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.

  • J0hn029

    Nicely put, however I think you should add one more factor into that:

    Car Park prices at stations.

    A licence to print money for TOCs, which they then outsource so that when the “fantastic digital systems” go down, they are not to blame.

    Car park charges, I think are more of a cost issue than tickets because regardless of how long you park for in the week, you have to pay for a full day. On average it’s about £40 a week. Add in fuel prices now going through the roof and it’s about time everyone decided that it’s not worth going into a big city anymore.

  • James

    I think Mystic Wolmar is right.

    There are all sorts of reasons that the rail industry has not got its act together (management, unions and politicians are all to blame), but as far as the passenger is concerned, the railway is bad value for money nowadays and that shows no sign of changing.

    Worse still, it is also clunky and unresponsive.

    For these reasons, I suspect that traffic may well be at the beginning of a long-term drift downwards and apart from placing various franchises in difficulty, this will also call into question a lot of glossy investment schemes like HS2.

    It could well be that the recent spate of strikes and general chaos have done something like what the early 1970s postal strikes did for the Post Office’s business. In the short term people fumed and had to lump it, but in the longer term they began to find ways to avoid using it altogether.

    As the economy winds down with Brexit (whatever you think of the idea, it has been totally botched beyond all recall now), the outlook for the railways is not encouraging. How long before some bright civil servant asks someone like Dr Beeching to do a “review” into spending on railways?

    If you don’t think that’s possible, just take a look at the NHS’s finances and then consider how many people in the UK +never+ use a train nowadays.

  • James

    Correct.

    My local Parkway station, which is the obvious one for most travellers to use if they can (most other stations have a rotten service or are practically inaccessible by road) is outsourced to a contractor and will set you back a cool £15.70 if you park any time before 11.00, no matter how soon you will be back.

    This virtually rules out any local journeys by car owners and makes a mockery of all the low carbon guff the government pumps out.

    Apart being an obvious rip off (this car park isn’t even secure), it strongly suggests that the government can’t really decide what role it wants the railways to play in our society. Profit or public service? It’s anybody’s guess.

  • Ken Johnson

    Ever since Ernest Marples the T*ries and their rich chums have had vested interests in road construction and regard raising train fares, reducing the number of seats and the number of trains, closing railways etc. as means of increasing road traffic, increasing road construction and, thereby, making money!

  • Ian Raymond

    I think Mystic Wolmar has picked a lot of things that are right. There is potentially one other thing though – for the last x years, rail companies have treated passengers as an inconvenience (in my opinion, as someone who travels across the whole country, far more than in the days of British Rail). Think about it: poor comfort of seats; declining catering offer (for those of us travelling more than a few hours); constant hectoring with announcements about skateboarding, having the right ticket, etc; gating stations so that friends/relatives can’t even see passengers off; pushing passengers onto rail replacement buses at the drop of a hat rather than maintaining operational flexibility and using diversionary routes; ever increasing levels of ticket restricitions; incredibly poor communication of information when things go wrong. Not exactly the sort of approach to engender customer loyalty, is it? I for one have voted with my feet, learnt to drive, and on most of my trips between the Northwest and Southwest now regrettably (as someone who *wants* to be environmentally friendly) use the car instead of the uncomfortable journey it has now become by a certain franchise.
    NB – may be worth thinking – has the decline in local bus services also contributed to falling rail patronage? (Prob. less of a factor than what CW highlights). If someone has to drive in order to reach the rail station rather than a previous bus service, they may now just drive all the way?

  • Paul Holt

    CW has missed several targets. A proper analysis would reveal a closer correlation of passenger number decline with the now endemic strikes rather than “austerity”. A question CW needs to ask, publicly and loudly, is how many peoples’ livelihoods have the strikes cost?

    People cannot be blamed for not taking non-existent trains, whether (a) Beeching took their rail line away e.g. Ventnor, (b) no trains run on existing track e.g. the Waterside Line in Hampshire, or (c) the necessary infrastructure has not been built e.g. Beaulieu Park station in Essex, promised for over thirty years but neither completed to date nor started. CW needs to focus on all these because people want to go to work and live their lives as best they can.

    One of the first things to drop out of a proper analysis of ever-increasing motoring taxes is that politicians rather like gridlock because lots of stationary vehicles are burning fuel and generating tax. The people, stuck in gridlock, want the bottlenecks cleared and traffic to flow. Consider this: flowing traffic generates less pollution than gridlocked traffic. Further, flowing traffic generates air currents that disperse the reduced pollution, thereby removing the justification for the hated congestion charge and Sadiq Khan’s T-charge. Everybody wins! Except the guzzling politicians.

    Which is why it won’t happen.

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