Train Fares: The Reasons Why The Cost Of A Ticket Is Anything But

Peter Taylor,

Seldom does a month go by in the UK without a story about the rail network, whether it is contractual wrangling, the ‘wrong kind of snow/leaves/air’ or above the rate of inflation rises in the costs of tickets. The latter of these has now become almost an annual tradition, regardless of the waxing and waning trends of inflation over the past decade.

But why is this? Some, like Oliver Huitson in his article for the Guardian, argue that it was as a direct result of the privatisation of British Rail by the Conservative government of 1993. In his argument, however, he made the fatal mistake a lot of ‘renationalisation’ advocates do in assuming that the UK’s rail network is actually fully private. It isn’t.

A fully private network wouldn’t need any state subsidy. A fully private network would have operators competing between themselves for services rather than through government tenders. Instead, what we have in its current form is a halfway house, which invariably draws criticism from both ends of the politico-economic line, as it satisfies neither group. Network Rail receives money from the state, the holders of each tender have a monopoly over a particular line and so in essence can charge what they like without any alternative for the customer.

It is my belief that the above would apply if it was ‘renationalised’. It would be analogous to the current situation but the state would have complete control – a public monopoly. The state would have no reason not to carry on the trend of rises of inflation. Wherever a monopoly exists on a service or goods, the price is inevitably higher than in a free market, regardless of the rate of supply of that service. That the current government is limiting fare increases by the rate of inflation +3% is testament not to the failure of the private operators per se but the current system and its reliance on the state.

Therefore, my solutions to the malaise chime well with a similar article about the free market and the environment posted elsewhere on this site – the introduction of a true free market, rid of the shackles of the state, will drive down fares:

  • Given the size of the UK and the number of lines there are, there is no need whatsoever for state subsidy. A more plausible argument for it could be made in China, Brazil or the USA on geographical grounds (regardless of the political persuasions of their governments). Even here, it is unlikely that every commercially active line will bring a profit; some could be run at a small loss, particularly in rural areas by companies that compete in areas where commuters are much more numerous.
  • End the current maxim of one line, one operator. Whilst there obviously needs to be some co-operation in terms of times and other common-sense safety procedures to avoid accidents, true competition will drive down fares, much like in a supermarket price war. The cheaper the fare, the more people will use their service; an operator that stuck rigidly to its pricing model of charging eye-watering prices for peak times would soon find itself out of business. A supermarket does not charge more for a loaf of bread if you buy it at a certain time of day and a similar principle should exist for transportation.
  • The free market will encourage private companies to investment in the infrastructure of the network itself and people will be drawn to those that spearheaded this. Again, it would require some co-operation between operators (if it was upgrading an existing line, for example) but it would be of mutual benefit to all involved.
  • Emulate examples of where a private rail network has worked. Japan has a vast but extremely efficient train system because private operators continually invest in new technology to improve it as a whole. Although this investment wouldn’t be cheap, they would reap the rewards in the long run, both from domestic customers and ‘rail tourists’ who would want to experience the speed and efficiency of the train/network first-hand; one way costs could be kept down would be to roll out more driverless trains. The Copenhagen Metro in Denmark is completely driver-free and has had no accidents in its lifetime. Boris Johnson has repeatedly called for this to be implemented on the London Underground.

Whilst there is no absolute guarantee that any of these measures by themselves would by themselves make fares cheaper for passengers, it is clear that the system in its current guise cannot continue and is holding the UK back. In the free market, there is more than enough room for private companies who can do things for that are seen to be for the public good and yet still profit from them: rail should be no exception.

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