Opinion ATOC PLATFORM Michael Roberts
Through operators responding to passengers’ needs and working increasingly closely with the rest of the industry to help reduce overall unit costs, the financial headroom can be created for government in future, if it chooses, to take the pressure off regulated fares while sustaining investment
W
ith sound logic to those of us who work in the railways, and to the bewilderment of others,
the ‘rail year’ is different to a normal year being divided up into 13 equal ‘months’. And while the rest of Britain enjoys winter, spring, summer and autumn, the railways also seem to have a season all of their own.
The first shoots of the ‘fares season’ usually appear when most of the country is on its summer holiday. The announcement of July’s Retail Prices Index measure of inflation in mid-August provides media and commentators with an idea of what will happen to certain fares come January.
As rail managers who will be asked about fares by passengers, colleagues and friends over the coming months, many of us will find ourselves having to explain fares changes.
Here are three key points to have at the front of your minds:
First is the significance of government policy in driving the overall level of fares. Around half of fares, including Seasons, Off-Peak intercity returns and some Anytime singles around our big cities, are regulated according to a government formula. Train companies set the remaining unregulated fares to compete with other operators and alternative forms of transport as well as other spending on leisure activities. Since 2004 government has set the average regulated fare by taking July’s level of RPI and adding one percentage point for most passengers. Scottish and Welsh politicians get to decide the regulated formula for their respective governments while some English passenger transport executives have a
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direct say over the average regulated fares baskets in their areas.
The aims of this policy are twofold. It supports the government’s welcome commitment to the kind of investment that has transformed King’s Cross and enabled projects like the Northern Hub which, when complete in around 2019, will see connectivity and journey times across our major Northern cities greatly improved. At the same time, the long-standing policy has sought to change the balance between the two main sources of industry funding – taxpayers and rail users, such as passengers. The goal has been to reverse a growing share (until recently) of total funding coming from taxpayers and return to the previous norm where passengers funded the bulk (around 75 per cent) of the cost of the railways. The share of total funding is now around 60/40 and latest figures show that the
level of subsidy per journey is lower than in six of the last 12 years of British Rail.
Simplistic comparisons with Europe Secondly, we need to confront the often told but simplistic story that Britain has some of the highest fares in Europe. Britain has some of the lowest ticket prices for long-distance journeys anywhere in Europe. Greater take up of cheap tickets, such as Advance and Off- Peak, has resulted in the average price paid per passenger mile across all journeys remaining almost flat, rising 4 per cent in real terms from 19.6p in 1997/8 to 20.4p in 2011/12.
Comparisons with Europe based solely on price alone also overlook that on many similar routes we provide faster and more frequent journeys. According to a recent European study, Britain not only has the most improved railway in Europe but our passengers are more satisfied with
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