Everything you know about British Train Fares is Wrong

[Christopher125]

City Metric - Everything you know about british train fares is wrong

 

A century and a half on, and many mergers, nationalisations, privatisations and re-nationalisations later, railway finance remains hard to follow. So when fares go up, you generally get to read misleading, knocked-together copy about how fares today are unreasonable and outrageous, how everything is better in other countries, and how everything used to be much nicer in the old days.

 

The blame for the sky having fallen varies with the publication’s bias. The Guardian blames privatisation and profiteers; the Telegraph blames regulation and bureaucrats. Both are almost entirely wrong.

Interesting article that attempts to mythbust many of the common assertions made in the press by lazy journalists about train fares in this country.

[edcayton]

Yes, a very interesting article assuming his facts are correct. Thanks for posting.

 

Ed

[Joseph_Pestell]

Certainly true that "walk-up" fares on Western European railways have gone up a lot in recent years and thus not so dissimilar to our own.

 

I think that his figures look pretty fair but, as always in accountancy, it is quite easy to reach the outcome that you want. For instance, true that profits at train operating companies are not that great expressed as a percentage of turnover. But look at them as a return on capital invested (very little as trains are almost all leased) and I suspect that they would  be very much top-drawer.

 

And let's not forget the massive salaries. Do countries in Europe pay the CEO of their track company four times the salary (excluding any bonus lost due to Finsbury Park fiasco) of their prime minister? I doubt it. I am sure that in BR days none of the Board received mega salaries and these days there are so many more "chiefs".

[Mike Storey]

Extremely interesting, albeit much of the data used in the main study is now 4/5 years old - for example UK rail usage has gone up from 1.3 bn to around 1.6 bn since the data, which would actually improve the UK's position still further in many of the tables. Many thanks for posting.

[pete_mcfarlane]

An interesting article. I was reading a similar one about the NHS the other day, which highlighted how A&E waiting times were a) pretty good by International standards and b) presented as a National disgrace by the press. 

 

And let's not forget the massive salaries. Do countries in Europe pay the CEO of their track company four times the salary (excluding any bonus lost due to Finsbury Park fiasco) of their prime minister? I doubt it. I am sure that in BR days none of the Board received mega salaries and these days there are so many more "chiefs".

Why are salaries a problem? We seem to have reached a situation in this country where people in business get automatically criticised for having relatively high salaries (mainly by newspapers owned by billionaires and edited by people on similar salaries). If they do a good job, then they are probably worth the money. 

[lmsforever]

Agree if someone is good at their job and improves the company position they are worth it ,but in the UK anyone who does well is fair game for detractors and the paers lead the way.

[Joseph_Pestell]

An interesting article. I was reading a similar one about the NHS the other day, which highlighted how A&E waiting times were a) pretty good by International standards and B) presented as a National disgrace by the press. 

 

Why are salaries a problem? We seem to have reached a situation in this country where people in business get automatically criticised for having relatively high salaries (mainly by newspapers owned by billionaires and edited by people on similar salaries). If they do a good job, then they are probably worth the money. 

 

Ask yourself this question.  If you were, for example, the CEO of a bank, would you rather do that job or. at the same salary, clean the loos in the bank HQ?

 

And then there is the question of "doing a good job". However clever the CEO of a large organisation, his/her results depend on his/her employees working well. In fact a CEO gets a lot of help from others while the much lower remunerated small business person has to master far more aspects of running the business.

 

Ask the shareholders of many large businesses (e.g. Barclays and Bob Diamond) whether the high-paid directors are doing a good job in terms of what they are getting by way of dividends.

 

Is there really only one man that can do a good job in a particular job? Very rarely. So why not shortlist all the candidates that can do the job and then ask them to bid against each other.  That would be the proper "market economics" way to do it.

[Roddy Angus]

Interesting that the calculations in article seem to ignore any income from freight.

 

Roddy

[Glorious NSE]

And let's not forget the massive salaries. Do countries in Europe pay the CEO of their track company four times the salary (excluding any bonus lost due to Finsbury Park fiasco) of their prime minister? I doubt it. I am sure that in BR days none of the Board received mega salaries and these days there are so many more "chiefs".

 

Do other companies pay their prime minister less than the local going rate for a captain of industry?

 

(Without bringing up whether one or other is worth it....)

[Ohmisterporter]

An interesting article and some of the links from it are also worth a read.

[pete_mcfarlane]

Do other companies pay their prime minister less than the local going rate for a captain of industry?

 

(Without bringing up whether one or other is worth it....)

Going OT, there's an interesting list here of World leader salaries: http://www.paywizard.co.uk/main/pay/vip-celebrity-salary/world-leaders-salary

(David Cameron seems to be quite good value for money when you see how much the mad woman who runs Argentina gets paid)

[The Stationmaster]

Certainly true that "walk-up" fares on Western European railways have gone up a lot in recent years and thus not so dissimilar to our own.

 

I think that his figures look pretty fair but, as always in accountancy, it is quite easy to reach the outcome that you want. For instance, true that profits at train operating companies are not that great expressed as a percentage of turnover. But look at them as a return on capital invested (very little as trains are almost all leased) and I suspect that they would  be very much top-drawer.

 

And let's not forget the massive salaries. Do countries in Europe pay the CEO of their track company four times the salary (excluding any bonus lost due to Finsbury Park fiasco) of their prime minister? I doubt it. I am sure that in BR days none of the Board received mega salaries and these days there are so many more "chiefs".

Inter-country comparisons are always difficult however in my final big railway job I occasionally found it interesting to make comparisons with people I knew working in other European countries.  My SNCF equivalent received a virtually gratis flat in paris as well as his salary, something more than I got in London.  A fairly direct equivalent on DSB was - he said - on a  salary 'several times yours, but you ought to see my tax rate' and equally a similar equivalent on SNCB was on considerably more than me.

 

Now as far as senior jobs in the trail industry go the position in TOCs (and probably freight companies) is that there are considerably fewer senior jobs than there were in the nearest equivalent parts of BR - simply illustrated by the number of posts taken out at and since privatisation.  However the other side of the coin is that some frontline jobs are now far better remunerated, in comparative terms, than they were in BR days.

 

Mind you I do wonder how RSSB jobs - in terms of numbers - compare with former BRB jobs and I don't know about the top end of Network rail but it does appear to have a lot more administrative tale than some of the equivalent BR departments did.

[Classsix T]

Staying OT, but grazing the paint on one of Mike's points, I get bemused when folk grumble about salaries compared to that given to the PM.

The First Lord of the Treasury gets given two more doss houses on top of any already owned, doesn't have to even drive let alone own a vehicle, free air travel and jollies abroad, bodyguards, secretaries, house staff, private health care...the list goes on. You'd be hard pushed to get his "package" in any other job, without even mentioning the pension, corporate part time bung fest and comfy sofa in the upper house once done.

 

C6T.

[Mike Storey]

I think it is easy to forget in making comparisons, that the UK Prime Minister is not the UK Head of State. So a comparison with the Presidents of any country is misleading. Instead, salaries paid should be compared with HM the Queen, including allowances, tax breaks, inherited wealth, property ownership and so on. I am no Republican (given the apparent alternatives) but let's match like with like.

 

A TOC, Freight or ROSCO CEO in the UK also carries (usually as a Company Director) a host of personal legal and financial responsibilities and consequent risks that their continental counterparts, usually as State Employees, do not. Therefore, counting the plethora of allowances, benefits and other trimmings associated with particularly French, Italian and to a large extent German, equivalents, it could easily be stated that the UK gets a good deal. When one adds the multi-level bureaucracies built in to those regimes, far greater than anything the British could even dream of, such comparisons, especially in terms of direct accountability, become meaningless.

 

In other words, accusations of undeservingly high salaries or packages for UK train industry leaders are somewhat misplaced.

[John_Miles]

All this is very interesting but remember there is election looming so we are bound to be  bombarded with lots of misinformation and promises which will never be met.

[Curlew]

Arguments suggesting that things on the railways are so much worse than before privatisation remind me so much of this............

 

[Xerces Fobe2]

I think that these figures in isolation do not provide a good camparison. Average salaries between counties are not considered therefore the proportion of income consumed by rail fares is not detailed. Station parking fees and feeder buses LRV systems costs are excluded

 

As an aside, my friends in San Fancisco are somewhat animated that the BART is scrapping free parking at it's stations and charging a daily rate of $3/day!

 

One day in the UK we might get the whole truth however the only people are really interested in this are the passengers, who are held hostage to fortune and have no power change the status quo.

 

XF

[edcayton]

Ask yourself this question.  If you were, for example, the CEO of a bank, would you rather do that job or. at the same salary, clean the loos in the bank HQ?

 

And then there is the question of "doing a good job". However clever the CEO of a large organisation, his/her results depend on his/her employees working well. In fact a CEO gets a lot of help from others while the much lower remunerated small business person has to master far more aspects of running the business.

 

Ask the shareholders of many large businesses (e.g. Barclays and Bob Diamond) whether the high-paid directors are doing a good job in terms of what they are getting by way of dividends.

 

Is there really only one man that can do a good job in a particular job? Very rarely. So why not shortlist all the candidates that can do the job and then ask them to bid against each other.  That would be the proper "market economics" way to do it.

 

The best example to me is the Head of a school or the Principal of a College. I have seen the difference one man/woman can make, and in a surprisingly short time. Yes, their results depend on their employees working well, but a good head can inspire the staff and a poor one the opposite. Good staff are a lot easier to lose than to find.

 

Ed

[Reorte]

The best example to me is the Head of a school or the Principal of a College. I have seen the difference one man/woman can make, and in a surprisingly short time. Yes, their results depend on their employees working well, but a good head can inspire the staff and a poor one the opposite. Good staff are a lot easier to lose than to find.

Yet the head on his own is of no use whatsoever. The position is just another link in a chain, one that only happens to need one person.

[corneliuslundie]

This is quite a change as the London commuter services used to be the most heavily subsidised, yet nine franchises including six commuter franchises are apparently now paying premiums rather than receiving subsidies. Northern Rail receives the biggest subsidy per passenger mile (25.7p).

 

However, it is important to note the indirect subsidies paid via Network Rail after which the only operators not receiving subsidy in 2014-14 were East Coast, First Capital Connect and South West Trains, and the total subsidy per passenger mile was 6.8p (compared with an average payment to the government before the NR payments of 1.8p per passenger mile). After the NR payments the Northern Rail subsidy is 51.5p per passenger mile.

 

So how much of the reported improvement is because of the change in the way subsidy passes from the government to the companies? I can't remember when it happened (I was out of the country I think).

[Talltim]

I knew quite a few things in that article. Does it mean that they are wrong?

[darrel]

What would be a better argument is to compare the 20 years before privatisation and the 20 years after based on the following.

 

Miles of track electrified.

Miles of track reopened

Number of new stations.

Number of passenger coaches built

Number of freight locomotives built

Number of wagons built.

[Joseph_Pestell]

Next time a journalist wants to make a daft fares comparison, there is a particularly good bargain available in the Languedoc-Roussillon Region of France (which stretches from the Spanish border at Cerbere right up into the Lozere. You can, so long as you only use regional trains (TER) go anywhere for just €1. Only condition seems to be that you have to book online.

 

Within each departement, bus fares too are only €1 with some long journeys possible. Despite such bargain fares, and more frequent services, very few people seem to be using them.

[Mike Storey]

This is quite a change as the London commuter services used to be the most heavily subsidised, yet nine franchises including six commuter franchises are apparently now paying premiums rather than receiving subsidies. Northern Rail receives the biggest subsidy per passenger mile (25.7p).

 

However, it is important to note the indirect subsidies paid via Network Rail after which the only operators not receiving subsidy in 2014-14 were East Coast, First Capital Connect and South West Trains, and the total subsidy per passenger mile was 6.8p (compared with an average payment to the government before the NR payments of 1.8p per passenger mile). After the NR payments the Northern Rail subsidy is 51.5p per passenger mile.

 

So how much of the reported improvement is because of the change in the way subsidy passes from the government to the companies? I can't remember when it happened (I was out of the country I think).

 

Not sure that is correct about the adjusted "subsidy" level for Northern Rail. The major alteration in the way that freight track access charges are now calculated, distorts these figures but not in a transparent way. Despite introducing an element of market pricing for some freight commodities in CP5, there is still an acknowledged large subsidy to freight operations which is not reflected regionally (or if it is, I have failed to spot it). The subsidy in England ad Wales was c. £200m in 2010, and, whilst no expert in the latest charging regime, I would hazard that this is now around £240m plus. Effectively a cap has been introduced on average variable freight charges. I applaud this to build the sector but it seems to be at the cost of the appearance of higher subsidy to TOCs, outside London anyway, I have never fully agreed with the way in which marginal freight costs have been calculated, especially in regard to progressive track damage and lost opportunity costs (one freight path can take up to three passenger train paths out of a timetable), but it has nevertheless enabled freight to grow. I would ask that anyone making comparisons of regional TOC subsidies bears this in mind.

 

In clear contrast, RFF (the NR of France, now to be re-merged with SNCF) has priced freight track access charges so heavily (as it was instructed to do apparently by M. Sarkozy) that SNCF Fret is slowly dying and open freight access is tiny, compared to the UK. Not only that but the present French govt have both declined to implement long distance lorry tariffs (with which the new rail charges were planned in mind) and have also deregulated long distance coach traffic. Strange that a supposedly socialist govt is doing less for sustainable transport than the UK coalition, whether by accident or design.

[Classsix T]

Is the French equivalent of Parliament a majority of Socialists though Mike, or a case of, like USA, the President happens to be left of centre but his policies are shot down in flames by a right wing dominated House?

 

C6T.