by Phil Marsh

Labour leader Ed Milliband calls for huge changes to the rail industry

Published: 3rd August 2014 looks behind the headlines

Labour leader Ed Miliband has warned rail commuters they could face fare rises of up to 5.6 per cent when fares increase in January 2015, just over 100 days before the next General Election.

He said that this is on top of inflation busting fare rises of nearly 20 per cent since David Cameron came to power. In what some see as a blatant electioneering ploy, he has also suggested that the Government adopts Labour’s policy of capping annual fare rises on every route to take the pressure off commuters next year. has a look at what the implications might be of this policy if it is implemented.

They said:

David Milliband said in Hastings that “Commuters here in Hastings travelling into London could see their fares rise by up to £265 to almost £5,000 next year. “A Labour government would cap annual fares on every route and drive through the biggest reforms of the railways since privatisation.”

Their pledges and the analysis:

“Labour plans to reform the railways to get a better deal for taxpayers and passengers by reviewing the Government’s failed franchising process as a priority, after the chaos of recent years, to safeguard taxpayer and passenger interests”. says: Franchising has not been an easy, totally successful or economically sound way of running the railways but it seems there is no other way of doing this. Successive Governments for over 20 years have stuck with the process despite the long defunct Office of Passenger Rail Franchising and Strategic Rail Authority replaced in turn with the Department for Transport and the Rail Delivery Group.

“Legislating to allow a public sector operator to be able to take on lines and challenge the train operators on a genuine level playing field to secure value for money for passengers and taxpayers”. says: The public sector would have to take on the potentially onerous safety and financial liabilities that come with running a railway. There is very little slack in today’s railways as assets are intensively used. British Rail had already removed most of the slack by 1994 under a strict Government financial cosh. Should another economic downturn hit the economy, would the public sector financially ring-fence their railway finances or make arbitrary service cuts?

“Building cooperative principles into the railways to ensure that passenger and employee involvement is increased, including encouraging new mutuals and co-operatives into the industry”. says: Employee loyalty is generally driven by reward and rarely from a pure motivational standpoint as with volunteering. Passengers’ requirements will often be at odds with a train operators who look for operating solutions to problems.

For example most want non-stop trains from their local station to the nearest town or city but obviously this cannot be accommodated. The next round of franchising includes an assessment of community involvement and quality as well as financial certainty.

“Devolving decisions over the running of regional and local services so that areas can bring together trains, buses, trams into a single network”. says: This often happens today in any case as in places like Manchester, Nottingham and London but the age old railway problem will then arise – who connects with what? Do trains have priority or connecting buses or trams or would it be the other way round? Timetabling is an intricate skill especially on a crowded network and there is a connectional policy in operation at key interchange stations.

“Tackling the monopoly market for rail rolling stock by giving Network Rail greater responsibility for developing a long term plan for procurement and leasing of new rolling stock” says: There are three main Rolling Stock Companies plus several new ones emerging so is there a real monopoly here? Should the infrastructure company lead train procurement when it is not allowed by statute to operate or purchase passenger trains and thus is one step away from passengers? It took the Government years to agree funding for their rolling stock projects delaying the trains.

“Creating a new guiding mind for the railways, bringing Network Rail together with a new representative passenger rail body to contract routes, co-ordinate services and skills in the industry, oversee stations, fares and ticketing, and ensure customer satisfaction across the network” says: Network Rail is one month away from becoming a Government Department so along with The Rail Delivery Group, The Department for Transport, Office of Rail Regulation, Rail Safety & Standards Board and Passenger Focus, do we need another quango?

“Easing the pressure on fare payers by passing savings from reforms on, capping annual fare rises on every route, simplifying fare structures and creating a new legal right to the cheapest ticket! says: The lack of seats is a constant source of complaint whether true or not and in many cases, it is. So what has been done about this? Longer trains and platforms have been introduced enabling millions of extra seats to be used. It is a fact that rail ridership continues to increase despite the above inflation fares’ increases so if fares are held steady or reduced, this will attract more passengers.

Look forward to increased queueing times at ticket offices if the cheapest ticket pledge is introduced. Impartial ticket retailing should always be the guiding rule in any case.

This will in turn increase overcrowding and bring more calls for more trains and punctuality will decrease further. But it is most unlikely that the extra passengers will generate as much income as is lost by holding fares down.

The money-go-round

The effect on revenue could skew franchise balance sheets and tip train companies into loss as their margins are not huge and based on volume. So there is a chance that franchises such as London Midland and Virgin who have made hundreds of staff redundant to save money could be tipped into default.

There was no mention that better train services allow commuters to enjoy living further and further away from city centres where housing is often unaffordable. More and more commuters look at their journey as working time with the mobile communications now available.

The London Overground services have expanded into an orbital service and increased property prices as a result. So many commuters will benefit this way despite having to purchase an expensive season ticket.

These are overtly populist policies which will strike a chord with most rail users but he is forgetting history when Labour viciously opposed privatisation in the 1992 and 1997 elections but did not implement similar policies from 1997 to 2010 when in power. And then for the 2001 election, Tony Blair went on a rail trip between Euston, Milton Keynes and Birmingham to declare the railway open again after the Hatfield accident which paralysed the network.

They said:

The Rail Delivery Group said: “By offering a range of fares to suit all pockets, running thousands more services and getting hundreds of thousands more people to their destinations, the industry’s generated growth that far outstrips European countries with state-run railways.

Best intentions

Rail privatisation was not designed or intended to grow rail usage and the growth caught most by surprise and prompted a huge investment by the last few Governments in five-year tranches. The benefits are now being seen and complete state control could well hinder more major projects.

One of the biggest problems a nationalised railway had was that funding was agreed annually within a three-year overarching period. This meant that if the Government was a bit tight for cash, or the economy suffered a downturn, funding was capped or reduced and it was impossible to take a long-term investment view.

All railway staff will view their industry becoming a political football with suspicion, it may not be perfect by a long way now, but is it so broke that it needs fixing?

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