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Subsidised rail fares are a great idea – but who ends up paying for our travel?

PUBLISHED: 06:00 04 January 2018

Rail fares have gone up, but how else should money be raised to invest in the network? Picture: ARCHANT

Rail fares have gone up, but how else should money be raised to invest in the network? Picture: ARCHANT


This week’s 3.4% rise in rail fares has prompted an understandable outcry from passengers – especially from commuters who have to use the train to get to work.

Engineers working on overhead wires at Gidea Park on the rail line to London. Picture: NETWORK RAILEngineers working on overhead wires at Gidea Park on the rail line to London. Picture: NETWORK RAIL

There is no question that British rail fares are among the most expensive, in terms of cost per mile, in the world – certainly near the top of the league table in Europe.

I would not fancy paying £6,458 for an annual season ticket between Ipswich and London, especially with all the hassle and “dead-time” that you have to put up with to get to and from work.

The fact is that, when you take tax and national insurance into consideration, you have to earn £10,000 a year just to pay for your season ticket from Suffolk to the capital.

So I am not at all unsympathetic to the suggestion that ticket prices should be cheaper – and that might encourage more people to use the trains.

However from a logical point of view there are a number of questions that need to be raised that are far greater than the arguments about ticket prices.

If prices were frozen, or reduced, where would the money to upgrade the rail network and buy new trains come from?

For more than 60 years after the Second World War there was inadequate investment in infrastructure and rolling stock. That is now being addressed but it costs money. Where would that come from if not from passenger fares and fees from transporting freight?

The answer is, of course, government subsidies. That’s what keeps ticket prices down in France, in Holland, and in just about every other European country. We do have government subsidies in this country – but nowhere near as high as elsewhere.

If subsidies were increased where would that money come from? Cuts to the NHS? Police? Social care? Or would we be happy to see our taxes rise?

European rates of taxation are generally higher than in this country and all the evidence of elections over the last 40 years or so suggests that British voters don’t want to pay any more tax.

If people could be persuaded to vote to pay more tax, where would they want to see it go? Would subsidising rail fares really be at the top of the list for most people (remember rail commuters are only a small minority of the total population).

If we are really to get to a situation where rail travel is cheap and subsidised we need to be prepared to elect a government that is prepared to admit it will raise taxes paid by most people to ensure public services are properly funded.

Last year the only political party to win a seat with a programme making that promise was The Greens.

Labour said it would increase tax for those earning more than £80,000 a year and would close tax loopholes. That would raise a bit more money for the government – but nowhere near enough to fulfil all its aspirations.

Until a political party is prepared to tell voters earning £30,000 a year that they will have to pay considerably more in tax (and the fairest tax is income tax) then promises of loads of extra money for services will continue to ring a bit hollow.

That is a tough message to sell. I have to admire Ipswich MP Sandy Martin’s commitment to make a voluntary contribution to good causes. He’s right. He can afford it and an increased rate of tax is fair.

But until a political party can persuade millions of voters to think the same way, that will not produce enough money for the economy as a whole.

Coming back to the cost of rail tickets.

I really don’t see how bringing the train operating companies back into public ownership would be any guarantee of reducing rail fares.

Back in the days of British Rail, fares regularly increased by more than the rate of inflation. Why would that not happen if the government re-nationalised the companies who currently run services?

Until it was being prepared for privatisation, BR was one of the most bureaucratic and top-heavy organisations in the country to deal with. Why would that be any different if it returned from the grave in which it was buried 20 years ago?

And don’t forget the ticket price rises are fixed by the government, not the companies. If the government was getting the money from a nationalised rail company, do you think it would be able to resist the temptation to increase fares more to pull in more cash – just like in BR days?

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