Rail 867: The truth behind rail’s growth

The doubling of rail passengers since the mid 1990s has been unprecedented and, in many respects, inexplicable. No coherent theory of why the growth has been so strong over such a prolonged period of time has been put forward.

Historically, there has been a strong correlation between growth in income and the increase in rail passenger numbers. In the good times, passenger numbers have soared and vice versa. However, during this period that trend line has been disrupted and even the sharp economic downturn which started with the banking crisis of 2008 only caused a momentary blip in the figures. Over the rest of this period, the numbers of people flooding onto the railways has greatly exceeded the predictions in conventional models and commentators, including myself, have struggled  to explain what is happening.

Now, at last, a very thorough and illuminating piece of research has been produced which offers the most enlightening analysis I have seen of this 20 year phenomenon. Do not be put off by the prosaic title, ‘Wider factors affecting the long-term growth in rail travel’  because the authors, Ian Williams and Kaveh Jahanshahi,  not only uncover  many answers to the fundamental question of where the growth has come from but also debunks some of the myths.

Let’s get one out of the way straight away. The huge increase in passenger numbers has led to claims by supporters of rail privatisation that the involvement of the private sector is the underlying reason behind this higher than expected rate of growth. However, they have struggled to point to anything done by the private sector which might have led to the rise. Sure, there has been lots of investment as well as considerable technical advances – British Rail would not still be fielding its enquiries on a phone line famous for being engaged – but most of that is a result of an increase in public resources rather than the flowering of private initiatives.

The research effectively debunks the notion that the private sector has been responsible, by pointing out that it is precisely the fact that conventional models have relied on examining factors within the industry that explains why they have failed to predict the far greater than expected rates of growth.  Instead of looking at factors within the influence of the rail industry, such as fares, frequency, facilities on offer and comfort, the authors focussed on ‘exogeneous’ factors (Gordon Brown’s favourite word, which means external influences over which the industry has no control). There has been, in fact, no increase in the average length of rail trips made by individual passengers and therefore the rise in passenger kilometres travelled was down to an increase number of trips. Yet, the official forecasts underestimated by around 30 per cent the actual growth.

That is because the model did not consider factors such as employment rates and the type of jobs that were being created. The authors say: ‘Job growth in England and Wales since 1995 has been strongest in many of these categories that have a high proportion of rail commuters. Sectors that have seen jobs almost double over that time period include information and communication services, professional scientific and technical work, administrative and support services and real estate services. In other words, white collar workers who often need to be based in central city areas. Indeed, they found that job growth in professional, scientific and technical work led to an estimated extra 190,000 rail commuters alone, while employment growth in information and communication services added an extra 90,000 rail commuters.

Multiply that over a year, with an estimated 250 return journeys for each of these people, and the growth figures can begin to be understood. London, of course, is key and the  number of jobs the capital 1995 has increased at nearly doublethe rate than the average across England and Wales – 49 per cent rather than 27 per cent. Crucially, ‘whereas in the 1970s and 1980s population growth was fastest in rural areas and stagnant or declining in dense urban areas, this situation has been reversed since the 1990s, such that population growth is now fastest in dense urban areas.’ Therefore it is the boom in urban living which is the predominant growth factor. There is, too, the simple matter of population growth, much of it due to immigration by people unlikely to own cars.

Indeed, cars, or rather the absence of them is another crucial aspect of this story. One of the factors that has affected rail use in this period was the change in the early 2000s to company car taxation which previously supported the purchase of these vehicles and effectively encouraged owners to make use of the cars in leisure time too. With company cars now no longer so financially attractive, rail has benefitted as, once a car is no longer used for business trips, the rail is the main alternative for many people. The wider trend of reduced car ownership in urban areas – for example, there was been a 22 per cent decline in cars per adult in Inner London between 2004 and 2017 – has also been crucial  because those in households without cars are three times more likely to make business trips by rail.

But what of the future? There is a warning from the authors of this research. It only covers the period up to 2016 and consequently has missed the recent decline in season ticket use. We still don’t know, despite a slightly recovery in the first quarter of this financial year, whether this is part of a long term trend but the authors suggest it might be. They note that the policies which have affected the growth are often the result of government decisions and these could result in changes in the other direction. For example, already the fact that we have had nine years of fuel tax increases being scrapped whereas rail fares have continued at, or above, the rate of inflation unabated has definitely pushed more people onto the roads. This trend may well continue unless the fiscal policy is changed.

The authors stress that rail usage is dependent on ‘policies that influence levels of car ownership and road network performance, patterns of employment, and the location of jobs and housing. As Government policies and circumstances change, it is not clear that these influences would necessarily continue to support rail growth in the future’. Indeed, I was speaking to a London planner the other day who questioned whether the assumption that London population growth will continue in the foreseeable future. I have long been sceptical of forecasts suggesting it will simply because life in London is becoming unaffordable, not just for people doing  minimum wage type jobs but even young professionals starting out their careers like doctors, lawyers and, especially, teachers.

The authors warn that if there is a return to people no longer wanting to move to urban areas, and a return to interest in living in small towns or rural areas, then ‘we could revert instead back to the situation before the 1990s when rail passenger demand was in gradual decline’. Moreover, the rail industry would be powerless to do anything about it: ‘in that case the future trajectory for rail passenger numbers would be very different to that experienced over the last two decades, irrespective of what future actions the rail industry itself might adopt in response’.

No wonder the franchise system has become increasingly complex to manage. No end of clever consultants (who now cost on average around £7m for each franchise bidding process) will ever be able to guess the future. This research is essential reading for anyone in the rail industry working on modelling, whether of potential new schemes or of franchise bids.

 

 

Another private initiative getting stuck

 

In the last issue, I wrote about plans to build the Heathrow Southern Railway as a rare example of a genuine private sector investment in the rail industry and the obstacles it faced. A reader, Ced Green, has pointed that another such project to build a railway line entirely with private funds has been on the stocks for several years in the Lake District. A company called CKP Tailways developed a plan to reopen the Penrith – Keswick line 15 years ago and produced a business case in 2007. It already raised £400,000 to pay for preliminary studies and has gained the support of local authorities, MP’s, Chamber of Commerce, the Lake District National Park and businesses throughout the area.  The plan even gained the support of the North West Development Authority only for that organisation to be shut down by the Coalition Government a few months later.

Nevertheless, the promoters are pushing ahead but have been stymied by the failure of Cumbria County Council to endorse the idea. Without that support, funders are unlikely to come forward. The council has told CKP that there are other priorities such as improving the existing network, notably the West Cumbria Line.

Hoever, it is unclear why the councillors cannot support both improving existing lines and reopening old ones. Having cycled in the Lake District myself earlier this year, I saw just how car-dominated the park is and how much improved rail links could do to ensure people could come there without a vehicle. I do no know the ins and outs of this scheme, but since it uses an existing alignment, and would be built using private funds, it seems strange that the promoters have essentially been stopped from putting it forward and that the local authority does not have tue imagination and ambition to support it. No wonder promises of large private sector investment in the railway have proved to be empty.

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