Democracy Inc. - bored of the USA

British Rail Fares 50% higher than European average – why oh why etc.

February 19, 2009

There should be a sign upon disembarking at London St Pancras International train terminal: “Welcome to Britain, where everything’s a lot dearer and a little bit rubbish.”

We already know why British rail passengers, especially commuters, pay 50% more for our generally uncomfortable and squalid rail journeys. It’s because we’re a nation of prats, governed by numbskulls. But enough of the sociology, let’s cut to the chase. Railways are a public utility and virtual monopoly. They cannot be run as though they exist in a free market competitive framework. Yet in the UK, we pretend otherwise. The 1993 Railways Act was one of the last ideological privatisations of the Conservative regime. It created an train wreck of 13 train franchise operators, some, such as Virgin Trains with no previous experience of railway operations. In fact, Will Whitehorn, Branson’s PR general and now chairman of ‘Virgin Galactic’ space travel company, was an early Managing Director. Many of the other franchises were run by the same timeservers who went through the motions in the public sector British Rail. The difference was that now they earned several multiples of their previous salaries and in some cases, became multi-millionaires by buying stock at bargain rates.

The aim of privatisation was to harness the energy of ’entrepreneurs’ to attract investment and make the trains run faster, better and more cost-effectively for the passengers (whom were renamed customers). Actually, the entrepreneurs did what entrepreneurs do best. They made vast profits, while delaying investment in new rolling stock for myriad reasons, primarily that the tracks, stations and infrastructure, run by a separate private organisation, Railtrack, wasn’t fit for purpose. The government paid subsidies, supposedly to compensate for the operating losses incurred by the operators. 13 years later, FirstGroup, one of the main transport companies, made £580m profit, National Express, formerly bus operator, made £113m.

British Rail subsidies were a fraction of the amount which has been awarded under New Labour, who took over in government in 1997. Having vehemently objected to Rail privatisations, Labour did little to reverse the process, apart from renationalising Railtrack, rebranding it Network Rail when it collapsed after a series of ghastly incidents, primarily the Hatfield Rail Crash, which though it killed only 4 people, highlighted criminal failings in maintenance procedures. New labour also created a watchdog, the Strategic Rail Authority, a toothless regulator whose last Chairman and CEO, Richard Bowker, was recruited from Virgin Trains. Neither Strategic, nor Authoritative, the SRA was closed down in 2004 and its indefinable role was absorbed by the Department of Transport.

In order to protect investment in the railways (and allow the entrepreneurs to make oligarch profits) the government is committed to increasing passenger fares by 1.5% more than the rate of inflation. In fact he average rise is between 6-8%. The Transport Minister, (Lord) Andrew Adonis, clearly not a regular user of trains, said today: the government was committed to “sharing the cost of rail services fairly between taxpayers and passengers”. ”It is estimated it would cost taxpayers an extra £500m a year to bring UK commuter fares in line with these other European countries, which are more heavily subsidised. There is no free lunch here. We as a community pay for this one way or another.” (Source BBC News).

No free lunch indeed. No lunch at all on many of the trains, unless we count cellophane-wrapped sandwiches at twice the price of a retail outlet. Lord Adonis went on to claim that since 1997, regulated fares had fallen sharply relative to earnings, and that with inflation now falling, train fares would drop further. While a limited number of advance fares can be bought cheaply, in many if not most cases, it is cheaper to fly, and much cheaper to drive, than to take the train in the UK. There IS a free lunch, dinner and tea. It has been gobbled up by the franchise operators.

Compared to Spain, Germany, France or even Switzerland, British commuters, travelling a short distance, regularly, pay fares which are at least 50% higher. This not only impacts the cost of living, it also mitigates against the much-vaunted competitiveness of UK Plc. Lord Adonis excuses this obscenity by stating that the continental systems are ‘heavily subsidised.’ So are the British – except we subsidise the shareholders of trai operating companies.

So what is to be done? The Conservatives aim to cut £850 million from the subsidies, a move which will serve only to drive up fares and reduce investment in improvements even further. The logical solution is forced re-nationalisation – it would cost a fraction of the bank bailouts, and redirect subsidies directly into the rail system without the gouging middleman. It is vital for the economy that rail fare increases, especially for commuters, are, at best, reduced or, at worst, keep pace with inflation. It is vital for the environment that people are encouraged to use rail as opposed to cars, and air travel for journeys less than 500 km.

The New Labour regime will be remembered for driving though more aggressive, and ultimately more damaging privatisations than the Tories whose buccaneering it was partly elected to reverse. UK utility bills have consistently risen ahead of inflation and have failed to fall in line with huge drops in global energy prices. The biggest UK utility companies are French and German. Their investment in green energy, for example, has been minimal. Their profits, a large part of which leave the UK, remain substantial. We know he endgame for the train fiasco. The huge profits which should have gone into infrastructure and rolling stock improvements ill be timed out. The customers will continue to be fleeced and promised ‘Jam Tomorrow.’ The only jam will be the traffic version. We have ourselves to blame.