2 January 2014
A report, published on the day that rail commuters have seen their season tickets rise by an average 3.1 per cent, has revealed that the Government will be making a profit from passengers by the end of the next Parliament.
Fares and Rail Financing, commissioned by Campaign for Better Transport and carried out by independent consultancy Credo, found that:
- By 2018, fares revenue will cover 103 per cent of the operating costs of the railways, up from 80 per cent in 2009
- Revenue from fares has increased from 54 per cent of overall funding in 2009 to 66 per cent today and is forecast to grow to 69 per cent by 2018
- By 2018, the Government’s share of funding the railways will have fallen to just 20 per cent, down from 38 per cent in 2009
Stephen Joseph, chief executive at Campaign for Better Transport, said: "Rail fares have been rising faster than wages for a decade now, putting ever more strain on household costs. What this report shows is that by the next Parliament income from fares will not only cover the entire running costs of the railways, the Government will actually begin to start profiting from passengers. The Government must re-examine its fares policy as a matter of urgency and commit to a fairer system in line with the consumer price index so that fares only rise in line with wages." The report highlights the increasing disparity between wages and fares. Recent increases in season tickets have far outstripped wages and mean that an even greater share of take home pay is now being spent on transport costs. For example, a current season ticket with travelcard from Reading into London costs more than a fifth (22 per cent) of the average London salary. Since 2008, the cost of a season ticket from Reading to London has risen 25 per cent, whilst average take home pay has risen just 9 per cent.
The report also examined the potential financial impact of changing the Government's policy of above inflation fare rises and found that matching fare increases to the consumer price index would allow average earnings to catch up with fare rises by 2018 with limited effect on revenue.
Notes to editors
- Read Fares and Rail Financing here.
- The analysis in the report takes advantage of published information and refers to franchised passenger rail over the previous ten years (two control periods).
- The railways are financed by a combination of fares, Government support and other income received by Network Rail and the train companies, which covers the operating costs and any capital expenditure such as investment. Network Rail also raises money through borrowing, but this has been excluded from the definition of funding in this report.
- Rail fares were frozen at RPI (3.1%) for January 2014, but rises of RPI+1% are planned for 2015 onwards.
- Credo is a leading advisory services firm.
- Campaign for Better Transport is the UK's leading authority on sustainable transport. We champion transport solutions that improve people's lives and reduce environmental damage. Our campaigns push innovative, practical policies at local and national levels. Campaign for Better Transport Charitable Trust is a registered charity (1101929).