Conservative rail fares pledge masks high costs of privatisation

The Conservative Party have pledged to freeze regulated rail fares for the next five years. What this announcement obscures is that even if capped at the level of inflation (what is meant by the term ‘freeze’), fares will still rise at wage-busting prices. At the same time our heavily subsidised private rail network wastes over £1bn a year. Passengers and taxpayers are losing out.

Since 2010, the average season ticket has risen by 27 per cent, which is more than two and half times faster than average wage increases. Furthermore, regulated rail fares (including season and anytime day tickets), will be frozen at the RPI inflation measure, while pensions and benefits are linked to the lower CPI inflation measure. This new announcement will do little to help people meet the cost of living crisis.

Since rail privatisation in 1995 up to 2013, the average ticket price has increased by 22 per cent in real terms, which has resulting in Britain having Europe’s highest commuter fares for both day returns and season tickets.

The most recent fare rise in January 2015 was ‘frozen’ – capped at the level of inflation in 2014 of 2.5 per cent. Analysis by Action for Rail at that time revealed that commuters on the UK’s privatised railways were spending more than twice as much of their salary on rail travel than passengers on publicly-owned railways in France, Germany, Spain and Italy.

Research by campaign group Transport for Quality of Life (TFQL) shows that our dysfunctional, fragmented and privatised rail system wastes over over £1bn per year. These costs include debt write-offs, dividend payments to private investors as well as the costs of franchise bidding rounds, marketing and re-branding on franchise takeovers. Further costs include the profit margins of complex tiers of contractors and sub-contractors in a fragmented system, not to mention excessive bonus payments and remuneration.

Public ownership of our railways could lead to a much fairer and more efficient system, with significant savings for passengers and taxpayers alike. Recent research commissioned by the TUC revealed that season tickets could be 10 per cent cheaper by 2017 if rail services were run by the public sector.

Contracts on 11 train lines will come up for renewal between 2015 and 2020, the research showed that £1.5bn could be saved if these routes were operated by the public sector. £520m million in shareholder dividends alone could be saved if the 11 train lines were brought into public ownership when their franchise came to an end.

As James Bloodworth on Left Foot Forward has argued, the freeze does seem to be a tacit  acknowledgement that rail privatisation has failed. It is also probable, as has happened for the past two years, that the pledge is a capitulation to public pressure.

The simple fact of the matter is that privatisation has led to eye-watering fare prices and huge costs for taxpayers. Polling has consistently revealed the popularity of public ownership of rail, which Action for Rail will continue to campaign to achieve.