How much money do cuts to services save the railway industry?

[tbtc]

The consensus on this thread seems quite an appealing argument, the idea that there’s no point in making mild/ medium reductions since the savings will be outweighed by the subsequent revenue loss

I can see why a lot of people want to believe this, I can see that it makes some sense (given the large fixed costs, the inflexible nature of “the railway”), I can nod along as I read people point out that cutting a tiny number of trains overall feels pointless because we’ll barely save any money other than a marginal amount of fuel but any reductions to services could make the railway less attractive and lead to a bigger revenue loss

However… The problem with this argument is that, if we accept that the Government want to freeze the Department budget (i.e. no inflationary increase, a real terms reduction) then the concept that even medium reductions will be counter productive on a railway that needs billions of pounds of subsidy a year, then that leaves only “status quo” and “bigger cuts” as an option for the Government

One of the frequent criticisms of Beeching are that he closed entire lines rather than tinkering at the edges and that he oversaw the sell off of land

But if you accept that salami slicing the number of services is pointless and that we’d be stuck paying for the upkeep of viaducts/ tunnels etc even if there were no services, then you can surely see why he felt he had to follow the paths that he did

Telling the Government that there’s no point in any mild/ medium changes feels like we are daring them to make much bigger cuts, which I don’t feel comfortable with. Because you’ve seen what they did to the rest of the public sector over the past dozen years, they were happy to oversee the closure of plenty of fire stations/ libraries etc so I doubt they’ll lose too much sleep over flooding off the land currently used by some basket case lines

 

[eldomtom2]

Didn't the BRB really make a big thing of the worst-case scenario of the Serpell report in order to discredit the paper in its entirety and avoid even the more moderate cutbacks in the other options? This could be a useful tactic.

"More moderate" compared to the other options, that is. All envisaged closing many lines that remain open today.

 

[Snow1964]

The consensus on this thread seems quite an appealing argument, the idea that there’s no point in making mild/ medium reductions since the savings will be outweighed by the subsequent revenue loss

I can see why a lot of people want to believe this, I can see that it makes some sense (given the large fixed costs, the inflexible nature of “the railway”),

A lot of the infrastructure is basically fixed at a specific level for decades, no one is going to remove every other colour light signal if service frequency is cut. It's too difficult to alter short term.

Similarly if already built the trains, it's really just marginal operating cost.

What has not been good in recent years is standardisation so spare trains can be moved around. There are bits of the commuter network over equipped, and some growing leisure areas that are struggling for trains, staff and paths.

So do we need cuts, yes in areas, but at same time need to accept some of the cuts should be reclassified as transfers. Need to stop thinking it has to be cut or growth, and think more about targeted growth, by moving assets.

Each TOC should have a sort of clearing house swap department offering what is doesn't need, and sourcing what is is short of. Without allowing DfT to micromanage offsets.

 

[Carlisle]

Each TOC should have a sort of clearing house swap department offering what is doesn't need, and sourcing what is is short of. Without allowing DfT to micromanage offsets.

A TOC will understandably likely prioritise what’s best for their owning groups finances & future health over the national network so a body with teeth overseeing everything is probably unavoidable.

 

[Big Jumby 74]

Need to stop thinking it has to be cut or growth, and think more about targeted growth, by moving assets.

Not having read through this thread in detail, but responding to one of the latest posts. A very good point indeed. After the 2008 financial crash certain rethinking of asset use outside the peaks was highlighted (in some TOC's - can't speak for all), and with experienced (planning) staff being given clear objectives in a timely fashion (ie; no dithering) by those above, revised plans and serious savings (in the several '£m' bracket for traction current alone - EC4T) was achieved in a very short time scale, without having a negative impact on actual loadings in general terms. There may have been a few odd exceptions to the latter (loadings), whereby the odd off peak train was more crowded than ideal, but in the greater scheme of things, if it was only one service thus so affected within that unit's entire days diagram, then (given the financial climate at the time) so be it. Difficult decisions have to be made, and always will be.

Only once a point has been reached within any (TOC) train plan, whereby it has been revised as far as it can be to extract any wasteful use of resources, can the plan be looked at afresh, with a view to re allocating resources where they will be most useful going forward, as dictated by wider (nationwide) circumstances in play at the time concerned.

 

[Krokodil]

every service reduction is an ‘issue‘ to someone.

What I was getting at was that there are some trains where if you cut them you would only inconvenience a handful of passengers - some of whom will just take a different train. But such a cut would be pointless because it doesn't save a unit or crew diagram in its own. The only cuts that would save anything of substance are the ones which involve off-leasing fleets and mothballing lines.

 

[Annetts key]

Well, if passengers numbers increase again (regardless of which tickets they buy and how much they cost), these cuts could actually end up costing more depending on what decisions are made. Both now, and in the future.

But as said already, the current government don’t really care about passengers. Their priority is cutting the amount of money that is being used to support the existing railways. And it appears, also to limit how much is currently being spent on the HS2 programme (which due to inflation increasing future costs, means it will cost more in the longer term).

And before anyone jumps in to say that there is no spare money. Almost all of the time, there is always a lack of money. And this will not change while consecutive governments continue to prefer waving tax cuts around rather than investing in the country and reducing the long term debt.

 

[yorksrob]

Well, if passengers numbers increase again (regardless of which tickets they buy and how much they cost), these cuts could actually end up costing more depending on what decisions are made. Both now, and in the future.

But as said already, the current government don’t really care about passengers. Their priority is cutting the amount of money that is being used to support the existing railways. And it appears, also to limit how much is currently being spent on the HS2 programme (which due to inflation increasing future costs, means it will cost more in the longer term).

And before anyone jumps in to say that there is no spare money. Almost all of the time, there is always a lack of money. And this will not change while consecutive governments continue to prefer waving tax cuts around rather than investing in the country and reducing the long term debt.

Absolutely spot on.

The scrapping of fleets without replacement is the most notable example of this policy which we will all suffer from.

 

[zwk500]

Well, if passengers numbers increase again (regardless of which tickets they buy and how much they cost), these cuts could actually end up costing more depending on what decisions are made. Both now, and in the future.

But as said already, the current government don’t really care about passengers. Their priority is cutting the amount of money that is being used to support the existing railways. And it appears, also to limit how much is currently being spent on the HS2 programme (which due to inflation increasing future costs, means it will cost more in the longer term).

And before anyone jumps in to say that there is no spare money. Almost all of the time, there is always a lack of money. And this will not change while consecutive governments continue to prefer waving tax cuts around rather than investing in the country and reducing the long term debt.

Agreed

The scrapping of fleets without replacement is the most notable example of this policy which we will all suffer from.

I personally think the constraints on maintenance spending will cause more problems than a lack of trains. Partly because trains that were never built can't fail.

 

[yorksrob]

Agreed

I personally think the constraints on maintenance spending will cause more problems than a lack of trains. Partly because trains that were never built can't fail.

Fair point. Maintenance cuts are a worry.

 

[notverydeep]

The consensus on this thread seems quite an appealing argument, the idea that there’s no point in making mild/ medium reductions since the savings will be outweighed by the subsequent revenue loss

I can see why a lot of people want to believe this, I can see that it makes some sense (given the large fixed costs, the inflexible nature of “the railway”), I can nod along as I read people point out that cutting a tiny number of trains overall feels pointless because we’ll barely save any money other than a marginal amount of fuel but any reductions to services could make the railway less attractive and lead to a bigger revenue loss

However… The problem with this argument is that, if we accept that the Government want to freeze the Department budget (i.e. no inflationary increase, a real terms reduction) then the concept that even medium reductions will be counter productive on a railway that needs billions of pounds of subsidy a year, then that leaves only “status quo” and “bigger cuts” as an option for the Government

One of the frequent criticisms of Beeching are that he closed entire lines rather than tinkering at the edges and that he oversaw the sell off of land

But if you accept that salami slicing the number of services is pointless and that we’d be stuck paying for the upkeep of viaducts/ tunnels etc even if there were no services, then you can surely see why he felt he had to follow the paths that he did

Telling the Government that there’s no point in any mild/ medium changes feels like we are daring them to make much bigger cuts, which I don’t feel comfortable with. Because you’ve seen what they did to the rest of the public sector over the past dozen years, they were happy to oversee the closure of plenty of fire stations/ libraries etc so I doubt they’ll lose too much sleep over flooding off the land currently used by some basket case lines

I don’t “want to believe it”. I am the one doing some of the evaluation, following the criteria laid out for the task by the DfT (WebTAG). And you are not wrong, it leaves the industry in a position where it has only bad options. It literally cannot cover its costs and would be bankrupt if it was a company.

But the industry as a whole is not a company. It exists to provide transport that underlies much of the economy. Even if you never take a train, you still benefit from the extra cars and lorries that are not further clogging up the roads, the additional pollution that would have been generated etc. The trouble is, these real wider economic benefits are not and cannot be captured as fare revenue. The task is to try to convince government that the industry and the service level it provides is still a good investment in the future of the economy as we recover from the pandemic.

Beeching couldn’t know some of the future benefits that UK railways would provide. Roads were less congested and pollution much less of a concern in the mid 1960s. This is why it is particularly important not to destroy assets (rolling stock or infrastructure) that are likely to be useful as demand recovers and would be hugely expensive to rebuild.

 

[Tester]

I don’t “want to believe it”. I am the one doing some of the evaluation, following the criteria laid out for the task by the DfT (WebTAG). And you are not wrong, it leaves the industry in a position where it has only bad options. It literally cannot cover its costs and would be bankrupt if it was a company.

But the industry as a whole is not a company. It exists to provide transport that underlies much of the economy. Even if you never take a train, you still benefit from the extra cars and lorries that are not further clogging up the roads, the additional pollution that would have been generated etc. The trouble is, these real wider economic benefits are not and cannot be captured as fare revenue. The task is to try to convince government that the industry and the service level it provides is still a good investment in the future of the economy as we recover from the pandemic.

Beeching couldn’t know some of the future benefits that UK railways would provide. Roads were less congested and pollution much less of a concern in the mid 1960s. This is why it is particularly important not to destroy assets (rolling stock or infrastructure) that are likely to be useful as demand recovers and would be hugely expensive to rebuild.

This, in spades.

 

[LUYMun]

Well, if passengers numbers increase again (regardless of which tickets they buy and how much they cost), these cuts could actually end up costing more depending on what decisions are made. Both now, and in the future.

But as said already, the current government don’t really care about passengers. Their priority is cutting the amount of money that is being used to support the existing railways. And it appears, also to limit how much is currently being spent on the HS2 programme (which due to inflation increasing future costs, means it will cost more in the longer term).

And before anyone jumps in to say that there is no spare money. Almost all of the time, there is always a lack of money. And this will not change while consecutive governments continue to prefer waving tax cuts around rather than investing in the country and reducing the long term debt.

To minorly add to this, it goes to show that government looks into the next couple of years instead of being longer-term - much like how the DfT seems to be employed by statisticians these days...

 

[zwk500]

To minorly add to this, it goes to show that government looks into the next couple of years instead of being longer-term - much like how the DfT seems to be employed by statisticians these days...

Minor point - it's the DfT employing the statisticians, not the other way round. Unless the ONS has launched a very stealthy coup...

 

[LUYMun]

Minor point - it's the DfT employing the statisticians, not the other way round. Unless the ONS has launched a very stealthy coup...

Ah yes, thanks, I hadn't been paying attention to my words!

 

[Tetchytyke]

But the industry as a whole is not a company. It exists to provide transport that underlies much of the economy. Even if you never take a train, you still benefit from the extra cars and lorries that are not further clogging up the roads, the additional pollution that would have been generated etc. The trouble is, these real wider economic benefits are not and cannot be captured as fare revenue.

My continuing frustration is that expenditure on railways is “subsidy” whilst expenditure on roads is “investment”.

HGVs’ road fund licence doesn’t come close to covering the costs of the damage they do to the roads they use, but the authorities just patch up the potholes and carry on as normal. There’s no expectation that this should be covered by any sort of fare revenue from HGV operators.

Beeching couldn’t know some of the future benefits that UK railways would provide. Roads were less congested and pollution much less of a concern in the mid 1960s.

I think the 60s wasn’t any different, roads were investment and trains were subsidy. Congestion was already becoming a big issue, which is why the London Ringways were devised, not to mention similar urban motorway road schemes in Birmingham, Manchester, Newcastle, and Leeds.

Beeching did what he did because that was the government policy, he was told to find cuts. It’s not so very different to what’s happening now.

It’s so misguided and just so frustrating.

 

[Bald Rick]

My continuing frustration is that expenditure on railways is “subsidy” whilst expenditure on roads is “investment”.

that not quite right.

expenditure on rail services is referred to as subsidy, where the fares income doesn’t cover the costs of providing the service.

expenditure on rail projects is referred to as investment, as with road projects. The most recent government announcement being a good example, noting that there is 4 times more investment in railways than roads over the next two years.

Transport Secretary sets out record investment plans for transport network

Over £40 billion will be invested in transformational transport schemes over the next 2 financial years across the country.

www.gov.uk

 

[43066]

expenditure on rail services is referred to as subsidy, where the fares income doesn’t cover the costs of providing the service.

What is the fuel duty cut/freeze referred to as?

 

[Bald Rick]

What is the fuel duty cut/freeze referred to as?

a tax cut

 

[43066]

a tax cut

Ha - well quite.

Not another form of subsidy, of course. It’s all part of trickledown economics, if we starve our public services of funding, and bung more cash to multimillionaires through tax breaks, we will all somehow end up better off. Such as abolishing the pensions cap - that definitely isn’t a form of subsidy, yet it’s been strenuously argued that it isn’t a tax break either …

Perhaps my forthcoming pay rise should be seen as an investment in the industry’s future! The power of language to distort reality is quite incredible.

that not quite right.

expenditure on rail services is referred to as subsidy, where the fares income doesn’t cover the costs of providing the service.

expenditure on rail projects is referred to as investment, as with road projects. The most recent government announcement being a good example, noting that there is 4 times more investment in railways than roads over the next two years.

Transport Secretary sets out record investment plans for transport network

Over £40 billion will be invested in transformational transport schemes over the next 2 financial years across the country.

www.gov.uk

I see they’ve even managed to blame Putin for something again in that paper, standard bogeyman. This government is utterly shameless and I’m afraid the Tories badly need some time in opposition

As someone who is clearly right of centre but also vaguely sensible, as I am myself(!), I suspect, deep down, you probably agree with me on this. They’ve been in power for too long and there is a distinctly unpleasant pall, a fetid stench of lingering death, hanging around this government.

 

[Nicholas Lewis]

What is the fuel duty cut/freeze referred to as?

Fuel duty and vehicle excise duty even at reduced rates are forecast to raise 32B in 2022/23 which is circa four times more than what is spent on maintaining the road network. At least in the UK we accept largely accept these taxes unlike France and it loads the burden on big expensive fuel consuming cars largely owned by the well off. Personally i would have liked to see some of the fuel duty restored given the drop in fuel prices but the Tories are in survival mode so are opting for anything that might help them through the next GE.

 

[43066]

Fuel duty and vehicle excise duty even at reduced rates are forecast to raise 32B in 2022/23 which is circa four times more than what is spent on maintaining the road network. At least in the UK we accept largely accept these taxes unlike France and it loads the burden on big expensive fuel consuming cars largely owned by the well off.

That’s true of course, but I suppose another way to look at it is to ask how much money has been turned away by reducing/freezing it?

Fuel duty isn’t ring-fenced to pay for roads, it goes into exactly the same pot as general tax revenue so, by freezing it, the government has incurred a massive cost in terms of money that could have have been used elsewhere. Yet the railway revenue “shortfall” is linked back to Covid support and is “unsustainable”.

I’m generally a small government/low tax kind of person, by the hypocrisy here is evident.

Personally i would have liked to see some of the fuel duty restored given the drop in fuel prices but the Tories are in survival mode so are opting for anything that might help them through the next GE.

Absolutely. There are in full on “playing to the base” mode now.

 

[Meerkat]

That’s true of course, but I suppose another way to look at it is to ask how much money has been turned away by reducing/freezing it?

Fuel duty isn’t ring-fenced to pay for roads, it goes into exactly the same pot as general tax revenue so, by freezing it, the government has incurred a massive cost in terms of money that could have have been used elsewhere.

So now you are arguing that money that could be raised by increasing tax is a subsidy if you don't do it? That's a quite novel concept there, and almost universally applicable.

 

[43066]

So now you are arguing that money that could be raised by increasing tax is a subsidy if you don't do it? That's a quite novel concept there, and almost universally applicable.

Fuel duty was originally put on an “escalator” (by the tories!) but has been frozen and was cut last year. That incurs a significant cost to the treasury, however you may wish to bandy words around how it’s described.

That has cost rather more than the £2bn railway revenue “shortfall” you have continually cited as being “unsustainable” in terms to railway finance. Yet you seem fine with it?

 

[Annetts key]

that not quite right.

expenditure on rail services is referred to as subsidy, where the fares income doesn’t cover the costs of providing the service.

expenditure on rail projects is referred to as investment, as with road projects. The most recent government announcement being a good example, noting that there is 4 times more investment in railways than roads over the next two years.

Transport Secretary sets out record investment plans for transport network

Over £40 billion will be invested in transformational transport schemes over the next 2 financial years across the country.

www.gov.uk

What is the fuel duty cut/freeze referred to as?

a tax cut

At the end of the day, all these words, subsidy, investment and tax cut are just names / labels. The different name / label being used for political purposes.

It’s no different to the railway describing track renewal works as investment.

If I go and buy a new tyre for my car, because the tread is worn on the existing tyre, is that an investment? Or running costs, or maintenance costs? The name / label is actually irrelevant, as without a tyre, the car will not operate correctly.

The same applies to the railways and roads. If the rails/sleepers/ballast formation/road surface/foundations/structures etc are not fit for purpose, that infrastructure will not be effective.

And a railway or road network without vehicles is pointless.

Similarly having trains or vehicles without a suitable railway or road network is also pointless.

The reality is that we do actually need good transportation systems. The railways are a big part of that. And for an effective, efficient and safe railway network, it needs to be both maintained correctly (infrastructure and trains), improved and expanded when the need arises.

It’s slightly different for the road network, primarily due to environmental factors (both local and international). But otherwise the principles are the same.

For environmental reasons, we should be reducing the number of vehicles on the road network and reducing the size of the network, not expanding it. But this is only realistic if we provide suitable alternatives. Such as better railways, MRT systems, trams, cycle ways, whatever.

Similarly we should be looking at what can be done to reduce the number of aircraft that operate, or find alternatives that cause significantly less environmental damage.

Oh, and I include excessive noise in environmental factors as well. You really have to live under a flight path near an airport or stand in the countryside near a motorway to appreciate how noisy aircraft and road vehicles can be. Yes, I know that trains are not exactly quiet either, but at least they are not as bad.

 

[Bald Rick]

As someone who is clearly right of centre but also vaguely sensible,

I wouldn’t say that. I have a firm view of politics and politicians - they’re mostly nice people and good individually - but all as bad as each other when they get together.

At the end of the day, all these words, subsidy, investment and tax cut are just names / labels. The different name / label being used for political purposes.

Agreed 100%.

Oh, and I include excessive noise in environmental factors as well. You really have to live under a flight path near an airport or stand in the countryside near a motorway to appreciate how noisy aircraft and road vehicles can be. Yes, I know that trains are not exactly quiet either, but at least they are not as bad.

Also agreed. I live under a flight path and close to a busy railway. The former is noisier, the latter more frequent, although I rarely notice either. But what makes the most noise is the road outside, or more specifically the traffic on it.

 

[Magdalia]

To minorly add to this, it goes to show that government looks into the next couple of years instead of being longer-term - much like how the DfT seems to be employed by statisticians these days...

Minor point - it's the DfT employing the statisticians, not the other way round. Unless the ONS has launched a very stealthy coup...

I have only just found this.

The statisticians in the Department for Transport, like in all government departments, are part of the Government Statistical Service (GSS). The majority of UK official statistics are produced by statisticians operating under the umbrella of the GSS. That includes government departments, agencies and the devolved administrations, not just the Office for National Statistics (ONS).

The work of the GSS is overseen by the UK Statistics Authority, which has an independent non-executive chairman (currently Sir Robert Chote) and its Chief Executive is the National Statistician, who is head of the ONS.

Every government department has its own head of profession for statistics: these and their staff are accountable to the National Statistician in their capacity as head of the GSS, in addition to being accountable to their Permanent Secretary on departmental matters.

 

[Meerkat]

Fuel duty was originally put on an “escalator” (by the tories!) but has been frozen and was cut last year. That incurs a significant cost to the treasury, however you may wish to bandy words around how it’s described.

That has cost rather more than the £2bn railway revenue “shortfall” you have continually cited as being “unsustainable” in terms to railway finance. Yet you seem fine with it?

Do you accept the tax raised from road vehicles is more than is spent on roads? If so then that is clearly not a subsidy.
Paying a chunk of people's train fares for them is clearly a subsidy.

 

[43066]

I wouldn’t say that. I have a firm view of politics and politicians - they’re mostly nice people and good individually - but all as bad as each other when they get together.

Most politicians strike me as deeply unpleasant, self serving, narcissists. You just have to get behind the ones who will advance the policies you agree with.

Do you accept the tax raised from road vehicles is more than is spent on roads? If so then that is clearly not a subsidy.
Paying a chunk of people's train fares for them is clearly a subsidy.

As I have said, the cost of the tax break awarded to motorists, in terms of the cut and subsequent freeze on fuel duty, exceeds the railway revenue short fall.

Yet only one of these is described as “unsustainable” by the government.

 

[Tetchytyke]

Fuel duty and vehicle excise duty even at reduced rates are forecast to raise 32B in 2022/23 which is circa four times more than what is spent on maintaining the road network.

VED brings in about £7bn, which is about half the amount paid out for maintaining the roads.

I know people like to lump in fuel duty to make it sound more impressive, but fuel duty has nothing to do with it. Not all fuel duty is paid for fuel used on the roads (due to recent changes construction machinery can’t use red diesel), and not all road users pay fuel duty (remind me again how much fuel duty EV owners pay).