New year, new rail fares: are they fair?

New year, new rail fares: are they fair?

John Humphrys asks: are the increases in rail fares justified or are the public being victimised?

If you are a commuter returning to work today, the realisation that the long midwinter holiday is over for another year and that the next bank holiday won’t turn up till the end of March will probably not be the only reason you are feeling less than joyful today. Forking out for your new season ticket on the train is hardly likely to have cheered you up. For the tenth year running, the cost of that ticket has risen more than inflation even while your pay has probably not kept up with the rising cost of living. But you have to go to work so there is no alternative but to accept the inevitable and pay up. Is this price hike justified? Or are you being victimised?

On average, regulated rail fares (the ones controlled by government, including season tickets and off-peak inter-city journeys) have gone up by 4.2% this week. That figure equals the inflation rate (the retail prices index) plus 1%. In practice, your season ticket may have gone up by much more than this or, if you’re lucky, a bit less. That’s because train companies have the freedom to increase their fares by up to 5% more than this imposed formula so long as they offset any such increases with lower increases, or even reduced fares, elsewhere. So you might be paying 9.2% more than last year for the privilege of going to work. Complicated? You bet it is.

There may be little solace in the knowledge that it could have been worse. Originally the government planned that the formula for this year’s increase should be the RPI + 3%, but backed down in October after widespread protest. But why should the increase be more than inflation anyway?

The official justification is that the extra money is needed to pay for investment in the rail system and therefore is a good thing for commuters. The idea that less of the money for this investment should come from taxpayers and more from passengers. Incidentally, let’s stick with that word. Whoever decided to rename passengers as ‘customers’ needs a basic lesson in the English language. Anyway, it goes back to the last government and has been kept on by this one. In 2004 the Labour government decided on the strategy and in 2007 set a target of raising three quarters of the cost of investment from passengers and only a quarter from taxpayers. Since passengers would be the beneficiaries of the new investment, they should pay the bulk of the cost, the argument went. We’ve now reached the point where about 60% of the cost is borne by those who buy the tickets.

The effect of this policy has been to clobber passengers. The Campaign for Better Transport, which is strongly in favour of rail travel but believes passengers are being unfairly hit, has produced figures to show that over the last decade average fares have gone up by over 40% while wages have risen by only 18%. The average annual season ticket for a London commuter has gone up by well over a thousand pounds during the decade.

Some people may think this is no great shakes. They may imagine the typical commuter to be a Home Counties stockbroker who can easily afford the increased demand on his wallet. But for every stockbroker there are many, many more commuters on much more straitened incomes. The rising cost of housing in London has forced people on modest incomes out into the suburbs and beyond, even when their work remains in the centre of the capital. They are genuinely squeezed by the above-inflation increase in fares.

Stephen Joseph, the Chief Executive of the Campaign for Better Transport, says: “The impact of successive governments’ policies on rail fares is appalling. It is truly shocking that we have deliberately made getting to work an extravagance that many struggle to afford.”

But defenders of the government policy counter that if we want an improved rail service, the money for the necessary investment has to come from somewhere and the only other obvious source is taxation. Everyone knows that government spending is on an extremely tight rein and there simply isn’t the spare cash in the government’s pocket to fund more of this investment and so keep rail fares from going up so much. In any case, they add, why should taxpayers foot more of the bill when it is commuters who are the beneficiaries of the service?

One answer to that is that commuters are not the only beneficiaries. Rail travel is a good in itself, it’s argued, because it is cleaner and more environmentally friendly than the main alternative, car travel. As economists would say, there is a ‘social good’ in rail travel so society should pay for it. They also argue that while train users are being penalised, car drivers are being pampered by the government’s seemingly endless postponement of a rise in the duty on petrol and diesel.

The government, though, says drivers have already been clobbered by the rising cost of fuel and the social value of rail travel is reflected in the fact that the taxpayer does pay for a sizeable chunk of rail investment.

But from a hard-headed point of view what may well clinch the argument for government is that, despite the rise in fares over the last decade, demand for rail travel has not fallen off. Far from it: train travel has never been more popular.

How long the squeeze on commuters will go on remains to be seen. But politicians of all stripes know that it is a very sensitive issue and that the sooner they can abandon the above-inflation formula for determining regulated fares, the better. Norman Baker, the Transport Minister, said: “We are engaged in the biggest rail investment since the 19th century and it is only right that the passenger, as well as the taxpayer, contributes. In the longer term we are determined to reduce the cost of running the railways so we can end the era of above-inflation fare rises.”

What’s your view?

  • If you are a commuter, how badly have you been hit by the rise in fares?
  • Have you seen any benefit in terms of improved service from the decade-long above-inflation fare rises?
  • In principle, do you think it is right that commuters as well as taxpayers should pay for investment in the railways?
  • Do you think the balance between the two – 75% from passengers, 25% from taxpayers – is the right one or, if not, what should it be?
  • Do you think rail travellers are unfairly hit compared with car drivers or not?
  • And how important do you think it is that Britain should have the better railway system that the investment is intended to bring about?

Let us know what you think.  

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