Rail 834: Fares need to be made fairer

The annual collective moan about rail fares has just started. The complainants against these rises have three bites at the cherry when the Retail Price Index figure is announced in early August, in the autumn when the precise fare rises are announced and in January when they are imposed.

Consequently, the pressure mounts up especially given that August is a quiet month for news and the fares rises inevitably get widespread publicity, even though many of those affected are on holiday. This time there has been even greater interest because the rise is far larger than in recent years because of the inflation caused – and let’s not beat about the bush – by Brexit.

In recent years, the government made concessions to the protestors. An attempt to raise fares by 3 per cent above inflation had to be scrapped and rises were reduced from RPI plus 1 per cent, which had been the rate of increase for several years, so simply RPI. But given that RPI is at 3.6 per cent, well above the rate of increase of average wage levels, there was bound to be widespread anger, even among the Tory-supporting press.

The anger of commuters has been compounded rightly by the long standing chaos of Southern, and, rather unfairly, by the work at Waterloo. Whatever the reasons, many passengers are at the end of their tether. Therefore, this time the protests will be even bigger and further concessions are highly likely.

Chris Grayling, however, is in a difficult position. Clearly money is tight in the industry caused by Network Rail’s overspending which may well result in essential work being delayed and consequently further deterioration in performance. The Southern dispute rumbles on with no sign of any solution and may well spread, and just to add to his woes, the scrapping of electrification schemes in the North and elsewhere has widespread political repercussions.

So Grayling needs some good news. However, reducing the 3.6 per cent rise will be expensive. Under the contracts with train operators, they will be entitled to compensation for the lost revenue which he would have to stump up (it is, incidentally, a very complex issue since the ‘elasticity of demand’ has to be taken into account – in other words, determining how many passengers would decide not to use the railways if the fares increases were waved through is an art rather than a science, and subject to much interpretation).

Therefore Grayling ought to announce other passenger-friendly measures which could soften the blow.

It is indisputable that the fares system is a complete mess. This is the result of various policies being implemented on top of each other without any assessment of their impact on previous systems. Because of franchise contracts and the consequent demands that the train operators would have if there were any potential of lost revenue, it is quite impossible to restructure the whole system. However, there are a lot of anomalies that could be sorted out.

First, he should press ahead with the changes proposed in a joint industry and government action plan published last December. There were several good ideas in the document, but its implementation appeared to be rather tentative and patchy. In particular, it failed to properly address one of the great hidden scandals in the industry, the failure of ticket vending machines to provide clear information on which people could base their purchases or to offer the full range of tickets, which means many people are paying over the odds. The document promised to end the use of ‘jargon’ such as ‘any permitted’ and ‘London terminals’ by the end of this year but I suspect that this target is not going to get met. Moreover, the reason why there are still queues at ticket offices while machines remain unused is the complexity of the process through which one has to buy a ticket. Even an old hand like me has ended up paying more than necessary especially if I am in a bit of a hurry to catch a train.

When Claire Perry was rail minister a couple of years ago, she took a great interest in this issue and suggested, for example, that all vending machines should have a sticker saying that cheaper options might be available at the ticket office. That has not happened, presumably because the operators are unwilling to push people towards using a more expensive option. Indeed, some operators are keen on closing offices, something which Grayling could stop, as Lord Adonis did when he was transport secretary in the late noughties.

Grayling should, therefore, press ahead with these long needed improvements to the machines, ensuring, in particular, that they should provide a service like those offered by ticket clerks. In other words, the software should be changed so that rather than offering a bewildering complexity of fares – some of which are not valid at the time of purchase anyway, such as off-peak at 8 am in the morning – the machines should be reprogrammed to respond to customer demands such as ‘I want a ticket to Swansea for me and my pensioner dad travelling now’ or ‘how much is a ticket to Newcastle?’ The machines should, too, have a ‘help’ button which would enable users to communicate immediately with a help line, just as is happening now on increasing numbers of websites. Sure, that would require some extra staff, but it would give people confidence in using the machines.

Here’s a couple of other ideas that could be implemented reasonably easily if there was a will. Grayling could, too, kickstart the process of offering people part time season tickets. This has been an idea which has been pushed by consumer groups and in particular the Campaign for Better Transport for a long time but with only vague promises of future action. How about enabling regular rail users who want to travel on the same route two or three times a week to be issued with a discount card that would allow them to buy tickets at the same rate as full time season ticket holders. Their use could be monitored and if they are not travelling sufficiently regularly to qualify for the discount, their card could easily be cancelled.

The other one is the longstanding ridiculous situation of returns being £1 more than the single trip. Some companies have partly addressed this but it is time that this type of pricing, which is incomprehensible to most passengers, should be scrapped. I know some people say it is a good system that rewards return travel but it makes no commercial or economic sense. Again, there may be issues with the train operators but this could be implemented in new and renewed franchise deals.

All this – and there are other ideas floating around, too – is aimed at softening the blow of these big rises. I suspect they will end up not being as high as 3.6 per cent but they will still be higher than more people’s wage rises. Therefore, they need to be alleviated with these improvements which would go some way to restoring consumer confidence in the industry which is draining fast. Grayling needs to present himself as the passenger’s friend, rather than the operators’ accomplice in fleecing them.

 

Heathrow plan, a real private initiative

 

As I argued in my previous column, Network Rail’s recent report on greater private sector involvement in the industry by Peter Hansford was largely tinkering around the edges. It focussed on yet more contracting out, rather than on genuinely stimulating innovation backed by private money into the industry.

I have always been suspicious of what I call ‘pretend capitalism’ which involves private companies taking over bits of the state with very little risk of ever losing their money. In response to my piece, I was sent details of a scheme that a genuine attempt to create a new section of railway with no requirement of public funds. It is the latest scheme – and there have been lots in the past – to try to connect Heathrow with the railway from the south. The Heathrow Southern Railway project would require the construction of eight miles of new railway to connect Terminal 5 where conveniently rail access to the south has been left as an option with Waterloo.  The innovative aspect of the idea is that the trains would not terminate in Terminal 5 (terminal stations are a bad idea operationally) but instead run through to Guildford or Basingstoke and even possibly further afield. Trains originating in Surrey could, too, run through the airport and onto Paddington, thereby reducing pressure on Waterloo for commuters with jobs in West or North London.

The company promoting the idea estimates the cost of the scheme at £1.2bn which it says would be  ‘privately financed’. Now of course there would need to be guarantees from government that the train paths would be purchased in order for the company to raise the necessary capital. This is, in fact, similar to the way that the Channel Tunnel was underwritten, which, of course, resulted in many unused train paths being funded by British Rail (and its successor body) that represented a hidden subsidy. In the case of this scheme, there is less likelihood of paths being unused given the high demand for rail travel in the South East.

Of course the figures might not stack up but at least this is a genuine private initiative which could bring about a great improvement to connections to Heathrow and other parts of the railway in the South East. It is a far more interesting idea than Network Rail contracting out more services to the private sector, which is exactly the opposite to what it needs to do and how the scheme progresses will be a test of whether the government is genuinely interested in private investment in the railways and, indeed, whether such schemes are feasible in the current structure of the industry.

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