Why do many railway lines in this country run at a loss instead of being replaced by alternative modes?

[hkstudent]

Of course London will always have a very much larger public transport system than other UK cities. But it's only fair that transport spend is roughly even per capita throughout the country. At the moment, it isn't at all.

I would add a point:
How much tax do London pay per capita compare to North England.
It's actually not unfair to give more to London as they paid more...

 

[Bletchleyite]

It's actually not unfair to give more to London as they paid more...

Generally, taxation is based around the principle of "to those based on their need, from those based on ability to pay" (or something like that - it's a paraphrase of Nye Bevan's speech on the NHS). It's a socialist principle.

If you wanted to do it on that basis, providing the service at a commercial price is simpler.

 

[RT4038]

Of course London will always have a very much larger public transport system than other UK cities. But it's only fair that transport spend is roughly even per capita throughout the country. At the moment, it isn't at all.

But it doesn't quite work like that, though. The denser the population, the more money that has to be spent on getting people around by public transport, as private transport for most is less practicable. Where the population is far more spread out, private transport can be/is used more and expenditure on public transport is less needed. Happens in many other countries too.

 

[BrianW]

'London bias' a bit off-topic maybe but not irrelevant. Some (most??) say 'perception is reality'. Most (some?) get confused or use words inaccurately, esp when getting emotive or wanting to support or rubbish this or that . It depends? Others have commented elsewhere on eg the population of Bradford as a city Vs Bradford as a Metropolitan Borough. SO stats, %s etc are of some (limited) benefit. Some things are hard to quantify and/or to compare. Density, distribution, actuals/ projections, hopes, maybes. Criteria, relative values? Optimism bias, politics, marginalities, HS2, 3, 4 ... Nothing is completely impartial. My view is best!!
Where does London start/ stop; 'the North'?; 'the London effect'; 'travel-to-work' areas; London 'generating' GDP/ 'propping up' everywhere else?
People live longer in Harrogate than Haringey.
London and South East (LASER) population c 18 million (excluding Essex; Herts, Beds, Cambs- all 'commutable'). The North-West, NE, Yorks and Humber c 15 million. East and West Midlands and East of England c 16 Million. Scotland, Wales and West Of England together c 14 Million.
Where do you 'charge' expenditure on eg GW electrification, MML, HS2 ...?
The less-populated areas of the country have had greater proportionate 'representation' in the House of Commons.
The 'regions' broadly similarly 'represented'- LASER 157 MPs; 'the North' 157; Midlands and East 163; SW + Wales + Scotland 154.
So, 'the regions' about 3 times the number of MPs to 'SPEAK UP'.

 

[quantinghome]

Generally, taxation is based around the principle of "to those based on their need, from those based on ability to pay" (or something like that - it's a paraphrase of Nye Bevan's speech on the NHS). It's a socialist principle.

If you wanted to do it on that basis, providing the service at a commercial price is simpler.

"From each according to their ability, to each according to their needs". The quote's from Marx, but skating over that...

Another argument is from a simple principle of fairness - schools and hospitals and other services are paid for roughly on a per capita basis. Why shouldn't transport?

But it doesn't quite work like that, though. The denser the population, the more money that has to be spent on getting people around by public transport, as private transport for most is less practicable. Where the population is far more spread out, private transport can be/is used more and expenditure on public transport is less needed. Happens in many other countries too.

Surely a per capita system would address this though: low density area, fewer people, less budget. London's per capita transport spend is about £900. Apply that to (say) Craven district in North Yorkshire (pop 57,000), gives you a little over £50million, which would give you one medium-sized bypass.

 

[Bletchleyite]

Surely a per capita system would address this though: low density area, fewer people, less budget. London's per capita transport spend is about £900. Apply that to (say) Craven district in North Yorkshire (pop 57,000), gives you a little over £50million, which would give you one medium-sized bypass.

It doesn't work, though, because public transport requires more subsidy in low population areas, not less subsidy. It has to be based on simple need, nothing else.

 

[Nicholas Lewis]

It doesn't work, though, because public transport requires more subsidy in low population areas, not less subsidy. It has to be based on simple need, nothing else.

Rural Rail Transport has been heavily subsidised since privatisation with infrastructure asset condition massively improved by NR and even when weather related impacted have caused significant damage NR have put it right. Witness the huge amounts spent on the Conway Valley line. Given this investment it would be wasteful now to close any lines and run buses.

 

[zwk500]

It has to be based on simple need, nothing else.

I can see that argument being effective in the meeting with the bank manager when they are asking for their money back. There is a balance between investing in the areas with the greatest return on investment (London) to give the Treasury income with which to fund areas where the return on investment is longer or even non-existent. It's worth remembering that nearly every single London transport project has been very well used once they finally open. It's not as if London are just hoarding investment and sitting on it without benefit.

Rural Rail Transport has been heavily subsidised since privatisation with infrastructure asset condition massively improved by NR and even when weather related impacted have caused significant damage NR have put it right. Witness the huge amounts spent on the Conway Valley line. Given this investment it would be wasteful now to close any lines and run buses.

Sunk cost fallacy, or throwing good money after bad, is not a responsible policy, financially or socially. If the money saved by closing the line and running a bus allows local services to remain open, surely that's a price worth paying?

 

[Nicholas Lewis]

Sunk cost fallacy, or throwing good money after bad, is not a responsible policy, financially or socially. If the money saved by closing the line and running a bus allows local services to remain open, surely that's a price worth paying?

No its not but its was NR is required to do under the current system and as those costs are now sunk shutting lines now saves little more than operating costs. The conversation on what sort of public transport system do we need/want should have been held decades ago but governments of both sides have failed to do that so we find ourselves in this situation. Furthermore i find it quite obscene the amounts of money that are needed to reopen railway lines and it can't possible make economic sense unless the basic infrastructure is already in place like Okehampton and Ashington.

 

[geordieblue]

If the North manages to get a similar population density as in London, then they will get it, I think...

I live in Leeds, the biggest city in Europe without a metro or light rail system, which I think casts doubt upon your theory.

 

[WelshBluebird]

Sunk cost fallacy, or throwing good money after bad, is not a responsible policy, financially or socially. If the money saved by closing the line and running a bus allows local services to remain open, surely that's a price worth paying?

History has shown doing exactly that would lead to those replacement bus services being eventually "retired" leaving the area without decent public transport. So no that isn't a "price worth paying" at all.

 

[Doctor Fegg]

I would add a point:
How much tax do London pay per capita compare to North England.
It's actually not unfair to give more to London as they paid more...

"London pays almost a third of UK tax": https://www.theguardian.com/money/2016/jul/07/london-top-tax...

"More than half UK investment in transport is in London": https://www.theguardian.com/uk-news/2017/feb/20/more-than-ha...

So yes, London is getting more than its fair share.

 

[Nicholas Lewis]

I live in Leeds, the biggest city in Europe without a metro or light rail system, which I think casts doubt upon your theory.

Absolutely but what has failed to happen, despite best endeavours of local politicians, is that as our regional cities have transformed themselves into smaller versions of London with high office populations and a better off workforce eating out and seeking entertainment the public transport offering has become very inadequate. Levelling up in theory should remedy these deficiencies but its going to take decades and that's if they even make it a central policy that integrated transport should be a key foundation for all cities and large regional towns.

The Tyne & Wear Metro approach should have been replicated in all major cities but the 1980's killed that off. However, what central govt is failing to address now is after decades in the doldrums all the great Northern cities have reinvented themselves with big office populations and a workforce that has more disposable income and will travel to eat out and seek entertainment and decent public transport is key to sustain that expansion. So levelling up should address this but it will it remains to be seen and even if it does it will be decades to build out anything like what has been achieved in most comparable French and German sized cities.

 

[quantinghome]

I can see that argument being effective in the meeting with the bank manager when they are asking for their money back. There is a balance between investing in the areas with the greatest return on investment (London) to give the Treasury income with which to fund areas where the return on investment is longer or even non-existent. It's worth remembering that nearly every single London transport project has been very well used once they finally open. It's not as if London are just hoarding investment and sitting on it without benefit.

It becomes a circular argument though - both a virtuous circle and a vicious circle.

London gets the virtuous circle - better infrastructure means London becomes more attractive to business, increasing returns, thus making further infrastructure investment viable etc.

A vicious circle is present elsewhere - poor infrastructure means a place is less attractive to business, so proposed infrastructure gives you a low RoI, so it doesn't happen, and business goes elsewhere etc.

Imagine applying the same RoI argument to education or health - economically depressed areas with low RoI tend to be associated with poor education or health outcomes. These areas have less of a return on education and health funding so these should be reduced. But this would just make the problem worse and likely drive people away from those areas. The results would be horrific.

Anyway it's not even true. London has had so much money to invest on transport it can fritter away millions on misguided projects with no prospect of a decent return, like the Emirates Airline, New bus for London and Garden Bridge.

 

[zwk500]

It becomes a circular argument though - both a virtuous circle and a vicious circle.

London gets the virtuous circle - better infrastructure means London becomes more attractive to business, increasing returns, thus making further infrastructure investment viable etc.

A vicious circle is present elsewhere - poor infrastructure means a place is less attractive to business, so proposed infrastructure gives you a low RoI, so it doesn't happen, and business goes elsewhere etc.

Imagine applying the same RoI argument to education or health - economically depressed areas with low RoI tend to be associated with poor education or health outcomes. These areas have less of a return on education and health funding so these should be reduced. But this would just make the problem worse and likely drive people away from those areas. The results would be horrific.

As I said, it's a balance. After all, the treasury can only give out so much money before inflation begins to creep in to the economy generally, and that'll hit less well-off areas much harder than any difficulties with public transport.

Anyway it's not even true. London has had so much money to invest on transport it can fritter away millions on misguided projects with no prospect of a decent return, like the Emirates Airline, New bus for London and Garden Bridge.

Notably, those 3 projects share a common factor - the Mayor who championed them (and now current PM). Boris throwing money at vanity projects nobody needed, or particularly wanted, is a common theme with him and apparently it hasn't stopped now he's moved into the rather bigger offices at Westminster.

 

[quantinghome]

As I said, it's a balance. After all, the treasury can only give out so much money before inflation begins to creep in to the economy generally, and that'll hit less well-off areas much harder than any difficulties with public transport.

There's a big difference in setting public finances to overstimulate consumer demand (see the current stamp duty holiday as a classic case) and using public money to build new transport infrastructure.

Notably, those 3 projects share a common factor - the Mayor who championed them (and now current PM). Boris throwing money at vanity projects nobody needed, or particularly wanted, is a common theme with him and apparently it hasn't stopped now he's moved into the rather bigger offices at Westminster.

Indeed, he's the common factor. But it's only possible to undertake vanity projects on that sort of scale in London. No other city has the transport budget to indulge in this.

 

[Nicholas Lewis]

As I said, it's a balance. After all, the treasury can only give out so much money before inflation begins to creep in to the economy generally, and that'll hit less well-off areas much harder than any difficulties with public transport.

Last ten years were already proving that running a high public spending deficit wasn't driving up inflation but the last years largesse may be step too far. What govt should be doing is raising tax to pull excess cash out of consumers pockets as this is driving a boom in construction and material costs now that will massively hurt the costings on infrastructure projects many of which are already looking costly.

 

[stuu]

"London pays almost a third of UK tax": https://www.theguardian.com/money/2016/jul/07/london-top-tax...

"More than half UK investment in transport is in London": https://www.theguardian.com/uk-news/2017/feb/20/more-than-ha...

So yes, London is getting more than its fair share.

That is true right now, and in the past decade, but it is absolutely not the case for most of the period 1945-2000, which people conveniently forget.

And once Crossrail is finished, the numbers will look very different again

 

[zwk500]

Last ten years were already proving that running a high public spending deficit wasn't driving up inflation but the last years largesse may be step too far. What govt should be doing is raising tax to pull excess cash out of consumers pockets as this is driving a boom in construction and material costs now that will massively hurt the costings on infrastructure projects many of which are already looking costly.

AIUI the massive price rise in construction materials is down to a combination of supply glut due to COVID, Brexit adjusting shipping habits (waiting for full containers rather than half-load JIT etc) and Infrastructure projects (mainly HS2, but also large-scale housebuilding) monopolising all the builders and materials rather than people who've been working from home deciding to get that extension/garden office done.

 

[hkstudent]

Absolutely but what has failed to happen, despite best endeavours of local politicians, is that as our regional cities have transformed themselves into smaller versions of London with high office populations and a better off workforce eating out and seeking entertainment the public transport offering has become very inadequate. Levelling up in theory should remedy these deficiencies but its going to take decades and that's if they even make it a central policy that integrated transport should be a key foundation for all cities and large regional towns.

The Tyne & Wear Metro approach should have been replicated in all major cities but the 1980's killed that off. However, what central govt is failing to address now is after decades in the doldrums all the great Northern cities have reinvented themselves with big office populations and a workforce that has more disposable income and will travel to eat out and seek entertainment and decent public transport is key to sustain that expansion. So levelling up should address this but it will it remains to be seen and even if it does it will be decades to build out anything like what has been achieved in most comparable French and German sized cities.

Yeah, for those medium-sized German cities, an extensive S-Bahn and Tram system would have been built to cater to travel demand, where the population density is not much greater than British counterparts.

 

[PR1Berske]

Yeah, for those medium-sized German cities, an extensive S-Bahn and Tram system would have been built to cater to travel demand, where the population density is not much greater than British counterparts.

A good point and something worth discussing.

A revitalised city centre needs more than just posh flats and a Turtle Bay. Are the buses up to scratch? Do they run after 10pm? Are the trains up to scratch? Can you afford to spend a Friday night in town in addition to a turn up and go ticket?

 

[The Ham]

Of course London will always have a very much larger public transport system than other UK cities. But it's only fair that transport spend is roughly even per capita throughout the country. At the moment, it isn't at all.

Only that considers spending on infrastructure and not the cost to subsidise services.

Based on 2018 figures if SWR had the same per passenger subsidy as TPE then it would have been able to have paid for Crossrail 2 over a 10 year period.

 

[johncrossley]

Isn't it true that London transport is subsidised less than any other major city in the world? A thread elsewhere quoted that Tube fares cover the operating costs. London buses had a modest level of subsidy by international standards in the early 00s but even that has been gradually removed.

 

[Dai Corner]

Isn't it true that London transport is subsidised less than any other major city in the world? A thread elsewhere quoted that Tube fares cover the operating costs. London buses had a modest level of subsidy by international standards in the early 00s but even that has been gradually removed.

TfL say fares make up 47% of their income.

How we are funded

We are funded from four main sources. We have also received funding from Government for post-pandemic recovery

tfl.gov.uk

Our income and funding comes from a variety of sources, including fares, the Congestion Charge, commercial activities, business rates and borrowing.

We're funded from four main sources​

• Fares income - this is the largest single source of our income
• Other income, including commercial activity and income from the Congestion Charge
• Grants (including business rates)
• Borrowing and cash reserves

We have also assumed £1.2bn funding for the Crossrail construction programme which includes grant funding from GLA.

TfL sources of funding 2019/20​

Breakdown of how we are funded

Fares income (£4.9bn)​

Fares are the single largest source of our income (projected to be 47% in 2019/20), and help to cover the costs of operating and improving our transport services. The decisions on fares are taken each year by the Mayor.
TfL fares are frozen for the length of the Mayor's term so Londoners will pay no more in 2020 than today. All TfL fare concessions are staying in place.

Other income (£1.2bn)​

In addition to fares income, we generate income from the Congestion Charge and road network compliance charges. From April 2019, this will also include the new Ultra Low Emission Zone which will help reduce the most harmful emissions generated by road transport in central London.
We also generate income from commercial activities such as advertising, property rentals and property sales as well as third-party sponsorship for Cycle Hire and the Emirates Air Line.
Other income makes up around 12% of our funding in 2019/20.

Grants including Crossrail funding (£3.4bn)​

Grants (including Crossrail funding) make up 33% of our funding in 2019/20 and are received from central and local government. The main sources are:

• Business Rates Retention, which is funded from a proportion of local business rates and paid to us from the GLA. Introduced in 2013/14, this replaces money previously paid to us by the DfT as investment grant
• Other capital grants, principally for the Northern line extension. This is provided by the GLA and financed from incremental business rates generated and retained within a new enterprise zone, and developers' contributions, raised by Wandsworth and Lambeth boroughs
• Funding from the GLA for Mayoral priorities which include a scheme to help scrap older vans for the Capital's microbusinesses and charities, and help low-income Londoners scrap older cars
• GLA precept - this is funded from local Council Tax receipts and is set annually by the Mayor
• Crossrail funding from the GLA which goes towards the project to build the infrastructure for the Elizabeth line. It is the responsibility of Crossrail Ltd, a wholly-owned subsidiary of ours. The project is jointly sponsored by us and the DfT

Our operating grant from the Department for Transport finished at the end of the 2017/18 fiscal year.

Borrowing & cash reserves (£0.9bn)​

We borrow from a variety of sources using a combination of mechanisms, including bonds, commercial paper, loans for specific projects from the European Investment Bank and the Public Works Loan Board. It makes up 8% of our 2019/20 funding pool.
We borrow in line with the provisions of the Prudential Code for Capital Finance in Local Authorities issued by the Chartered Institute of Public Finance & Accountancy. We must stay within the authorised limit for external debt at all times. The amount that we can afford to borrow is linked to both recurring annual income and cash available to pay financing costs.
Incremental borrowing is in line with the amounts agreed with Government as set out in the March 2017 Funding Agreement Letter and will be used to fund capital investment projects, including the acquisition of new rolling stock, station and line upgrades and new cycling infrastructure.

Reinvesting in transport​

We are committed to reducing costs and reinvesting all our income to run and improve services.
We are a public body, with no shareholders or parent companies, which means we can reinvest every pound of income in the transport network
For every pound we receive, around 79% is spent on the everyday running costs of the network and around 21% on improving it for the future.

However it seems that while the tube raises over £800m, the buses lose almost as much

TfL set for £742m loss thanks to bus subsidies

Tube passengers will generate a bumper £823 million “profit” for Transport for London due to the annual hike in Travelcard prices, it was revealed today.

www.standard.co.uk

Tube passengers will generate a bumper £823 million “profit” for Transport for London due to the annual hike in Travelcard prices, it was revealed today.
However TfL as a whole will make an overall £742 million loss in 2019/20, largely due to the record £722 million subsidy needed to run the bus network.
The figures emerged today as TfL published its draft annual budget.

This shows its anticipated £1 billion deficit for 2018/19 was virtually halved due to cost savings and a surge in Tube passengers in the run-up to Christmas.
Income from Tube fares is expected to hit £2.817 billion in the new financial year, generating the £823 million profit, which is up £85 million on 2018/19 after Travelcards increased by 3.1 per cent in January.

 

[johncrossley]

Is there a major city outside the UK that has more expensive fares than London? (Bus fares are cheap but realistically a lot of journeys needs a combination of bus and tube. The separate fare structures for bus and tube mean that changing modes is particularly expensive).

 

[Robertj21a]

Is there a major city outside the UK that has more expensive fares than London? (Bus fares are cheap but realistically a lot of journeys needs a combination of bus and tube. The separate fare structures for bus and tube mean that changing modes is particularly expensive).

There's certainly few places in the UK that have bus fares as ridiculously cheap as London. There must be many places outside the UK with more expensive fares - think Switzerland etc

 

[johncrossley]

There's certainly few places in the UK that have bus fares as ridiculously cheap as London. There must be many places outside the UK with more expensive fares - think Switzerland etc

A single ride in inner/central London typically costs £3.95 (£2.40 + £1.55).
A zone 1-2 monthly Travelcard costs £142.10

A one hour ticket in Zurich costs 4.40 CHF (£3.45).
A one month ticket in Zurich costs 85 CHF (£67)

https://www.zvv.ch/zvv-assets/abos-und-tickets/zvv_tickets_and_prices_e_2017.pdf

That doesn't take into account the much higher wages and general cost of living in Switzerland.

Obviously a lot of people in Switzerland have the famous nationwide GA ticket, giving unlimited travel nationwide for less than the cost of a season ticket between London and Woking.

 

[WelshBluebird]

Is there a major city outside the UK that has more expensive fares than London? (Bus fares are cheap but realistically a lot of journeys needs a combination of bus and tube. The separate fare structures for bus and tube mean that changing modes is particularly expensive).

I think there'll be lots of places with fares more expensive than London.
Take Bristol as an example. Individual bus fares are definitely more expensive (£2.25 for a single journey within the Bristol zone, or more expensive if you cross the border). And individual rail fares are usually more expensive too (Temple Meads to Bedminster which is a 3 min journey is £2.70 single). If you want to compare the travelcard, the nearest Bristol has is the Freedom Travel Pass which granted is great value for just inside Bristol city centre (£100 a month) but if you want the version that lets you go just outside (say to Cribbs Causeway or Severn Beach) then its £192.

 

[johncrossley]

I think there'll be lots of places with fares more expensive than London.
Take Bristol as an example. Individual bus fares are definitely more expensive (£2.25 for a single journey within the Bristol zone, or more expensive if you cross the border). And individual rail fares are usually more expensive too (Temple Meads to Bedminster which is a 3 min journey is £2.70 single). If you want to compare the travelcard, the nearest Bristol has is the Freedom Travel Pass which granted is great value for just inside Bristol city centre (£100 a month) but if you want the version that lets you go just outside (say to Cribbs Causeway or Severn Beach) then its £192.

We know transport in Britain is expensive, whether that's in London or outside London. That's why I was interested in fares *outside the UK*. Transport in major cities outside the UK is typically heavily subsidised. It makes more sense for transport in cities outside London to be compared with comparable sized cities outside the UK and for London to be compared with other world cities like Paris or New York.

 

[WelshBluebird]

We know transport in Britain is expensive, whether that's in London or outside London. That's why I was interested in fares *outside the UK*. Transport in major cities outside the UK is typically heavily subsidised. It makes more sense for transport in cities outside London to be compared with comparable sized cities outside the UK and for London to be compared with other world cities like Paris or New York.

I guess my badly made point is that transport in London is not expensive, it is pretty damn cheap in comparison to other places within the UK so anyone complaining about London transport being expensive probably would do well to live in another UK city for a while before complaining!