Opinion: Straphanging now takes a quarter of your wages – what do the continentals do?

Virgin trainHappy New Year Britain! Stand by for more cuts! cuts! cuts! Except in rail fares. There it’s a case of “let the train drain you dry”. As part of the festive fireworks, rail fares exploded by 4.3% so, if you are privileged enough to have a job at all, you can kiss good-bye to up to a quarter of your pay packet just to get you to work.

A season ticket will cost as much as 23% of gross salary or, put another way, you’ll effectively have to work till April Fools’ Day for nowt. Supreme irony or something else? You decide.

Even rail aficionado Michael Portillo appears to have been priced off the UK railways. In the teeth of recent BBC budget travails, Michael’s much-loved Great British Railway Journeys has transmogrified into a collection of rail journeys “across the heart of Europe”, no doubt slashing his programme budget by half at a stroke. Nice one, Michael.

Accentuating the positive, we in the UK can at least now claim to come top of something in Europe: public transport pricing.

So how do those pesky continentals do it?

Well, for a start, between 80% and 100% of passenger train services are provided by the public sector, making profits less of an issue. The result is this chart, which compares average UK passenger rail fares with those of other European countries (the squeamish among you should look away now):

Comparative rail

Source: Just Economics (2011) analysis of data from Passenger Focus (2009)

So, in the interest of Joe Public: What would Borgen do?

Just to recap: Borgen is the pet-name for Christiansborg, a castle in Copenhagen and seat of the Danish Parliament, the ‘Folketing’ or ‘People Thing’ (scan that through your synonymeter for a moment). And, sad but true, not even Denmark is immune to the current financial omnishambles. Borgen controls the railways in Denmark and Borgen is hiking the fares. By 3.1%.

The most expensive annual season ticket in the country will now rocket to 13,364 Kroner or £1458 or 3.47% of average gross income (DKK383K = £42K). To hammer home the point I quote the most expensive season ticket theoretically available, just for fun, because the average Danish commute would most likely run to around 320 Kroner (£35) a month, in Copenhagen, the most expensive area in which to move about. My slightly shaky maths concludes that is DKK3840 per annum = £418 or roughly 1% of gross annual income.

Yes. One per cent.

OK, so Borgen does benefit from charging their citizens a king’s ransom in tax, with which to subsidise public utilities like railways. The Danes seem to prefer it that way. It makes budgeting far less time-consuming for the average household, who is busy having a good time.

About 50% of the Danish State Railways’ income comes from fares, the other 50% comes from the State. In contrast, the UK government rail subsidies run to about 20%, leaving passengers to foot 80% of the bill.

In fact, it seems, bizarrely, that UK subsidies have gone up since the break-up of British Rail, rather than down, which presumably was the intention? That, coupled with sky-rocketing ticket prices has, however, guaranteed a nice bonus for shareholders.

So we dutifully queue up at the ticket window to hand over our shrinking pay packets. A year after the McNulty report warned that the cost of rail remains sky-high in Britain – up to £3.5bn more than it ought to be, Railtrack again announces a doubling of profits from £313m to £754m.

Now who’s the April Fool?

* Kirsten de Keyser sits on the Camden Liberal Democrat Executive and is a member of Social Liberal Forum and Liberal Democrat Friends of Palestine. She blogs here.

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36 Comments

  • Kirsten de Keyser 14th Jan '13 - 11:51am

    @Tom Papworth
    “Every year we have the same shock-horror news stories about rail fares rising faster than inflation”.
    Prices rising faster than inflation is not the issue. The issue is the starting point of up to 300% of continental rail pricing.

    “Are you suggesting that high levels of taxation and public spending can be justified on the grounds that it spares the poor, busy masses from the time-consuming and irksome business of choosing how they spend their own money?”
    Yes

    And apologies for the reference to “Railtrack”. A few hours of rail research left me trapped in a word cloud of Railtrack, Network Rail, UK Rail, British Rail, National Rail…

    “Our love affair with rail may be blinding us to cheaper, more efficient alternatives.”
    Such as?

  • Tom, “I suspect that those in low paid jobs already live in London, and so pay far less for their travel…” – and far more in rent.

  • Alex Macfie 14th Jan '13 - 1:15pm

    I suspect that the reason Michael Portillo has started doing the trains in Continental Europe is he has done most of the UK by now. Anyway long-distance international rail travel is also rather expensive and inconvenient to book, especially when starting from the UK, but the issues there are different from those of commuter travel.

    I’m sceptical of the value of competition in passenger rail services, especially for commuter travel. As a commuter living in outer London with a travelcard season ticket, I like the fact that my travel pass allows me unlimited travel on all trains (Tube, DLR and National Rail) in the zones covered by it, and all London buses and all trams. I would not find it so useful if I had to determine whether my season ticket was valid on the train that had just arrived on the platform depending on the train operator. Suburban public transport systems operate best as an integrated whole, not as a mish-mash of separate competing operators as used to be the case in Japanese cities.

  • Charles Beaumont 14th Jan '13 - 1:42pm

    @Simon, @Tom – it’s pleasantly simplistic to say that railways should be paid for solely by those that use them. But that rather fails to understand the concept of a public utility. Are the railways a public good? Since they allow the speediest and most reliable form of mass transport between cities, whilst reducing CO2 emissions, air pollution and congestion (all of which are particularly bad in London, with negative economic impacts) it seems pretty obvious that a train is one of a fairly small number of things that a government is best-placed to run. The benefits of a high-quality railway network do not solely fall to the passengers.

    On the point about low-income workers commuting long-distance, In my experience of working in the public sector, quite a lot of low-income employees have a long commute as London housing is unaffordable.

  • Simon Beard 14th Jan '13 - 3:33pm

    One of the reasons that commuter rail fairs in this country are the most expensive in Europe is that non commuter rail fairs tend to be the cheapest (I’m not making that up, see http://www.seat61.com/uk-europe-train-fares-comparison.html)

    As a nation we have decided that day to day commuters should subsidize long distance and rural routs – OK not quite, its rather that the government should subsidize one of these more heavily than the other, but still – are you absolutely sure you would want it the other way around? i.e. cheaper rail fairs in and out of cities, but no new investment in intercity travel and the end of unprofitable rural lines? It has been proposed before, but I never heard many Lib Dem’s singing Dr Beeching’s praises for suggesting it.

  • Charles Beaumont 14th Jan '13 - 3:57pm

    @Simon Beard – you’re guilty of being slightly misleading. What the Seat61 link says (btw it’s a brilliant site) is that long distance fares in the UK are cheaper if you buy in advance and don’t travel in peak hours. So that merely proves that one type of ticket in the UK (off-peak long distance) can be cheaper than comparable journeys on the continent. As Seat61 also notes, UK trains have a much more commercially-aggressive stance in squeezing more money out of the travellers with fewer choices. The commuter into most major cities (and certainly London) will probably have to use a train as it will provide the shortest journey without the risk of a traffic jam, so the commuter becomes a cash cow for a monopolistic supplier. I don’t see any evidence that “as a nation we have decided” to screw more money out of commuters. Rather the commercial franchise operators exploit their best revenue streams, as you’d expect them to.
    If we see rail travel as a public good (my point above) then the calculations of best value would of course be different.

  • @Simon Shaw – your figures assume people only commute within London. My season ticket for access to rail (not just tube, as you cite) is c£5,000, which makes a salary of c£21k if it were to be 23%.

    (Alternatively I could live in London, but I suspect any savings in rail fairs I would lose in rent…)

  • Simon Shaw

    Daft as it may sound people commute from the West an East Midlands to London. The journey time is manageable but the cost can go from 5000 to 10000 depending on route and whether you want to use the tube

    In Switzerland an AG costs chf3550 for a years free travel on virtually all public transport. Even at today’s crazy x rate that is just over £2200. For chf150 you can get half price fares on public transport and you don’t need to even be resident

    I do not know why you are defending the ridiculous fares in the uk. Especially for these commuter journeys

  • “Among operative jobs – clerks, receptionists and data entry positions, for example – a season ticket now accounts for as much as 23% of gross salary.”
    Further on in the article the Guardian shows a graph where it indicates that the average London session ticket represents 18% of this group’s salary. Further down still they give a table of selected session tickets, Although they don’t give any description of how they arrived at the average cost of a session ticket for their chosen user group, nor do they give any rationale for selecting this user group, although I suspect they for a group of workers who on average earn around £26,000 pa.

  • @Simon Shaw: Long-distance advance-purchase fares are irrelevant to commuters. Even if your commute is long enough that advance-purchase fares exist for it, commuting on them would be totally impractical.

  • Simon,
    let’s stop quibbling.

    Rail travel in this country is too expensive. Rail companies unfairly use underregulated pricing structures to manage demand on popular routes during peak hours.

    But rail travel tickets are still 50% cheaper and faster than buses over comparable distances and routes. That’s competitive!

  • @peter.tyzack
    “WE decide where we live and where we work, and therefore how far we travel between the two, no-one else.”

    REALLY.. Perhaps in the ideal world this is true, but ask a jobseeker who requires benefits whether they get to chose where they work, most employment contracts allow scope for some redeployment etc etc. The truth is that in economically challenging times people have far less say on what, where and how they earn their living.

  • Peter Watson 15th Jan '13 - 3:51pm

    @Simon Shaw
    The figures for “Advance Long Distance” are certainly interesting (as is their exclusion from the article).
    I wonder why we are relatively less expensive in that category. It might reflect that European long distances are international journeys (very long distance!) or that they have less reason to offer incentives for advance planning of off-peak travel.

  • Kirsten de Keyser 15th Jan '13 - 9:22pm

    Simon McGrath (and others) – “You appear to be proposing that rather than people who use railways pay for them, everyone else should pay higher taxes to subsidise their tickets. Why is that fairer?” Charles Beaumont answered your question Simon “Are the railways a public good?” and that’s actually the nub of the matter. On the continent railways are treated as a public good, in the UK this distinction is in serious doubt, due to the pricing structure in place.

    @ Simon Beard “One of the reasons that commuter rail fairs in this country are the most expensive in Europe is that non commuter rail fairs tend to be the cheapest”.

    Cheap advance tickets are part of the baffling pricing structure operated in the UK. Consumer bodies have argued for ages that low advance fares are only offered so that train operators can quote these prices in promotional material. In reality, few travellers are able to take advantage of these fares, if they can even work out how to access them. Which? found only 1% of users quizzed knew fully how Off-Peak and Advance Fares work (££) http://www.highbeam.com/doc/1G1-267402736.html. Even the people paid to know are completely confused. http://www.telegraph.co.uk/news/uknews/1439100/Train-advice-line-quoting-passengers-double-fare.html

    Advance fares are uncommon or non-existent on the continent, save for very long distance tourist roaming type tickets, hardly the commuter’s choice. For this reason I omitted those prices from the table as they were not comparing like with like. There’s nothing ‘dubious’ about it.

    To my mind Peter Tyzack comes closest to a solution (apart from the implementation of the McNulty report, which would shave 30% off the cost base). We need to live closer to our work. Pricing people out of city centres is the kind of short term, profit driven fad in which this country excels.

    Now, if we want to construct a vote winner for 2015 – someone had better start drafting a policy proposal that brings rail fares – and rail operations in general – into line with our continental cousins. It’s not rocket science, there are plenty of examples to pick from just across the water.

  • Simon McGrath 15th Jan '13 - 9:45pm

    @Kirsten -I am a London commuter. happy that people who live elsewhere should subsidise my fares. Quite why you think this is a ‘public good’ escapes me.

  • @Simon, I must say that I am shocked that you of all people cannot understand why this is a ‘public good’ .

    1=Social mobility: Countries, like Taiwan, which have access to reliable and cheap train services have far greater access to work as it is very easy for them to commute and most do not fear living far from their families as it is cheap and easy to return home. As it is, in the UK I currently had to move from my home in the Midlands to a place in the South West to get work, this move was forced on me by the job market. I now cannot afford take the train home to see my family or my partner as a standard weekend return ticket costs upwards of 80 pounds and I work on minim wage. To go to a family wedding last weekend I had to take a 3 hour bus to London and then a second 4 bus to my aunt’s home due to plain impracticality of rail services. Now I took this leap as I wanted to work, many will not or simply cannot. Currently, many families in the UK have members who cannot work because they cannot afford to travel to work.

    2=Commuting: Many here say, move closer to work; that is simply is not possible for most families, most accommodation in this country is simply too expensive as well, so if they all moved into the city, it would force many already struggling families into sub-standard accommodation. Heck, in London this is already having. London is one of the worst affected cities in Europe for displacement and cheap, usable public transport offers us a real, afford and long term way out of this. Again,I go to Taiwan, rent in Taipei is some of the cheapest in the developed world for a capital city because cheap public transport means that people are not fighting for a few central locations as instead they can commute easily. (There are other reasons for their cheap rent, but this has helped. One only has to look at the development in districts like Nangang after the MRT was build to see what a positive effect good public transport has.)

    3= Environment: A well funded and serviced train is not only environmentally friendly, but it also gets people off the road and out of planes. Currently, Britain has one of the lowest user rates of trains in Europe, why? Simply because they are too expensive, so most would rather take the other options despite their negative impacts on the environment. Furthermore, due to the disreputable companies which currently run our rail system underfunding themselves for profit, trains in the UK are woeful for the environment. (Though this is more of argument to get rid of Great Western than argument for trains.)

    4=Planes=People say it is wrong to make people subsidise evil rail-users’ fares , but the Government massively subsidises air-travel. Why is it OK for businessmen and the middle classes to have their flights subsidised, but it is not OK to develop our rail industry which will help everyone?

    5=Localisation=Currently, we suffer from a massive over concentration problem in London, however, if travel to other regions became a realistic and viable option, then surely, this would give businesses the freedom to move outside of London. Moreover, this would also again, lessen the pressures on London’s ready to bust rent issues.

  • Advance purchase fares do exist elsewhere in Europe. But it is certainly true, as others have said, that the

  • Advance purchase fares do exist elsewhere in Europe. But it is certainly true, as others have said, that passenger rail operations in the UK are more commercially aggressive than in many other countries, both with maximising revenue from ‘captive travellers’ such as commuters and business travellers, and filling otherwise-empty off-peak seats (which is what advance fares are for, from the train operator’s point of view). However, from the table reprinted by Simon Shaw, it appears that France has considerably cheaper advance-purchase fares than UK in cost-per-mile terms (and presumably on super-fast TGV trains). And in Europe, it seems to be the open-access, high-speed,usually (but not always) cross-border operations such as Eurostar and Thalys that most extensively use advance-purchase fares — indeed they use a pure airline-style fare model where everything is pre-book only, and the only cheap(ish) fares available are the ones with restrictions on change of travel plans.

    I’ve bought advance tickets for occasional long journeys, and not had any problem finding reasonable fares that are less than the walk-up fare. It is true that the headline fare usually has to be booked well in advance; however, one thing that can be said about advance train tickets is that the price quoted when booking is the price you pay, unlike fares on low-cost airlines such as Ry*na*r, where there are always additional charges for luggage, check-in etc. And on the UK rail system, advance tickets can also be used on connecting train services where applicable, so there isn’t the additional cost of airport transit that you have when buying cheap air tickets.

  • Tom “Are you suggesting that high levels of taxation and public spending can be justified on the grounds that it spares the poor, busy masses from the time-consuming and irksome business of choosing how they spend their own money?”
    Kirsten Yes

    Proof, if it were needed, that social liberalism is a contradiction in terms.

  • Alex Macfie 17th Jan '13 - 4:19pm

    For information to those who bang on about choice, you don’t “choose” whether to spend your own money on travel to and from work. I could tell my employers that from now on I’m not going to come into work because I’m choosing not to spend money on the train into work. I wonder how long I’d keep my job. Choosing to live nearer work, or find work nearer home, are not always options in the real world.

  • @Alex, if you offered to do the same job but take a pay cut equivalent to half the (unsubsididised) cost of the travel, then you might find your employer more amenable. As it stands though, the subsidy is actually a transfer from companies who trust their staff to work at home (and from those staff) to companies who make their staff come in. I know some companies like credit card companies can’t have data accessed from home, but pulling people into some office block where the data is kepy is a cost of their business that they should pay for.
    By the way, I agree that you should be able to deduct your ticket against tax in the same way as a self-employed person could.

  • @Alex,
    The money spent on subsidising transport and its infrastructure is also a big transfer from regions like mine, the North-East to regions like the South-East that have more of this infrastructure. At one time I changed from working as a programmer in Redcar (where I could walk to work), to working as a programmer in London, where my travel costs ate up about a fifth of the wage increase – if it had been a higher proportion (i.e. if I’d had to pay the real cost) I might have chosen differently. In there being a number different to exactly 1 (one) company nationwide that I was capable of getting a job at, I was not unusual, even if that doesn’t fit your view of the British people as weak and helpless.

  • Richard S: I am not making any value judgement about the British people, so kindly do not use that patronising canard. Your comment shows little understanding of the reality of jobseeking. It is not just a question of there existing companies where someone is capable of getting a job at, but a question of finding such companies, and persuading them of one’s capability, and so on… sometimes people have the luxury of choice, often they do not. This is more an indication of the economic situation we are in than anyone’s personal qualities.
    Why should I take a pay cut to work from home? If the work is of equal value at home as in the office, then it should be paid the same, simple as that.

  • @Alex Macfie,

    Yes it is more difficult to get a job these days. But if you can find one then you can also, after some time, find a second one (while you are still working at the first), and change to something more suitable. So there is an element of weighing up options, and there is no reason for the longer-distance option to have a random subsidy from the government that isn’t available for the shorter-distance job. But if I accept your premise that we have no choice about where we work, then why should person A, whose walk-to-job nets him 16000 pounds, not have a higher disposable income than person B, whose commute-job nets him 17000, but requires 1200 pounds (unsubsidised cost) per year of transport to reach? Isn’t it just the case that person A has found a better job than person B?

    I happen to think that work done at home is of equal value. When I have too much translating work I email it out to someone else to do, presumably at home. I don’t make them sit in my office while they do it – and if that was the condition then I would probably have to pay more, at least to cover the transport costs, for something of equal value. But not every firm agrees with me; in your previous post you suggested it would be difficult to persuade a company that they weren’t losing out. I suggested cutting a mutually beneficial deal with them that would save both you and them (and the taxpayer) money. It is irrelevant that in our opinion they”should” pay the same if they don’t want to put that offer on the table.

    Of course not all travel is work-related anyway.

  • Kirsten de Keyser 18th Jan '13 - 8:01pm

    Richard S “Proof, if it were needed, that social liberalism is a contradiction in terms.”
    Now you might very well think that but, of course, I couldn’t possibly comment.

    And I agree with you that “you should be able to deduct your ticket against tax in the same way as a self-employed person could.”
    In fact, so does Borgen; in Denmark, commuting exceeding 24 kilometers/day receives a DKK 1.90 per kilometer tax deduction. For commutes exceeding 100 kilometers per day, the rate is reduced to DKK 0.95 per kilometer. And that applies to all commuters.

  • Alex Macfie 20th Jan '13 - 1:00pm

    Richard S: I did not say that we have no choice about where to work. You are, again, twisting my words to read into them what you must know I did not mean. Of course people have choices about where they take up jobs. This is nothing to do with any perception that it is “unfair” that one individual has more disposable income than another because of lower travel costs. People may well consider issues other than the cost of living or commuting for one job in one location compared to another. However, there are serious social implications when in the places where most of the jobs are, most workers are priced out of local accommodation and are also hit with high commuting costs when they live away. You may think this does not matter, because you seem to be looking at the issue purely in terms of how individuals can deal with this situation as it stands. My point is that it bad for the local community in the places where it happens.

  • @Alex Macfie

    Sorry, if you think it is unfair that some people have more disposable income than others due to their work arrangements then there is no point continuing the discussion because we are just too far away. If, on the other hand, you (or anyone else, you say there is a perception, does this mean you believe others think this but you don’t yourself?) think that travel costs are a special exception that the government has to level off, while not at the same time levelling off other outcomes of work success, then the onus is on you to make the case for why they are so exceptional.
    That some areas have high numbers of jobs and others have low numbers of jobs is not a reason to make financial transfers to the area with high numbers of jobs in order to help with their supposed social problems, One of the big advantages of keeping your skills in an area disadvantaged in other ways (such as when I was in the northern IT industry) is the possibility to walk to work or have a very short commute.

  • Alex Macfie 13th Feb '13 - 7:55am

    @Richard S: not sure why it took you 3 weeks to respond, but no matter, I did not express either of the views that you attribute to me so there is indeed no point in continuing the discussion because we will always be at cross-purposes.

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