Rail fare increases - gouging profits or a stealth tax?

Annual income twenty pounds, annual expenditure nineteen nineteen six, result happiness.

Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery.

Dickens' wisdom, from the mouth of his literary creation Mr.Micawber, would suggest that British train companies have had a surfeit of happiness in the last decade. 


Companies seldom admit they put up prices to fatten their executives' pay or to boost dividends to their shareholders. They'd far rather claim they are forced to take more money from us for our own good. Energy companies justify price hikes asserting, dubiously, that they pay for 'greening' their output. Train companies justify rocketing fares with the claim they are investing in track and trains. A cleaner country and better commuting. Who wouldn't pay for that, they assert.

The reality, exposed in their own rail industry reports, is that in the last decade the train operating companies have been growing their income while reducing their expenditure on improvements. Yet rail bosses still plead the need to increase fares, apparently demonstrating their Micawberish tendencies in their puffing pursuit of personal happiness. 

If that is not the case, where is the money going?

According to the Office of Rail Regulation (ORR) everything about the railways has been steaming upwards for a decade except for one thing that has been falling like a lump of coal: investment by the private sector train companies back into the industry. 

We are told repeatedly, by rail company directors and government transport ministers, that fares need to go up to pay for renewing our railways. However, statistics from the ORR show private investment, excluding the track owning Network Rail, halved between 2006 and 2010. And the rise in 2011 has only brought it back to 70% of 2006 spending. 

In contrast to this precipitous fall in investment, ORR figures show that Ticket Prices have soared by upto 50% since 2004

(If you thought that the big fall in 'Advance' tickets in 2009 was generous, be aware that according to a Department of Transport report in 2012 these constitute just 4% of all tickets).

Again, in stark contrast to the fall in investment, total ticket revenues have increased 97% since 2002, and gone up over 40% since 2006:

This increase in revenue has not been achieved by running more trains, as ORR figures show Train Kilometres (i.e. the total number of kilometres travelled by our trains) has crept up by a mere 15%. (To clarify: if twice as many trains ran on the same line, then the number of train kilometres would double).

Even though train kilometres have only edged up 15%, Passenger Kilometres, i.e. total number of kilometres travelled by us Britons and our foreign visitors, has jumped by 40% since 2004. A 40% increase in passenger kilometres and only a 15% increase in train kilometres, all in the same period, has presumably been achieved by packing us in more tightly.

So where has all this extra loot gone? Perhaps the additional money extracted from the travelling public is not all going into the pockets of the executives of the train companies. Perhaps some is going to Network Rail? But even Network Rail has no plans to significantly increase their spending. In 2009, when fares were soaring, Network Rail's expenditure plans showed a falling trend. It makes one wonder, at a time when all investment plans were reducing, why passenger fares continue to rise so fast?

Their updated plans of 2012 showed a broadly flat trend - and certainly no significant increase.

So if it's not going to train nor track executives, is all that extra money going simply so the government can save money by cutting its funding for rail investment? 

Government cuts in spending have enabled cuts to the top rate and corporation taxes, as done in the 2012 budget? Stealthily recouping the lost revenue from train travellers?

Income tax takes more from those who have more. Rail fare increases are like a flat tax, the same for everybody buying a ticket. An extra £1 on your ticket price a day is an extra 1% tax on shop assistants earning £100 a day, and an extra 0.2% on a manager earning £500 a day. It's all going into the pot to pay for the 5% tax cut in the 2012 budget for those earning over £150,000.

Do I hear you ask why the taxpayer should subsidise commuters? Well, the government forked out billions to bail out the banks. In spite of the wild exaggerations of banker-groupies the banks' contribution to the UK economy is far smaller than any one of manufacturing, business services, education and health.

Gouging profits for train operators or a stealth tax for the government? Either way stonking fare hikes are just another rip-off on us ripped-off Britons.