..leasing old trains

[empip]

Times on Line LINK

THE three banks that own nearly all of Britain's trains are facing a competition inquiry over allegations that they are making excessive profits from leasing carriages that are up to 70 years old...

Ministers believe that they are overcharging by up to £100 million a year for more than 7,000 carriages built by British Rail before the railways were privatised a decade ago.
In many cases, the construction costs have been repaid several times over, but the banks continue to charge more than £1,000 a week per carriage...

The companies are Angel, owned by the Royal Bank of Scotland, Porterbrook, owned by Abbey, and HSBC Rail.
They charge the train operators more than £1 billion a year to lease the trains and make a combined profit of at least £165 million.

South West Trains pays more than £150,000 a year to rent 12 carriages built in 1938 and used on the Island Line on the Isle of Wight.
The high leasing costs are one of the reasons why the eight-mile line is the most heavily subsidised in the country, costing the taxpayer 77p for each mile travelled by every passenger.

Is there no end to it? Could be more expensive than when owned by the people.

 

[Softus]

Is there no end to it?

Tell me about it. There's a (c) word for the people who run those banks.

 

[Nige F]

.there is a collective noun for a group of bankers..........a Wunch...of Bankers

 

[JohnD]

I blame the idiots who were running a train company, and thought it would be a good idea to sell all their trains and lease them back


A temporary fix to the cash-flow, followed by decades of paying the banks to use what used to be yours.

Like taking out a second mortgage and blowing the money on a binge holiday

Repeat after me:

I must avoid loan sharks
I must avoid loan sharks
I must avoid loan sharks

 

[pickles]

As far as I know they have just scrapped the last of the slam door carriages that were built in the 50's, so the point may be valid but I don't think there are any 70 year old carriages on the network. To be fair most of the stuff I see is at most 20 years old.

The Isle of wight railway uses old tube stock from the 70's

 

[johnny_t]

From the article....

But Roger Ford, technical editor of Modern Railways, said that a two-carriage Pacer train, built in the early 1980s and found on many regional lines, typically cost £106,000 a year to lease. A Pacer cost £700,000 to build in today’s money.

South West Trains pays more than £150,000 a year to rent 12 carriages built in 1938 and used on the Island Line on the Isle of Wight.

The high leasing costs are one of the reasons why the eight-mile line is the most heavily subsidised in the country, costing the taxpayer 77p for each mile travelled by every passenger.

I lease a car for work, and it costs somewhere around £4800 per year for a £22000 car, ior 22% of the car's value annually for a 3-year lease, so in that context, £106000 for a £700000 train (15%) isn't too bad, given that leasing presents a fixed cost and takes out the variables for breakdown and maintenance.

For the IoW trains, £150,000 per year for 12 carriages = £12,500 per carriage or £240 per week. Couldn't even hire a Nissan Micra for that, could you ?? The IoW trains are actually refurbished 1938 tube stock, but that is being used in the story to distort the picture, as I don't think there are many (any ?) other passenger trains built before the 1970's.



EDIT:

In fact, the last paragraph of the article say....

“We would prefer the regulator looked at the business in a more detached way and are confident he will find that making £165 million profit on assets of £7 billion is actually pretty poor.”

This is the key to it. If they turned round to the train operators and told them to buy their trains off them, then, liquidated their £7bn and stuck it in a building society account they'd probably make more money. Of course this all kind of depends on if they paid a fair price in the first place, or if the carriages just dropped into their laps......

 

[big-all]

thatcher tried to sell off the railways no one was realy interested
she also new politicaly it could be suicidle

then major[i think it was ] came along put in a dived system DOUBLED the subsidy to allow for all the extra managment and running costs plus leave enough to make it look attractive
and surprise surprize lots of interest

why did they not just give british rail the money and we would have a world class railway that was accountable to the people that used it and owned it!!!!!! "ALL OFF US"

 

[Nige F]

Proper Railways=S.N.C.F........only a matter of time, mon cher PS. why did T****** try and commit political suicide must`ve gone agin` the grain

 

[ban-all-sheds]

In many cases, the construction costs have been repaid several times over, but the banks continue to charge more than £1,000 a week per carriage...

Was this article written by somebody who doesn't understand what leasing is?

 

[empip]

I have been informed that the pacer cost under £200k in early 80's.
Just a modified Leyland bus apparently.
Also...British Rail used to write off its rolling stock over seven years and therefore any old stock was effectively free, apart from the cost of maintenance...
Only heavy maintenance is covered by the lease (engine, gearbox, wheels), day to day maintenance is covered by train operating companies outside the lease charges.

Like a nice 20 yr old lease car .. £22k in todays money! Oh, thought not !

 

[JohnD]

That's not the point.

The railway comapny would have contracted with their financers, that they (the railway company) would sell the trains for £mmmmm each, and pay £mm reach per year.

What the mmmms were I don't know.

They were just trying to get their hands on some cash NOW in the knowledge that someone else would have to pay for it for many years to come.

Just like when you take out a second mortgage of £200,000 on the house you bought for £80,000 ten years ago, and spend the3 money on coke and tarts (or other confectionery and soft drinks).

 

[johnny_t]

Or is it the fact that the current renewable-license system does not allow the rail companies to invest in new trains themselves, but forces them down the lease route ?

 

[empip]

"We would prefer the regulator looked at the business in a more detached way and are confident he will find that making £165 million profit on assets of £7 billion is actually pretty poor."

So the banks value the assetts at £7 billion ... Isn't that because they make £165 million profit and therefore decide to base that profit around an arbritary percentage, 165 m / 0.024 = £6.875 Billion .. (2.4% suspiciously close to the CPI )
Banks happily making 2.4% profit? Must be easy money ! Or incorrect assett valuation !

 

[johnny_t]

All of the train companies I use regularly (Hull Trains, GNER & TransPennine Express) all have a standard of trains and services far in excess of that in the BR days. They all have to pay out for leasing trains, using track, using stations, caterers, ticket staff, etc., all to separate private companies, all of whom seem to be enjoying some reported profit bonanza and feeding cash back to their shareholders.

By comparison, BR was a money-gobbling shambles. How so ? (Apart from the tw*tting-great big fares these days - presumably there must be at least some element of better management too....)

 

[big-all]

All of the train companies I use regularly (Hull Trains, GNER & TransPennine Express) all have a standard of trains and services far in excess of that in the BR days. They all have to pay out for leasing trains, using track, using stations, caterers, ticket staff, etc., all to separate private companies, all of whom seem to be enjoying some reported profit bonanza and feeding cash back to their shareholders.

By comparison, BR was a money-gobbling shambles. How so ? (Apart from the tw*tting-great big fares these days - presumably there must be at least some element of better management too....)

investment was disasterous in br days
br used to have to run the service with trains averaging 30 years old hardly surprising things were bad

if they doubled the amount to B R as was given to make privatisation attractive the service would be better than now as the money would go to the services and not to inflated profits

and just for your interest some of the oldest trains in mainline service are the intercity 125 diesel hst they are 30 years old
obviously they have been refurbished several times