Rail 858: Things aren’t getting better

Things are getting worse. The railway is haemorrhaging passengers and the train companies, not surprisingly, are a dither. Talking to rail managers, they angst about whether this is the beginning of a long term trend or a blip. They hope for the latter but the hardheads are beginning to realise that actually there are major changes affecting the rail market and none of them are positive.

An analysis circulating within the Department for Transport makes clear that there are a number of reasons why evidence points to the fact that there is not going to be a sudden reversal in the trend. Sure, passenger numbers may well not continue to fall, but the long period of significant growth has ended. Moreover, more seriously for the railway companies, it is season ticket sales that have declined most sharply and puts at risk their long term plans. The analysis suggests there are five core reasons influencing the trend, and a few other factors which should also be taken into account.

 

  1. Austerity Ten years of continuous cutbacks and cheeseparing in government have taken their toll. Not only have the direct cuts had an impact in terms of reducing employment and expenditure in the wider economy, they have created a climate in which people are reluctant to take risks and spend their money. For many, travel is discretionary and consequently can be reduced.
  2. Wage Growth Wages are basically at the same level as they were a decade ago. This is another part of the squeeze on workers who are the mainstay of the rail market but who have suffered badly during the past decade. With no increase in wages, people may well change jobs to more local areas in order to reduce their cost of travel. To make matters worse, while overall employment has increased, the rise has been in low paid jobs and self-employment, which are unlikely to require travel to work by rail. Even if they do, the jobs are likely to be insecure and therefore their holders are unlikely to buy season tickets.
  3. Cost of childcare In a way this is all part of the same pattern, the pressure on the squeezed middle. Women returning to work often accept that their wages after tax will barely cover the cost of childcare. But if that equation puts them in the red, they may well decide that the hassle of the job is not worthwhile, and either stay at home to look after the kids for a while or get a job that is more local, even if it does not pay as much.

 There is a wider point, here, too. The new generation of workers, say those under 40, are reluctant to repeat the pattern of their parents, whereby their father, living an hour’s travel away from his job, went off to work 7 30 am and was not seen again until 12 hours later, probably just missing the kids’ bedtime. Men are far more involved in child rearing and the cost of childcare may tempt them, too, to not travel to work every day. Or they may also take a job nearer home to be more readily available to look after the kids

  1. New technology and flexible working patterns This, in truth, is probably the biggie and the one that is inevitably becoming increasingly a factor. There are numerous aspects to this. It is remarkable how many people mention that Thursday is the new Friday. We seem, surreptitiously, to be moving to a four day week – even though people work five either through flexitime or by ‘working at home’. The latter has, in fact, now become easy to monitor and therefore is no longer a euphemism for gardening or going down to the pub.

There is, too, video conferencing. A reader, Guy Bettley-Cooke wrote to me the other day saying that a friend of his working for a major internet provide told him that there has been a big increase recently in businesses using distance technology ‘to employ people “anywhere”’ and giving the reasons as ‘house prices and lack of availability and the cost of commuting, both in terms of money and time’.

Hitherto, I have argued that the odd Skype call made instead of travelling for a meeting might have little impact on passenger numbers since ultimately people like meeting face to face. Actually, however, I now feel that has changed and this technology is causing inroads into train loadings.

  1. Petrol prices Clearly that has probably been the tipping point for many people making a long journey. Yes, rail is still more convenient in many instances but the eight years in which fuel tax rises have been scrapped in successive budgets, together with the world slump in the oil price (recently rather reversed, thanks to Trump’s Iranian sanctions and the refusal of the OPEC countries to step up production) has made the car an increasingly attractive option.

 There are other factors, too. This recent tweet from a ‘Becky W’ says it all: ‘Hey @SouthernRailUK @TLRailUK I’ve handed my notice in because I cannot cope with the terrible service anymore. 8 years and this past few months has finally sent me over the edge. Can I get a refund on my monthly season ticket seeing as I’m not going to need it now? #thameslink’.

Hopefully she will get her refund but there are an awful lot of Beckys out there given that the industrial action on Southern has now been compounded by the timetable chaos which has continued unabated on Thameslink (and somewhat improved on Northern).

In an article in the latest RailReview, Matt Lovering made a telling point suggesting that there are three one-off changes that have helped passenger number to grow in the past but no longer apply. First, there has been better revenue and demand management, through such initiatives as advanced fares in off peak periods but growth is now tailing off. Secondly, the competition from aviation has greatly reduced thanks partly to Air Passenger Duty and the hassle of security but he suggests ‘there is some evidence that domestic air travel is growing again’. And thirdly, the improvement in passenger experience such as modern air conditioned trains and the provision of wifi, though again some of the new rolling stock is definitely less comfortable than its predecessors. He suggests ‘the effects of these improvements have been fully captured’.

The fundamental point is that the world is changing and I’m not sure the rail industry is adapting sufficiently. Just take, for example, the failure to introduce cheaper deals for people who travel two or three times a week, or perhaps 40 weeks per year, and consequently for whom an annual season ticket is not worthwhile. All we get is some vague ‘fares review’ which suffers immediately from having to be ‘revenue neutral’, which kills off any hope of any radical thinking.

The Department for Transport relies on Network Rail to provide its forecasts of future demand and that is hardly an independent source. Network Rail is hardly incentivised to say we don’t need all those new lines and shiny stations. Optimism, therefore, has been built into the railway forecasting structure.

OK, Mystic Wolmar will stick his neck out on this one. The decline in passenger numbers will continue and there will be no increase until the economy turns up again sharply. That does beg the question of whether big schemes like HS2 and Crossrail 2 will be considered worthwhile. In his RailReview article, Matt Lovering did make the point that ‘in a scenario of constrained public funding, the Government may realise more benefits by investing in connectivity rather than capital-intensive transport schemes’. As I have suggested before, since we have no idea who will be governing us in a few months time, let alone in 2022 when the next election is due to be held, the future of HS2 is by no means guaranteed, especially if this passenger trend continues for several years.

 

An ombudsman at last

 

It’s taken a while but at last the rail industry has followed the example of many others – such as insurance and banking –to appoint an independent ombudsman to consider complaints by passengers. Creating an independent body to consider complaints that have not been resolved by the train operators was a commitment made by Paul Maynard, one of the best recent rail ministers, but its introduction has long been delayed by bureaucratic wrangling behind the scenes.

Now, though, the service, to be known as the Dispute Resolution Ombudsman, will begin in November and will tackle the sort of complaints that the rail operators – and British Rail before them – refused to address. For example, the railway currently has no liability if a train delay leads to a missed flight or vital business appointment. How far the ombudsman will go in rectifying collateral damage will be interesting to see. The industry’s reluctance to go down this path until it was forced to do so may well have been prescient and it will open the floodgates. Or it may be a damp squib, with those type of complaints still hitting the buffers (spot the very rare railway pun!). Watch this space.

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