Everything you know about British train fares is wrong

The good old days. Image: Getty.

Railways are complicated. Their mechanical complexity required the invention of the modern engineering profession to stop them from killing people (mostly). Just as importantly, their business complexity required the invention of the modern accounting profession to stop them from going bust (mostly).

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.

Charging by use, not by set price

The very worst reporting on the cost of rail involves a cherry-picked comparison of particular journeys, where a foreign ticket is compared to the most expensive available walk-up UK ticket for a long-distance journey. This allows the Telegraph to pretend a ticket from London to Bristol costs £96.50, compared to £29 for the similar distance from Marseille to Nice.

In fact, a morning peak ticket from London to Bristol booked a day in advance costs £42.50, and an off-peak ticket booked a couple of weeks in advance costs £18. Newspapers run the same trick when they compare walk-up rail fares to advance-booked plane fares, which should amuse anyone who’s ever tried to buy a walk-up plane fare.

Look more closely, and you’ll find that UK long-distance and regional train fares are on a par with other high-income countries; the only exceptions are expensive peak-time walk-up tickets. In other words, the UK is better at yield management, selling cheap tickets on empty trains and expensive ones on full trains.

Who pays the piper?

The data required for a proper comparison is available, but is also confusing. To keep things simple, we’ll use data for England here (funding regimes in Northern Ireland, Wales and Scotland are different, reporting isn’t always consistent, and England makes up over 90 per cent of total spending).

In 2013-14, trains in England were subsidised to the tune of £2.3bn. That number is the subsidy that the government pays directly to publicly-owned track operator Network Rail (£2.9bn), minus the premium that train operators pay the government for the right to operate (£616m).

Passengers in England paid £7.1bn in fares in 2012-13. The 2013-14 data is not yet available, but if we assume there was no increase in fares paid, that would mean that total rail funding was at least £9.4bn.

So 24 per cent of the cost of running the rail network in England in 2014 was paid by taxpayers, and the remaining 76 per cent was paid for by train fares. This compares to 2010-11, when 36 per cent of the cost was paid by taxpayers and 64 per cent out of train fares.

In other words, the amount by which the state is subsidising the rail network is falling. The subsidy is also far less than is paid elsewhere. In New York City, taxpayers pay 44 per cent of the rail system’s operating cost. In Montreal, Canada, it’s 43 per cent, while in Sydney, Australia it’s 80 per cent.

In 2012, German rail consultants Civity carried out a study for the UK’s Office of Rail Regulation. That confirmed that the level of subsidy for Great Britain (including Wales and Scotland but not Northern Ireland) was low compared to other western European countries, particularly for commuters:

Percentage of train operating company revenues from taxpayer grants

Commuters pay a lot, but they still come

So commuter train fares in England are more expensive than those elsewhere. The pro-austerity coalition government has made deliberate and conscious policy decisions that reduce the amount that taxpayers pay towards the railways, and increase the amount that passengers pay.

The drive to cut subsidy has been concentrated on high-demand commuter services. Regional passengers get a good deal by international standards; so do long-distance passengers, so long as they’ve bought their ticket in advance.

Whether that’s a good way to structure things is very much open to personal taste. There is plenty of research to suggest that greater rail usage has benefits for society at large. On the other hand, rail usage in the UK has grown by 70 per cent since 1995 and by 9 per cent from 2010 to 2012 despite rising prices; most of this growth has been among commuters. In other words, as much as people grumble about lower rail subsidy and higher fares in the UK, they aren’t actually putting many people off.


But what about the privateers?

A final common complaint about the railways is that the train operating companies remove significant amounts of money from the system in dividends. You’ll be shocked to hear that this isn’t true either.

Train operators in England made a total profit of £250m in 2012-13. That’s about a 3 per cent margin on the industry’s revenue. By way of comparison, supermarkets make a revenue margin or about 6 per cent; Apple makes 40 per cent.

The upshot of all this is that, if we were to keep the subsidy at the same rate, eliminate operators’ profits tomorrow, and pass all the money saved straight onto commuters, it would lead to a cut in rail fares of 4 per cent. Once.

That’s even if you accept the case that train operators are useless parasites with the tendering process providing no benefits over recreating British Rail in-house, and if you assume that the process of restructuring would be cost-free.  That’s a pretty bold set of assumptions to make for the sake of a one-off 4 per cent cut in your ticket.

Rail subsidies are complicated, analysing things is difficult, and hacks are lazy: it’s no surprise that most commentary on the relative value of UK rail fares should be worthless. But, if you do the analysis properly, it turns out that when fares are higher, there’s a good reason for it: people don’t like paying tax.

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How can we stop city breaks killing our cities?

This couple may look happy, but they’re destroying Barcelona. Image: Getty.

Can’t wait to pack your bags and head off on holiday again? It used to be that people would look forward to a long break in summer – but now tourists have got used to regular short breaks through the year. We love to jet off to the world’s glittering cities, even if only for a day or two. The trouble is, binge travelling may be killing the places we visit.

You may even have seen some “tourists go home” graffiti on your last trip, and it’s not hard to see why. Barcelona is a good example of how a city can groan under the weight of its popularity. It now has the busiest cruise port, and the second fastest growing airport in Europe. Walking through the Barcelona streets at peak season (which now never seems to end) flings you into a relentless stream of tourists. They fill the city’s hot spots in search of “authentic” tapas and sangria, and a bit of culture under the sun. The mayor has echoed residents’ concerns over the impact of tourism; a strategic plan has been put in place.

It is true though, that cities tend to start managing the impact of tourism only when it is already too late. It creeps up on them. Unlike visitors to purpose-built beach destinations and national parks, city-break tourists use the same infrastructure as the locals: existing systems start slowly to stretch at the seams. Business travellers, stag parties and museum visitors will all use existing leisure facilities.

‘Meet the friendly locals’, they said. Image: Sterling Ely/Flickrcreative commons.

Barcelona may only be the 59th largest city in the world, but it is the 12th most popular with international visitors. Compared to London or Paris, it is small, and tourism has spiked sharply since the 1992 Olympics rather than grown steadily as in other European favourites like Rome.

Growth is relentless. The UN World Tourism Organisation (UNWTO) even speaks about tourism as a right for all citizens, and citizens are increasingly exercising that right: from 1bn international travellers today, we will grow to 1.8bn by 2030, according to UNWTO forecasts.

Faced with this gathering storm, just who is tourism supposed to benefit? Travellers, cities, residents or the tourism industry?

Market forces

Managing the impact of tourism starts by changing the way destinations market themselves: once the tourists arrive, it’s too late. Tourism authorities need to understand that they are accountable to the city, not to the tourism industry. When the city of Barcelona commissioned the University of Surrey to look into how it might best promote sustainable development, we found a series of techniques which have been incorporated, at least in part, into the city’s 2020 Tourism Strategy.

In the simplest terms, the trick is to cajole tourists into city breaks which are far less of a burden on the urban infrastructure. In other words, normalising the consumption of sustainable tourism products and services. In Copenhagen, 70 per cent of the hotels are certified as sustainable and the municipal authority demands sustainability from its suppliers.

Higher than the sun. A primal scream from the world’s cities? Image: Josep Tomàs/Flickr/creative commons.

Destinations must also be accountable for the transport impact of their visitors. The marketing department might prefer a Japanese tourist to Barcelona because on average they will spend €40 more than a French tourist – according to unpublished data from the Barcelona Tourist Board – but the carbon footprint we collectively pay for is not taken into account.

Crucially, for the kind of city breaks we might enjoy in Barcelona, most of the carbon footprint from your holiday is from your transport. Short breaks therefore pollute more per night, and so destinations ought to be fighting tooth and nail to get you to stay longer. It seems like a win for tourists too: a few extra days in the Spanish sun, a more relaxing break, and all accompanied by the warm glow of self-satisfaction and a gold star for sustainability.


Destinations can also target customers that behave the most like locals. Japanese first-time visitors to Barcelona will crowd the Sagrada Familia cathedral, while most French tourists are repeat visitors that will spread out to lesser-known parts of the city. Reducing seasonality by emphasising activities that can be done in winter or at less crowded times, and geographically spreading tourism by improving less popular areas and communicating their particular charms can also help reduce pressure on hot spots, much like Amsterdam is doing.

Turnover is vanity, and profit margins are sanity. No city should smugly crow about the sheer volume of visitors through its gates. If tourism is here to stay, then the least cities can do is to sell products that will have the greatest benefit for society. Whether it’s Barcelona, Berlin, Bologna or Bognor, there should be a focus on locally and ethically produced products and services which residents are proud to sell. Tourist boards should work with small businesses that offer creative and original things to do and places to stay, adding breadth to the city’s offering.

The ConversationWhether Barcelona will introduce these ideas will depend on the bravery of politicians and buy-in from the powerful businesses which are happily making short-term profits at the expense of residents and the planet. It is possible to do things differently, and for everyone to benefit more. It may be that the tipping point lies in the age-old mechanics of supply and demand: bear that in mind next time you’re booking a quick city break that looks like it’s only adding to the problem.

Xavier Font is professor of marketing at the University of Surrey.

This article was originally published on The Conversation. Read the original article.