Proposals to simplify fares to reduce disputes

[NARobertson]

I do not dispute that rail fares have become more expensive in recent times: with increases at RPI + 3% that is inevitable.

I do have figures from the 19th century taken from The Industries of Scotland by David Brewster published in 1869; I got the 1969 reprint of this book a while back.

In 1866 the receipts of the Caledonian Railway from passengers were £638,376. There were in that year 9,127,203 passengers, not including 7724 season ticket holders. They were carried in 113512 trains that traveled in aggregate 2,699,330 miles. How far these passengers traveled is not given. The average revenue per passenger that year amounted to about 7 p, which according to the Bank of England inflation calculator was about £8.75 pa in today's money. The population of Scotland back then was about 3.2 million. Scotland in 1866 had a railway route mileage of 2244 miles of which the Caledonian owned 673 miles, about 30% of the total. Put together, if the whole population had used the trains back then (little competition of course) then on average each Caledonian passenger would have made about nine journeys a year, for which they paid in total about £125 in today's money. The figures for the North British, the other big Scottish railway, were similar. That looks like reasonable value to me.

Brewster also gives figures of the cost to construct the Caledonian: the share capital was £2.1 million and the company had borrowed £700,000, making in total £2.8 million. The estimated cost was £2.1 million. The £2.8 million figure is about £365 million in today's money, each of the 673 miles cost on average about £540,000. But in today's post-industrial Britain even the GWR electrification scheme cost billions and went so over budget that the wires ended at Thingley Junction between Chippenham and Bath. I believe that the greatly increased costs of building, renewing and maintaining railway infrastructure is the basic reason why rail is now so expensive and not competitive in money terms with other modes of transport. Note also that back then most of the capital was put up by the shareholders so that borrowing was a relatively low proportion of the total. This kept interest charges down.

Neil Robertson

 

[JonathanH]

I do not dispute that rail fares have become more expensive in recent times: with increases at RPI + 3% that is inevitable.

How many years was RPI+3% actually applied?

 

[6Gman]

The stations I am talking about were intermediate stations. Termini in long stations should obviously be of adequate length. The shortening of platforms at Paddington was an own goal from the point of view of the railways.

Yes, clearly drawing up is irrelevant at termini.

But the fact remains that lengthening (e.g.) Pendolinos is very difficult at Liverpool Lime Street (where it would require massive rebuilding since it's squeezed between the city centre and a tunnel/cutting) or Manchester Piccadilly (where it would require the entire station throat to be remodelled).

 

[NARobertson]

How many years was RPI+3% actually applied?

According to a 2018 House of Commons report on rail fares the average regulated fare went up by 20% in real terms between 1995 and 2018. There is a graph which shows that this average figure was split between ones of about 12% for London and South East and Regional Railways and one of about 37% on long distance routes.

I was a bit surprised about how open this document is in its description of regulated fares as those applying to journeys where it is thought there is not much competition.

That increase of 35 to 40% in real terms on long distance routes is very substantial.

 

[JonathanH]

20% in real terms between 1995 and 2018.

...is a little less than RPI+1% a year.

Even

37% on long distance routes

is RPI+1.3% a year.

I guess we should be thankful that RPI+3% has not been applied on a sustained basis.

 

[deltic]

According to a 2018 House of Commons report on rail fares the average regulated fare went up by 20% in real terms between 1995 and 2018. There is a graph which shows that this average figure was split between ones of about 12% for London and South East and Regional Railways and one of about 37% on long distance routes.

I was a bit surprised about how open this document is in its description of regulated fares as those applying to journeys where it is thought there is not much competition.

That increase of 35 to 40% in real terms on long distance routes is very substantial.

Depends which years you do your analysis over. According to the ORR the average fare paid per mile traveled in 2019-20 was just 3% higher than in 2008/9 in real terms.

I do not dispute that rail fares have become more expensive in recent times: with increases at RPI + 3% that is inevitable.

I do have figures from the 19th century taken from The Industries of Scotland by David Brewster published in 1869; I got the 1969 reprint of this book a while back.

In 1866 the receipts of the Caledonian Railway from passengers were £638,376. There were in that year 9,127,203 passengers, not including 7724 season ticket holders. They were carried in 113512 trains that traveled in aggregate 2,699,330 miles. How far these passengers traveled is not given. The average revenue per passenger that year amounted to about 7 p, which according to the Bank of England inflation calculator was about £8.75 pa in today's money. The population of Scotland back then was about 3.2 million. Scotland in 1866 had a railway route mileage of 2244 miles of which the Caledonian owned 673 miles, about 30% of the total. Put together, if the whole population had used the trains back then (little competition of course) then on average each Caledonian passenger would have made about nine journeys a year, for which they paid in total about £125 in today's money. The figures for the North British, the other big Scottish railway, were similar. That looks like reasonable value to me.

The average rail fare paid in 2019-20 was £5.92 according to the ORR so again less than the 1866 figure you have estimated.

 

[RT4038]

I do not dispute that rail fares have become more expensive in recent times: with increases at RPI + 3% that is inevitable.

I do have figures from the 19th century taken from The Industries of Scotland by David Brewster published in 1869; I got the 1969 reprint of this book a while back.

In 1866 the receipts of the Caledonian Railway from passengers were £638,376. There were in that year 9,127,203 passengers, not including 7724 season ticket holders. They were carried in 113512 trains that traveled in aggregate 2,699,330 miles. How far these passengers traveled is not given. The average revenue per passenger that year amounted to about 7 p, which according to the Bank of England inflation calculator was about £8.75 pa in today's money. The population of Scotland back then was about 3.2 million. Scotland in 1866 had a railway route mileage of 2244 miles of which the Caledonian owned 673 miles, about 30% of the total. Put together, if the whole population had used the trains back then (little competition of course) then on average each Caledonian passenger would have made about nine journeys a year, for which they paid in total about £125 in today's money. The figures for the North British, the other big Scottish railway, were similar. That looks like reasonable value to me.

I would expect a substantial majority of those journeys would have been on suburban trains, in particular in the Glasgow area but also Edinburgh, travelling only a few stations. There was virtually no omnibus or tram competition then, and manual workers would have been less likely to be season ticket holders, but would have not lived far from their workplace. (We don't know if the 7724 season ticket holders held them the entire year, but if they did it would have been a whopping 4+ million more journeys). I suspect that a relatively small number of individuals clocked up the lions share of journeys at cheap fares (on the per mile rate system as was in force then), leaving most of the rest of the population to make no or a very small number of journeys per year at relatively high fares compared to average earnings.
The demographics and population distribution are hardly comparable to the situation now.

Brewster also gives figures of the cost to construct the Caledonian: the share capital was £2.1 million and the company had borrowed £700,000, making in total £2.8 million. The estimated cost was £2.1 million. The £2.8 million figure is about £365 million in today's money, each of the 673 miles cost on average about £540,000. But in today's post-industrial Britain even the GWR electrification scheme cost billions and went so over budget that the wires ended at Thingley Junction between Chippenham and Bath. I believe that the greatly increased costs of building, renewing and maintaining railway infrastructure is the basic reason why rail is now so expensive and not competitive in money terms with other modes of transport.

To be fair, trains run more often, much faster and much safer than they did in 1866. Railway construction and maintenance has to be done in a much safer manner now, and planning laws did not exist then.
The Caledonian Railway were the hosts of the worst railway accident in this country - if that had happened in todays legal framework it would have bankrupted them.

 

[NARobertson]

Depends which years you do your analysis over. According to the ORR the average fare paid per mile traveled in 2019-20 was just 3% higher than in 2008/9 in real terms.

The average rail fare paid in 2019-20 was £5.92 according to the ORR so again less than the 1866 figure you have estimated.

It was a Commons Committee that selected the period 1995 to 2018 not me. I cannot find any figure for the average rail fare on the ORR site, only data about fare increases. I am skeptical of the figure of £5.92. I did, however, find a similar figure on the Statista site of 6.53 dollars for the average US commuter fare in 2018.

I have managed to track down some relevant information about average fares on the GWR. I found this information in the Shareholder's Annual Report for the First Group for the year ending 31/3/2019. In that year GWR had total passenger receipts of £2.667 billion pounds and the total number of passenger miles was 9 billion. Consequently, the average cost per passenger mile was £0.296. This was the cost averaged over all journeys and all ticket types.

Depends which years you do your analysis over. According to the ORR the average fare paid per mile traveled in 2019-20 was just 3% higher than in 2008/9 in real terms.

The average rail fare paid in 2019-20 was £5.92 according to the ORR so again less than the 1866 figure you have estimated.

I would expect a substantial majority of those journeys would have been on suburban trains, in particular in the Glasgow area but also Edinburgh, travelling only a few stations. There was virtually no omnibus or tram competition then, and manual workers would have been less likely to be season ticket holders, but would have not lived far from their workplace. (We don't know if the 7724 season ticket holders held them the entire year, but if they did it would have been a whopping 4+ million more journeys). I suspect that a relatively small number of individuals clocked up the lions share of journeys at cheap fares (on the per mile rate system as was in force then), leaving most of the rest of the population to make no or a very small number of journeys per year at relatively high fares compared to average earnings.
The demographics and population distribution are hardly comparable to the situation now.


To be fair, trains run more often, much faster and much safer than they did in 1866. Railway construction and maintenance has to be done in a much safer manner now, and planning laws did not exist then.
The Caledonian Railway were the hosts of the worst railway accident in this country - if that had happened in todays legal framework it would have bankrupted them.

There have been many changes in technology since the 19th century which have improved safety. But in the 19th century most railways were built more or less to schedule and budget. Even then the realities of adding railways in this crowded island imposed constraints and costs over the average. This continued to be the case up to the late 20th century: the West Coast and East Coast electrification schemes, for instance, were implemented without undue problems. Since then there has been a sharp deterioration. The Cross-Rail scheme was originally scheduled for completion by the year 2000. But it still is not ready because, I believe, of incompatible signalling systems. The Edinburgh to Glasgow electrification scheme went better, although when it was originally completed it was discovered that the gap between the trains and the overhead wires was wrong! This problem took some time to resolve. The GWR electrification scheme had to be cut short because of big cost overruns and delays. This resulted in new electric trains that were ready lying idle for a year or two. The original projected timetable between Paddington and Bristol Temple Meads of up to four trains an hour each way was never implemented. It is not obvious to me why the contracts for major schemes do not have penalties written in them in the case of undue delay. This would give the contractors an incentive to work efficiently. Instead, they seem to actually profit from delays. Contracts would appear to be on a cost+ basis, which is a disadvantage for both taxpayers and passengers.

On the question of comparison with the Caledonian a big difference was that freight formed the main part of that Company's business, as for most British railways then and for a long time afterwards. So in 1866, the Caley's income from passengers was £638,376 and that from freight and livestock £1,146,341. Operating fast passenger trains and slow minerals traffic required careful traffic management. However, some engines were in the mixed traffic category and could pull both some types of freight and passenger trains. This gave such railways a degree of flexibility in that they could switch engines and crews from freight to passenger duties in the form of seaside specials, football specials and relief trains. By contrast, today's TOCs are much more limited concerns, some of which own little more than the staff's uniforms. They don't have the freight business nor even the excursion business. Their scope for responding to big swings in demand is much less than that of traditional railways. About the only measure they can take to equalize demand with capacity is that of having fares at greatly varying prices.

 

[yorkie]

I think it's fair to look at fare increases in the past 20 years or so.

Making comparisons with a hundred years ago is completely pointless.

I agree with th general principle of proposals that reduce the cost of fares, providing this is not done in a way that causes some fares to increase.

I'm yet to see any proposals that would tick all the boxes (affordable, "simple", and achievable), but I am open to suggestions.

 

[NARobertson]

I think it's fair to look at fare increases in the past 20 years or so.

Making comparisons with a hundred years ago is completely pointless.

I agree with th general principle of proposals that reduce the cost of fares, providing this is not done in a way that causes some fares to increase.

I'm yet to see any proposals that would tick all the boxes (affordable, "simple", and achievable), but I am open to suggestions.

Unfortunately, it is the Government that sets the fares. And it has decreed that regulated fares rise at RPI + 3% a year. The unregulated fares probably vary in relation to the regulated ones, e.g. railcards giving a percentage reduction on regulated fares. So politicians would need to be persuaded to break away from the formula they have used for a long time. The trouble is they say the railways are subsidized by the taxpayer, who on average may be less well off than the average train passenger, and so fares need to go on increasing. The railways would need to create a better impression with politicians. To do that they would need to ensure that capital expenditure is well spent. As I said in a previous post that has not been the case in the last 20 or 30 years. Rail projects such as Crossrail and GWR electrification have cost far more than anticipated. The contractors for these schemes have been the main beneficiaries. The internecine squabbles in the railway industry about questions such as guards on trains have also caused disruption from time to time and not improved the reputation of the railways among either politicians or the public. Railways are probably the most environmentally friendly form of transport and maybe more could be made of that. When I lived in Austria the railcard there was known as the Umwelt (Environment) card, although this was later changed to Vorteils (advantage) card.

 

[AlterEgo]

Probably true. I would imagine that the cut in airport duty on domestic flights announced in the budget today will be quite damaging to the railways on some long journeys. It is also a blow to environmentalists looking for cuts in CO2 to slow down climate change.

Yet you want to charge people based on distance! How does that fit with getting people to take longer journeys, like London to Scotland, more responsibly?

 

[NARobertson]

Yet you want to charge people based on distance! How does that fit with getting people to take longer journeys, like London to Scotland, more responsibly?

Journeys usually cost more the further you go irrespective of travel mode. The basic reason for this is that more energy and therefore fuel is required to go further. The old railways fares system did make a lower charge per mile when distance exceeded 200 miles. Looking to the future and the need to reduce the amount of CO2 and other harmful emissions, there would appear to be a need to continue to link fares with distance covered. Further electrification of the rail network would also make rail travel more attractive to environmentally conscious people.