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Rail fare rises are unpopular but that doesn’t make them wrong

2 January 2018

3:04 PM

2 January 2018

3:04 PM

As is traditional, the new year begins with harrumphing. Railway users appear appalled by the suggestion they pay a greater share of the cost of their journey. The current formula for determining railway fares, introduced by the last Labour government a decade ago, was designed to offer a better deal to the majority of citizens while asking those who benefit from trains – the wealthy, on the whole – to pay a little more. 

So you can see why this is unpopular and the kind of thing designed to provoke a run on torches and pitchforks all across suburban England. The wealthy always dislike being asked to pay more; their ability to cause a fuss about this is one of the reasons they are wealthy. 

Nevertheless, trains are – overwhelmingly – a middle-class mode of transport. There is nothing disagreeable about this. Half the country is middle class these days. Nevertheless, it remains the case that commuters travelling by national rail are, as a general rule, wealthier than the average citizen. The poor tend not to leave for the suburbs. And, of course, one reason for living in the suburbs is the additional disposable income doing so provides. This being so, you can understand why increases in the price of rail travel are unpopular. 

But being unpopular is not the same as being deplorable. We recognise that rail travel, like other forms of public transport, is a necessary good. That’s why we agree to subsidise it. The argument then becomes about the appropriate level of subsidy, not the existence of that subsidy. In some parts of the network, the state’s subsidy has been reduced to approximately 35 per cent of the network’s operating cost; in others – Scotland for instance – the subsidy remains above 55 per cent. 

Every single person complaining about the horror of being asked to pay more is, in effect, demanding that people who do not use the train (sometimes because there are no trains for them to use) pay more to support the choices of those who do use the train. You may think this a respectable argument and one that might even be in the public good but at least be honest about it: you want non-users to subsidise users more than is currently the case. 

At which point, someone will surely observe that if fat cat owners weren’t making millions from the railways, fares would be lower and there would be more investment in new rolling stock and infrastructure too. Every train should have its own pet unicorn. 

Except that the railways are a pretty poor business. That is, the average profit margin for companies operating a railway franchise in Britain is something like three per cent. Money can be made but – as the experience of Stagecoach on the east coast mainline demonstrates – it is no kind of sure thing. Admittedly, Chris Grayling’s decision to bail out Stagecoach is typically stupid and indefensible. The whole point of the franchise model is to transfer risk from the public purse to the private sector. The system is corrupted and undermined if ministers fail to follow the logic of that point. 

Nevertheless, running railways in Britain is not the easiest way to make money. Indeed, since most fares are set by the government, increasing the number of passenger journeys is the only way in which the train operators can make any kind of return. And judged by this measure they have been spectacularly successful: British Rail managed decline but passenger numbers have doubled since privatisation. This is astonishing and the sort of thing that would have been reckoned all but impossible 25 years ago. 

Of course challenges remain and will do so for as long as we continue to struggle with upgrading infrastructure that is, in many instances, more than 100 years old. Most delays on Britain’s railways, however, are caused by engineering works or infrastructure breakdowns that are the responsibility of Network Rail. In other words, most delays are actually attributed to the publicly-owned part of the network, not the privately-managed part. 

It is true that if you were starting from scratch you might not construct a system that looked very much like Britain’s railways. But we are where we are and there is precisely no indication that a nationalised railway – for all that it might poll very well – would actually offer any significant improvement on current levels of service. 

Those levels of service, incidentally, are pretty good in most parts of the country most of the time. Some franchises have 90 per cent levels of customer satisfaction. A reminder that people in this country love grumbling about things they accept they are actually quite satisfied by. Happy new year.

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