Opinion
The UK has the strongest growth in rail market share but is still only at the European average points out Jim Steer. In the decades ahead there is good reason to expect a continuing growth story
B
ritain has the best passenger railway in Europe. So believes the European Commission1 and less surprisingly the Association of
Train Operating Companies2. The UK has the strongest growth
in rail market share, tops the league in growth of customer satisfaction (measured over the period of rail privatisation 1997 – 2012), tops the growth in capacity utilisation (measured as passenger traffic per line-km), leaving only the Netherlands ahead on this score and – best of all – tops performance on rail safety. More contentiously, it also tops the
chart on improvement in efficiency, despite railway employment numbers having increased over the 2000-08 period by 13 per cent in the UK while falling by 13 per cent across the EU as a whole. But over this same period, while subsidies for Public Service Obligations (the way they measure it in Europe) grew in France, Italy and Spain, they fell by 23 per cent in the UK.
On fares, we don’t do so well, not very
much worse than the European average, but much worse than France or Germany. Increases in the UK Between 2000 and 2011 (the Eurostat data are on calendar years) were 34 per cent in real terms against an EU average of 28 per cent, but increases were held to just 16 per cent in Germany and just 10 per cent in France. And yet, as the ATOC report of last month shows, despite having had greater fares increases, the UK’s passenger rail journey growth over this period has been far higher: the Netherlands managed +10 per cent, Germany +14 per cent and France +31 per cent, but the UK was up by a truly impressive 49 per cent. In the days of British Rail and annual budget setting, H M Treasury and the DfT would have sharpened fares higher still so that aggregate demand didn’t rise – well certainly not to this extent. ATOC claims that the average
price per passenger mile has in any event only increased from 19.6p to 20.4p from 1997/8 to 2011/2, thanks to a growing take up of discounted Advance fares and a near-doubling in the use of railcards. The differing conclusions between ATOC and
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the European Commission on the pace of UK fares rises reflects the exclusion of the 1997 – 2000 period in the dataset used by the Commission: this was the period when RPI -1 (real terms) was in force as the annual fare modifier, helping people plan to make use of a transport mode that could be expected to get cheaper as the years go by. More recently, we have the damaging combination of a stated policy of a RPI+3 annual fares escalator (deterring individuals and businesses from planning reliance on future rail use) that hasn’t actually been applied (so Treasury doesn’t get the extra cash that people have assumed will be payable). Successive Secretaries of State have reined back the Treasury appetite to a more reasonable RPI+1 since RPI+3 became policy.
UK and Sweden most liberalised The EC conclusion from late last year was that the UK and Sweden are the two nations that have seen the greatest levels of improvement in passenger rail since the 1990’s. These also happen to be the two countries that adopted the policy of separation of management of track and train earliest. They are, in European
terms, the most liberalised. A handy conclusion for the Commission, given its deliberations over the Fourth Railway Package. Franchising and open access have worked and will form a key part of European policy going forward. Sadly, since similar conclusions could have been drawn on the achievements of the UK’s railfreight sector, the chance to open up the EU for freight operators with suitable legislative reform has not been taken.
Not related to economic growth The ATOC report provides some useful evidence on why demand growth has been so strong on the UK network. Economic performance as measured by GDP was always considered an important factor influencing travel demand. But in the British Rail era, there was believed to be an annual decline in rail use offsetting this factor, such that in times of recession, rail travel would fall. The ATOC work reflects this historic reality and shows an increase in passenger rail journeys of just 27 per cent over the 15 year period 1982/3 – 1996/7 (when franchising was completed), despite GDP growth of 53 per cent. But over the next 15 year period from 1997/8
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