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Author Topic: Wales may scrap Network Rail payments  (Read 2476 times)
grahame
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« on: January 19, 2019, 07:41:47 am »

From Transport Extra

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Wales may scrap Network Rail payments

18 January 2019
 
Wales may soon abolish a system of penalty payments for causing rail disruption, to bring Network Rail and train operators closer together and eliminate the cost of administering the penalties.

The system was established during rail privatisation to incentivise train and infrastructure operators to improve performance and minimise delays to trains.

However, James Price, chief executive of Transport for Wales, told a National Assembly for Wales committee last week that the administration...

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.
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TaplowGreen
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« Reply #1 on: January 19, 2019, 08:06:51 am »

From Transport Extra

Quote
Wales may scrap Network Rail payments

18 January 2019
 
Wales may soon abolish a system of penalty payments for causing rail disruption, to bring Network Rail and train operators closer together and eliminate the cost of administering the penalties.

The system was established during rail privatisation to incentivise train and infrastructure operators to improve performance and minimise delays to trains.

However, James Price, chief executive of Transport for Wales, told a National Assembly for Wales committee last week that the administration...

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.



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stuving
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« Reply #2 on: January 19, 2019, 07:24:11 pm »

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"?

Network Rail are at pains to explain 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 (in thousands) for each TOC, which is quite interesting.

Train Operating Company2017/182016/172015/162014/152013/142012/132011/122010/112009/10
First Capital ConnectDR339692722637
Govia Thameslink RailwayDR4249149672233584
CrossCountryDR23752479158013631212141010221319990
East Midlands TrainsDR11312031767516674351291220324
London MidlandDR11501018588432409385173309268
West Midlands TrainsDR365
SouthernDR1093162314698055225254
National Express East CoastDR806
East CoastDR6249765468445108883499
Virgin Trains East CoastDR146031373910850450
SoutheasternDR29063577227013512301523148
National Express East AngliaDR
Greater AngliaDR450047192366230614001563120
Virgin Trains West CoastDR173661315813826103876797
c2cDR19027323623
Arriva Trains Wales655453321
Chiltern Railways537353237
Great Western Railway990066486048
NorthernDR567326173
South West Trains1716486601003
South Western RailwayDR1415
TransPennine Express DR  163711751324
Total807107357644915256232260812603802132562981

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.
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Adrian
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« Reply #3 on: January 19, 2019, 07:27:29 pm »

Do these Network Rail payments to ToCs also include loss of revenue due to scheduled engineering possessions?
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Celestial
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« Reply #4 on: January 19, 2019, 07:43:04 pm »

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.)
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stuving
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« Reply #5 on: January 19, 2019, 07:50:56 pm »

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

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.
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Lee
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« Reply #6 on: January 20, 2019, 08:39:26 am »

HOWEVER ... if the penalty system were to be removed, could it lead to Network Rail becoming less caring / careful towards TOCs and passengers...

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...
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grahame
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« Reply #7 on: January 20, 2019, 09:07:17 am »

HOWEVER ... if the penalty system were to be removed, could it lead to Network Rail becoming less caring / careful towards TOCs and passengers...

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 ...
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Lee
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« Reply #8 on: January 20, 2019, 03:32:52 pm »

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/

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.

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 ...

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...
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