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From Transport Extra (https://www.transportxtra.com/publications/local-transport-today/news/60018/wales-may-scrap-network-rail-payments)


Article continues behind paywall.

In my view, as far as I understand it, the current system of penalty payments is over complex, over expensive to administer, and leads to some decisions which may be distorted to reduce financial penalties rather than reduce delays to passengers. And - as the Welsh suggest - it may also be unhelpful to the relationship between Network Rail in the train operators.

HOWEVER ... if the penalty system were to be removed, could it lead to Network Rail becoming less caring / careful towards TOCs and passengers, and  might to lead to TOC costs being put up, making franchises less financially stable and/or leading to TOCs needing to raise extra revenue to fund passenger deals compensation - i.e. higher fares.

How much (%?) of the financial compensation paid to TOCs in respect of disruption makes it as far as the customers, how much is genuinely used to offset costs to TOCs caused by NR induced delays and how much ends up in their coffers as a nice little "bonus"?


Limiting NR payouts to the first two categories would seem appropriate.

Network Rail are at pains to explain (https://www.networkrail.co.uk/industry-commercial-partners/information-operating-companies/payments-for-planned-disruption-on-the-railway/) that their section 8 payments have nothing to do with compensation paid to passengers (mentioned lower down,after section 4 payments for possessions). That's true in that the calculations, which are done monthly, are based on totals vs. the levels regarded as "normal", and produce payments not linearly related to delay minutes or anything else.

"Loss of revenue" - the concept that the system is based on - must include compensation paid as one element, but it would only be the amount actually paid. If the amount paid goes up (e.g. with Delay Repay) then that component of the mystical compensation regime formula would go up too. And compensation is only one component, as in addition there will be losses from passengers not travelling, and alternative transport costs, as well as some extra staff costs. I'm pretty sure that if you could work out that "bonus" it would be large but negative and also not a very meaningful figure.

DfT have a table of the compensation payments (https://www.gov.uk/government/publications/train-operating-companies-passengers-charter-compensation/latest) (in thousands) for each TOC, which is quite interesting.

Train Operating Company		2017/18	2016/17	2015/16	2014/15	2013/14	2012/13	2011/12	2010/11	2009/10
First Capital Connect	DR	—–	—–	—–	339	692	722	637	—–	—–
Govia Thameslink Railway	DR	4249	14967	2233	584	—–	—–	—–	—–	—–
CrossCountry	DR	2375	2479	1580	1363	1212	1410	1022	1319	990
East Midlands Trains	DR	1131	2031	767	516	674	351	291	220	324
London Midland	DR	1150	1018	588	432	409	385	173	309	268
West Midlands Trains	DR	365	—–	—–	—–	—–	—–	—–	—–	—–
Southern	DR	—–	—–	1093	1623	1469	805	522	525	4
National Express East Coast	DR	—–	—–	—–	—–	—–	—–	—–	—–	806
East Coast	DR	—–	—–	—–	6249	7654	6844	5108	883	499
Virgin Trains East Coast	DR	14603	13739	10850	450	—–	—–	—–	—–	—–
Southeastern	DR	2906	3577	2270	1351	2301	523	148	—–	—–
National Express East Anglia	DR	—–	—–	—–	—–	—–	—–		—–	—–
Greater Anglia	DR	4500	4719	2366	2306	1400	1563	120	—–	—–
Virgin Trains West Coast	DR	17366	13158	13826	10387	6797	—–	—–	—–	—–
c2c	DR	190	273	236	23	—–	—–	—–	—–	—–
Arriva Trains Wales		655	453	321	—–	—–	—–	—–	—–	—–
Chiltern Railways		537	353	237	—–	—–	—–	—–	—–	—–
Great Western Railway		9900	6648	6048	—–	—–	—–	—–	—–	—–
Northern	DR	567	326	173	—–	—–	—–	—–	—–	—–
South West Trains		17164	8660	1003	—–	—–	—–	—–	—–	—–
South Western Railway	DR	1415	—–	—–	—–	—–	—–	—–	—–	—–
TransPennine Express	DR	1637	1175	1324	—–	—–	—–	—–	—–	—–
Total		80710	73576	44915	25623	22608	12603	8021	3256	2981

There are loads of notes in the original, but not an explanation of the short history for some TOCs - I guess it's based on current and very recent franchises only. These figures include all payments, even discretionary ones not in their charter.

The rows not marked "DR" are for old-style charter regimes. The increase in the total amounts paid out must be partly lower performance, and partly "better claims performance" - on both sides. And aren't the figures for SWT - note, before SWR took over - rather amazing?
 
ORR have statistics on this too, of course, though it's hard to make them comparable.

Do these Network Rail payments to ToCs also include loss of revenue due to scheduled engineering possessions?

I think I read that compensation payments during improvement works adds to the cost of projects? If so, this could reduce the headline figure of any future projects in Wales. That could make electrifying to Swansea look more viable, though I am probably kidding myself in thinking that it will be reinstated. (Though maybe with lighter weight steelwork like is being used in Scotland and no compensation costs, it might just be viable, and as an added bonus enable the WG to "show the DfT how it's done".  Sorry, I'm dreaming again.)

They are two similar processes, generally called schedule 4 and 8. The only figures I've seen for those, in the ORR's "UK rail industry financial information" datasheets, are for both added together.

Sorry grahame, but rarely have I guffawed more into my cornflakes than at the notion that NR could somehow become LESS caring/careful towards TOCs and passengers...

Network Rail appear to lack a passenger's / end user consumers advocate's representative at their dizzy heights.  We have had board vacancies / applications for none-exec positions posted in the past, on this an other near-government bodies, but customer / community advocates seem to get weeded out of the application process very early on - and that's even before they get to the hurdle of actually being able to make a difference.  What could be really positive is for one of these high flights to explain in user and potential user terms why things are done and politicised a certain way, without the distorting factors of marketing along the way.

https://www.networkrail.co.uk/who-we-are/how-we-work/our-leadership/our-board/

I recall a "how are we doing" report of n pages (where n was a large number) from Network Rail ... and in each category there were two measures - how we are actually doing, and the perception by those outside of how we are doing ...

Yes, but such a board member shouldn't be elected simply to sell the Network Rail line as to why things are done and politicised a certain way - they should aim (and ideally be encouraged) to have a good look at how and why things are done from a passenger perspective and get much-needed improvements in the process implemented.


One thing that Network Rail and those outside can agree on is that there is a fundamental misconception of reality at play in that equation. What they vehemently disagree on is which of them is labouring under that misconception...