Can the railway 'break even' and is it desirable?

[daccer]

Recent financial reports show that the passenger/taxpayer split is now around 75/25 for funding the railway as whole. In fact if the railway was being kept in a steady state without any upgrades it would actually be almost breaking even now. So my question is twofold.

Firstly will it ever get to the situation were it is 100% funded by the passengers and secondly is this a desirable state as it means that upgrades have probably been scaled back and growth may well be restrained because of this?

 

[yorkie]

No, it is not desirable. The intention of Government appears to be to penalise people without access to cars and to increase congestion and pollution.

The road network does not truly pay its way when all true and indirect costs are considered.

 

[Moonshot]

Recent financial reports show that the passenger/taxpayer split is now around 75/25 for funding the railway as whole. In fact if the railway was being kept in a steady state without any upgrades it would actually be almost breaking even now. So my question is twofold.

Firstly will it ever get to the situation were it is 100% funded by the passengers and secondly is this a desirable state as it means that upgrades have probably been scaled back and growth may well be restrained because of this?

If Network Rail was ever privatised, it may well mean that 100% funding by the passenger is achieved.....as I suspect some projects would never see the light of day due to low BCRs ...

 

[Joe Paxton]

Firstly will it ever get to the situation where [the railway] is 100% funded by the passengers...

No. Ain't gonna happen!

 

[D1009]

Recent financial reports show that the passenger/taxpayer split is now around 75/25 for funding the railway as whole.

Sounds like "creative accountancy" to prove a point, at least to me.

 

[D365]

Could it be done? Yes.

Is it desirable? Absolutely not.

 

[Shaw S Hunter]

Put "Serpell Report" into your preferred search engine and check out Option A.:roll:

 

[Bantamzen]

If the railways were to become 100% passenger revenue reliant, then another Beeching style shut down of large parts of the network would follow almost immediately. This would then have the effect of shifting large numbers of commuters and travelers onto the roads, which would effectively shut down large parts of the road network into many cities and towns at peak times at least. The resultant loss of productivity would have businesses demanding that much more be spent increasing the road network capacity, and would need large rises in both local and central taxes to fund any such projects. It would take decades to complete, cause untold misery to commuters in particular and would probably result in loss of business as the transport network is over stretched and unable to deliver to usual timescales.

So in short, is 100% reliance desirable, no. The railway network is an asset to the country in so much that it (generally) delivers people to and from their places of work in good time. Even though it comes at a net cost to the country directly, it's benefits far outweigh that. This is why I get annoyed when some people demand that trains should only be run where they can be shown to make a profit. It is an overly simplistic way to look at the network.

 

[pdeaves]

So in short, is 100% reliance desirable, no. The railway network is an asset to the country in so much that it (generally) delivers people to and from their places of work in good time. Even though it comes at a net cost to the country directly, it's benefits far outweigh that. This is why I get annoyed when some people demand that trains should only be run where they can be shown to make a profit. It is an overly simplistic way to look at the network.

I agree. In fact, lots of local authorities see the benefits to their areas are sufficiently great that they are prepared to put money into 'their' railway (whether through supporting services or building stations or (re)opening lines, etc.).

It seems (on the face of it at least) that only the treasury wants non-supported, profit-making railways everywhere!

 

[al78]

So in short, is 100% reliance desirable, no. The railway network is an asset to the country in so much that it (generally) delivers people to and from their places of work in good time. Even though it comes at a net cost to the country directly, it's benefits far outweigh that. This is why I get annoyed when some people demand that trains should only be run where they can be shown to make a profit. It is an overly simplistic way to look at the network.

It is because some people cannot look beyond the money money money money money, and are blind to concepts such as societal benefits and externalised costs.

If people use trains, they are not using cars and contributing to congestion, pollution and reducing externalised risk to others, all of which have a financial cost.

 

[AM9]

No, it is not desirable. The intention of Government appears to be to penalise people without access to cars and to increase congestion and pollution.

The road network does not truly pay its way when all true and indirect costs are considered.

It's a right-wing nation's mindset, - rail is subsidised but roads are publically funded.

 

[najaB]

Firstly will it ever get to the situation were it is 100% funded by the passengers and secondly is this a desirable state as it means that upgrades have probably been scaled back and growth may well be restrained because of this?

The railways were built as commercial endeavours so clearly it is possible to run them on a purely commercial basis. That's the first part of the question answered.

No, it would not be desirable as a purely commercial network would look significantly different both in terms of geographical scope and service levels - and neither change would be beneficial to society on the whole. A smaller railway running fewer services benefits nobody in the long run.

 

[absolutelymilk]

It's a right-wing nation's mindset, - rail is subsidised but roads are publically funded.

Or a nation where most people drive and therefore prefer the roads to be subsidised than the railways.

 

[RichmondCommu]

No, it is not desirable. The intention of Government appears to be to penalise people without access to cars and to increase congestion and pollution.

The road network does not truly pay its way when all true and indirect costs are considered.

However if the railway could break even (and I admit that is highly unlikely to happen) that surely couldn't be seen as being a bad thing.

 

[Dr Hoo]

Whilst it is undoubtedly the case that a public 'mass' transport system can generate wider benefits in terms of the environment, opportunity, safety, energy conservation, etc. and thereby 'justify' financial support this is not without its own problems.

Large among them are that any government, regardless of political colour, may decide to reduce such funding at some point and so trigger cuts in services or slowdowns in investment and renewals. This phenomenon has been seen across the world.

A genuinely 'self-sufficient', profitable railway would not be exposed to this risk.

 

[LNW-GW Joint]

If we have stumbled upon a formula which says operations break even but infrastructure development needs public money, I think that's a reasonable public/private compromise.
Government (any shade) will interfere with everything that public money is spent on.
However, despite the headlines, TOCs are not paying their way, because operations money goes direct from DfT to NR to top up the TOCs' payments.

 

[zaax]

How about other (new) TOC's using spare space on the lines? eg the Ipswich to Norwich line is only used every 1/2 hour which gives space for a cheaper trains between Ipswich and Norwich.

 

[najaB]

How about other (new) TOC's using spare space on the lines? eg the Ipswich to Norwich line is only used every 1/2 hour which gives space for a cheaper trains between Ipswich and Norwich.

Those are Open Access operators and they already exist, examples being Grand Central and Hull Trains. As your previous thread showed even at £10 you had a carriage to yourself on Ipswich to Norwich - which to me indicates the demand just isn't there.

 

[SemaphoreSam]

Looking at it from another way, shouldn't road users be made to pay fully for road usage, AND rail users also for rail? Smart Cards can now register milage used by cars and lorries, and (with GPS) monitor which roads were traveled; then roads and rail would be on an equal footing (possibly including subsidies for the poor/old for both road and rail). This would probably put more people on rail, and would also encourage freight to use rail also, especially for longer travel, thus lowering costs for rail travel. The tremendous cost overruns for the Cambridge and Luton busways demonstrate that rail is much cheaper and easier to build and maintain, as well as costing less for environmental damage; these could be built into the formulas for charging for use on each mode of transport. Sam

 

[pdeaves]

The railways were built as commercial endeavours so clearly it is possible to run them on a purely commercial basis.

The vast majority, of course, were built when the social situation was very different, when freight demands (and the income to 'the railway') were very different, when cross-subsidy from one part to another was different. Such a comparison may no longer be relevant (e.g. passenger service income is not topped up by freight service income). Of course, even when built many lines failed to make a profit! (I know that 'profit' does not exactly correlate to 'commercial basis').

 

[najaB]

The vast majority, of course, were built when the social situation was very different...

Oh, I get that. The point I was making is that railways have and can be run on a purely commercial basis but the result would be very different to what we have now, inasmuch as what we have now is very different to when the railways were originally built.

I guess I could sum it up as "Could the railway break even? Yes. Could today's railway beak even? Probably not."

 

[Raul_Duke]

The railways were built as commercial endeavours when no-one owned a car and there was a LOT of coal and other goods to be moved with no viable alternative so clearly it is possible to run them on a purely commercial basis. That's the first part of the question answered

Edited that slightly...

 

[najaB]

Edited that slightly...

Indeed. That was kinda the point I was making.

 

[AndrewNewens]

My understanding is that if one excludes the servicing of debt and other interest re-payments (which is a big figure admittedly) as well as investment in specific upgrades (almost as big), but include income from property rentals etc, the network already just about breaks even in terms of day to day operations. The railway infrastructure is a national asset however which the government must continue to support financially.

 

[Deepgreen]

The railways were built as commercial endeavours so clearly it is possible to run them on a purely commercial basis. That's the first part of the question answered.

No, it would not be desirable as a purely commercial network would look significantly different both in terms of geographical scope and service levels - and neither change would be beneficial to society on the whole. A smaller railway running fewer services benefits nobody in the long run.

Almost all at a time when labour (construction and operating) costs were a tiny fraction of today's levels. The 'navvies' were not a great deal more than slave labour for the most part, not to mention the lack of safety constraints.

 

[najaB]

Almost all at a time when labour (construction and operating) costs were a tiny fraction of today's levels. The 'navvies' were not a great deal more than slave labour for the most part, not to mention the lack of safety constraints.

Again, just making the point that it is possible to run a railway that breaks even, but it won't be today's railway.

 

[brompton rail]

Again, just making the point that it is possible to run a railway that breaks even, but it won't be today's railway.

I'm not sure that there are any (?) examples of commercial rail networks that turn a profit and have no financial input from government. I'd be intrigued to be shown to be wrong!

 

[najaB]

I'm not sure that there are any (?) examples of commercial rail networks that turn a profit and have no financial input from government. I'd be intrigued to be shown to be wrong!

US freight railways receive no subsidy. Oh, you meant passenger railways? Then you'd probably be looking at Japan.

 

[Bantamzen]

Looking at it from another way, shouldn't road users be made to pay fully for road usage, AND rail users also for rail? Smart Cards can now register milage used by cars and lorries, and (with GPS) monitor which roads were traveled; then roads and rail would be on an equal footing (possibly including subsidies for the poor/old for both road and rail). This would probably put more people on rail, and would also encourage freight to use rail also, especially for longer travel, thus lowering costs for rail travel. The tremendous cost overruns for the Cambridge and Luton busways demonstrate that rail is much cheaper and easier to build and maintain, as well as costing less for environmental damage; these could be built into the formulas for charging for use on each mode of transport. Sam

I can hear the cries of anguish from Middle England already! Pay per mile, and be monitored by the state! The Daily Mail would go into a hysterical meltdown.....!!

But seriously, schemes like this are in operation in some countries. Last time I was in Austria I noted that they had a smart payment scheme whereby the driver (I was on a coach trip with my wife) had a smartbox in the cab which was read by regular readers built along the autobahns. The idea is you buy in advance of travel, topping up the box with credits which are then deducted as you travel. To assist people arriving into Austria there are service stations in neighbouring countries (well in Germany at least) where you can buy credits before crossing the border. So it does happen.

Funnily enough on our trip, as we approached the border the driver told us to listen for the beeps from the box, 1 for plenty of credit, 2 for getting low, and 3 for uh oh we're in trouble. He got the shock of his life when we crossed and said box emitted 4 beeps! So it was off to the first service station were he was informed that the box had no credit, and it was 4 beeps not 3 to indicate this. This was news to said driver as the previous one had assured him that there was plenty left from the company's last trip into Austria.

However a couple of days later, on the autobahn the police pulled us up as when we had crossed the border it had triggered an alert that the coach had a previous outstanding payment due, and they were there not only to collect but issue a fine. The poor sod was down 300 Euros that day!!

 

[WatcherZero]

My understanding is that if one excludes the servicing of debt and other interest re-payments (which is a big figure admittedly) as well as investment in specific upgrades (almost as big), but include income from property rentals etc, the network already just about breaks even in terms of day to day operations. The railway infrastructure is a national asset however which the government must continue to support financially.

Yeah, only expansion of capacity and debt repayment not covered by income now. Day to day operations and even reliability and performance improving interventions (e.g. flyovers, junction remodelling) are now covered by revenue.

The system today is essentially fully self supporting in a steady state, just would be no new lines, stations or significant capacity enhancements.