Environmental Engineering Reference
In-Depth Information
costs in excess of £3m but revenues less than £1m - the subsidy therefore being greater
than the total support for socially necessary bus services in many shire counties.
Such lines are of course often greatly valued (or claimed to be so) by the local
communities they serve, and in recognition of this the SRA published a 'Community
Rail Development Strategy' since adopted by DfT. This seeks to establish partnerships
with local authorities, business and community groups to promote the use and
development of individual lines (see the work of ACORP - the Association of
Community Rail Partnerships - at www.acorp.uk.com). The strategy states that with
local support it should be possible to double fare income originating from these lines
over a five-year period and to reduce subsidy per passenger by a half, thereby putting
the lines on 'a more sustainable basis' for the future (DfT 2007j).
Since privatisation, operators have had the freedom to determine both the level
and structure of fares on their services with the exception of season tickets and off-
peak Saver tickets for longer distance journeys, which remain regulated. Price rises on
these were limited to 1% below inflation in the period to 2003 and 1% above inflation
since. Revenue from these regulated fares represents about 40% of the total.
Operators have responded by introducing enormous variety - some would say chaos
- into the system of rail fares and ticketing. Each has exploited the opportunities in its
own patch in its own way. These practices, combined with the effect of the regulated
fares, have not altered the long-term trend of the average cost of rail travel (Figure
1.6 earlier) - if indeed this remains a meaningful concept. They have however offered
choice to the consumer and enabled operators to maximise their revenue, thereby
contributing to the profile of falling subsidy payments. The disadvantage is confusion
amongst passengers trying to understand the different products and procedures offered
by the various companies and annoyance at paying extra (or being caught out by some
restriction) if they do not. The price-setting policies of commercial railway companies
also bears no relation to any wider public interest. The opposing arguments are clearly
contrasted in the Government's response to the Select Committee's report on this
subject:
The Government does not believe that encouraging modal shift to rail is a
cause for subsidy in itself. However the Government does have wider objectives
including those related to environment or congestion towards which rail is well-
placed to make a contribution. These wide objectives are reflected in the fact that
currently over 40% of all rail costs are met though subsidy.
… The Government's approach to regulation (compatible with wider policies)
is only to regulate where we believe that market elasticities are such that
passengers do not have realistic alternative travel choices. Predominantly this is
commuter markets (with travel choices being linked to home ownership). Issues
of Saver regulation are more complicated.
(House of Commons 2006a)
The Government would almost certainly like to do away with regulated Saver fares
but is inhibited by opposition from consumer groups and by public scepticism about
the behaviour of operators on ticketing generally. Nevertheless it is sympathetic to the
concerns highlighted by the Select Committee and has therefore been working with
operators to devise a standardised ticketing framework within which all companies
would work (see Box 15.1). Interestingly the proposed framework would allow for
subdivision of the 'off-peak' time period, for example to include separate periods
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