Spain has announced a new trial which will make certain journeys on intercity trains free of charge between September and December this year, in an effort to ease the burden of the cost-of-living crisis on households. The initiative is being funded by a windfall tax – which is expected to raise about €7bn (£5.9bn) – on the banks and energy companies that have profited from the crisis.
It’s enough to make UK commuters squirm in their scratchy seats. The UK has some of the highest train fares in Europe, as British train operators squeeze as much as they can out of those who need to use rail services the most – such as commuters – with the price of some on-peak season tickets running into five figures. Intercity journeys of the type being made free in Spain are more expensive than flying and rail fares are increasing while short-haul flights are getting cheaper.
The reason the UK’s trains cost so much is because it’s a franchise system, introduced in the 1990s, under which train operators bid to run individual lines and are then responsible for selling tickets – and keeping any profit they make. The result is that while the UK’s train system is by no means the worst in Europe, it’s also not the best: in a review by Boston Consulting Group in 2017, Great Britain’s rail network came eighth out of 25 European nations. Although it scored points for its “excellent rating for safety”, its “quality of service is poor because of high fares and the relatively low punctuality of regional trains”, the report said.
Ironically, many of the companies that operate British train services – Abellio and Arriva, for example – are owned by other governments, and thus return their profit directly to transport systems in the Netherlands and Germany.
After three decades of experimentation, even the government has acknowledged that the franchise system doesn’t work. The Department for Transport published the Williams-Shapps plan in 2021, which seeks to replace the franchise model with a “concession” model – similar to that used by Transport for London – in which private companies run some parts of the transport network but overall control is centralised to a government body called “Great British Railways”. Parts of the plan have already been put in place: LNER, Northern, Southeastern and Scotrail are all in the process of being transferred into government hands.
But what if the government went one step further and made train travel completely free? How much would that cost? Figures from the National Audit Office have shown that in the year to April 2020 (so the first few months of the pandemic), England’s rail system’s expenditure was £17.1bn, of which 30 per cent came from the government, while the rest predominantly came from rail fares. Of those costs, £6.6bn was operating and staff costs, and £200m was fuel (that’s likely to have gone up substantially in recent months), while lease costs for rolling stock – the trains themselves – was £2.6bn. It adds that between 2019 and 2024, the total budget for England will be £34.1bn to operate, maintain and renew the railway – a few billion less than the amount the government budgeted to run its failed Test and Trace programme for two years.
These figures don’t include Transport for London (which was forced to extend a funding deal with the DfT this week after the sudden drop in passengers during the pandemic created a £2bn budget black hole) and other networks in which responsibility is devolved (such as HS1). But a more sustained focus on public transport would have knock-on effect on other budgets. The government currently plans to spend £27.4bn on roads, while Rishi Sunak has spent £5bn on a barely noticeable cut to fuel duty and Penny Mordaunt is proposing a further £13bn cut (by halving the £26bn the UK currently collects in fuel duty). Another way to take pressure off both households and public finances during the cost-of-living crisis would be to give them a better alternative to cars.
And while the UK economy technically grew by 0.5 per cent in May, much of this came from a rise in GP appointments and bookings for foreign holidays; retail and consumer-facing services (such as hospitality and culture) continued to shrink. Properly subsidised rail travel could help bring more customers to struggling businesses.
Could the government afford it? It would hardly be the wildest fiscal policy decision to be thrown around this week: the tax cuts included in some Tory leadership candidates’ pitches would cost tens of billions, with lower corporation tax taking £31bn a year from the Treasury (according to the Institute for Fiscal Studies). If the UK can afford that, it can afford this instead.
[See also: Why your flights keep getting cancelled]