/ Travel & Leisure

Can commuters cope with train fare increases?

Interior of Liverpool Street Station in London

If the rude awakening from a routine of lie-ins and Quality Streets isn’t bad enough, rail commuters are most likely to be returning to work with above-inflation train fare increases this morning.

Across the whole rail network the average fare will today cost you an extra 3.9% and the average season ticket will cost 4.2% more than it would have done in 2012. But on some unregulated routes fares have gone up by as much as 11%.

Research from the Campaign for Better Transport suggests that on average, UK fares are 20% higher than European rail prices, and London commuters pay twice as much for their season tickets as their counterparts in other major European cities.

Personally, I’ve seen an extra £144 added onto my annual season ticket from Hertfordshire into London. Getting to and from work will now cost me the princely sum of £3,392 a year.

I’m lucky that I can use a season ticket loan from my employer to fund the cost upfront but it still takes a chunk out of my salary every month that makes my eyes water. And for anyone who purchases their ticket monthly or weekly, the hit on your wallet is likely to be even bigger.

Sending budgets off the rails

The cost of travel is putting a severe strain on already overstretched budgets. In the South East, for example, commuters are often spending more than 15% of their salaries getting to work. Some people have had enough and according to our latest Consumer Tracker nearly a third of people say they are planning to cut their spending on public transport over the next few months.

I think people would be a little more accepting if they felt they were getting good value for money. But it’s difficult to stomach fare raises for future upgrades and improvements that may take years to come into effect.

Maybe I’m just too cynical, but I have not seen much evidence of improvements over the past few years. There seem to be delays aplenty, and over crowding in carriages. In fact, some trains in the UK are now overcrowded by as much as 180%.

Do you feel you get value for money from your train services? Have you been priced out of public transport?

Comments
Profile photo of malcolm r
Member

Data I have seen shows that season tickets have increased by 40% over the last 5 years. Petrol prices have increased by 35%. So commuting (and travelling) overall has been affected, not just rail. The cost is a consequence of travelling to work. It needs to be considered against the cost of housing, remuneration and so on. Should we subsidise people travelling?

Member
George says:
3 January 2013

Malcolm, it’s not a matter of subsidising travel, though if push came to shove, then yes we should subsidise it and more than we do now.

The issue is not that there is not enough money but where it is going. We have a costly and fragmented rail network in this country where private profits come before passengers. It’s time to change that! http://www.farefail.org

Profile photo of malcolm r
Member

Geoge, the Govt., I understand, already subsidises rail to 35% of total revenue and is trying to reduce this. I don’t see why the taxpayer should help pay for people to travel to work. Many who do have made a choice as to where they live and work and presumably take travel costs into account when doing so. Commuters put a particular stress on the rail system by creating peak loading – perhaps campaigning for staggered working hours would be helpful in easing both congestion on trains and the need to provide the additional capital needed to support them?
Motoring, bus and coach costs have apparently risen proportionately more than rail over the last few years (railway-technical.com). As far as I know motorists travel costs are not subsidised.
Perhaps someone can provide information on the way rail companies’ revenues are split between capital and operating costs, payments to /subsidies from Govt. and profits. Facts are always useful!

Profile photo of wavechange
Member

I agree, Malcolm. It would also be good to get more people living close to where they work, without rising transport costs forcing this to happen.

Member
George says:
3 January 2013

Malcolm, you write “As far as I know motorists travel costs are not subsidised.” Really? Who pays for road construction and maintenance? Who pays for traffic cops?

Public investment in transport – all transport, road, rail and sea – is necessary because of the huge return it creates for our economy. This isn’t a controversial point.

Your point about staggering working hours would be great in an ideal society but we don’t live in one of those – until we do let’s not ignore the real issue here, which is private train operators making massive amounts of cash from taxpayer and farepayers’ expense.

Profile photo of skeptictank
Member

@Malcolm R
Road travel is subsidised according to a study by Dresden University (http://tinyurl.com/abe2t3e).
The annual cost of UK roads is about £48bn taking into account the cost of KSI’s on the road (lost productivity, NHS costs, police investigation etc.). Total revenue raised from all taxes (fuel and VED) is about £38bn leaving a shortfall of £10bn.

In addition you need to consider the volume of peak hour commuters that rail shifts which the road infrastructure would be unable to accommodate.

Subsidy of rail is essential for the economy.

Profile photo of malcolm r
Member

George, would you list the TOCs turnovers and net profits so we can see where the money goes please?

Profile photo of Katie Benson
Member

You may have already seen this, but the Association of Train Operating Companies (ATOC) has produced a chart showing a breakdown of how every £1 of income is used (on average):

http://www.atoc.org/2013fares/fares-faqs.php

Profile photo of skeptictank
Member

Katie, thanks for that.
ATOC’s breakdown isn’t very informative. I would have preferred a breakdown consolidating all costs (including Network Rail and train leasing) into operational costs, capital reinvestment, management costs and profit. This would give passengers a clearer idea of how much of their ticket money is usefully spent on getting them from A to B.

Profile photo of skeptictank
Member

John Major’s conservatives privatised rail and broke it up into a complex structure in an attempt to create the illusion of competition. Labour failed to consolidate and simplify the services so instead of having one administration managing what is effectively a single vertical service, Wikipedia lists 18 rail service providers, and an infrastructure provider (have I missed out any?).

To make the structure more complex, these companies have found it convenient divide the services even further by outsourcing to companies like Balfour Beatty, Babcock, Jarvis (remember them?) and so on, making accountability as easy to pin down as nailing jelly to a wall.

Each of these companies duplicates administration and getting them to work together takes mammoth effort and expense. Where other EU countries talk about an integrated transport solution the UK has failed to integrate what is a single vertical service.

Complexity costs money. Why is no-one asking questions about how much taxpayer and passenger money is wasted in perpetuating this complexity?

Profile photo of malcolm r
Member

skeptic, I’d like to see independent figures for subsidies – facts that these conversations are often short of. If your sample figures are correct, road is subsidised 20%, and rail 35%. However, my direct car travel costs – fuel, wear and tear – are not subsidised.
I’d like to see commuting distances reduced – many result from choice not necessity – and reducing peak loading by staggering hours. It has nothing to do with an ideal world, just taking a logical approach. If we are to sensibly address travel costs and congestion we would benefit all users (road, rail, personal and commercial), and the economy.

Profile photo of skeptictank
Member

For a logical approach you would need a team of disinterested actuaries and enough data to show what the real cost and benefit is to the economy.

The maths is complex. A PAYE rail commuter for example who’s marginal tax rate is 40% may argue that his/her rail journey is not subsided at all on the basis that their fare is paid with taxed money. If the journey were tax deductible (as working expense) the net cost of the journey would be lower for this particular commuter because present subsidy is lower than the tax payers marginal rate.

Not everyone however is a PAYE tax payer with a marginal rate of 40%, and not every rail journey is a commute and therefore a working expense.

The same argument may be put forward for PAYE car commuters with the same sort of variables.

The government who robs Peter to pay Paul can be guaranteed of the support of Paul and there is more than an element of that dynamic in this debate. If there are more rail commuters than car commuters, they will win and visa versa. Logic won’t play much of a part in the result.

Profile photo of malcolm r
Member

Katie Benson, thanks for the link to the ATOCs. This is the kind of information that is helpful to understanding more about this topic.

Member
David Betton says:
4 January 2013

What is all the fuss about? If you’ve got any sense, you renew your season ticket at the end of December, so you pay the previous year’s price.

Profile photo of skeptictank
Member

Your comment makes the following assumptions:
1. The commuter has the available capital to afford an annual season ticket.
This isn’t always the case. In fact one of the reasons that this debate is happening is that the cost of rail transport is becoming beyond the means of many people in lower income groups. Many university graduates and people providing essential services fall into this category. Some people are paying up to 25% of their disposable income on rail travel.
2. The person buy’s a season ticket.
Not always the case. I know of a few commuters who travel to London every other day and don’t reap the benefits of a season ticket discount. They pay full premium price for their ticket even though they are regular commuters. Radio 4 presenter Peter White who commutes in from Winchester (and is blind disabled) falls into this category.

Profile photo of Clint Kirk
Member

Skeptic, I broadly agree with your comments but in answer to point 1, I would point out that I buy an annual season ticket even though I can’t afford it and it goes on a credit card for which I pay 6% APR interest. Is this madness? I don’t think so. An annual season ticket is much cheaper than 12 monthly ones, and cheaper still than 52 weekly ones. You could say that’s discriminating against those who haven’t got the cash upfront, but unfortunately that’s how it is. At least, I take advantage of the previous year’s prices by renewing on New Year’s Eve.

Your point 2 is a very good point. Nowadays, a lot of people work from home on some days of the week. With the latest advances in technology, giving us fast broadband, WebEx, Skype, etc., home working ought to be encouraged, as it eases the pressure on transport systems. Unfortunately, the train operators are behind the times and their pricing policies actually discourage home working. If you only commute three days a week, your tickets cost a lot more. It would be good if, instead of season tickets that are based on a fixed period of time, we had season tickets based on a fixed number of journeys. For example, if we could buy a batch of 200 travel tickets, instead of an annual season ticket, this would make it fairer to those who work from home as they would not be paying for days on which they don’t travel.

Profile photo of malcolm r
Member

The assumption made is that people have no choice but to travel long distances to work. This is not generally essential.
Rail fares have not suddenly increased dramatically in cost, they have been a substantial outlay for many years and users have to balance their lifestyle choice against this. Just the same as those who drive to work.

Profile photo of skeptictank
Member

Can you show the figures to substantiate that?

Member

If a journey costs £120 by car and £110 by rail, it’s cheaper for a business to go by car. This is because the business can reclaim £20 VAT on the car cost but can’t claim anything on the rail cost.

Keep rail fares the same but make the price include VAT. Business would no longer have a VAT bias towards use of a car. The public would have no difference in cost.

Profile photo of malcolm r
Member

Bob, commuting is usually a personal cost, not a business cost, isn’t it? So no VAT reclaim possible.

Member

Malcom, you’re right. Commuting is personal. So the distortion doesn’t apply there. Apologies for being slightly off-topic.

The distortion applies to business trips. I know the topic was about commuting but it was also about tax and subsidies. VAT is both a tax and, in this case, an effective subsidy to business travel by car. The popular misconception is that uneven VAT is good if for businesses subject to the lower rate. In the case of rail, the zero rate of VAT on rail tickets is a bad thing because ends up subsidising business trips by car.

I hope the point I was making is of interest.

Member
pitebull says:
9 March 2015

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pitebull says:
14 March 2015

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