Rail fare hike the largest in five years

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Rail fare hike the largest in five years

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Author Mark Fairlie

From the 2nd of January, train fares across Britain will see an increase of 3.4% of average; the largest rise since 2013.

The hike has risen train fares over the current CPI rate of inflation, currently peaking at its own five year high of 3%, and above the annual rise in wages. The changes are said to be a “kick in the teeth” for travellers by the Rail, Maritime and Transport Union.

Price rises

Covering regulated train fares, like season tickets, and unregulated fares, such as off-peak leisure tickets, passengers of all kinds are set to feel the changes.

Annual season tickets along some journey lines will see an average increase of £122; with a Brighton to London ticket costing as much as £4,332 per year. An off-peak day ticket from London to Slough will cost travellers 9.4% more than it would have in 2017.

A government-commissioned study carried out by McNulty Value found that weekday commuter train fares are significantly higher in Britain than anywhere else in Europe. Fares by distance travelled were around 30% higher in the UK.

A report from the TUC also stated that season tickets for big-city commuters could be up to six times the price of those in France, Germany, Spain and Italy.

Why do rail lines companies need to change their prices?

The average number of train journeys in the UK has seen a steady 4% annual increase over the last 20 years. Economic consulting company Oxera put the growth in the industry down to changes to the industry model and an increase in freight traffic worth as much as £7.2billion.

Over the past 14 years, the number of passengers on routes to King’s Cross has risen over 70%, according to BBC transport correspondent, Richard Westcott. Passenger numbers on Southern trains to the capital have doubled since 2005.

As much of the UK’s rail network has not been replaced since the Victorian era, the existing infrastructure has begun to buckle under the strain.

In the last year, one in every nine trains arrived late at its destination. Unions and commuters have pushed for rail companies to bring in new trains and better lines but updating the network whilst keeping it running has proven both difficult and expensive.

Where do rail companies lines get their funding from?

Train fare hike the largest in five years

British Rail was privatised in 1997 and, since then, government funding per journey has fallen to just £2.35 – 29% lower than in the first full year of privatisation.

Figures from the Office of Rail and Road show an almost 13% drop in investment in the rail industry in 2016-17 from the previous year.

With funding decreasing, and both demand and inflation rising, rail companies are now asking their train fare payers to pick up the tab.

Where is the money going?

The Rail Delivery Group admitted the rise in ticket prices was “significant” but stressed that 97% of all train fare income goes towards improving and running the railway.

For every £1 spent on a rail ticket:

  • 22p goes towards train and track maintenance,
  • 11p is used for leasing the trains,
  • 4p is spent on fuel,
  • 25p goes to paying industry staff wages,
  • 9p is used to pay interest and other costs, and
  • 26p goes back into investing in the rail network.

Only 3p of each £1 is taken in profit by the rail companies.

A Department of Transport spokesperson has said the government is “investing in the biggest rail modernisation programme for over a century to improve services for passengers – providing faster and better trains with more seats.

Scotland will see an average rise of 3.2% in fares, 0.2% below the national average. A spokesperson for Scotrail has said that 85% of their revenue comes from fares regulated by the Scottish Government.

The company also said they are currently “investing millions of pounds to build the best railway Scotland has ever had, and that’s why we remain the best performing large operator in the UK.”

The RDG has also said that private sector investments, in addition to the revenue raised in higher fares, will help to deliver improvements such as 5,700 new carriages across the UK by 2021.

How do people feel about the train fares changes?

Despite the government’s reassurance that the hike increase will result in a better service, many are unhappy with the changes.

Anthony Smith, CEO of Transport Focus, stressed that whilst new trains and improved tracks are a “welcome investment”, he was concerned that

”passengers are still seeing the basic promises made by the rail industry broken on too many days.”

General Secretary of the RMT union, Mick Cash, said the increased fares are just “another twist of the economic knife,” and that “the private train companies are laughing all the way to the bank.”

However, Paul Plummer of the Rail Delivery Group told BBC’s Today programme they are

“very aware of the pressures on people and the state of the economy and are making sure everything we do is looking to improve and change and make the best use of that money.”

By | 2017-12-07T11:14:19+00:00 December 7th, 2017|Economy, Politics|0 Comments

About the Author:

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Journalist, Mark Farlie, provides cutting edge articles with a focus on plain English & zero jargon. With a breadth of interests, Mark writes on topics such as; personal finance, commercial finance, B2B, marketing, law and technology.

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