At Conservative Party conference earlier this month, the Prime Minister indicated that the government would make a U-turn on rail fare rises and cap them at 1% above inflation. To UK commuters, who already pay the highest rail fares in Europe and who were set to face increases of at least 6% from next January, this decision may seem like good news. However the promise will mean very little to rail companies who can still charge more on popular routes as long as the average increase settles at RPI+1%.
The coalition insisted that these fare rises are necessary to meet the costs of essential investment. However, the National Audit Office has warned that they are just as likely to boost the profits of train companies. Furthermore, of the £9bn of 'new' government funding announced back in July, half was announced under the previous Labour government and a significant percentage is due for the next Parliament and is therefore uncosted. Rail users in the UK are clearly getting a bad deal.
Rail reform could be the key to alleviating the financial pressure on UK commuters and to making the transport system more responsive to the needs of its users.
Back in June shadow transport secretary, Maria Eagle, welcomed the Rebuilding Rail report by Transport for Quality of Life as a consideration in the policy review. The report presented the case for reintegrating the operations and infrastructure arms, phasing out franchising and giving passengers, the workforce and elected local and regional authorities a greater say in the industry.
The current system guarantees private rail operators taxpayer funds if their profits fall below a fixed level. It is estimated that £1.2bn of public money has been lost each year as a direct result of the fragmented system. This money could have reduced current fares by as much as 18%. Taxpayers already subsidise the rail industry to the tune of £4bn a year – an industry characterised by mini-monopolies charging UK passengers high fares and siphoning off the profits to continental parent companies. The recent West Coast mainline fiasco and the demise of National Express on the East Coast line in 2009 have proven that the franchise system is broken and represents poor value for money for the taxpayer.
Phasing out the franchise system and adopting a more integrated system such as the one outlined by the Rebuilding Rail report could secure better value for money and put an end to above inflation fare rises. Such a policy would be a welcome reprieve for squeezed commuters hit by higher and higher rail fares.
The Transport for London model with its publicly accountable structure on a city region basis has proven to be an effective means of running a reliable public transport system in the capital. However adopting a similar model elsewhere in the country isn't necessarily appropriate given the length of the process and its financial viability. Nevertheless, we can apply the principles of public accountability and integration to other areas of the transport system. Merseytravel in Liverpool is a good example of how the public and private sectors can work together to ensure that transport runs efficiently and responds to the needs of its users. These kind of relationships are especially important in ensuring everyone has access to public transport regardless of income.
On a national level, agreements between governments and train operators should come with more stringent conditions and an emphasis on customer service outcomes. Excessive fare rises for commuters and large subsidies provided by the government whilst the payment of premiums is back loaded is clearly not a sustainable model for the industry. The franchise system was intended to remove the need for government subsidies but we have been left with something that is expensive for the taxpayer and the commuter, but without a reliable system to show for it.
Labour's policy review is an opportunity for some of these concerns to be addressed. Ed Miliband has consistently put fairness at the heart of his leadership. On energy markets and challenging the rip-off culture, he has set the agenda, whilst coalition policies such as the VAT rise compound the pressures on working families. A programme of rail reform that delivered savings for the taxpayer and lower fares for squeezed commuters would be a logical battleground.
No comments:
Post a Comment