Media bias: Privatised train fares rise three times faster than cost of living

[Zoe]

Land based public transport (buses & trains) should be, in my view, for the people and run by the people's elected representatives, not a profit-making entity.

The 1992 elected representatives had a mandate to privatize. For the railways to be run by the government on a not for profit basis, you'd need to actually elect a government that agreed it should be done that way and none of the major parties are proposing this.

 

[Buttsy]

Whilst what you say is true Buttsy you cannot and should not blame the TOC for that. As you've correctly identifed the TOC is a private company. It's main goal is to maximise shareholder value. It is legally obliged to do this - it's not optional.

The problem is the system, not the players.

I fully agree, I am annoyed at the system, as, understandably, everyone will play the system to their advantage.
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The 1992 elected representatives had a mandate to privatize. For the railways to be run by the government on a no for profit basis, you'd need to actually elect a government that agreed it should be done that way and none of the major parties are proposing this.

More's the pity.

 

[dstrat]

Hardly media bias. A huge and perhaps the greatest focus of transport is getting people to their places of work. When the fares for these sort of journeys are going up like they are - there is all the more reason to complain.

I think most people understand the argument now. Run the railways as a public service and not for private profit. A public entity could do anything that any of the private ones are doing - albeit without the profit they make (and they are ala East Coast).

The 'efficiency savings' that could be made my amalgamating all rail ops has got to be huge. Not to mention the profits that are leaked away from the railway.

 

[maniacmartin]

Sorry but do you know for fact that govt subsidy goes to pay shareholders. Some rail services run at a loss which is not sustainable! You would lose these services without subsidy. If it were run as a non-for-profit then you wouldn't get the investment in the line like Chiltern are doing

We don't have this problem in some other privatised industries. I'd bet that Royal Mail make a loss on delivering letters to rural address in the Highlands that were posted in Cornwall. BT might not make a profit from installing a phone line to a remote address. The DfT could introduce a similar style of Universal Service Obligation to rail franchises too, without paying a subsidy.

The government pays TOCs a subsidy. The TOC pays its shareholders (as it should, being a private company). So indirectly the government is paying the shareholders. It's a shame the government can't look at the bigger picture and cut out the middleman, and invest in the railway itself in the same way TOCs do nowadays.

Of course anything directly paid for with taxpayers money might cost them votes though, especially if the benefits don't come before the next election.

 

[Zoe]

We don't have this problem in some other privatised industries. I'd bet that Royal Mail make a loss on delivering letters to rural address in the Highlands that were posted in Cornwall.

Royal Mail is still state owned although it will soon be privatized.

 

[Buttsy]

Royal Mail is still state owned although it will soon be privatized.

Another public service is to sacrificed on the alter of privatization... :roll:

£2 to post a letter anyone?

 

[Simon11]

The government pays TOCs a subsidy. The TOC pays its shareholders (as it should, being a private company). So indirectly the government is paying the shareholders. It's a shame the government can't look at the bigger picture and cut out the middleman, and invest in the railway itself in the same way TOCs do nowadays.

Firstly, not all tocs are making money. Ever thought that some shareholders are actually subsiding the railways thus benefitting the government. Additionally, the average profit margin is tiny. I don't see a huge rush for people to invest in transport companies because the returns as so poor, its far better to invest in other companies.
You also fail to mention the benfits of a private company which aims to reduce costs and increase revenue more than a normal company would. I've seen investment in systems to improve how operate and how they manage cost/revenue that a public company simply wouldn't have the incentive to do.

 

[Buttsy]

Firstly, not all tocs are making money. Ever thought that some shareholders are actually subsiding the railways thus benefitting the government. Additionally, the average profit margin is tiny. I don't see a huge rush for people to invest in transport companies because the returns as so poor, its far better to invest in other companies.
You also fail to mention the benfits of a private company which aims to reduce costs and increase revenue more than a normal company would. I've seen investment in systems to improve how operate and how they manage cost/revenue that a public company simply wouldn't have the incentive to do.

Still doesn't tally for me in that how come the most 'value for money' (lowest subsidy) railway in Europe in the early 1990s becomes one of the 'least value for money' (high subsidy) systems in 20 years?

 

[Simon11]

Higher staff costs which is impacted by increasing safety needing more staff and stronger unions ensuring the t+c remain with fair wage increases each year. There is also the issue of lack of investment in stock, routes and new lines.

 

[yorksrob]

The trick about subsidy is to know where its going.

We have a sort of consensus in this country that there are some unprofitable routes which require public subsidy for the greater good. We don't , as a nation, tend to believe that intercity mainlines should receive subsidy (and IMO we never will). The problem is, how do you know in our rather opaque system that the subsidy is going where it should ?

 

[Simon11]

http://www.iea.org.uk/blog/why-are-rail-subsidies-so-high

Here is a blog about why subsidy are higher now, of which that blog points to poor investment decisions, which are financially viable for an operator but are the right way forward for the economy.

 

[Buttsy]

http://www.iea.org.uk/blog/why-are-rail-subsidies-so-high

Here is a blog about why subsidy are higher now, of which that blog points to poor investment decisions, which are financially viable for an operator but are the right way forward for the economy.

The IEA, which was something Milton Friedman was heavily involved in in the 1970s and I also believe Alfred Sherman, Mrs Thatcher's privatisation guru. Reading 'When The Lights Went Out', Norris McWhirter and Aiery Neave appear to have got a lot of their ideas from them.

I, personally, wouldn't consider their views to be balanced as they are historially a right-wing, free-market thinking organisation, so are more likely to find reasons for why privatisation was right, even though it costs more.

 

[yorksrob]

Prof Welling has previously cropped up on this forum:

http://www.railforums.co.uk/showthread.php?p=1318746&highlight=wellings#post1318746

 

[Dave1987]

Hardly media bias. A huge and perhaps the greatest focus of transport is getting people to their places of work. When the fares for these sort of journeys are going up like they are - there is all the more reason to complain.

I think most people understand the argument now. Run the railways as a public service and not for private profit. A public entity could do anything that any of the private ones are doing - albeit without the profit they make (and they are ala East Coast).

The 'efficiency savings' that could be made my amalgamating all rail ops has got to be huge. Not to mention the profits that are leaked away from the railway.

The problem is is the major parties would constantly pledge to reduce fairs and guess what they will reduce investment!! Cue later days of BR when infrastructure was falling apart.

At the end of the day under privatisation passengers numbers have grown and grown so it can't be that bad!!

 

[Goatboy]

The problem is is the major parties would constantly pledge to reduce fairs and guess what they will reduce investment!! Cue later days of BR when infrastructure was falling apart.

Yea, curse BR never spending any money on its infrastructure.

Well other than things like the entire ECML route modernisation completed just before privatisation, obviously.

At the end of the day under privatisation passengers numbers have grown and grown so it can't be that bad!!

They'd have grown anyway.

 

[Dave1987]

Yea, curse BR never spending any money on its infrastructure.

Well other than things like the entire ECML route modernisation completed just before privatisation, obviously.



They'd have grown anyway.

Lol do I gather you are very pro renationilsation?

 

[stanley T]

Surely it should be possible from passenger ticket revenue data to work out average fares paid, then and now, including advance and off peak?

 

[Simon11]

How would you get access to revenue data?

You would require revenue and journeys by flow and product to work out the stats for yield growth.

 

[ainsworth74]

Yea, curse BR never spending any money on its infrastructure.

Well other than things like the entire ECML route modernisation completed just before privatisation, obviously.

I suspect Dave1987 is referring to the maintenance holidays that were often taken rather than the big ticket investment items like ECML electrification. I forget the figure but in the early 00s we were spending a rather spectacular amount just catching up on maintenance backlogs left over from the 80s and 90s.

 

[swj99]

Is there any information available online or elsewhere, which gives details of train fares from years gone by, so that comparisons could be made ?

 

[Goatboy]

Lol do I gather you are very pro renationilsation?

I am pro a railway network operated purely as a public service for the benefit of the country. Renationalisation is not the only way to do this, infact you could still achieve it with privately operated trains I would imagine, but it would take a very different approach from central government.

The current system is the worst of all worlds - private sector profit without letting TOCs have total control over what they do and state meddling without having complete control over costs etc.

 

[Dave1987]

I am pro a railway network operated purely as a public service for the benefit of the country. Renationalisation is not the only way to do this, infact you could still achieve it with privately operated trains I would imagine, but it would take a very different approach from central government.

The current system is the worst of all worlds - private sector profit without letting TOCs have total control over what they do and state meddling without having complete control over costs etc.

I don't think it is the worst of all worlds by any means. Having a rail network that is a public service for the benefit of the country is all well and good in theory, but the treasury would never want the massive expense of the rail network back on its books. I think there are a lot of misgivings from many quarters at how much the private sector is getting out of rail fares. I believe it is 3%. That's hardly massive profits is it. I feel BR had its chance for a long time it didn't work very well. The thought of having Mr Balls holding the purse strings for the railway makes me shiver. Rail passengers numbers are increasing, rail investment is increasing, if it ain't broke don't fix it.

 

[Gwenllian2001]

Having a rail network that is a public service for the benefit of the country is all well and good in theory, but the treasury would never want the massive expense of the rail network back on its books. I

And just who do you think is paying for it now?

 

[Wath Yard]

Well that nice Mr Branson paid for the WCML upgrade didn't he?

 

[Dave1987]

And just who do you think is paying for it now?

Not the treasury, TOC pay Network Rail which is a non for profit company. I can assure you the rail network is not on the treasury's books (or at least that is what I am lead to believe).

 

[Wath Yard]

Lead to believe by whom? Santa Claus? Although you are correct that NR's debt isn't on the Treasury's books but that doesn't mean it isn't really Government debt as the government guarantees it.

Where do you think the TOCs get a large portion of their money from, and where do you think the people who give the TOCs the money get it from?

To save a pointless guessing game, it is the DfT that give the TOCs and Network Rail a lot of their money, and the DfT is allocated their budget by the Treasury.

 

[Dave1987]

Lead to believe by whom? Santa Claus? Although you are correct that NR's debt isn't on the Treasury's books but that doesn't mean it isn't really Government debt as the government guarantees it.

Where do you think the TOCs get a large portion of their money from, and where do you think the people who give the TOCs the money get it from?

To save a pointless guessing game, it is the DfT that give the TOCs and Network Rail a lot of their money, and the DfT is allocated their budget by the Treasury.

A member of my family is senior management at a TOC (not the one I work for) and tells me a lot of what goes on as they get involved with NR and the DFT a lot. Privatisation has its downsides but also has its upsides. The grass is always greener on the other side, like I have said previously the current model works passenger numbers are growing year on year so I see no reason to change it.

 

[Wath Yard]

The grass is always greener on the other side, like I have said previously the current model works passenger numbers are growing year on year so I see no reason to change it.

You can say it as many times as you like, it doesn't mean it makes any sense, or is even true. Nobody knows how much passenger numbers have increased by; they keep adding new ticket types to the numbers and changing the calculation.

 

[Dave1987]

You can say it as many times as you like, it doesn't mean it makes any sense, or is even true. Nobody knows how much passenger numbers have increased by; they keep adding new ticket types to the numbers and changing the calculation.

But how do you know renationalisation is the silver bullet that suddenly makes rail travel fit for everyone?

 

[LE Greys]

This particular debate is liable to go on until the cows come home, but to put in my twopenn'orth, correllation is not causation. Passenger numbers were increasing before privatisation anyway, and it's a moot point what difference privatisation made to this. The real success story, though, is freight. Ton-miles (or TEU-miles) have gone from a slight decline to a massive increase, although economic effects have caused them to level off somewhat recently. Again, I can't say whether that was the economy or privatisation, but the change is a lot more noticeable.

As for fares, I'm sure the TOCs charge what they think people are willing to pay. That's capitalism.
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Rail passengers numbers are increasing, rail investment is increasing, if it ain't broke don't fix it.

Back in 1991, BR produced a report called Future Rail: The Next Decade which said pretty much the same thing. It makes interesting reading.

http://www.railwaysarchive.co.uk/docsummary.php?docID=125