Train ticket prices

Travelling in London is nearly three and a half times more expensive than Paris and 10 times dearer than in Rome, according to research by the Campaign for Better Transport.

With successive Governments in Britain allowing fares to rise faster than inflation, the gap has also been widening in recent years.

OK. Simple, factual, information, we like that in these sorts of handwaving reports.

“In many other countries, the state chooses to subsidise the railways more heavily than in Britain. In this country, the long-standing government approach to sustain investment in the railways is to cut the contribution from taxpayers and increase the share paid by passengers.”

Also true.

Now there is an argument in favour of some (note, some) taxpayer subsidy of the commuter railways in and around London. The place simply wouldn\’t work without them, there are, or would be, horrible externalities from everyone trying to get in by car etc.

There\’s also an argument against them. Without them we\’d almost certainly see a reduction in the importance of London in the national economy as some business that must be done in cities spread itself around the other cities of the country. And yes, one of the interesting structural features of the UK economy (too much to call it a \”problem\” but you will note that many do in fact call London\’s dominance a problem, one that would be reduced by reducing these subsidies) is that London looms larger in it than most other capital cities of most other European nations do.

That\’s the argument in favour of some subsidies. But what level should those subsidies be (and note, there is no argument at all, no, not even about carbon emissions, for the subsidy of intercity lines)?

More than others? Less than other European capitals? Well, actually, the argument about the right level of subsidies is sweet FA to do with what anyone else is doing. Actually, it\’s about, what level of costs are we avoiding by using rail to commute and what\’s the minimum subsidy we can get away with to avoid those costs?

For, do note, the \”subsidy\” is actually taxes paid by someone on Lewis (nearest railway some tens if not hundreds of miles), in Mousehole (still waiting for the 18 th century and trains to arrive) and Twerton (local station closed in mid-70s).

How much should all of these people be paying to make London work? No, I don\’t know the exact answer either but it\’s got bugger all to do with what the people of Messina pay to make Rome work, Marseilles to make Paris, does it?

17 comments on “Train ticket prices

  1. It will be interesting to see the effects of spending a fantastic amount of money to *stop* London from working for a few weeks during summer 2012. The VIP-only Olympic Route Network includes the Embankment, City Road to the WestWay, and Park Lane. That, with crowds and security delays at public transport termini, will largely cut off the City, Westminster Village and the West End from the rest of the world for a few weeks.

    Doctors generally do not recommend a tourniquet to the neck. Politicians say it is good for us and will leave a *legacy* more important than mere brain damage. What do economists think?

  2. As land values increase with the building of railways and are maintained by them , it is just a matter of instituting a Land Value Tax to make them self financing.This way the subsidy is paid for by the beneficiaries.

  3. Londoners – pah! They have the world’s most extensive, comprehensive, flexible and cost-effective public transport system and the still complain. There is absolutely no need to own a car if you live and work within five miles of Trafalgar Square – given the standard calculation for car running costs (at 40p per mile) that’s £4,000 to spend on getting the bus, tube or train. I reckon the Londoner will more the manage his transport needs at that price.

    So they can shut up and stop taking my taxes (where we get the occasional bus) to subsidise them (in effect) owning a car.

  4. “There is absolutely no need to own a car” – there’s a very large set of things that we have no need of. Personally, and I know I speak also for many millions of others, a car is the number one non-essential possesion – above even fridge and tele.

  5. Subsidies aren’t the only solution. The McNulty report found that in Britain the rail network costs 40% more to run than in continental European countries – despite the weak pound. He pointed the finger squarely at the unions. If train drivers weren’t paid £40k and silly overtime rates we could have lower fares (or lower subsidies). Each year fares go up by RPI+n because unionised railway workers’ wages go up by the same amount.

  6. it is just a matter of instituting a Land Value Tax to make them self financing.

    And how do we magically get this LVT from the land owners to the railway owners in the correct amounts and distributions? This is an extremely non-trivial problem, especially as you are claiming “fairness” as a core benefit of your tax proposal.

  7. It always annoys me when people talk about “fare increases above the rate of inflation”. Reminds me of the time a friend of mine at school asked if everyone had got an above-average score on the recent test.

  8. 1) Trains in Rome are crap, much worse than those in London. It is thus not only a matter of the % spent that is subsidised but also how much is spent. In Italy the politicians like to grandstand about how they don’t raise ticket prices – it gets them re-elected

    2) People in Messina generally don’t pay taxes, it’s the taxes paid in Milan, Turin, Parma, Verona, etc that are used to subsidise the Roman’s public services

  9. Andrew M.
    Sorry to be rude but that’s ignorant tosh, do you really think that every bit of inefficiency on the rail network can be put down to unionised workers ? What about the contractors who do a lot of the sort of work that McNulty was referring to ? I work for Network Rail and our wages don’t go up by RPI+n every year, they are doing so this year because NR ( who don’t set train fares ) insisted on a two year deal and got caught out by inflation, nothing to do with the union. If your argument held water it would have been true under BR when the Unions were even stronger but wages then were generally quite poor, one of the reasons why recruitment was always a problem. The wage rates have actually improved since privatisation basically because the ToC’s and NR are receiving a larger subsidy than BR did and they are keeping the workforce sweet to stay in good odour with the government, the unions will naturally take advantage of that, wouldn’t you ?
    Overtime rates aren’t silly either, they reflect the need to get people to work unsocial hours and are actually simpler and less generous than under BR ( when they subsidised low basic rates ). If you reduced them you would find it difficult to cover at certain times as with higher basic rates people are willing to trade extra money for more time off, an example of tax incidence I believe.

  10. “…an example of tax incidence I believe.”

    An example of the labour-leisure substitution effect.

  11. Simon,

    I think the subsidy to commuter lines benefits those who live quite a bit more than than five miles from Trafalgar Square, actually. Such as Penge, which by any standards is a commuter area, has a London post code but is nowhere near Trafalgar Square. I think you may remember it – since that’s where you were born, you Londoner!

  12. perhaps you can check your maths Simon. 10 mikles each way from say Croydon to Trafalgar Sq – 20 *210 days *.4 = £1680. And if you want to get across London rather than into the centre, public transport is often very circuitious and time-consuming.

  13. David Gillies // Dec 30, 2011 at 7:50 pm

    “…an example of tax incidence I believe.”

    An example of the labour-leisure substitution effect.

    Thanks for the correction. Although it’s interesting that those who do overtime ( I’m not one ) are generally keener on Sundays than on extra time on weekdays which is paid at a lower rate, I’d have thought that if leisure was the most important factor Sundays would have been less popular.

  14. I lived in Central London for a dozen years when the railways were nationalised and all London buses were owned by the GLC. I was good at walking home, usually beating the bus (an alleged ten minute frequency) on a five-mile journey that I did once a week. I only tried once to take the bus to work because it was so much slower than walking.
    After I moved out to the Green Belt I ran a few marathons in my 40s (not at or near “elite” standard) and once wrote to British Rail to complain that my fastest journey home that week had been when I ran home from work. They didn’t even apologise.
    British Rail management was even worse than the unions but my point is that if you want to get people to use public transport you need a better quality more reliable system that costs less or not much more than driving. My local train service has improved since privatisation (it couldn’t do much else) but it’s still too expensive. Why? because there is too much spent on direct and even more on indirect wages. I often see buses with no fare-paying passengers, just OAPs with bus passes.
    thornavis has swallowed too much PR – the largest element of train fares is the money that the Train Operating Companies pay to Network Rail. He might as well say that the farmers and millers don’t set the price of bread (equally true but equally misleading).
    Under BR wages were quite poor? You mean that you weren’t paying higher-rate tax for a 35-hour week with seven weeks annual leave when I was working a 50-hour week. My heart bleeds for you … NOT

  15. Tim,

    I think you will find that London actually pays more taxes than it receives back in benefits.
    So the money comes from us, no one else not people in Lewis.

    Rather than cut money to our transport system, why not cut money paid to some many parasites living in London in nice housing while we can´t afford it!

  16. You’re correct, since the early 1990s UK train fares on average have increases faster then inflation as reported by RPI, but does this tell the whole story, as the recent news headline make out?

    Over the last 25 years, UK train fares have generally increased inline with UK average salary growth. This is very different to the trend with RPI were train fares increases much faster. So on average train fares are approximately as expensive/cheap, relative to average wages, as they were in the late 1980s
    Reference : http://www.inflationarypressure.co.uk/customchart1987/Graph%20of%20price%20of%20Rail%20Fares%20against%20Average%20Salary%20-%20Index%20showing%20inflation.html

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