British Train Ticket Prices Are Far Too Low – They Must Be Increased

A standard whinge in Britain today is that rail privatisation has failed – just look, the trains are so crowded! The thought that people flocking to use something proves failure being a most odd one of course. That more people use the train sets to travel longer distances more often should be seen as a triumph of privatisation, not a proof of its failure. And we should note that the last few decades of British Rail did show – population adjusted – falling ridership.

There’s also a certain puzzlement at the next cry of outrage – that ticket prices are too high. If people are flocking to use something etc then it’s difficult to insist that prices are too high. But that’s the confecta which is indeed the standard Labour Party complaint:

The top 10 busiest peak train services in England and Wales are carrying almost twice as many passengers as they are designed to. New analysis published by the Labour Party revealed the worst rail routes are now on average 187 per cent over capacity – an increase of more than 25 per cent since 2011. The situation is predicted to get worse with the top 10 most overcrowded train routes expected to carry more than twice as many passengers as they should by the end of 2022. Labour sought to capitalise amid commuter fury after fares went up across the board by an average of 3.1 per cent despite widespread rail misery in 2018.

Popularity both proves that the basic system is wrong and also that prices are too high. Tough this economics stuff, isn’t it?

As to the congestion part, well, on those popular lines and routes the route itself is running at capacity. It’s just not possible to squeeze more trains onto the tracks without them running into each other. Ah, but goes the cry, government should do something! But the tracks are already run by government, that we’re not getting more track capacity is government’s fault. Giving us a good guide to how it would be if government ran it all – as history tells it was like when government did.

As to the prices, well, that overcrowding shows us that prices are too low. We need some method of rationing that access to something being over-used. Price is always the best method of rationing. Thus prices should be higher to relieve that over-crowding – while we wait a few decades for government to pull thumb out and provide more track capacity.

But even that’s not enough. Ticket prices should be higher anyway:

Contrary to much wibbling around the place the British system of railways is not notably more expensive than those of other countries. Rather, the difference is in who pays for it all. Here, passenger ticket prices pay for some 99% of operating costs. In many other countries there is a substantial contribution from the general taxpayer. That’s what explains the difference in ticket prices. We think it’s just fine that those doing the travelling pay for the travel to be done. We do not see the point of taxing the dustman so that the Duke may go shooting. There are parts of the network which really do need subsidy – the commuter lines around the largest cities. They also get that subsidy. Other parts of the network make a profit and the two largely balance each other. This might not be perfect but we do indeed insist that it’s better than a general levy upon non-travellers to pay for those who travel. That tickets are still too cheap is proven by the manner in which only operating costs are being covered – capital costs still largely devolve to the taxpayer. This should not be therefore tickets should cost more.

This being a point we’ve made more than just the once:

So yes, it is true that rail fares in Britain are higher than in most other places in Europe. It is also true that the costs of running the railways are largely the same across Europe. The difference is that in other countries, the general taxpayer has to subsidise those travellers as they sit nice and warm in their carriages. Here, the passenger pays the cost of being a passenger. Which, of course, is right and proper – you do not pay through your taxes for my shoe leather if I walk to work, my energy expenditure if I cycle, or my petrol if I drive. So why should you pay for me to be in a comfy seat, or crammed into the aisles, as the train takes the strain? In fact, fares still don’t cover the full cost of the journey – because they only pay for the running costs of the railways, not the capital costs. Which suggests that prices are actually still too low.

If the railways need more money – which is indeed the argument being put forward, investment to reduce overcrowding – then passengers should be paying more for their tickets to provide that investment. Why should we be paying for their travel?

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Samarkand TonyDodgy GeezerQuentin Voleliterate3Bernie G. Recent comment authors
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Bernie G.
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Bernie G.

Listening to the handful of commuters featured on television news, people don’t necessarily have a problem with the cost/price increases so much as the poor service (cancellations, delays, etc.). I think most appreciate it would be unfair for the taxpayer to subsidise their decision to move to a nice house in the suburbs/countryside. Let’s face it, rail travel is a minority sport as a percentage of the population. For many of us, buses are non-existent, let alone pre-Beeching rail services. Commuting to the City by coach was commonplace in the old days (80s and 90s), railway was for the well-heeled.

Bernie G.
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Bernie G.

Increasing fares seems the most obvious way of addressing an oversubscribed service; in much the same way ‘our’ NHS rations access to medical care.

Dodgy Geezer
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Dodgy Geezer

A properly functioning capitalist system should indeed allow for prices to rise. When they rise to a sufficient level the expected profits should encourage investment in competing services, bringing the price down and improving the service volume. That produces a better result for service providers and customers alike. But the railways – commuting routes especially, are an effective monopoly. There is no way that another surface line is going to be built from the London suburbs to the centre of town. Assuming no advance in signalling systems or other methods of getting more trains onto a track (perhaps the development… Read more »

Quentin Vole
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Quentin Vole

In-cab signalling could safely allow substantially more trains on the track than our current ‘traffic light’ systems.

Dodgy Geezer
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Dodgy Geezer

Which is why I mentioned signalling advances. But there are a host of problems to overcome. For instance, the most efficient way to operate would be to take the drivers out of the equation and have driverless trains like the DLR – but how do you square that with the unions…?

Mr Worstall seems to think that raising prices is an answer in itself. It is only the first stage. Raised prices encourage human ingenuity to be applied to a problem, resulting in a technological advance which makes life better for everyone. Julian Simon refers…

literate3
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literate3

Those who are complaining about over-crowding on the railways are not those who can remember commuting on British Fail in the 60s and 70s. Occasionally someone passed out and remained standing because we were packed together so tightly and cancellations and delays were endemic.

Samarkand Tony
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Samarkand Tony

Talking of people who believe two opposite things at once, Tim believes both that the market shows us we need more rail capacity and that railways are a worthless waste of space.

Communications are a GDP multiplier, not an addition.