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2 January 2018updated 02 Aug 2023 3:19pm

Complex and painful: seven thoughts on the rail fare rises

Ow ow ow ow ow ow ow.

By Jonn Elledge

It’s January, it’s cold, we’re all back at work and most of us are broke. What better time, then, for Britain’s beloved train operating companies to give commuters their annual rinsing?

As of today, train fares have risen by an average of 3.4 per cent, which is significantly more than the average pay packet has risen of late. If you commute by train, then today’s news will, in all likelihood, make you poorer.

And this, or something like this, happens every year: since 2010, indeed, rail fares have risen roughly twice as fast as wages. Both the hike in fares, and howls of outrage, are now as much a part of the New Year’s ritual as hangovers and wasting money on a gym membership you’re never going to use.

But exactly how big a piss-take are the TOCs pulling here? Is it really as bad as all that?

Some thoughts.

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1. Rail fares are not quite as horrific as they seem

There’s a CityMetric piece I roll out at roughly this point every year, with the headline, “Everything you know about British train fares is wrong”. In it, John Band argues that – contrary to what you might have read – fares here are not radically out of step with those elsewhere in Europe, where trains are nationalised. What’s more, the train operating companies make a profit margin of around 3-4 per cent, which is not in fact very high.

So: the picture is not quite as simple as evil private rail companies ripping off decent, honest travellers.

2. But they are more complex

There are two reasons why fares, nonetheless, seem comically high. One is that, for the last decade, government policy has been to reduce public subsidy and pass more of the costs of the railways on to those who actually use them – hence the gradual, year-on-year fare increases.

The other reason is that certain fares are much higher than elsewhere. To get the best rate you generally have to book in advance: the most ridiculous fares are those you pay when you turn up without warning. Getting from London to Manchester this afternoon, for example, would set you back at least £145, which, LOL.

Even if you do book in advance, commuter fares are higher than in many comparable countries. In both cases, the explanation for all this is the same: as with plane tickets or Uber, the British railway system uses fares to manage demand. In John Band’s words, “the UK is better at yield management, selling cheap tickets on empty trains and expensive ones on full trains”.

3. All the same, commuters are getting stuffed

This may be of limited comfort though because, for many people, commuting by train is basically compulsory. Planning policies like the green belt mean that, for decades now, much of London’s housing need has been met by building in its commuter hinterland.

If you live in, say, Stevenage, then you very probably work in London, and have to be at your desk by 9am. You probably can’t afford to move to central London, and you probably don’t get much choice as to whether or not you travel at peak times. You’re stuck with those fares. Tough.

4. …but not all commuters

Here’s a great map, courtesy of Twitter’s @election_data. It shows the share of residents commuting by train in each parliamentary constituency. See if you can spot any patterns:

In other words, in much of the country, it doesn’t matter whether train fares rise or fall: these increases are a largely south eastern problem, and the reason we’re talking about it is because Britain’s politicians and journalists are concentrated overwhelmingly in and around London.

In most of the country, a government could do far more to improve people’s experience of public transport by sorting out the bus network: letting cities set routes and fares again, as they once did. In London, the authorities still do: it’s not a coincidence that it has the best bus network in Britain.

5. There are other ways to run a railway – but they cost

Many of those who actually live in London itself will be protected from the increase: the capital’s mayor Sadiq Khan made it a cornerstone electoral pledge to freeze fares on Transport for London services until 2020.

This, though, will have a knock-on effect on investment in London transport, and we might not notice that for a while, but sooner or later we probably would. Tighter controls on national rail fares would have much the same effect. Our options are basically to raises fares, cut investment – or increase government subsidies.

The last of these is a perfectly reasonable option, taken in many other railway systems around the world. Personally, I’m entirely in favour, on the grounds that trains are cool, and far better for the environment and society than cars.

But since the beneficiaries would largely be commuters in the south of England, it’s not obvious that this is, in the short term, the progressive policy choice. It’s also not, it’s worth noting, what Labour is suggesting. It’s promised “an efficient, affordable, nationalised rail service”, funded by the savings that come from scrapping the need to pay dividends to TOC shareholders. But given that profit margins are around 4 per cent of revenues, that suggests that nationalisation by itself would save commuters from perhaps a year of fare increases – maybe two at the outside.

So: we could get fares down. But it’d cost public money, would mainly benefit the better off, and best of all might increase over-crowding as more people pile onto cheaper trains.

All the same, though…

6. The current mess still has a political cost for the government

…because fares are rising and wages aren’t, and a huge number of people in marginal constituencies still have to travel by train.

I’m not convinced Labour’s nationalisation plan will magically solve all this. But I do think that – as in so many other policy areas – the Tories’ decision to act like the status quo is fine has and will cost the party votes.

7. Chris Grayling still shouldn’t be transport secretary

Not because of this, specifically (although running off to Qatar so he doesn’t have to answer questions about it is a nice touch). But he’s not exactly Mr Competent, is he? He once, while transport secretary, knocked a cyclist off their bike, and then lectured them, while being filmed. A man who never thinks, “Oh, might this look bad if somebody saw me?” is not a man who should hold high office.

Yet he remains – like David Davis, or Boris Johnson, or Liam “security risk” Fox, he’s protected by the invincibility shield of having been in favour of Brexit.

This point isn’t really about the fare rise, in all honesty, I just think Grayling is rubbish.

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