RAIL fares are up again. Amid the chaos of last week, it almost went unreported that most passengers faced the double whammy of above inflation rises. Yet, the railways are booming, with record numbers letting the train take the strain as people flee congested roads and overcrowded airports which have been turned into a nightmare by inefficient and ridiculous security measures.
In a normal industry, where usage was increasing by between six and eight per cent per year, the companies providing the service would be able to keep price rises down to a minimum because of the extra income brought in atlittle cost. This is not happening in the railways. On the contrary, the train companies seem to be taking advantage of increased demand to fleece passengers.
The reason is that the railways, despite having being privatised for a decade, are not a normal industry. They are an amalgam between the public and private sectors which are partially immune from the normal play of market forces because of the effective monopoly they enjoy in many cases, and subject to pressures from the Government which mean that they do not behave at all like conventional capitalist companies.
Train operating companies are given franchises by the Government mostly for periods of seven years and in recent deals, such as National Express’s successful bid to replace the collapsed GNER on the East Coast Main Line, they have set themselves very onerous targets in order to make a profit, requiring both increased passenger numbers as well as fares rises.
This is because the Government is keen to reduce the record £5bn per year subsidy now going into the rail industry and consequently is putting pressure on the train companies to come up with what many commentators think are unrealistic bids.
Therefore, the train companies are trying to cash in on their position while the economy is buoyant and people are flocking to the railways. The collapse of GNER in 2006, however, suggests that there are risks in this strategy. GNER could not cope with the blip in demand caused by the London Underground bombings in July 2005 and had to throw in the towel, allowing National Express to take over after the bidding process.
There is too a monopoly element in the railway business. Many commuters using the railways have little alternative to taking the train into work, as the equivalent road journey would take too long or be too unreliable. And many long-distance journeys, like Leeds to London, are so much more pleasant and quicker by train that people are willing to fork out the extra that they cost.
However, a downturn in the economy, or another series of confidence-busting terrorist attacks, could easily upset the train operators’ calculations and cause a crisis in the industry. In the meantime, passengers have to expect similar above inflation rises for several years to come.
If growth does continue at the rate of the past few years, the industry will face another problem – growing overcrowding which is making travel less pleasant and, indeed, causes delays as passengers struggle to get on or off trains. The year 2007 should have marked the turning point with the Government at last recognising the need for a major investment programme. Unfortunately, it will go down as one of missed opportunity for the railways.
The poor suffering passengers had been promised a long-term strategy from the Government examining what investment should be made over the next 30 years with the implication that funds would, at last, be available for a major increase in capacity.
However, when the White Paper, Delivering a Sustainable Railway, was finally published in July, it turned out to be a great disappointment. Sure, there were promises of some investment such as unblocking the bottleneck at Reading station and providing a new station at Birmingham New Street – although the funding for the latter is still unclear – and since its publication the go-ahead has been given for the Crossrail scheme to relieve pressure on the London Underground.
However, the strategy offered very little else and instead suggested that the growth rate in the industry would slow down, obviating the need for major new investments. So there are no plans for electrification, even for infill schemes such as the idea of installing wires on a section of track east of Leeds towards Selby to avoid trains having to turnaround at Leeds.
Nor, most disappointingly for both business and leisure passengers in the North East, was there any plans to begin work on a North-South high speed rail line, despite the successful opening of Britain’s first high speed railway between St Pancras and the Channel Tunnel in November.
Although Labour had promised to consider this in its manifesto for the 2005 election, the idea has been kicked far into touch with no intention even to examine the feasibility of the line until 2014 at the earliest.
The plans for investment are so threadbare, particularly compared with those of our European neighbours which are opening high speed lines and new metro or tram lines all the time, that it seems the Government is trying to avoid having to invest in the railways by allowing fares to rise so fast that they will damp down demand.
There is a deep irony in all this. One of the claims for the privatisation of the rail industry by the Tory government of 1992-7 was that it would free up the railways from the dead hand of British Rail.
Now the same thing is happening again, but it is private companies that are having to implement the Government’s policy. Either way, it is the poor passengers who are suffering.