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Tuesday, 3 January 2012

Tuesday, January 03, 2012 Posted by Jake 10 comments Labels: , , ,
Posted by Jake on Tuesday, January 03, 2012 with 10 comments | Labels: , , ,

Railways traditionally involve a lot of smoke and steam. Long after the network converted to electricity and diesel, hot air and cinders continue to provide useful cover for one of the great British rip-offs - train fares. To penetrate all this obscurity, we refer you to the McNulty Report of May 2011, done for the Department of Transport and the Office of Rail Regulation, "Realising the potential of GB Rail" and its associated consultants reports.


We are told very loudly that ticket prices must go up because the government subsidy must go down. Could be sensible - why should people who don't use the trains pay for them? Very quietly we are told, regardless of subsidies, the British rail industry is grotesquely inefficient. As the graph above shows, the rot set in following privatisation in 1995-97. What was the reason? The crass incompetence of people who didn't know how to run a railway, or the sublime competence of people who knew how to extract a profit? Either or neither way, after privatisation things cost much more to do.


Comparing costs for rail projects reinforces this assertion, whatever the reason, it costs much more to do the same thing in Britain than in other similar countries: 


One thing the rail network is doing well is attracting travellers. A consistent increase in passenger journeys was only briefly interrupted by the banking crash that started in 2008. You would have thought that this increased utilisation would allow costs to be spread over more journeys, bringing the individual ticket price down. But you'd be wrong.



The graph below shows that rail company revenues per passenger kilometre, without government subsidies, are about the same as the revenue per kilometre in Europe with their government subsidies. The UK government subsidies make up the difference for the inefficiencies in the UK rail industry.


Comparison between Great Britain, France (A), the Netherlands (B), Sweden (C) and Switzerland (D). Page 40 of "Realising the Potential of GB Rail", Department of Transport

If you were worried before, the next graph should worry you more. This projection, done in 2007, accurately predicted the 6.5% increase in fares this year. It predicts increases in excess of 7% in the next two years. This is happening during two years of austerity and pay freezes.


Energy companies overcharge, blaming wholesale oil prices. Bankers overcharge, blaming their need to pay themselves bonuses to avoid being poached by other banks. Train companies overcharge, blaming the government for withdrawing its subsidy. Whatever the reason, they all overcharge.  

To paraphrase Oscar Wilde: 
"It's not whether you are greedy or incompetent, it's how you place the blame"


10 comments:

  1. A list of salaries paid to directors would be usefull

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  2. No other business could survive running at low capacity - 1st Class - while standard class is crammed full. If a hotel chain sat with empty rooms it would go out of business. Yet we allow empty seats to remain so during peak times and then say we need more capacity. In a word, Bonkers.

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  3. This nonsense about "Why should people who don't use the railways pay for the railways" gets on my udders. They may not use the railway but that doesn't mean they don't benefit from the railway. If you run a business, actually having fast efficient affordable transport for your customers is a good thing. Things like shops, cinemas, restaurants etc.

    If you use your car for business, it benefits you as well. Spreading the net number of journeys being made across road and rail means roads are less busy as well. Parking in town and city centres is also crap in most places. Fewer train journeys translates, usually, into more cars on the road. But don't let simple facts get in the way. Snarkingfarkinggrumblegrumblehalfbaked....

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  4. This comment has been removed by the author.

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  5. "‏@RippedOffBriton 16 Feb
    The real reason why British rail fares are sky high is the grotesque waste unparalleled in the western world: http://bit.ly/vUB6nG

    ‏@ThrivingPlanet 16 Feb
    @RippedOffBriton I've heard also that rail subsidy is 5 times higher since privatisation, any truth in that? #sustrans #UKpol

    ‏@RippedOffBriton 16 Feb
    @ThrivingPlanet Perhaps you can do a websearch for the info? Then post a comment on our article

    >>>>
    Ok, here's what I found. Yes, rail subsidy is 4 times higher now than at the time of privatisation.

    On the other hand, in my view this article is right to question that subsidy relative to an increase in passenger numbers. However, the article then goes on to compare figures for subsidy as a proportion of increased revenue - which is not the same thing, especially if fares have been rising.

    I do think it would be interesting to compare figures as subsidy per passenger over a long time period, as well as a ratio of revenue.

    The article also makes two fascinating points:
    *In some years since privatisation, government subsidy outstripped passenger revenue.
    *The cost of picking up the pieces post privatisation, especially related to the collapse of RailTrack, has been huge.

    http://fullfact.org/factchecks/taxpayer_subsidy_train_network_nationalisation-3391

    I am not qualified to comment further, but some insight from people who have been working in the industry would be welcome.

    As a punter, I know that my experience is that the train system was creaking and problematic before privatisation, underfunded and in need of a culture shift. It feels to me that privatisation was the wrong remedy, and an expensive one. I now think carefully about train travel, as it is often prohibitively expensive. I resent that both my fares and the tax burden are now much higher, while executives and shareholders extract wealth, and there is a confusing and poorly organised system for travelling, especially over long distances using various companies.

    I would find it easier to deal with one train company, paying fares based on distance travelled, not on when and how I booked, or some other obscure formulas based on EasyJet style marketing. I would love to see the rail system reimagined as a new modern version of a publicly owned, not for profit enterprise, run for the benfit of passengers, and with significant policy input by passenger groups.

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    1. it was massively underfunded compared to today,but it was also ran by operators, people who had climbed through the ranks and dealt with safety issues promptly, with all staff trained in operating procedures. It's now ran by business men who have no idea of the effect of a signal failure, think employing staff who don't collect money is a waste and reducing and placing critical technicians in one location to cover a whole line sometimes up to 5 hours away from critical junctions that tend to experience more failures for obvious reasons, just for the sake of profits. Major accidents since privatisation were not accidents, they were down to cost cutting at the expense of safety. Recruiting and training staff in critical roles directly off the streets with no operational experience to pay them less, is the reason we get silly excuses for trivial delays. It's all about profit and as long as railways are in private hands subsidized by governments, it WILLget worse. Prime example, the best performing line in 3 years up to last year was East coast which was then in public hands until Cameron saw it fit to cash in again. Need I say more?

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  6. Greedy narcissistic profiteering scum, the whole lot of them. Makes me sick to my stomach. :(

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    1. Not an argument Neil - but I understand. Network rail a public/private #pseudo operation is run by morons who are ripped off massively by private maintenance contractors leading to high costs. Subsidies are far too high when rail firms can run empty 1st class carriages - this must be dealt with.

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  7. Re Fig 9.5: how much of that can be correlated to the relative price of land (inevitably higher in densely-populated Britain and the densely-populated parts of the US that actually have railways than in sparsely-populated Sweden and Norway)?

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  8. Entire Rail Industry is in a mess and being disguised by a Department of Transport that won`t admit the truth. In addition to the subsidy they were also borrowing around £4bn a year for "investment". In 2014, Network Rail was about to breach its lending Loan to Value so had to be taken back onto the Treasury's books adding £33bn of debt. Meanwhile the ORR tells us that Railfreight does 42% of the damage to rails leading to massive maintenance costs and contributes only 1% to revenue.

    We have a report on HS1 and Eurostar that indicate both projects did not deliver the benefits predicted and have generated massive losses for UK taxpayer. DFT minister hid that report from MPs before the 2nd Reading on the High Speed train.

    Now many people will respond by saying, we couldn't live without HS1, and while it does have a benefit, it remains a highly subsidised part of the network as taxpayers remain on the hook for the maintenance costs even after its sale. Equally, since its only generating 1/3rd of passenger numbers predicted, its being turned over more and more to freight to help it pay for itself - leading to more damage and maintenance costs.

    In 2012 the Major Projects Authority told the DFT they could not afford to fund the High Speed 2 line and maintain existing funding commitments to regional rail upgrades. Since then we have seen 7 major rail upgrades "delayed" for 7 years due to lack of finance yet the High Speed 2 funding continues, despite offering very little that couldn't be delivered at 1/10th of the price. They originally looked at creating capacity by building a dedicated freight line on the old Great Central Railway to take freight off the West Coast line. Its cost was only £6bn with far less environmental damage than High Speed 2. Meantime the cost of HS2 has risen inexplicably from £18bn in 2012, £32bn in 2013, £42bn in 2014 and now £56bn in 2015. Its a vampire squid of a train project and the DFT is so wedded to the project it cant see that our rail network needs a root and branch line review with the HS2 project cancelled, cheaper solutions delivered, funding diverted to regional commuter services which are suffering the most acute shortages of capacity (meaning they are most productive lines).

    A final point, to understand just how blinkered the DFT are, they said HS2 would solve Heathrow's 3rd runway issue back in 2008, not only does it not deliver such a benefit, it doesn't even connect to Heathrow now and inexplicably doesn't connect to HS1 and Europe. Its absolutely and utterly nuts and the whole scheme is in chaos and needs binned.

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