs rising from £7.5 million in 2013-14 to just under £10 million in 2017-18.
Still at least National Rail commuters will be getting advanced smartcard functionality for the taxpayer’s £100 million? Er, not quite, according to Informed Sources ITSO will provide only what you get from a magnetic stripe card ticket today: so no PAYG.
A current colloquialism, referring to politicians is ‘they just don’t get it’. When it comes to the West Coast Main Line it also applies to Network Rail Chief Executive Iain Coucher. Iain seems to think that the Route Modernisation is completed, so onwards to the next triumph with Thameslink.
But out on the working railway it is painfully apparent that that back in December the WCRM delivered what Sir Alan Sugar would call ‘a right load of old tut’. Amazingly Network Rail confirmed this be sending out a press release boasting of record punctuality across the network together with a table of
In the column I trace how we got to this situation and how the train operators saw it coming but were over-ridden by DfT Rail, ORR and Network Rail’s hubris.
Virgin was particularly miffed by the press release because it had been unable to agree its Joint Performance Improvement Plan (JPIP) for the current year with Network Rail and had complained to the Office of Rail Regulation back in April.
It is clear that Network Rail’s submission in September last year which persuaded ORR that the VHF could go ahead in December had only a tenuous connection with reality on the working railway. I was assured that unreliable new kit was being sorted, which was clearly not the case. On top of which the ‘islands of antiquity’ in the £9 billion ‘New West Coast main line’ – such as the sections of 1960’s signalling, are increasingly prone to falling over.
Anyway, updating the column, the latest situation is that on 17 June Virgin Trains signed up to a new JPIP – but only for the first six months. The JPIP promises a PPM of 87.4% by May 2010. This compares with 88.1% punctuality sixteen years ago.
ORR is due to consider this new JPIP at its board meeting today (22 June). As the column reports, ORR is in chocolate kettle mode on the WCML woes and I have some not-so gentle fun at their expense.
Meanwhile within DfT, the view now is that if an 80% PPM is what we get for a £9 billion upgrade why should we modernise the Great Western which is working fine?
Currently out to consultation is Network Rail’s Electrification Route Utilisation Strategy (
For readers of Modern Railways it’s pretty much as expected. The core strategy covers electrification of the GWML, to
Also in the core strategy is Gospel Oak to
Both the GWML and the MML have hard business cases and do not depend on Cost Benefit Analysis. The Benefit:Cost Ratios of a further five schemes pass DfT Rail’s ‘value for money test rate’ when delivered as part of a longer term rolling programme. Cross Country and North Trans-Pennine would follow in a rolling programme.
So the good news is that the detail of a rolling programme is emerging. The bad news is, to quote Tony Mercado, DfT Rail Director Technical & Professional at a recent conference, ‘There’s no cash guys. There will be severe constrains on railway funding fir the foreseeable future’.
Anyway, take this month’s report on the
It is now three years since I started the electrification fight-back with an-update of the 1981 Joint Report. Given the current situation, we are probably halfway to achieving commitment to a rolling programme. But whether that’s halfway to getting the go ahead, or halfway to getting the first orders is another matter.
Phew! I ended last month’s blog with a moan about being chained to a hot spread sheet. And since then it’s been all go.
At the end of May Stagecoach’s spring reception on gave me chance to find out about the ‘collar’ challenge at first hand and the latest news on the WCML front. The following week, Tuesday saw the annual Rail Freight Group conference. Having rubbished ‘growth’ claims in last month’s column, I tried to be helpful by pointing to the good news that a freight infill was in the electrification core strategy. This got me slapped-down by Lord Adonis who dismissed my optimism as unfounded
Up to
Having got Informed Sources and RBI away,the week just past kicked off on Tuesday with an excellent conference organised by the Railway Division of the Mechanical Engineers on ‘Future rail energy supplies’. A whole day of thought-provoking papers plus some useful chats in the breaks.
Wednesday it was off to see Grand Prix driver Rubens Barichello inaugurate Alstom’s ‘Pit Stop’ approach to rapid turn-round maintenance of Pendolinos at Wembley. Having started my railway engineering career in Depots, I stand in awe of what Alstom’s Train Care organisation is achieving with modernised old buildings. Their customers are impressed too.
The same evening it was back to London for the opera ‘Lulu’ at Covent Garden which I mention only because it meant I was back home just before
This coming week sees the last Fourth Friday Club meeting of the 2008-09 Session. As an indication of the status of the Club, Lord Adonis, who accepted the invitation to speak when he was Transport Minister, is keeping the appointment despite being elevated to Transport Secretary.
Andrew is not only a witty speaker, but also understands railways well beyond his brief. He will also be presenting this year’s Modern Railways/Railway Forum Innovation Awards at the end of the lunch which is being held at the Landmark Hotel. With five days to go it’s pretty much a full house, but if you want to attend, the Secretary (01892 525339) might be able to squeeze in a few more seats.
So after an enjoyably hectic June I’m looking forward to a quiet July with, so far, only the launch of the Desiro City – Siemens’ challenger for the Thameslink new train fleet - in mid-month to drag me away from my comfortable office chair!
There’s no pleasing some people!
Roger