Wednesday, 2 January 2013

Train Fares

The news this morning was once again all about train-fare rises. The 10th year, apparently of above-inflation rises. So I'm reposting, for the benefit of the BBC, what I wrote when they were announced in August.


I'll declare an interest: I use the rail network, but not to commute. There has been an astonishing amount of bollocks being spoken about train-fare rises. Especially commuters, whose season tickets are rising by hundreds of pounds. "The trains are crowded" they complain. Yes, they are, and cutting rail fares will help that, how exactly? "It's too expensive" Well move house, or change jobs. Or travel off-peak. This crowding is because more people try to use the network than is optimal at peak hours.
The effects are not just stress and misery on the journey. This underpriced peak-hour rail drives up house-prices along the rail corridors, and sucks life and employment out of the towns. It also makes people unhappy. People make bad decisions about what makes them happy. They overvalue big houses, and undervalue time not spent on an hour-long commute into town. They overvalue money, and undervalue social contact and family time. And they're aided and abetted in this happiness-destroying cultural artefact by heavily subsidised commuting.

 If the crippling over-dependence of the country on London is to be addressed, the market must be allowed to do its work on rail fairs. Shifting economic activity out of London is to be desired. Britain does not benefit from shifting millions into town and out again every day, when with a bit of thought, much of this economic activity could happen in Reading, or Northampton or Brighton or Hull. Making it easy to live in Cambride and work in London doesn't help Cambridge or its economy.

 You may FEEL you have no choice but to buy the season-ticket, and in the short-run you're probably right. But in the longer term, every person deciding the commute isn't worth it, and seeking a job locally helps the local economy. Every person moving nearer their place of work reduces stress at peak hours on the transport system. In the long run, people respond to economic incentives. It shouldn't be the government's role to insulate people from the reality of their choices.

So, you want to get into central London by 9am? Why not do what I did when I lived in London, and live in a grotty part of town instead, within cycling distance? OH! You want a big house out of London? So you want ME to subsidise your big house by keeping your rail-fare down? Is that fair? It's not like you're without choices: there are no solutions in economics, only trade-offs. Compromise on your house, or compromise on your job. Or accept the real cost of rail-fares. You want a seat, guaranteed? Buy a first-class ticket. Overcrowding in cattle-class in the carriages is merely evidence that the price is wrong.

If there was a free market, rather than fares being regulated, peak hour journeys would certainly be more expensive, and off-peak would probably be cheaper. Lower house-prices in the commuter-belt would offset this somewhat. So renegotiate your hours. Capacity-smoothing fares make sense. Ultimately the problem is one of mis-priced resources, especially space on the world's second busiest rail network. Like the Roads, the Rail Network is overused at peak times and underused off peak. Prices reflecting this are a step in the right direction.

Sorry, rail commuters, your fares are not going down any time soon. I don't mind paying for a rail ticket when I buy a ticket. I do mind paying for rail tickets I'm not using, subsidising people to drive up the price of a house I want where I live, when I fill in my tax-return. The fare rises are necessary, and will have positive economic effects, if you let them. It's not all bad news. 



12 comments:

Anonymous said...

I agree whole heartedly with what you are saying as far as pricing is concerned, but with the population explosion that we are having at the moment it means that overcrowding is inevitable. They could be extending the platforms quite easily rather than building a high speed new line, which would go a long way to solving these short term problems.

Blue Eyes said...

Yes, agreed. And one of Labour's few sensible policies was to realise this and start reducing the taxpayer subsidy of the rail industry. It was nice to hear a LD minister on the radio this morning justifying the policy.

I live in a grotty part of town and walk to work. When I do get the tube I am free to laugh at all the people who traipse into Central London in a foul mood. Win, win.

Anonymous said...

You're ignorant mate.

Anonymous said...

Moving house or jobs? In the current climate? Easier said then done. The fact is that London is where the jobs and opportunities mostly lie. It is our capital. That is inevitable. We get more foreign direct investment into London then anywhere else in the UK. We get more UK and overseas companies setting up their headquarters in...yes you've guessed it, London. From a resource perspective, if you think jobs locally will meet the demands of our those who commute from that area, then you are deluded. If you work in certain sectors like central government, the creative industries, publishing, finance, technology start-ups, fashion then London is centric to all of these.

Secondly,

the fact is that you don't commute. You don't have to put up with the huge amount of delays and the excuses as a result. Commuters don't mind paying for improvements but I'm still rolling on the same clapped out carriages that I was sitting on as a teenager and it's almost 15 years on now. Where is the investment going? Why is there a need to increase rail fares every year? These are the questions which commuters are asking, and have every right to ask. We're not travelling on these trains for free, we are paying through our noses!

As for living in big houses outside of London. You clearly are out of touch. The majority of commuters I know don't live in mansions outside of London mate. And we certainly couldn't afford to live in a 'grotty' part of London as you describe. Even the grotty parts are expensive. The truth is increasing economic activity outside of London has nothing to do with train fares. It's to do with jobs and the firms who create them, and local and central government who can incentivise to create wealth locally....Or perhaps I can pack up my job and start stacking shelves in the local supermarket because where I live that seems to be the only job going!

Jackart said...

I don't commute as a deliberate life policy, a decision made when I was about 22.

This shows the usual misunderstanding about long-run and short-run elasticities of demand for something like transport. You feel you need it, but with just a few changes, yes, quite big ones, you find you don't.

No jobs where you are? Well perhaps if commuting wasn't so heavilly subsidised, there might be.

The point is in the commuter belt, motgage plus transport equals london london mortgage, but the properties are a bit bigger.

So no, Anon, I am not out of touch, nor am I ignorant. I just think a little deeper than you.

cuffleyburgers said...

Hopefully the higher fares might also encourage the railway companies to provide longer trains at peak times, and employers to be more flexible about starting and finishing times.

David said...

A stimulating post, but I take issue with a lot of it. However, I would your thoughts on my comments.

Firstly, you claim that "If there was a free market, rather than fares being regulated, peak hour journeys would certainly be more expensive, and off-peak would probably be cheaper." I would contest this and would ask what your evidence for this is. If you deregulate all fares, and because the Train Operating Companies are essentially monopolies, what is there to say they wouldn't put fares up wholesale. Consider; the current hours the majority of people work are nine until five. This will not change immediately, or soon. So when the fares are deregulated,the TOCs will see the opportunity to whack up the prices and make a huge sum of money on people who have to travel at those times at the moment.

Which leads me onto my second point, the idea that people can renegotiate their hours. I don't discount that some people can, but in the main most people don't or can't. For example, most jobs exist within existing frameworks; shift patterns, opening hours or when an industry is operating. What, foregoing the issue of moving house, about a nurse who has to be at work at 9 am, or perhaps a shop worker who has to be there at a certain time? Even if they travel short distances, a 9 am start can be very pricey.

Thirdly, I agree that within the economy we should encourage less focus on London, but I feel that unless the bonds business has with London, which have been built up since the nineteenth century, are completely broken down very quickly, the suburban commute will remain for a considerable time. Indeed, the commute into London is a product of the nineteenth century, and railway managers then faced many of the same issues current transport planners do. Therefore, I struggle to see how you would change many of the work and transport patterns already ingrained. Indeed, trying to do so would mean altering a whole geography of the economy.

I also feel the post presumes that the average commuter is a middle to high income earner. This assumption, which is also prevalent in the press, I think is erroneous. Many on low-incomes who travel still find it a struggle to afford fares even when they travel short distances. Many, like those I cited above, travel to work locally but have to start early. Furthermore, a few charities last year suggested that one problem is that those out of work cannot travel to job interviews because of the high price of fares. Indeed, If that was so I would suggest that high fares in some respects hinder the economy.

Also, you seem to come from the perspective that people have no ties to their locations. So, for example, what if their children are finishing school or they care for an elderly relative? The choices you suggest are that either they move away from these things and incur the cost of them (or their children) travelling back, or they stay where they are and endure the cost of travelling to work.

David said...

Lastly, I don't understand why you didn't talk about the high cost of the rail industry which has risen year-on-year since privatisation. It is an intrinsic matter in the issue over rail pricing. Indeed, the recent McNulty report showed extensively that most of the reason for high fares are the operating costs of the industry, both within the state-owned Network Rail and the private companies. Therefore, the fare payer and the tax payer are actually not subsidising homes, but subsidising both public and private wasteful organisations. Indeed, considering that British Rail on privatisation was the most efficient railway network in Europe (and if you are interested, Gourvish's detailed business history of BR has the stats in) it would suggest that a comparison is necessary with the current system and the way it works. Consequently, your criticisms of people just trying to go about their daily business, live their lives and complaining when a price goes up (as we all do), to me is rather baffling when the problem is not them, but the structure and operation of the industry.

Anyway, thanks for the stimulation.

Anonymous said...

Agreed.

In addition, 90% of the population don't use the train to commute to work yet they are heavily subsidised by the taxpayer.

Fair's fair. When the Government start subsidising me for my daily treck, I might have a little bit of sympathy. Until then, whinge away, nobody outside of your own pathetic little single-interest group cares.

Jackart said...

The privatisation of the Rail industry was a sham. They are so tightly regulated (they're not even allowed to increase capacity by lengthening trains) few of the benefits accrue to passengers.

As for my assumption of Middle to High income earners using the rails, no. That's simply bollocks.

Anonymous said...

Assuming rail costs figure in the inflation rate, then something else must be going up more slowly - any punter may find their own costs going up quicker or slower than the 'model punter' fitting the exact profile on which inflation rates are based.

Anonymous said...

As white flight from london continues there well may develope a real white ghetto up north por someplace.
And a real London can re develope.

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