Thursday 15 March 2012

Wrong priorities

The announcements by the UK Government last week about rail finances serve only to confirm a lack of real commitment to public transport.  Faced with a demand which exceeds the supply at peak hours, their response seems to be the classic piece of economics – increase the price until the demand drops to match the supply.
There is scope, of course, to stagger the peak hours more effectively by encouraging companies to work more flexibly, and that would make better overall use of resources.  I doubt, however, whether upping the price of peak hour public transport is going to be the most effective or efficient mechanism to achieve that.
Pricing people off the railways will only increase roads congestion, and lead to yet more calls for more road-building.  What is actually needed is a plan to increase rail capacity, in order to reward and encourage the growing trend to the use of public transport, but they seem unwilling even to consider that.
Comparisons with the cost levels of railways in other countries may be interesting; but in themselves, I’m not convinced that they tell us much, since the circumstances are so different.  In any large organisation, there will always be some degree of inefficiency and therefore scope for doing things better, but it seems like the wrong thing to be putting centre stage at a time when we really need a cohesive plan for investment and improvement.
So, certainly there are smarter ways of handling ticketing in an increasingly computerised system, and it would seem sensible to pursue those; but we shouldn’t be waiting to drive out cost before we look at how we expand and improve the service.


Anonymous said...

Peak times are regulated fares (season tickets, weeklys and peak single/returns). Their price is fixed by the Department of Transport, and is defined by Westminster legislation, resulting contractual obligations in the TOCs franchise agreement. Whilst innovative 'products' like cheaper 'early bird' tickets have been tried by some TOCs, it was only on the basis of a temporary variance of the TOCs contract, approved by the UK minister. Essentially, you are making a TOC franchise holder to ask the government to reduce their revenue in order to ease congestion. Also, all performance related subsidy paid to them from government is based on punctuality and lack service of cancellations, not on congestion relief. It's no surprise they don't innovate. There is another issue, and that is TOC franchises are of a fixed term and the payments they make back to government (license fees) and infrastructure usage costs paid to Network Rail are 'end loaded' towards the end of the franchise term. This results in an incentive to maximise non-regulated revenue at the start of a franchise term (about 80p in the £1 collected) but towards the end of the franchise term the labour costs of maximising non-regulated revenue outweighs the cost of collecting it (about 20p in the £1 collected). Permanent incentives to move passenger travel to off-peak times is therefore just a mechanism to give away any profits in the franchise. It's unthinkable in the current arrangements, regardless of any statutory changes in regulated fares. Usually any 'profit' in a transport system is yielded by better capacity utilisation (increasing the overall bums on seats throughout the total period of time assets are employed (rolling stock and wage costs). However, the way in which the railways are price-structured, better capacity utilisation actually reduces profit yield. Essentially, if the train is full between Swansea and Cardiff at 7am in the morning, a private market would suggest you travel from Aberdeen to Dundee at 3pm in the afternoon, instead. No-one has yet found a way to overcome this abomination of privatisation.

Unknown said...

With all due respect, John, Bugger that!

Will you be re-joining Plaid now that we have a way forward under Leanne?

Boncath said...

Plaid needs you. WALES NEEDS YOU

John Dixon said...

Anonymous 2,

I don't know whether your guess at the identity of Anon 15:27 is correct or not. I allow anonymous comments on this blog, provided that they adhere to normal protocols. I know that I haven't set out the protocols clearly anywhere, so this might look like an arbitrary rule, but if they were written down somewhere, one of them would be that I won't allow comments guessing at the identity of anonymous contributors! It's up to them, not me, whether they should be identified or not. So your comment hasn't appeared...