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As fares go up again, what do Britain's rail users get for their money? As fares go up again, what do Britain's rail users get for their money?
(7 months later)
Before commuters have kissed summer goodbye, the chill winds of January's fare rises are blowing down the tracks. The latest inflation figures mean ticket prices will rise by 3.5% in 2015, more than double the rate of consumer price inflation and nearly six times as fast as growth in wages. It has once again raised the question of whether travellers and taxpayers get value for money on the railways. Just what are Britain's passengers paying for?Before commuters have kissed summer goodbye, the chill winds of January's fare rises are blowing down the tracks. The latest inflation figures mean ticket prices will rise by 3.5% in 2015, more than double the rate of consumer price inflation and nearly six times as fast as growth in wages. It has once again raised the question of whether travellers and taxpayers get value for money on the railways. Just what are Britain's passengers paying for?
The disquiet only grows when it is pointed out that rail users in continental Europe pay less to travel on more modern trains (if not necessarily on every journey). While the British rail industry rightly points to its recent achievements – not least that of being one of the safest railways, with no fatal passenger accidents since 2007 – the idea that travellers are being ripped off compared with their European neighbours has taken hold. Just 31% of commuters think they are getting value for money, according to research by the official rail users' watchdog.The disquiet only grows when it is pointed out that rail users in continental Europe pay less to travel on more modern trains (if not necessarily on every journey). While the British rail industry rightly points to its recent achievements – not least that of being one of the safest railways, with no fatal passenger accidents since 2007 – the idea that travellers are being ripped off compared with their European neighbours has taken hold. Just 31% of commuters think they are getting value for money, according to research by the official rail users' watchdog.
Little wonder. When, in 2009, the watchdog, Passenger Focus, published the biggest comparative study of European train fares in recent years, it found season tickets of all kinds were significantly more expensive in and out of London than in other cities in the eight major European countries it studied – and these included Switzerland and Sweden. According to the study, which analysed a complex picture of long-distance and urban routes, with peak fares and advance purchases, journeys of all kinds cost notably more in Britain.Little wonder. When, in 2009, the watchdog, Passenger Focus, published the biggest comparative study of European train fares in recent years, it found season tickets of all kinds were significantly more expensive in and out of London than in other cities in the eight major European countries it studied – and these included Switzerland and Sweden. According to the study, which analysed a complex picture of long-distance and urban routes, with peak fares and advance purchases, journeys of all kinds cost notably more in Britain.
It says nothing has significantly altered the picture since the research was conducted in 2008 (its methodology took account of fluctuating exchange rates), bar five years of above-inflation fare rises here.It says nothing has significantly altered the picture since the research was conducted in 2008 (its methodology took account of fluctuating exchange rates), bar five years of above-inflation fare rises here.
David Sidebottom, team director at Passenger Focus, acknowledges that while British rail travellers are indeed paying some of the highest fares in Europe, there are reasons for this: "Our long-distance, 'walk-up' railway network is expensive compared with other countries but trains do tend to run more frequently in Britain. Travel on long-distance trains can be cheaper in Britain than elsewhere in Europe, but only if you buy the lowest-priced advance ticket on a fixed-time train."David Sidebottom, team director at Passenger Focus, acknowledges that while British rail travellers are indeed paying some of the highest fares in Europe, there are reasons for this: "Our long-distance, 'walk-up' railway network is expensive compared with other countries but trains do tend to run more frequently in Britain. Travel on long-distance trains can be cheaper in Britain than elsewhere in Europe, but only if you buy the lowest-priced advance ticket on a fixed-time train."
Claire Perry, the new transport minister, clung to that line this week when she was wheeled out to defend the annual fare rises. On Radio 4, she told the Today presenter John Humphrys that, these days, "people don't just rock up to the station". But according to her statistics, most of us in fact do: less than half of tickets are bought in advance.Claire Perry, the new transport minister, clung to that line this week when she was wheeled out to defend the annual fare rises. On Radio 4, she told the Today presenter John Humphrys that, these days, "people don't just rock up to the station". But according to her statistics, most of us in fact do: less than half of tickets are bought in advance.
Tickets at an unusually small fraction of full fares are available to those with the opportunity, time, fixed plans and online access. Passenger Focus found the variation between standard flexible and off-peak fares to be startlingly bigger in the UK than elsewhere. A study commissioned for Roy McNulty's 2011 report into railway value for money found that advance tickets were priced even lower than the threshold at which the most price-sensitive passengers would be prepared to cough up.Tickets at an unusually small fraction of full fares are available to those with the opportunity, time, fixed plans and online access. Passenger Focus found the variation between standard flexible and off-peak fares to be startlingly bigger in the UK than elsewhere. A study commissioned for Roy McNulty's 2011 report into railway value for money found that advance tickets were priced even lower than the threshold at which the most price-sensitive passengers would be prepared to cough up.
Since the middle of the last decade, both Labour and coalition governments have implicitly endorsed the idea that the user should pay an increasing share of the cost of running the railways, and put fares up by more than inflation. McNulty's conclusion was that both farepayer and taxpayer were paying over the odds because of inefficiencies in the system. Britain's railway was being run at a cost 40% higher than in four comparable countries (France, Sweden, Switzerland and the Netherlands). The burden was largely borne by taxpayers, but fares were also 30% higher in Britain.Since the middle of the last decade, both Labour and coalition governments have implicitly endorsed the idea that the user should pay an increasing share of the cost of running the railways, and put fares up by more than inflation. McNulty's conclusion was that both farepayer and taxpayer were paying over the odds because of inefficiencies in the system. Britain's railway was being run at a cost 40% higher than in four comparable countries (France, Sweden, Switzerland and the Netherlands). The burden was largely borne by taxpayers, but fares were also 30% higher in Britain.
Do we get better trains and services for that? David Briginshaw, editor-in-chief of the International Railway Journal, says: "The frequency is very good; the comfort leaves something to be desired. A lot of European trains are much better appointed, especially on a modern German or Swedish service."Do we get better trains and services for that? David Briginshaw, editor-in-chief of the International Railway Journal, says: "The frequency is very good; the comfort leaves something to be desired. A lot of European trains are much better appointed, especially on a modern German or Swedish service."
Fares on the continent are more often set by the railway operators rather than the government. Prices on high-speed trains in Italy and Belgium, for example, are quite high, while those on regional and local services are state-regulated and kept very low. But Briginshaw says cheap tickets haven't meant great services: "It causes major problems for the operators because there is little money. If you travel on a high-speed train in Italy, it's expensive but comfortable."Fares on the continent are more often set by the railway operators rather than the government. Prices on high-speed trains in Italy and Belgium, for example, are quite high, while those on regional and local services are state-regulated and kept very low. But Briginshaw says cheap tickets haven't meant great services: "It causes major problems for the operators because there is little money. If you travel on a high-speed train in Italy, it's expensive but comfortable."
In Germany and France fares are set by the state-owned Deutsche Bahn and SNCF, and that usually means hefty public subsidies. Says Briginshaw: "They have a general philosophy that rail travel should be affordable, even if you travel by TGV." In Germany and France fares are set by the state-owned Deutsche Bahn and SNCF, and that usually means hefty public subsidies. Says Briginshaw: "They have a general philosophy that rail travel should be affordable, even if you travel by TGV."
Yet the headscratcher that emerges from the bewildering flows of capital around Britain's rail system is that the government is spending more than ever. Individual franchises return vastly differing amounts to the Treasury. Department for Transport figures published this week showed that East Coast – the state-run long-distance train service –was a net contributor of 0.6p per passenger mile, a figure only slightly bettered by commuter franchises SouthWest Trains and First Capital Connect.Yet the headscratcher that emerges from the bewildering flows of capital around Britain's rail system is that the government is spending more than ever. Individual franchises return vastly differing amounts to the Treasury. Department for Transport figures published this week showed that East Coast – the state-run long-distance train service –was a net contributor of 0.6p per passenger mile, a figure only slightly bettered by commuter franchises SouthWest Trains and First Capital Connect.
At the other end of the scale, Northern, which runs a mixture of commuter services and rural lines, took a subsidy of 51.5p per passenger mile.At the other end of the scale, Northern, which runs a mixture of commuter services and rural lines, took a subsidy of 51.5p per passenger mile.
Meanwhile dividends paid out by private operators reached £200m last year, when they had received taxpayer subsidies totalling £4bn, according to the Office of Rail Regulation. Northern, which took £713m in direct and indirect grants from the government, paid out £36m to its shareholders. In an effort to rein in that state support, the next Northern franchise will charge passengers premium fares in the evening peak.Meanwhile dividends paid out by private operators reached £200m last year, when they had received taxpayer subsidies totalling £4bn, according to the Office of Rail Regulation. Northern, which took £713m in direct and indirect grants from the government, paid out £36m to its shareholders. In an effort to rein in that state support, the next Northern franchise will charge passengers premium fares in the evening peak.
This all stokes the row over value. McNulty's review identified the fragmented structure of the railway as a drain, the "misaligned incentives" of track and train operators. Unions echo this, pointing to the money that goes on private train operators' dividends and franchise bids; the compensation payments flowing between train and track operator for delays and punctuality; and the armies of lawyers, accountants and bureaucrats processing it all.This all stokes the row over value. McNulty's review identified the fragmented structure of the railway as a drain, the "misaligned incentives" of track and train operators. Unions echo this, pointing to the money that goes on private train operators' dividends and franchise bids; the compensation payments flowing between train and track operator for delays and punctuality; and the armies of lawyers, accountants and bureaucrats processing it all.
Others think McNulty has flagged up a need to get more efficiency from a workforce of well-paid employees in an era when pay and conditions elsewhere have not been preserved.Others think McNulty has flagged up a need to get more efficiency from a workforce of well-paid employees in an era when pay and conditions elsewhere have not been preserved.
What no one disagrees about is that railways require sustained, massive investment – with or without HS2. Even the Office of Rail Regulation, attempting to find the fat and trim the odd billion from Network Rail's budget of £37.5bn for five years from April 2014, said more would have to be spent to ensure the tracks could stand up to climate change. It had identified this as a challenge even before February's storms swept away the coastal line that joins Devon and Cornwall to the rest of England.What no one disagrees about is that railways require sustained, massive investment – with or without HS2. Even the Office of Rail Regulation, attempting to find the fat and trim the odd billion from Network Rail's budget of £37.5bn for five years from April 2014, said more would have to be spent to ensure the tracks could stand up to climate change. It had identified this as a challenge even before February's storms swept away the coastal line that joins Devon and Cornwall to the rest of England.
But does that mean that passengers must bear an ever bigger share of the burden? Stephen Joseph, chief executive of the Campaign for Better Transport, argues not: "A good-quality rail network has value far beyond its regular users – in connecting people to jobs and in reducing pollution and congestion on roads for example – but compared with other European countries, the UK government isn't recognising this."But does that mean that passengers must bear an ever bigger share of the burden? Stephen Joseph, chief executive of the Campaign for Better Transport, argues not: "A good-quality rail network has value far beyond its regular users – in connecting people to jobs and in reducing pollution and congestion on roads for example – but compared with other European countries, the UK government isn't recognising this."
That, he says, doesn't just leave passengers short-changed and paying increasingly high fares for overcrowded trains and understaffed stations. "The country as a whole won't get the full benefit of the rail network until the government provides coherent, ambitious support for rail that makes it fully accessible to the rising numbers of people who want to use it."That, he says, doesn't just leave passengers short-changed and paying increasingly high fares for overcrowded trains and understaffed stations. "The country as a whole won't get the full benefit of the rail network until the government provides coherent, ambitious support for rail that makes it fully accessible to the rising numbers of people who want to use it."