Rail 517: ATOC has shot itself in both feet with peak-pricing plan

Wasn’t it nasty old nationalised BR that used to price passengers off the railway? Well, the umbrella body representing the private TOCs is now having a bash at it too with its ludicrous congestion charging proposals, according to CHRISTIAN WOLMAR.

In terms of own goals, it was more of a howler than Gary Sprake throwing the ball into his own net. What, might one ask, was the Association of Train Operators thinking about? The idea of congestion charging on trains might sound faintly amusing at first sight, and was bound to attract media attention, but the aim of ATOC’s intervention into the debate on the future of the railways is a complete mystery. As one senior train operator executive put it to me in an email, ‘you have to hand it to ATOC – who else would shoot themselves in both feet at the same time?’.

ATOC had produced a worthy piece of research called Looking Forward, Contribution to Railway Strategy. Given the organisation’s usual omert á on any strategic debate about the railways, this was a refreshing intervention.

Indeed, the report contained some interesting analysis on the notional profit and loss account for the railways. There was a complicated graph about future growth, which I almost understood, and some calculations on future subsidy suggesting that the railways will still need a support of around £2.2bn in ten years time, at today’s prices, compared with nearly £5bn today, thanks to passenger numbers going up by 2.5 per cent per year and fares by 1 per cent annually. Breaking down today’s figures, ATOC suggests that InterCity (interesting that this name is still used even though the Tories stupidly did not preserve it at privatisation) currently loses £452m while regional railway requires £1.25bn subsidy and London commuting network £1.1bn – it would be churlish and backwards looking to compare that with the days of British Rail so I won’t; well, except to say that when in the late 1980s, at the height of the last economic boom, InterCity was profitable, and NetworkSouthEast (a name that has not been preserved) virtually broke even.

But then some bright spark – you there, in the back of the class, confess and you will be permanently excluded from talking to the media – added a crazy paragraph, apparently at a late stage, to the document which started: ‘Road pricing will have a very substantial effect on rail pricing and on the ticketing technology used. The railway will need its own equivalent –“rail peak pricing”’.(my itals) Since that was buried on page 18, ATOC ensured that it would receive coverage by briefing The Times ‘take no prisoners’ transport correspondent, Ben Webster and the paper splashed the story over its tabloid front page. Well, it was very useful for me, thank you very much, as by five past midnight I was on the Radio 5 Live debunking the idea and by lunchtime I had done a dozen TV and radio interviews since it was a quiet news day with little else to satisfy the news hounds.

It was not so good for Alistair Darling, however. The Transport Secretary was speaking at the Railway Forum conference for which the ATOC pamphlet had been produced and he was ‘spitting tacks’ about having to answer questions about rail congestion charging and, indeed, said specifically the opposite in his speech. The normally unflappable Darling clearly got angry when a third hack asked questions on the story, clearly trying to get more headlines for the following day’s paper. ATOC had wrecked Darling’s record of keeping the railways out of the media and harsh words were had in private.

Possibly as a diversionary tactic, Darling floated the idea of double deck trains and apparently has asked his blue skies thinker, Sir Rod Eddington, the former head of BA, to produce a report on the idea. We have been here before. British Rail experimented with double-deck trains on the Dartford line in Kent in the 1950s and 1960s but they were cramped and uncomfortable and caused delays as people took too long to get on and off. I could save Eddington the trouble now: Increasing the gauge on any line other than the Great Western – which has few tunnels and was built to Brunel’s wider gauge which makes it a bit easier – would be prohibitively expensive.

Darling’s speech, in fact, marked an interesting change in that he appeared to be recognising, belatedly, that more rail capacity would be needed, whereas previously he had spent much of his three years acting as the Treasury man he is by saying enhancements were too expensive.

The idea of ‘train congestion charging’ is, of course, ludicrous for several reasons. First, people already pay very heavily for peak time travelling at the moment, especially on InterCity routes where prices can be several times the off-peak fares and there always seem to be large numbers of empty seats as a result. Secondly, the technology to charge people differently for every train would, even if available, cost a fortune. Look at the massive costs of the London congestion charge scheme. Thirdly, the practical difficulties are legion: how would operators cope with, say, a train that started out on time but arrived late at intermediate stations. Would people be allowed on it or not? And so on.

Most industries would see a predicted increase in the competitors’ prices (through road congestion charging) as an opportunity to snaffle a higher proportion of the market rather than trying to get extra revenue by exploiting its monopoly position. ATOC is an umbrella organisation of private companies, some of which turn a very handy profit. The day after the story, Stagecoach, which got a far too generous deal for its South West Trains franchise (as mentioned several times previously in this column) announced even better profits – £48.8m, up 10 per cent – and the Evening Standardsplashed on ‘Gravy train row as rail profits soar – Bosses defend rise but warn of more overcrowding’.

So the whole episode looked rather like a self-interested group of private companies trying to dream up new ways of screwing their customers thanks to their monopoly position. Or have I missed something?

In fact, the daftest thing about the whole episode is that c2c already has a version of the charging concept by reducing its season tickets on earlier trains in order to deter people from using the most busy ones. But that was an initiative to cut fares, not exploit its passengers by charging more.

Perhaps someone in ATOC could see it from the public’s point of view: that a bunch of private operators – called famously by Shriti Vadera, Gordon Brown’s adviser, ‘thinly capitalised equity profiteers of the worst kind’ – have cooked up a scheme to make themselves more money. And, they might think, wasn’t the industry privatised to attract more people onto the railways using private sector flair and initiative. Wasn’t is nasty old state owned BR that priced people off the railways when demand soared (though not as much as myth has it, but that is another story)? To call it a hapless attempt to do a bit of spinning is an insult to haps.

Stagecoach, interestingly responded with its own idea of Megatrains as an extension of its cheap Megabus concept – cramming more people paying onto a coach with more seats on an existing train. No details are forthcoming as the idea is being worked up but I can see all kinds of practical problems. Interestingly, Stagecoach’s first move into railways a decade ago was to put on coaches on sleeper trains between Scotland and London but it was not a success as people did not want to sit up all night in uncomfortable seats even if it saved them a few bob. However, despite the obvious difficulties, at least Stagecoach was thinking of attracting people onto rail, rather than putting them off.

Of course, the rail industry has to look at the issue of overcrowding. However, the trains are not as overcrowded as is often suggested. Professor Rod Smith of Imperial College has calculated that the average number of passengers per kilometre of track per day is 5,800 (the actual measure is passenger kilometres per route kilometre per day but that is a bit difficult to get your head round) in the UK compared with 33,800 in Japan. The busiest commuter line, Great Eastern, gets 18,400, less than the average in Japan, while in Tokyo the private Odaku line gets a staggering 237,000 and the Tokaido Shinkansen has 195,000 compared with GNER’s 7,200.

The point he is making is that there is plenty of room to expand usage of the railways through conventional methods such as improved signalling, rolling stock with fewer seats, extended platforms, and flyovers/underpasses instead of at grade crossovers. There are soft measures, too, such as more staff at platforms which can improve punctuality. It is all a lot more boring than double decker trains or fancy ideas about congestion charging for trains, but the technology is here today and work could start straight away. But at a time when even the Thameslink box at Kings Cross is not being fitted out for want of £70m, we can hardly have much confidence in Darling’s new found commitment to expanding capacity on the railways nor on the train operators to find imaginative solutions rather than pricing passengers off the railway by fleecing them.