Cap and Collar costs revealed

This from the RMT... 

Evidence unearthed by rail union RMT has revealed that all of the rail franchises currently eligible for receiving taxpayer financial support under loaded contract rules are now claiming it with the exception of Northern Rail and London Midland who could move onto the same special measures shortly.

RMT research also reveals today that the total level of revenue support paid back to the train companies has shot up to £451 million, meaning that nearly half the £1 billion paid to the government in premiums is returned to the operators in a revolving door of corporate welfare. The revenue support payments have gone up from £290 million in a year and are still rising.

The so-called system of “revenue support” – better known as “corporate welfare - is where under the franchising “cap and collar” procedures, private train operators can get more subsidy or pay less premium if their revenue undershoots original inflated projections.

The Parliamentary information shows that the following TOC’s are now being bailed out by the taxpayer because they and DFT have got their sums wrong,

• FGW
• Virgin West Coast
• FCC
• South Eastern
• South West trains
• East Midland
• Cross Country
• Southern (from 20/9/13)

That means that eight out of the current 19 rail franchises are on taxpayer bailouts and, whilst Northern Rail and London Midland are in revenue share at the moment (paying more premium or getting less subsidy) this is only by a marginal sum and they could also apply for a bailout at any time.

Yet another reason for Richard Brown's remit to be extended. 

Rather than reviewing 'the franchising programme', now is the time to look into whether franchising is working and if there are better ways to provide passenger services. Through 'concessions' for instance...

UPDATE This blatant piece of puffery from a Mr Chris Jackson...

Interested to see that RMT has now 'discovered' how many TOCs are getting revenue support. 

Subscribers to Rail Business Intelligence would already be well aware, as we published the full list in issue 422 a fortnight ago.

(Can I have a discount on my subscription now? Ed)

ICWC bid spat exposes industry's immaturity

The InterCity West Coast franchise excitement continues...

Both First and Virgin have continued trading blows on-line and through the media over the last couple of days.

Sir Richard Branson took to his blog on Friday to say:

The Government may as well have auctioned the West Coast Main Line on eBay: “Roll up, roll up for the Great Train Sale! Highest bidder wins. Doesn’t matter when you pay, 10 years or 15 years time will do.

“We don’t mind how much debt your company has. Deliverability not an issue. Quality not a factor. Redundancies not a problem. Roll up, roll up.”

It would have saved everyone a lot of time and effort and the taxpayer lots of money...

A member of the public completely independent of Virgin has set up an e-petition calling for the government to reconsider the West Coast Main Line franchise decision

If you want to join them and let the Government know your thoughts, we urge you to sign the independent e-petition.

A call to action that @VirginTrain's own twitter account took to heart:

Amusing to think that in December this renamed account will be tweeting on behalf of First Group! 

Such are the paradoxes of the franchising system.

Meanwhile Tim O'Toole in Saturday's Daily Mail accused Beardie of being a bad loser:

‘Branson has lost and he is off the field now,’ he said. ‘What he is saying is simply not true. We are not going to be cutting staff – staff levels will be about the same.

‘But there are two things which are particularly outrageous. Had he won, he was planning to cut twice as much as he said we would have cut. And if he had won with his bid, he would have made a huge amount of money. Maybe that explains his hysteria.’

Whilst the main protagonists continued playing Punch and Judy across the broadsheets on Sunday, it now looks as if the National Audit Office and Transport Select Committee will be scrutinizing the bids.

According to Alistair Osborne in today's Telegraph:

Margaret Hodge, PAC chairman, said she was concerned that, following bid fiascos on the East Coast line, the Department for Transport (DfT) had been “over-optimistic about passenger numbers and economic growth”.

“There is no evidence to us that the DfT has changed its spots on any of this,” she said. “It would probably be legitimate for us to look at the process they have engaged in on this bid.”

Whilst this all adds greatly to the general gaiety of the nation, is it anyway to run a railway?

The benefits of franchising explained

This from Austin Healey...

Has anyone spotted the sudden rush to slap paint on VT stations?

Here the waiting room at Stafford.


And here, the stairs at Crewe.


Might this be related to franchise renewal, and if so can we expect the next coat to be applied around 2025?

UPDATE: This from Steve Strong...

Either its down to franchise renewal or both Stafford and Crewe are about to be closed...