Thursday, 15 August 2013


The sensible choice would be for the Welsh Government to follow Scottish example of freezing off-peak prices, as RPI inflation figures (3.1% in the year to July) threaten another 4.1% increase from January 2014 across Wales. It is worth noting that Trade union leaders and transport experts have called on the Government to follow Scotland’s lead and freeze or limit rises in train fares for passengers.  The Welsh Government’s default position is that fares should only rise by 1% above the July inflation figure. The problem is that while the Labour in Wales administration could choose to freeze or limit the fares increase (this deal has been made every year since 2001 for the Wales and the Borders franchise) this is not set in stone.

A choice: Not for profit or Profit before people?
The Western Mail’s sources revealed yesterday that although Scotland is freezing the cost of off-peak journeys. There is a distinct possibility that hard-pressed Welsh commuters may well end up having to face another 4.1% increase in January 2014, this would be on top of the 4% rise at the start of this year (2013).  In Scotland, the cost peak-rail travel will rise with inflation at 3.1% and the freeze in off-peak travel will cover about 40% of rail journeys. A 4.1% increase in rail fares would increase the cost of an annual commuter route season ticket between Pontypridd and Cardiff from £880 to £916 and between Aberdare and Cardiff from £1,040 to around £1,082.

The current franchise was awarded to Arriva Trains Wales in 2003 and runs for 15 years, and is due to end in 2018. There have been many persistent calls for the rail franchise to be run as a not-for-profit operation – with profits being feed back into the system, rather than vanishing to pay shareholders dividends. The Welsh Government has been considering this option for when the deal ends. Arriva Trains Wales is the only train firm covered by the Welsh Government’s transport remit. Any longer-distance services e.g. Swansea or Cardiff to Paddington, are currently operated by First Great Western, who have their fares regulated by the UK Government Department for Transport. They have stated that rail fares on the routes it controls would increase by an average of 4.1% from January 2013.

To make matters worse the announced rise in rail fares will come take place against a backdrop of squeezed incomes, with average earnings increasing by just 1% and many experiencing pay freezes. There have been calls for the ending the annual inflation-plus fares rise, with them being replaced by a new formula, RPI minus 1% from 2015.  The rail fare rises which will arrive in January’s rise will be the sixth time in seven years that rail fares have outstripped wages. It has been calculated that between 2008 and next January rail fares will have risen some 40%, compared with a 15% increase in average earnings.

It should also be noted that the cost of some season tickets may rise by 9% as some routes are not subject to regulation under franchise agreements. All these rail fare increases will take place against projections of a 2.4% increase in average earnings next year. The TUC has suggested that since the railways were privatised, they have cost taxpayers about £1.2 billion pounds a year and this with what has been described as “minimal” investment in trains and stations.  

The Department for Transport continues to insist that the UK Westminster Government is investing record amounts in the railways to help deliver economic growth and boost passenger capacity. Additionally the Association of Train Operating Companies has also insisted that only a small proportion of income goes on profits, with most going on staff costs and investment. They also say that railway companies only make modest profits with 3p from every pound earned going towards profit, 17p goes towards staff costs, and 48p goes towards maintaining and improving infrastructure (including track and signalling).

At the end of the day, this is good news for rail operators and shareholders but bad news for hard-pressed long suffering rail commuters who are having to hand over even more of their pay packets for poor-quality services. We are where we are because regulated fares, including peak-time journeys, have been set at RPI inflation plus 1% since 2004 because successive Governments (both Labour and Con Dem) have been trying to shift the burden of paying for the railways from taxpayers to rail passengers.

It is Somewhat ironic that the persistent attempts of successive Westminster governments to wash their collective hands of their responsibilities for rail transport infrastructure come at a time when annual passenger journey numbers have increased from 750 million to 1.5 billion. The day that the rail franchise in our country is run on a not for profit basis, with profits being reinvested into the business, cannot come soon enough.

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