Written by Misc

Rail Fares: Who’d Benefit From Cutting Them?

Today, most of the country went back to work, or at least began to return judging by the generally quiet commute I had today.

But a new year means new rail fares. Or more to the point increased rail fares.

It’s always worth noting that it’s UK Government policy to reduce rail subsidies. Like most forms of transport, general taxation pays for at least part of our transport needs. And it has been government policy to get rail users to pay for a larger part of the cost of the railways over time. Hence we see above inflation fare increases each year.

Certain routes and fares are capped, but others aren’t. For goodness’ sake, don’t try travelling from London to Newcastle on the spur of the moment!

(Of course, nobody thinks about “subsidies” to road users. New roads are considered “investments.” And no, vehicle licence funds (aka your “car tax”) do not pay for all the roads.)

Anyway, the usual protest groups were out today protesting the ever increasing fares we’re paying, and the increasing proportion of salaries accounted for by commuting costs.

On Twitter, I saw this Tweet from Buzzfeed’s James Ball:

Are rich people really likely to be the big winners if rail fare increases were reigned in?

The data in the Tweet above came from the 2014 National Transport Survey, and it’s worth noting that the numbers refer to the average number of journeys completed by each income group, and not percentages as you might at first believe.

The 2015 data is now available, so for the rest of this piece, I’ll refer to that.

Here’s the equivalent data from that 2015 survey:

The numbers are pretty similar, and would seem to tell the same story. The richest in society make more train journeys. So do they benefit the most?

Of course, these are averages.

But we can also look at the miles travelled:

This shows a similar story – the rich travel further.

But if we use both sets of data, we can look at the average trip length:

Suddenly the data is much closer. It seems that regardless of income level, if you travel by train, your journey will be broadly the same length.

Now this kind of overall data obfuscates things a lot. Buried within it are people who travel once or twice a year perhaps visiting family and going on holiday, and those who travel every day for work.

Other factors need to be considered too. If I’m very poor and in the lowest income level, then I’m likely to be either not in employment, or perhaps only have a part-time job.

The ONS shows that lowest quintile earns a median “final income” of £13,841. It notes that increases in tax credits and Jobseekers Allowances make a difference in this quintile.

If we assume that rail travel is relatively expensive, then it seems likely that anyone at the lowest level of employment is unlikely to travel a great deal, or indeed choose a job that is sufficiently distant the train travel is an optimal travel solution.

In other words, if I live in Croydon, and have a job in central London that gives me an income of just £13,841, I’m not going to be happy to spend £1,704, or 12.3% of my entire income on train fares. I’m going to look for a low-paid local job if I can that minimises my commuting costs.

On the other hand, if I’m in the top quintile with an average final income of £86,768, then spending just 2.0% of my income on my commute is far more palatable.

Just to be clear, this is really all about commuting. 56% of all rail trips are for commuting/business purposes.

But rail isn’t remotely suitable for commuting if there isn’t a line that works for you. It’s perhaps unsurprising that London and the south east see far more rail commuting than other parts of the country, simply because the infrastructure is there.

And note that this excludes tube travel.

With both property prices and earnings higher in the south-east, plus active disincentives to use other forms of transport – notably the car – then these London and home counties travellers significantly skew the results in favour of the wealthier.

Yet increases in rail fares do not solely affect those in the top quintile. All it means is that those transport users – who largely have no other choice of transport to use – are less affected than poorer users.

In many respects, the archetypal “Surrey stockbroker” can moan, but get on afford to pay for their trainfare. But a nurse who has to live far outside of central London through high property prices has pay the fares or look for a job elsewhere.