Should passengers pay for better rail service?

Jul 31 2007 by Vicky Anderson, Liverpool Daily Post

A report indicates train fares are set to soar. Vicky Anderson reports

A GOVERNMENT White Paper launched last week by Transport Minister Ruth Kelly announced a £15bn expansion of the nation’s railways – but an increase in the percentage of funding for the network is expected to come from passenger fares.

Fares account for around half of rail revenue. But, by 2014, this figure will have risen to about 75%.

Launching the White Paper, Ms Kelly said: "Our railway is flourishing and in this White Paper we show how we will grow and develop the network for decades to come.

"Passengers want more capacity and reliability on their trains and more modern stations, simple and efficient ticketing, quality of service and value for money. They're right to be so demanding and this strat- egy can deliver what they want."

The proposals are part of a national regeneration of the rail- ways – but the situation is different throughout Merseyside, which controls its own rail network, unlike the rest of the country.

Merseytravel took control of the region’s railways from the Strategic Rail Authority five years ago, and since then has reached an agree- ment that fares will not rise above the rate of inflation. But passengers travelling outside Merseyside to other areas will be affected.

Why should passengers and commuters be charged more – already on top of some of the highest train fares in Europe – to improve a service they already pay to use?

Since the railways were privatised, aren’t such improvements the responsibility of the private companies that profit from the service?

This week, the Daily Post asks: Should rail passengers be paying for improvements to the rail network?

vickyanderson@dailypost.co.uk

NO: The Case Against - We are concerned unregulated fares will bear brunt

by Julie Warburton, Passenger Focus manager, North West

THE plans laid out in the Govern-ment’s “Delivering a Sustainable Railway” White Paper last week should make a big difference to rail passengers in Liverpool and the North West.

Passenger Focus’s in-depth research with 4,000 passengers showed that the top three most important improvements for passengers in the North West are getting value for money for the price of their ticket, being able to get a seat and more trains.

The thousands travelling in and around Liverpool should be pleased the Government has committed to making sure more trains arrive on time and to address crowding which is a serious issue.

Passengers should be encour-aged the Government is investing £150m to redevelop 150 stations.

Liverpool Lime Street station is used for more than 14m rail journeys a year and with only 52% of passengers saying they are satisfied with the station, it is clearly in need of improvements, hopefully in time for 2008.

Only 40% of passengers in the National Passenger Survey are satisfied they get value for money.

The Government’s announce-ment last week also made clear that for season ticket-holders and passengers who buy Saver tickets, their price increases will be capped at the rate of inflation plus 1%, as these are regulated fares by the Government.

We are pleased that, in the absence of an alternative, the Government has decided not to deregulate Saver tickets, along with the simplification of the fares structure which passengers frequently tell us they find complex and confusing.

However, the Government has also made clear that revenue from passengers is expected to increase significantly.

Passenger revenue is around £4.5bn to £5bn each year and this is expected to increase to £9bn by 2013-2014.

With 30% growth predicted by 2016, there will be more passengers to contribute towards the railway but will unregulated fares also be expected to play a major part? Recently announced franchises, such as the new Cross Country franchise, explicitly state that unregulated fares will increase each year by an average of 3% or 4% above inflation, this means some passengers may see their fares rise by more than 50% over the length of the franchise.

We are concerned increases at this level suggest unregulated fares are bearing the brunt of new investment.

We want to see greater consumer protection for passengers so that they don’t see their fares increase by such large amounts.

YES: The Case For - If we don't pay higher fares, we'll pay higher taxes

by Stephen Pearse, policy specialist, Liverpool Chamber of Commerce

THE White Paper issued by the Government last week outlined a number of improvements for the nation's rail network.

One of the aims in that document that was picked up by the media related to increasing the percentage of cost borne by ticket revenue. This is a matter of government policy, as, otherwise, it would require enhancing the operating subsidy, which at the end of the day would come from the taxpayer.

We all wish to see improvements in the existing railway service, and clearly that expenditure has to be financed somehow. In the UK, this is usually by increasing the amount which the user pays, although invariably there will be competition with continual fares policy - where the user pays a much lower portion of the costs.

The costs of operating a rail network, too, is not always appreciated, and, of course, what is paid by way of ticket price to the operator has to cover all the services - including leasing of rolling stock, track access charges, and a whole host of other operational costs.

While it is appreciated that we all desire to have lower ticket prices, the revenue has to be financed from somewhere. As part
of the proposals, the Government is working with the rail industry to introduce a simplified fare structure which will, hopefully, make that true cost more apparent, while permitting customer choice of the type of ticket to be used for each particular journey.

At the moment, ticket prices on other franchises across the country have, while capped by the Government, risen over and above
the Price Index in certain instances, whereas in Merseyside it is restricted. I think it is almost inevitable that, unless we adopt a different philosophy, the cost will be met to some extent by higher fares for either the users, as in passengers, or freight users as well - that shouldn't be forgotten.

If we don't have charges received through usage, then a bigger burden will be on the tax payers, with subsequent rise in taxes. The growth in patronage on the rail system is actually part of the problem. Needing new investment, for example to improve key
central stations and additional rolling stock, all has to be paid for.