From The Evening Standard:
Thousands of long-distance commuters are having to pay more for their season tickets than their mortgage.
Research published today shows workers on packed rush-hour trains now need to put aside up to a third of take-home pay - compared with an average 28 per cent for the mortgage bill. Season ticket prices have soared in recent years as the Government seeks to force passengers to contribute more towards the cost of the railways...
For commuters from Swindon to Paddington, a £7,024 annual season ticket is 34.9 per cent of the £20,149 national average take-home pay*. This will rise to 36.9 per cent next year. In 2012, a Norwich-London season ticket will be worth 34.3 per cent of average pay; and one from Bournemouth to the capital will amount to 28.5 per cent.
The Campaign for Better Transport said it was did the research after getting a letter from a commuter saying: "My train fare is now more than my mortgage. I have absolutely no money left for food, clothes, necessities of life."
Why, we wonder, would anybody live in Swindon and commute to London, which costs him or her £7,024 a year? I can only assume that it's because houses are about £200,000 cheaper in Swindon, so our Swindonian saves £10,000 a year on his mortgage (or rent), spends £7,024 on his season ticket and treats the balance as compensation for the extra time he spends commuting.
Sure, the government could tell the wicked, exploitative railway companies that henceforth all train travel is to be free. So what happens then? Existing homeowners in Swindon would be delighted (assuming that 'somebody else' is prepared to pay to subsidise the railway and that service quality does not deteriorate, it would get a bit more crowded for a start). But rents and house prices in Swindon would just go up commensurately, so the next generation would find that they are still no better off living in Swindon than in London.
This is the whole point of Home-Owner-Ism - all existing generations do their best to keep the next generation just above the breadline, and to take as much of their wages off them as possible, whether that's in income tax etc; in rents/mortgage repayments; or in the cost of a season ticket prices.
Why younger generations put up with this is a mystery to me, but hey.
* The comparison with net national average wage is misleading. If they are looking at the cost of a season ticket for Swindon-Paddington, we can safely assume that the commuter lives in Swindon and works in London, so it would be better to compare the cost with the net average wage in London, but hey.
Dark thoughts
2 hours ago
28 comments:
MW - agree generally - the only "oddity" (the exception that proves the rule? ) is Bournemouth - I am sure that a "survey" I saw recently said that on a "multiples of median income required to buy a local median priced house" Bournemouth topped the league in the UK with a ratio of over 8 whereas London (probably including Greater) came out at 7 ... presumably therefore this shows that "over time " Bournemouth residents used their "comopensation " element (which no longer exists !) to simply bid up local house prices !
I chose never to commute and don't really care, except insofar that improved rail access pushes up house prices - and that eventually evens out.
But that doesn't address the basic problem of why rail travel is so ridiculously expensive.
It only takes one engine and one driver to move a train with dozens of passengers, it's vastly more expensive per mile than flying! So where is all the money going?
Anon, Bournemouth is the joker in the pack, but then if you add on the "Near the seaside hallowed greenbelt" factor (which also blights workers in e.g. Cornwall) it all evens out.
W42, I don't think that rail travel is ridiculously expensive. £7,042 divided by 400 journeys a year = £18 per journey. I'd rather pay that than drive everyday.
See also: London Mayoral candidates who all said "The Tube is too crowded and too expensive". Firstly, it's cheap (for season tickets) and secondly, if it were even cheaper it would be even more crowded. Thirdly, if they added more services to reduce crowding (assuming that were physically possible, which it's not) then rents and house prices just go up to match.
£18 per journey and Swindon to London is 89 miles. That's around 22.5 pence per mile.
The AA car running cost table for a small diesel at 30,000 miles per year is 25.6 pence per mile. Car share with one other person and the cost would be 13p per mile.
Car travel is very heavily taxed and inefficient, transporting just one or two people. Train travel is designed to be a mass market travel option that has huge economies of scale.
Like you, were I stupid enough to choose such a commute I would prefer to use the train, but if run efficiently the train should be much cheaper than other options.
W42, two people sharing a car is cheaper than rail, that's one of my rules of thumb. But then you have to add on 200 x £lots for parking at the London end, so maybe the break even point it three people sharing.
I can see how the market is working here and rail companies are just charging what the consumer is prepared to pay when all their costs are factored in. However I'm interested to take this a little further. To my mind the rail network is a natural monopoly, there are huge barriers for new entrants in terms of costs and opportunities and typically the consumer has no choice of provider for a given service. UK governments seemed to be of the mind that rail funding through tax-payers should be avoided (I don't think this is backed when you look at other countries). I would classify the rail network as essential national infrastructure (like roads) and needs government investment. Investment that can easily be recouped by taxes on the increased value of the land served by the improved rail network.
DNAse:
"I would classify the rail network as essential national infrastructure (like roads) and needs government investment. Investment that can easily be recouped by taxes on the increased value of the land served by the improved rail network."
I would completely agree. For some reason, privately owned railways never make enough money for themselves (although they make lots of money for surrounding land owners) which is why they are always nationalised or subsidised.
But our Homeys want the railways to be subsidised by the magical money tree, not taxpayers' money, and they certainly don't want taxes on land values to be raised, even if they are used to fund things which clearly boost land values.
And if rail travel were much cheaper, it would be correspondingly crowded and then they'd wail about overcrowding.
W42/MW. Au contraire, the car is very 'efficient' indeed. The wonderful thing about a 'car' is that it is just as good at taking 1 person or 4 persons (or in my case 1 person or twelve persons - 1996 LR Defender 110, since you ask). Plus it waits outside my door for me and generally takes me to the exact place I want to go, in comfort, at the time I want, and exactly when I want to, in all weathers, so allowing me to utilise my time in the most efficient way for me. And as it is efficient for me it is also efficient for society. My 'car' also doubles as a van, a tow truck, a neighbour helper, a fly tipping clearer, a mother taker to the doctor-er, a child to universty-er etc etc.
This flexibility and latent 'efficiency' is why all sensible people like to use cars, aka personal transport, as much as possible.
The train is inefficient because it only runs on fixed rails between hubs along corridors. It works very well for commuters (see Swindon - London) but doesn't work if I want to go from Ipswich to Fishguard (say), or my home to the dump.
And then there's Africa. Cars and mobile phones do more to develop africa than subsidies.
In other words the 'rents' go to the landowners, rather then the investors.
As a general rule I trust the State run anything about as much as I trust a Cobra not to bite me if I stand on its tail.
Question. So what mechanism can we (the market) devise to pass on the unearned rent profits from landowners to private rail companies? Perhaps subsiies ('rebates'?) from LVT on the 'excess' rents in the nodes serviced by the railway/road?
L: "The train is inefficient because it only runs on fixed rails between hubs along corridors. It works very well for commuters (see Swindon - London) but doesn't work if I want to go from Ipswich to Fishguard (say), or my home to the dump."
Exactly - it's horses for courses, and if it's two or more people, car is usually cheaper BUT you have to factor in parking charges. And if you want to go to Australia, clearly flying is the best.
But where railways really come into their own is for Tube or Metro in large cities. If they shut them down then London or Paris would simply wither and die.
And where cars come into their own is out in the countryside (if I'm heading into London, then it's always Tube, if I'm heading outwards, then it's always car).
To try and start a discussion about "What's better - train or car?" is fairly meaningless unless we know starting and end points, how many people travelling, how much luggage or shopping is to be transported, frequency, time of day, will you be all having a drink wherever you end up, etc.
MW. Exactly. And I was factoring parking charges. My per mile calculations for business use always do that.
Me too. If going to London on business I use the train/tube/cab nearly 100% of the time. But, if taking a child back to its home or university in London I always use the car.
Re Australia. I worked it out. It uses less fuel per passenger to take your family to Australia overland by landrover (and by ship across the deep wet bits) than it does by flying. Mind you it takes a bit longer.
L: "Question. So what mechanism can we (the market) devise to pass on the unearned rent profits from landowners to private rail companies? Perhaps subsiies ('rebates'?) from LVT on the 'excess' rents in the nodes serviced by the railway/road?"
As has been explained to me, we can't have LVT because Kirsty Allsop's parents bought a house for 2'6 fifty years ago which is now worth £2 million.
"Re Australia. I worked it out. It uses less fuel per passenger to take your family to Australia overland by landrover (and by ship across the deep wet bits) than it does by flying. Mind you it takes a bit longer."
The most efficient way of going to Australia is simply not to go there.
"Question. So what mechanism can we (the market) devise to pass on the unearned rent profits from landowners to private rail companies? Perhaps subsiies ('rebates'?) from LVT on the 'excess' rents in the nodes serviced by the railway/road?"
Surely the answer is the investment of *future* LVT increases into the infrastructure, extending platforms and widening lines etc, to make it as easy as possible for potential operators to step in. Thus the government acts to transfer unearned rent to the rail company in the form of improved infrastructure making it easier for them to do business. Increased competition between businesses for use of the improved infrastructure will then be to the benefit of the passenger. This obviously requires some fore-sight, something governments are not known for.
DNAse
Since we both agree that gummint, especially, doesn't have 2020 foresight, what can be done? There must be a mechanism to pass the land value added by the railway to improvements/maintenance in the railway?
Look. I live in town A with a high demand for labour and materials. I can see that town B on the coast has a good port and labour. So I say to town B, I'll finance and bring the railway to you if you give me a share of the value my entrepreneurial skill adds. (Ditto to all the nodes along the route). Or I suppose once having done the value adding bit I could simply put up my prices to 'share' the increased rents with the landowners in town B.
Surely that's it. The pricing mechanism in the free market. As the Railway (or road come to that) adds value to the land, fares (or road tolls) need to rise. And the only way of ensuring an equitable outcome for the 'workers' is only to tax them on the same notional value, that is no wages or purchase taxes and duties etc.
(This post is an argument, not a comment!)
DNAse, L, of course governments don't have 20/20 foresight, but we can do a lot of educated guesswork based on 'stuff that has already happened' and project into the future. With most roads and railways, it is difficult to get it wrong as demand always changes to meet supply.
For example, if the govt or council foolishly decides to build the road from Town A to Town C which is nearer but has a smaller port, then Town C will end up expanding its port and people will move from Town B to Town C instead.
The value that is added by (most) roads and railways vastly exceeds the cost (let's make possible exceptions for HS2 or the Humber Bridge?), so if you have £10 billion to spend, it would be best to build it somewhere where it adds £50 billion value, but if you mess up, it will still be adding £25 billion in value, it's all good. If you waste the money on a footbridge between two remote Scottish islands, then Heaven help you.
As we have established, it is impossible to disentangle all the factors that affect land values. If we build Lola's new road from Town A to Town (by mistake), then land values in B might fall and land values in A and C will rise, but values in C will partly rise because of the expanded port facilities and the increased demand for housing for the new workers, but this only happened because of the new road etc etc.
There is no need to be overly scientific about this.
Subsidies aside the cost (tickets + subsidies) is ridiculous. The network is allready built. (Would it be a viable business proposition starting from scratch)
The real point is MW's throwaway comment towards the end "Why (do) the younger generation put up with it?"
Its amazing that the students rioted over an additional/unnecessary £30k on university fees.They should have been rioting over an unnecessary charge of £100k fot the land under any home they try to set up when they leave.
Instead of the Specials (see elsewhere) ,they should be listening to wiser, more balanced representatives of the older generation such as the Sex Pistols: "There's no future for you-hoo."
(Just returned from a triumph of market economics rail trip from Northampton to the Smoke [London was once smokey? You'd beter believe it: draconian anti- individual-liberty State action settled that one with Clean Air Acts]The staff are refusing to do overtime at weekends because the management has cut the rate from double time to time and a half so there are srbitary cancellations not all covered by replacement coaches.Back to the Future:re-nationalise the natural monopolies!)
DBC Reed, Don't understand your bit in parentheses? Care to elaborate? That is, I get the bit about the clean air acts but not the commen about monopolies?
Den, don't ask me how they work out ticket prices. Round the South East they seem pretty good value, but going from London to Yorkshire is outrageous.
DBC, yup, that point about £30,000 for 'something' versus £100,000 for 'nothing' fails to register with most people.
L, a natural monopoly is a special case and fair target for state regulation, taxation, subsidies, whatever. There are very few natural monopolies (mainly utilities, railways and roads).
Here is one of the rail problems
http://www.thisislondon.co.uk/standard/article-23936673-all-aboard-the-gravy-train-network-rail-bosses-on-track-for-huge-bonuses.do
And don't forget that you may pay to park your car, but rail commuters will pay for tube/taxi etc to get to anf from the stations. It's £8 a day to park in Crewe station car park just to catch the bloody train!
W42, yup, that's what happens in privatised utilities - private sector salaries and public sector levels of service.
Parking charges are yet another reason why houses within walking distance of the station cost more to rent or buy, as the £1,600 a year saving (in Crewe) goes straight into the rent or house price (adds about £30,000 to the value compared to somewhere ten minutes' drive away).
Parking charges are an interesting case, as it's a good guide to a reasonable level of LVT for an area - you are paying purely for the location as the tarmac surface costs pennies on an amortised basis.
In central Crewe, for example, £8/day x 200 days divided by average twenty-five sq yards for a parking space (i.e. a well-planned one acre car park can take about 200 cars) = £64 per square yard per year.
MW. I do see the 'natural monopoloies' argument, but when we do that it seems to always end up in massive producer capture, rationing and constant price rises - the latter without any seeming justification.
"Like you, were I stupid enough to choose such a commute I would prefer to use the train, but if run efficiently the train should be much cheaper than other options."
Why should it? The railway companies don't work on cost plus pricing you know. They know bloody well "what the competition charges", i.e the cost of using a private car and set their fares accordingly.
B, don't use the word 'should'.
Either railways are private, in which case they maximise their income by charging the profit-maximising price; or they are state-run, in which case they'd be daft to charge anything less than what a private company would charge for the same level of service (not to do so is throwing away taxpayers' money).
And as to 'cheaper', do you mean 'minimising input costs (to themselves)' or 'minimising the price charged to the consumer'? If all taxpayers benefit from the profits, then it is only input costs that matter.
M, dunno, I was quoting Woodsy42. Ditto your point about "should" (with which I agree).
"Anon, Bournemouth is the joker in the pack, but then if you add on the "Near the seaside hallowed greenbelt" factor (which also blights workers in e.g. Cornwall) it all evens out."
I think it's more likely to be the "downsizing retiree with lots of cash" factor, ditto Cornwall.
B, yes "near the seaside hallowed greenbelt" attracts the downsizing retiree with lots of cash, same all along the south coast, it's the same thing. Frankly, if I retired with lots of cash that's exactly where I would go.
The real joker in the pack is Sandbanks, in Poole, which counts as part of Bournemouth. There property prices are similar to Central London, God know why. Thay could have a skewing effect on the average.
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