...but pas­sen­gers de­served to pay no more in 2019

Rail (UK) - - Contents - Ste­fanie Fos­ter ste­fanie.fos­[email protected]­me­ @ste­fa­trail

Ste­fanie Fos­ter says fares should have been frozen… for a year.

If you Googled ‘rail’ dur­ing the first week of this year, the search re­sults were de­press­ing. Page after page of ‘an­gry pas­sen­gers’, ‘out­raged com­muters’ and ‘pub­lic out­cry’ - hardly sur­pris­ing given the big­gest fares in­crease in five years (for reg­u­lated fares at least), at a time when the pub­lic’s re­la­tion­ship with the rail­ways was al­ready at rock bot­tom.

One in seven trains was de­layed by five min­utes or more in 2018 - the worst per­for­mance in 13 years. Rail had been sav­aged by timetable melt­downs, weather dis­rup­tion and seem­ingly re­lent­less strikes. And then the Govern­ment an­nounced that fares would in­crease as usual in Jan­uary. Is it any won­der that pas­sen­gers are fu­ri­ous, when their al­ready-painful com­mute is go­ing to cost even more than be­fore that truly mis­er­able year?

Let’s be clear: RAIL’s view is that fares should NOT have in­creased in Jan­uary.

Yes, run­ning costs al­ways rise with inflation. And yes, de­liv­er­ing im­prove­ments de­mands in­vest­ment, which has to come from some­where: the fare­box or the tax­payer. You, in other words, just by dif­fer­ent routes.

It’s an act of brass- necked gall for Govern­ment to ar­gue that fare in­creases are the price of an im­proved ser­vice, given that it spec­tac­u­larly failed to keep this same prom­ise in 2018. Pas­sen­ger anger is en­tirely jus­ti­fied.

With this ill-feel­ing in full flow (fu­elled, as ever, by dam­ag­ing me­dia cov­er­age), Trans­port Sec­re­tary Chris Grayling poured petrol on the flames on Jan­uary 2 in an in­ter­view with BBC Ra­dio 4’s To­day, bullishly claim­ing that this fare rise was un­avoid­able in the face of pay de­mands by trade unions. Of course, pay in­creases play a part in ris­ing costs - but only a part. This sweep­ing claim came across as nakedly po­lit­i­cal. As in all wars, truth is al­ways the first ca­su­alty.

In the same in­ter­view, Shadow Trans­port Sec­re­tary Andy McDon­ald lam­basted Grayling for “blam­ing work­ers” in­stead of say­ing that “the prof­its of the com­pa­nies should be lim­ited”. But just how much of the av­er­age 2% TOC profit (which of­ten slips into loss) does he think should be “lim­ited”?

These dis­plays of po­lit­i­cal breast-beat­ing gen­er­ated more heat, but pre­cious lit­tle light, and merely fu­elled the pub­lic’s al­ready dis­torted view of the way the rail­ways are run.

Where prom­ises of gen­uine im­prove­ment are kept, Grayling is right that mea­sured fare in­creases help pay for in­vest­ment. Freez­ing fares over sev­eral years is not a long-term panacea - it’s a dan­ger­ous short-term sug­ar­rush of plea­sure with a painful price to be paid later. Just look at what Lon­don Trans­port Com­mis­sioner Mike Brown is dealing with.

Lon­don Mayor Sadiq Khan has frozen Trans­port for Lon­don fares for the third suc­ces­sive year, hav­ing com­mit­ted dur­ing his elec­tion cam­paign that he would hold fares for four years. In The In­de­pen­dent on Jan­uary 3, Khan ar­gued that TfL ser­vices have im­proved de­spite his fares freeze.

Khan: “It begs the ques­tion: if I can freeze fares whilst pro­vid­ing a bet­ter ser­vice for Lon­don­ers, why can’t the Govern­ment do the same across Bri­tain?”

Not only is this yet more overt pol­i­tick­ing, to me it is disin­gen­u­ous and dis­hon­est.

When Khan took over as Mayor in 2016, his pre­de­ces­sor Boris John­son had al­ready agreed to elim­i­nate the op­er­at­ing sub­sidy TfL re­ceived from Govern­ment (which was £1.1 bil­lion five years ago), ef­fec­tively re­mov­ing the bur­den from the na­tional tax­payer of pay­ing for Lon­don’s trans­port net­works.

Yet TfL’s costs have been in­creas­ing, just like ev­ery­one else’s. But it has not re­ceived a sin­gle ex­tra penny from the fare­box to com­pen­sate - and now it is re­ceiv­ing no money from the Govern­ment ei­ther. Stir in the 15% slump in pas­sen­ger jour­neys over the past four years and TfL’s fi­nances are mired in cri­sis. Brown al­ways faced a strug­gle to make ends meet - now he’s in the wretched po­si­tion of hang­ing on to two ends which are re­lent­lessly mov­ing apart. For Khan to claim that this model is suc­cess­ful, and one which should be repli­cated na­tion­ally, beg­gars be­lief.

The arith­metic is dev­as­tat­ing. Freeze fares for one year and you’ll be 3% worse off. But in year two, the cu­mu­la­tive losses are not 6%, they are 6.09% be­cause your se­cond 3% in­crease would have been on the higher, un­frozen, fare rather than your base fig­ure. For ex­am­ple, on a fare of £100, with a 3% in­crease it would be £103 in year two. But by year three, this would in­crease to £106.09 if it were ris­ing at 3% again, as it is now 3% of £103.

Com­pound in­ter­est piles on fi­nan­cial agony rapidly - as it did for Stage­coach on the East Coast, with its 10% com­pound rev­enue tar­gets. Over sev­eral years, the ef­fect of freez­ing fares quickly cre­ates a fi­nan­cial black hole.

In the short term, you can ‘get by’. But even­tu­ally those fi­nan­cial chick­ens come home to roost. Longer term, where is the ex­tra money com­ing from to run the ser­vices?

Well, in Lon­don, it isn’t com­ing from any­where. Which is why TfL’s lat­est busi­ness plan is be­ing hol­lowed out from the in­side, with big-ticket projects such as the Deep Tube pro­gramme and res­ig­nalling schemes on hold, de­lay­ing the ben­e­fits they would bring to pas­sen­gers ( Anal­y­sis, RAIL 869).

The short-term sugar rush of a multi-year fares freeze has a painful longer-term con­se­quence. Yes, pas­sen­gers might be happy with their fares freeze now, but it won’t take long be­fore the de­fer­ment of ma­jor im­prove­ments bites and their mood will change. Khan is guilty of skat­ing fast over thin ice, and it is mad­ness to sug­gest that we fol­low this pol­icy na­tion­ally. In a re­cent in­ter­view with the BBC, the Mayor re­fused to pledge a fur­ther fares freeze in the next may­oral elec­tion in 2020. I won­der why, if it’s such a great pol­icy that he wants to in­flict it on the rest of us!

John­son was re- elected as Mayor in 2012 hav­ing in­creased fares dur­ing his pre­vi­ous term - be­cause peo­ple were gen­er­ally happy. Raise fares rea­son­ably, then im­prove ser­vices - this is the only sen­si­ble way for­ward.

But when Govern­ment fails to de­liver bet­ter ser­vices, and hikes fares re­gard­less, it plays into the hands of Labour’s na­tion­al­i­sa­tion ar­gu­ment by in­vok­ing the wrath of a pub­lic al­ready dis­il­lu­sioned with the cur­rent sys­tem. The over­whelm­ing mes­sage to the pub­lic in the main­stream me­dia is that pri­vati­sa­tion is to blame and should be re­versed.

Long-term fare freezes are dis­as­trous - as TfL is prov­ing, what­ever lu­di­crous claims the Mayor is mak­ing. But to main­tain pub­lic faith, Govern­ment should have taken it on the chin this year in recog­ni­tion of how badly pas­sen­gers were let down in 2018. That would have been the right thing to do. But the DfT cyn­i­cally squeezed harder. That was the wrong thing to do.

Re­gain­ing pub­lic trust just be­came even more difficult.

Nigel Har­ris will be back next is­sue.

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