Why does Richard Branson throw his toys out of the pram over losing the West Coast Main Line franchise? By all accounts, the franchising and bidding process is fair – after more than ten years’ experience, the DfT ought to have got it right, and have at least reduced the risk of ministerial influence on who wins it. I cannot believe that David Cameron will get involved, in spite of Branson’s plea! I will also be surprised if the DfT loses the Judicial Review challenge by Branson.
Branson lost in a competition! He claims to have built up the WCML service from scratch, supplied new trains and achieved strong growth. But for the first years of Virgin’s operations, they were on a cost plus contract because the line was beign upgraded. Virgin did not pay for the trains, or the line upgrade. It benefited at the end from a virtually new railway and new trains. Comparing this with other intercity routes, especially Great Western, with aging infrastructure and aged trains, is not relevant.
Why, you ask? Because he has better PR.
Hello, Lord Berkeley;
and beware ‘falsification’
(both from Others and from your-self:
“By all accounts…”
EXCEPT the Denied Greater Account Contexts, of
1) “Individual Capitalism is both Longterm-Inefficient and Shortterm-Civilisationally unsustainworthy: a new Cooperative-Capitalism is needed to replace it, both urgently and importantly”.
2) “after more than ten years the DfT (must have) got it right”
is a fallacy of Presumption:
[Try: a) Apriorism; b) Argumentum ad Antiquitam; c) Ex post facto Statistics;
[That’s offered as a ‘welcome’, by the way-side;
into which teeth
may possibly be got ?]
What about the 167,000 people who have now signed the petition to request a review – are we also “throwing our toys out of the pram”? I personally have not seen such public support in favour of First Group’s getting the bid.
D’accord, Rebecca;
false and pseudo-toys, dumped upon us from on-high, we do need to be throwing out of our various peoples-prams;
[ such as “Friendly-Fire” (shot in back by own troops)].
Bigger-contexts-influencing also need to be shown, and to show very clearly that certain of our Democratic-Peoples’ so-called “pram toys”, and “off-topics-democratic-participation-attempts”,
are not toys at all,
and that we need to keep on spotlighting and re-tabling them,
and to stop them being summarily “thrown out” as being “irrelevant” and “out of order”.
————
Possibly the posting peer was the primary ’out of order’ culprit, in choosing to feed us an Ad Hominem fallacy attacking the Person:
“By Analogy, the Virgin Branson foul-player is a spoilt baby”.
(Pots calling kettles black).
I think the main comparison he makes is with the East Coast lines where he lost the franchise but the companies that won went broke and the line had to be taken back into public ownership. He has run the West Coast line successfully and it has become the premier service for north-south travel.
FirstGroup has a poor reputation. There was a petition to remove the First Capital Connect contract from it in 2009. Complaints have been raised about overcrowding, increasing fares, extra charges, unreliable time keeping and trains breaking down.
As for having faith in the process of handing out franchises, what happened to the companies on the East Coast? If you have a successful company why change it for what looks like a worse one?
The commuters have been generally pleased with what Branson has done. They don’t care whether he got the 140mph pendalino trains for free. If he did, it sounds like good business. Unfortunately, the track wasn’t upgraded well enough, the trains can still only run at 125mph on this line. Still, he has at least has proved that he can run the line successfully.
The main thing is that another rubbish company is not palmed off on the passengers to unnecessarily ruin what they already have. Clearly, 160,000 people have more doubts than the author of the abilities of those who hand out the franchises, since they signed an e-petition to have the issue discussed in parliament.
Perhaps their’s an element of envy or spite in some people’s attitude to Branson but the commuters mainly care about the outcome and he has proved his worth.
I understand that First/GoAhead is a subsidiary of the French nationalised railway
SNCF(Société National de Chemins de Fers), but that it does have some shares for sale which are basically a good yielding loan stock price £12.90 yield 7.7. It varies very little in price through the years but does a jump at dividend time then to return to the same price.
In so far as the SNCF is not a nationalised business in the UK, it is splitting hairs rather to say that First is not a state run enterprise. It is, but not by the UK government.
Presumably the Conservative UK govt considers that, if it is not to have the responsibility of union negotiation and the like when there is a strike, then it can not be considered favouritism to give the deal to a French enterprise of any sort.
In the event of strikes it would have to be organised from Paris, and where would we be then?
Branson is trading on the nuance as last resort.
The greater part of the bus companies in the south of England and another two railway companies are also run by the SNCF. I think they are run particularly well; in fact I am considering a few shares in the their subsidiary. I take the buses regularly.
The return is very good.
I am member of the Labour party and my view is that an Internationalised company is no different from a Nationalised one, except in size, but the Unions do seem to have had their day, and international unionism does not have the air of any considerable power about it.
The newish Anti- capitalist,Socialist organisations of “Occupy” may have different opinions, and different international ambitions, which would most certainly be anathema to Branson’s business, so he might do best to let it lie for now; just save face for his business.
I agree with many of your sentiments, Lord Berkeley. One would think the DfT know what they are doing, and that the process is fair and thorough. However, the only issue that sows a seed of doubt, as raykelly mentions above, is the East Coast fiasco. If the DfT made a mistake there by accepting an unrealistically high bid, could it not happen again? That is the only issue that concerns me.
I don’t agree with any of the other arguments about levels of customer service. I remember in the early days of privatisation, Virgin Trains had a terrible reputation. For what it’s worth, I use First Great Western quite frequently, and I find the service excellent. They use fantastic, refurbished trains; they are usually on time; the staff and customer service is great. Admittedly, I don’t travel at peak times, and there’s the rub. Most of the complaints against First – mainly overcrowding and the result of congested tracks – are actually beyond their control. Many people fail to realise how much the railways are still under central control by the government. The operators have little say in timetabling, service frequency or rolling stock. Having services run by a different operator won’t make the problems magically go away or suddenly deteriorate. And the only way to significantly increase capacity on the West Coast route is to build HS2!
I very much doubt customers will see a worse service when First take over the route, the question is whether the company finds it doesn’t pay and walks away leaving the government to run it.
A British established company providing a good service. We should support Virgin to the hilt. I only hope that they are not scared off from applying for other franchises.
My take on Branson, once again, making a protest is, he is caught up in the shenanigans of politics that to his way of thinking are corrupt and filled with those on the take, whilst at the same time selling the idea they are straight and above board. There are jokers in the game who are playing against his principles and making a lot of payola on the quiet. So, as he did with the lottery fix and the BA dealings, he is letting the public know what goes on.
He, being a big boy and in the game of acquisition for a long time, should have been well aware and well equipped for the journey he took up when investing in railways. But his losses must have been dramatic and have pxxxxxd him off in the extreme.
However, in my opinion, the railway is akin to a utility, it is a life necessity and therefore should not be in the hands of pirates. Nationalization is the answer and the only answer. Rail in the rest of Europe is heavily subsidized by their tax payers and as a result they have a modern service fit for the twenty first century. What we have is a half wit farce run by a bunch of Bill Sykes.
But once again, ideology is more important to our dim wit leaders and no matter what chaos they witness nothing will turn those lunatics from their chosen path. Even when they view the fall of all they survey.
It’s just cronyism played out in public.
1. Branson asking government to do his dirty work.
2. Politicians rigging the market.
Note the common theme. At the centre of it all are politicians screwing companies and the public.
=========
Rail in the rest of Europe is heavily subsidized by their tax payers and as a result they have a modern service fit for the twenty first century
========
Ah yes, you can’t get away from the cronyism. It’s all OK, if you are the crony, isn’t it?
Why should you get a subsidy at the expense of someone on min wage? Remember they have to pay 3K a year in taxes so you can swan about on the cheap
My rough reckoning is that someone on minimum wage pays only half that amount of tax per year, and only a small fraction is spent on subsidising the railways. And if it wasn’t subsidised, what chance would there be of people on minimum wage ever taking a train?
If you don’t like the way railways are subsidised in this country, you could always go and live somewhere that doesn’t have a fantastic, cheap, state-subsidised rail network…
Rail in the rest of Europe is heavily subsidized by their tax payers
But the French taxpayer does not subsidize the
British transport system. They make a profit out of it, whilst the Bus passes for all pensioners and disabled people, are paid to them, from the British public purse.
http://en.wikipedia.org/wiki/First_Group
To clarify my confusion as clear as mud……..
http://en.wikipedia.org/wiki/Go-Ahead_Group
A veritable cobweb of cross holdings through Western Europe and North America, by both companies.
One of these has a joint holding with Danish state railways, but I shall also endeavor to ascertain the alleged link to SNCF(French National Railway)
My understanding is FirstGroup is a loser and cannot live up to its obligation and the British know it. So, why have they taken these second rate managers on for the UK franchise on train running? Who is getting a kick back? Anyone know?
http://www.itfglobal.org/itf-americas/press-releases.cfm/pressdetail/1168/region/1/section/0/order/1/ViewIn/SPA
And it tells us here that the American O’toole is a failure in the bus business, but he wants the British Railway West Coast to ruin that as he did the buses.
Why is it these British top brass so believe in the fancy footwork of these guys from that side of the big pond. They are all Bob Diamond clones. And they find our naivete humorous in the extreme.
http://www.independent.co.uk/news/business/analysis-and-features/wheels-are-turning-slower-at-firstgroup-7782625.html
This is another American run company with the tentacles spreading throughout Europe and within a very short period of time it will be choking the life out of us all.
Branson should reveal the truth about this set of fishy smelling dealers. In other words, he must go to the mattresses.
http://www.youtube.com/watch?v=VBl_gvTBO9g&feature=related
And one more time, the only way to be rid of pirates is to nationalise the lot and send First Group back to their American owners.
GoAhead group in fact part owned by the SNCF
GOVIA (65% stake, other stakeholder SNCF)
who operate: Thameslink and Southern (trains)
Thank you !
So there are state enterprise holdings in both companies but the one company is about three times the size, of the other, in every respect.
Study the Wikipedia links Lords ladies and gentlemen before any more exagerated comments, not least by me. The dimensions of
Virgin will also be useful 49/51 Stagecoach ownership with Virgin trains.
Capitalisation and income not as readily available on wikipedia. I wonder why?
http://en.wikipedia.org/wiki/Virgin_Trains
The Virgin Crosscountry from Bournemouth to Edinburgh was a great joy to travel on; 12 hours of unmitigated pleasure. It still runs but under a different flag.
The smaller business has just been squeezed out by the larger enterprises, which is in some ways a pity since they took the romantic view of travelling by train, but it ain’t a romantic game.
@Gareth Howell:
So, I’m not sure what it is you are trying to get across? Is it that this ‘FirstGroup’ bunch are in fact not US driven and are European operators, mainly in France or are a French company?
Where they operate and are registered does not for a minute mean they are of the area their service functions in. They are global and global usually means money is off shore for their top brass and the top brass are closely tied to the USA. So it is an American concern. Doubt it?
Well read up on this. Who they are and where they started.
http://www.firstgroup.com/corporate/investors/directors.php
They operate where they think the pickings are easy. And they make those who give them the opportunity in their field very happy indeed. Not by running a smooth outfit, but, by being a smooth outfit of facilitators in the acquisition department.
Look who are their advisers. Goldman Sachs, JP Morgan Cazenove, Deloitte. Ring any bells?
http://www.firstgroup.com/corporate/investors/advisors.php
Isn’t Blair and many others we hear about, connected financially with one of two of these ‘advisers?’
Virgin is said not to be a train operator at all at the moment, yet I was given a ticket on Cross Country from Birmingham 18months ago, by somebody who said he as working for Virgin, so
what I was travelling on I really can’t say.
One of our most enjoyable moments in local west country lore was when A Virgin train came in to Swanage railways station from Waterloo and the mian line for the first time since the Beeching Axe in about 2002.
Virgin had paid for track upgrading to allow this to happen.
The private railway now takes train from London from time to time, and will have a regular service from Wareham this year, about 10 miles, on their own rolling stock.
If Virgin is not thought to be a train operator but does things like that, and still feels aggrieved at the loss of the East coast main line, what kind of train business are they running?
Is it for the reflected glamour in its other businesses….. wheels firmly on the tracks at all times?
The romance of the Bournemouth to Glasgow service included 3hr breakdowns every other day, while they brought in a replacement engine.
A 3hr wait can be fun but not if you are an old person, and it becomes an overnight wait
due to further delays, and there you are still sitting in the carriage.
Saying that, SWT(South Western)specializes in selling day returns that do not get back until the next day, and you have waited on the platform at Bournemouth for 7 hours overnight to enjoy the privilege, of their service.
This is very complex for a number of reasons. ‘Baron’ Branson it seems has good cause to be concerned. Its all very well leaving your legacy to somebody you respect its quite another to see all the blood sweat and tears go to waste.
A difficulty for Branson like Israeli born Neubauer of Aramak is that in the early years of their empires they floated their companies. Neither liked the experience so their billion dollar companies went private.
The difficulty or benefit depending on your viewpoint is that operating ratios do not have to be declared in company accounts. Contrast this with FirstGroup and Stagecoach their ratios are highly visible.
FirstGroup’s gross margin is a respectable 27.65% whilst its EBITDA Margin is a poor 11.86%. Stagecoach, Branson’s partner in Virgin Rail has a lower gross margin of 18.65% its EBITDA Margin is 13.51% meaning more of its income is retained than FirstGroup. One might assume that Virgin Rail’s figures are about the same as Stagecoach?
So what has this to do with Aramak; the (invisible) low margin of Virgin Rail for one and the mindset of its corporate employees for another. I chose to pitch Aramak (they did the Olympics catering) against Virgin because both have fingers in many pies.
Aramak when listed had a gross margin of 9.3% and an EBITDA Margin of 7.8%, this company cannot make mistakes but neither can Branson. FirstGroup by comparison is very wasteful and inefficient and I think this is what Branson is getting at. What we don’t want is for the franchise holder to be straining employee relations because margins are so tight and wages so poor that the public have to endure strike action by disgruntled employees.
In 2009 Aramak are feeling the pinch and feature in the PricewaterhouseCoopers Hourglass magazine. It says: “What’s your greatest asset – your employees, or your relationship with them?” How Branson and Neubauer achieve this is to have employees 100% behind the corporate image and accepting of low pay. How much lower would pay fall by accepting the FirstGroup bid?
Aramak have a web presence and note the qualifications of its UK CEO.
Virgin Group: Resource: Exploring Corporate Strategy; 2000
http://www.esecourses.com/cfincase.pdf
FirstGroup Plc (FGP:London): Ratios: Gross Margin; EBITDA Margin
http://investing.businessweek.com/research/stocks/financials/ratios.asp?ticker=FGP:LN
Stagecoach Group Plc (SGC:London): Ratios: Gross Margin; EBITDA Margin
http://investing.businessweek.com/research/stocks/financials/ratios.asp?ticker=SGC:LN
Amarak: NYSE:ARMK
http://ca.advfn.com/p.php?pid=financials&symbol=NYSE%3ARMK
PCW: Hourglass; Managing in a Downturn – Risk and Opportunity.
Aramak UK: Preparation is the Key Ingredient. Page 22. Sep 2009
http://www.pwc.co.uk/assets/pdf/hourglass-issue-15.pdf
Remember too that the Lib Dems want to take lots of money from Branson.
After all he’s one of the rich whose money they are after.
So, LB, whose money should they be after? The already marginalised and starving, who the rich already bled dry?
No-ones
The trouble is, Blagger, the rich interfere with the lives of us all and with the soul purpose of stripping us bare.
This country of ours is a tax haven of the worst kind. We are run by a bunch creeps on the fiddle and seemingly we are ready to roll over for a belly tickle at the drop of a proverbial hat.
Read this:
http://www.wsws.org/articles/2007/jan2007/tax-j06.shtml
And if we come back to, Branson, both Virgin and Stagecoach, his partners, are off shore companies and play on the global market twenty four hours, including the futures rip offs.
Which is why I know they are pirates. Pirates are off shore and they plunder the purse of the uninitiated anywhere they can. The fight between these cheating corvettes will be interesting but they are both as bent as each other. And the British government should not be fanning the flames for either of them to legitimize the money pool.
They are both American concerns. Either way, the British railway user is being taken by these people who see us as fodder for their easy game of monopoly. The game for us is nationalization.
http://www.youtube.com/watch?v=_TU8cJ8ef2E
And this government wants to squeeze the most poverty stricken out of the life support we as tax payers donate directly from our hard earned to insure ourselves against devastation. Our government then allows these pirates to take it regularly. You see, we are led by doggies.
Nationalise the entire country.
Privatise the lot.
Now, you complain about the rich, but you still haven’t commented on why you want other people’s money so you can ride the rails on the cheap. You’re just as bad as any crony in that respect. They want other people’s money. You want other people’s money. There is no difference.
On your last bit, about extracting the cash. You’re right. That is what the government is doing. However you’re completely deluded as to why. They are doing it because they are bust. Bankrupt. Operating whilst bankrupt is a crime. Taking money for services with no intention of providing them is fraud.
That’s why your solution of give everything to the fraudsters (nationalisation) is completely bonkers.
Let me give you one solution.
Let Vince set up this new bank.
Conditions.
1. He puts his personal wealth and pension on the line. He’s keen for bankers to do this, he should do the same. So first losses come off his wealth before we get hit.
2. No special treatment. He has to learn first hand what it means to set up a business in the UK, in particular a bank.
3. For example, will he pass the test on being a fit and proper person giving his track record of violating the human rights act. [Right to a fair trial, and he’s the judge whose going to war on one of the participants]
4. Then once removed from the business department, axe it. Lots of money to reduce corporation tax or cut.
Spending £16.5 billion.
Income tax receipts, 150 bn. People could have a 10% reduction in their income tax payments.
What would they choose? Uncle Vince or the money?
Capital gains tax raised 4 bn. That could go – completely
Inheritance tax – 3 bn. You could get rid of that too.
Stamp duty – 6 bn. So you could get the housing market moving with removal of that, IHT and CGT.
You could even get rid of airline passenger duty, or alternatively tax on insurance.
I think its time to axe that department completely.
http://www.hmrc.gov.uk/stats/tax_receipts/tax-receipts-and-taxpayers.pdf
Details on the receipts.
http://en.wikipedia.org/wiki/Department_for_Business,_Innovation_and_Skills
For how much Vince Cable costs us
Blagger and Maude, you are both missing a point about Branson. He has a social conscience but if he didn’t have one, he might operate his business like this: impose a culture of excellence throughout his global empire weeding out those that didn’t fit within a very narrow range of ability.
A case of don’t defend the weak sack them.
Next, having achieved an ultra right wing heaven of total competency he would lower his gross profit margin to 7% with a net of 5% and expand his businesses until every country of the world was his playground. His income would benefit from scale and size with each pound of profit adding up to provide billions to the UK supply side. In each country he would undercut competing businesses that operated on a higher margin forcing them out of business creating a brand monopoly that governments would eventually depend on.
But would such a business group be acceptable to politicians? Each individual piece of his puzzle with its society destroying margins would contribute little to the supply side of government in the country of operation. If his paradigm was taken up by other global businesses then the scale of social destruction would be enormous and destabilising but what nation would host such businesses?
Whilst markets would admire such brands governments are all about social infrastructure and employment for both the strong and the weak. Businesses need to have respectable margins to obtain a balance that satisfy both markets and government supply side needs.
So when Branson says something is bad for the UK we have to look at how he operates his business and what he gives back to society. I like to think he gives a great deal back to society on many levels except in one respect.
How can he afford new rolling stock on such low operating margins?
I’m not missing the point.
Politicians want a wealth tax because they need the money for their Ponzi fraud.
Branson tax, Dyson tax, its all the same to them. It doesn’t matter who they take the money from or the damage taking the money does.
So lets call it what it really is. A smash and grab raid from the productive by a bunch of fraudsters.