Season tickets could be 10 per cent cheaper by 2017 if rail services were run by public sector, says TUC

Season tickets could be 10 per cent cheaper by 2017 if rail services were run by the public sector, according to new research published by the Action for Rail campaign today (Tuesday).

The research, carried out by Transport for Quality of Life, shows that £1.5bn could be saved over the next five years if routes, including the Northern, Transpennine and West Coast Main Line, were operated by the public sector.

Contracts on 11 train lines will come up for renewal between 2015 and 2020; Northern, Transpennine, Greater Anglia, West Coast, London Midland, East Midlands, South Eastern, Wales & Borders, Great Western, South Western and Cross Country.

The report says that if they were run by the public sector the Treasury would be able to pass on massive savings to commuters over the next five years, including introducing free off peak travel for children travelling with their parents.

The biggest saving would come from recouping the money train companies currently operating these routes pay to their shareholders.

The report estimates that £520m million in shareholder dividends alone could be saved if the 11 train lines were run by the public sector when their franchise came to an end.

The study says that if the 11 routes were operated by the public sector the following could happen:

  • Before the end of 2015 it would be possible to introduce free off peak travel for children travelling with their parents
  • From 2017 regulated fares – including season and anytime day tickets – could be cut by 10 per cent.
  • From 2020 all fares could be cut by 3 per cent.

The study comes after separate Action for Rail research revealed that commuters on the UK’s privatised railways could be spending more than twice as much of their salary on rail travel than passengers on publicly-owned railways in France, Germany, Spain and Italy.

On the eve of the 21st anniversary of rail privatisation, rail unions will today begin a day of action at over 40 stations throughout the UK, including Manchester Piccadilly, Glasgow Central, Nottingham and Portsmouth, as part of the Action for Rail campaign.

Campaigners will be outside London Waterloo mainline station (Victory Arch entrance) at 8am today handing out leaflets to passengers, which highlight the high costs of fares and privatisation and call for public ownership of the railways.

TUC General Secretary and chair of Action for Rail, Frances O’Grady said:

“The UK has the most expensive rail fares in all of Europe. If services were run by the public sector it would make a big difference to families and hard-pressed commuters who have suffered year after year of wage-busting fare increases under privatised rail.

“This report highlights once again the huge cost of privatisation to taxpayers and passengers. Money that could be spent on making journeys cheaper is instead being siphoned off into shareholders’ pockets and wasted on bidding and other franchising costs.

“The case for an integrated rail network under public ownership is overwhelming.”

ASLEF General Secretary Mick Whelan said:

“At a time when families are struggling to make ends meet, and the government talks of value for money, delivering a different model that could cut fares makes sense not only for the passenger but for the taxpayer. Let’s ease the burden on everyone now by doing what the public are demanding.”

RMT General Secretary Mick Cash said:

“British people ‎ have had enough of the exploitation and racketeering and support public ownership of our railways.

“The British passenger pays the highest fares in Europe to travel on rammed-out and unreliable services, while the private train companies are laughing all the way to the bank. The recent shocking pictures of the dangerous overcrowding at London Bridge are the culmination of two decades of privatisation.”

TSSA General Secretary Manuel Cortes said:

“This report confirms what we have been saying for the past twenty years, a public railway is a cheaper railway. In Germany, France, Spain and Italy fares really are cheaper because their railways are all publicly-owned.”

Unite national rail officer Tony Murphy said:

“This report only reinforces what Unite has been saying for years – that rail privatisation is driven by a right-wing ideology and not for the benefit of the hard-pressed commuter.

“The UK has the most expensive rail system in Europe because of the demands of shareholders who cream off the cash at the expense of rail travellers who are faced with annual fare rises way beyond the rate of inflation.

“As the private rail contracts come up for renewal, they should be allowed to lapse and the services should be taken back into public ownership for the good of the travelling public and their wallets and purses, and not rapacious shareholders.”

 

NOTES TO EDITORS:

Savings in ongoing annual costs from 11 lines that will continue indefinitely and could support a fare cut

Item saved 2015/16£m/yr 2016/17£m/yr 2017/18£m/yr 2018/19£m/yr 2019/2020£m/yr
DfT contractor costs for franchise competitions nil nil 3.75 3.75 3.75
Train Operating Company bidding costs (an indirect gain) nil nil 22.25 44.50 66.75
Dividends paid to private Train Operating Company shareholders 53 66 111 136 154
De-duplication of Train Operating Company management & marketing 6.5 10.3 19.5 30.5 37.6
Interface ‘friction’ for Train Operating Companies nil 10 40 90 145
Train Operating Company subcontractor profits (brought in-house) 5 10 15 20 25
Network Rail interface ‘friction’ 5 5 30 50 70
Dividends paid to Network Rail subcontractors 10 20 40 70 100
Totals rounded 80 121 282 445 602


A timetable of possible fare cuts during the next term of government, fully funded by savings achieved by structural rail reforms as they progress

Fare cut 2015/16£m/yr 2016/17£m/yr 2017/18£m/yr 2018/19£m/yr 2019/2020£m/yr
Cash-flow reduction by year end 80 121 282 445 602
50% cut in child off-peak fares to ¼-fare 20 20 20 20 20
Free child travel with parents off-peak 20 20 20 20 20
10% cut to regulated fares 270 270 270
3% cut to all fares 230
Remaining annual cash-flow saving 40 81 (38) 135 62

To provide a simple illustration of the level of fare cuts that could be made, the figures have been calculated as if available savings were applied across the whole railway. In practice it would be preferable to apply fare cuts just to the parts of the railway which are being operated by a public operator by the time the price change is introduced. This approach would provide a helpful pilot process to check that the consumer responses match cost predictions and would avoid spending some of the savings on reimbursement of the remaining private operators and the administrative costs that process would incur.

A copy of the report can be found at – http://bit.ly/1HO4cqx

– Action for Rail is a campaign involving the TUC, and its affiliated unions with members working on the railways – ASLEF, RMT, TSSA and Unite. Its aim is to work with passenger groups, rail campaigners and environmentalists to campaign against cuts to rail services and staffing and to promote the case for integrated, national rail under public ownership. For more information please visit www.actionforrail.org

– All TUC press releases can be found at www.tuc.org.uk
– Follow the TUC on Twitter: @tucnews

Contacts:

Media enquiries:
TUC      Alex Rossiter  T: 020 7467 1285  M: 07887 572130  E: arossiter@tuc.org.uk