Monday, 24 August 2015

Fun with numbers

From City AM:

This week, fed-up Londoners will be forced to endure two more Tube strikes.

And this despite Transport for London having already offered the unions: a two per cent salary increase this year, inflation-protected rises in 2016 and 2017, a £500 bonus for all staff on Night Tube lines, £200 extra per Night Tube shift for drivers, and the freedom to decide whether or not to work Night Tube shifts at all...

Accepting these demands would require a fare rise of 6.5 per cent or an extra £152 per year for a Zone 1-6 Travelcard. Clearly, this is unacceptable.

The article includes a long list of ostensibly sensible cost saving suggestions, such as driverless trains.

But he is jumbling several quite distinct questions, for example:

1. Are London commuters prepared to pay 6.5% more on their Travelcards in exchange for a 24-hour Tube? Is it worth £3 extra a week on your Travelcard to be able to stay out as long as you like without getting stung for taxi fares home? What about people who work night shifts, this will be a boon to them. Etcetera.

2. To the extent that sensible cost savings can be made, should those be reflected in lower ticket prices or a lower subsidy from the taxpayer?
Via, MBK, a shock horror from The Sunday Times:

NEARLY two-thirds of people due to retire next year will receive about £116 a week as their new “flat rate” state pension, rather than the full payout, a Freedom of Information (FoI) request reveals today...

The reason many people’s incomes will be slashed is because they have spent time “contracted out” of the state system. Simply put, this means that they paid lower national insurance (NI) contributions during their working life, and this will be taken into account under the new scheme.

If you were in a final salary or career-average pension scheme, you will have paid a lower rate of NI in return for giving up your entitlement to the government’s earnings-related pension top-up. This top-up, called the state earnings related pension scheme (Serps) and later the state second pension (S2P), is currently added to the basic state pension.

If you were in a personal pension or defined contribution workplace scheme, you will have paid the standard rate of NI, but some of it will have been paid back into your private pension pot.

For a start, this has been known for years, and secondly, that all seems perfectly fair and reasonable to me.

Those who 'opted out' must have known that they were swapping a lower state pension in return for a higher private or employer pension. Doing otherwise would be a retrospective subsidy to the 'pensions industry'.


Random said...

Pensions is a bit of a con really. It is all a current production issue. Transfer output to the elderly in other words just a type of redistribution.
Let's say you want pensioners to buy tins of beans. You introduce compulsory pension contributions for the population and sell it with a massive advertising campaign.
Those pension contributions then buy the asset tokens off the people about to become pensioners. The pensioners can then buy the beans, and those forced to pay pension contributions have less capacity to buy beans.
Just pay the State Pension at the Living Wage.

Bayard said...

"Accepting these demands would require a fare rise of 6.5 per cent or an extra £152 per year for a Zone 1-6 Travelcard. Clearly, this is unacceptable."

Well, to the extent that commuters will want to pay the minimum they can get away with for their Travelcards, any price rise is unacceptable. In a free market, TfL would just hike the fares and see how much the passenger numbers fell. My guess would be hardly at all. At least the customers are getting something extra in return for their extra fares. The problem is that TPTB can't make up their minds as to whether London Transport is a public service, in which case why is it not funded entirely from taxes, or a commercial company, in which case why should it not charge the maximum the market can bear.

Graeme said...

soon the papers will be telling us that we will have to retire at a greater age in order to get a state if that is news

Mark Wadsworth said...

R, it is not "a con" as such, it is just presented incorrectly. The wrinkles all say "But i paid for my pension and free healthcare and free social care with my National Insurance contributions" because that is the convenient lie spun by politicians from Nye Bevan onwards. It's a big fat lie, truth is pensioners are welfare recipients. Quite deserved welfare recipients, as it happens, but they ought to show a bit more gratitude to the people paying for them.

B, exactly. Point is, if we had a vote among Tube and night bus users, would we accept a 6.5% fare rise in exchange for 24 hour service?

G, exactly, as if that hasn't been obvious to any sentient being for decades.

JJ said...

"To the extent that sensible cost savings can be made, should those be reflected in lower ticket prices or a lower subsidy from the taxpayer?"

For me the trade off should be between lower fares and more capital investment. As has been suggested on here before if the line/network/route is at or near capacity then it would be stupid to lower fares therefore savings should be directed towards increasing said capacity. Whereas if it isn't at capacity then the savings should be used to lower fares.

The railways give way more to the "taxpayer" than they cost in subsidy (in this instance such a weasel word). The funding should be increased considerably in my opinion.

Mark Wadsworth said...

JJ, well yes, that is another perspective.

However things like "driverless trains" require up front investment as well, so it is not so clear cut. The point being that with driverless trains you can increase the number of trains running per hour without requiring new track etc. Although using more trains per hour means the tracks have to be replaced more often. Is more frequent repairs a 'cost' or is it 'investment'?

As to 'giving to the taxpayer', no, mainly they give to 'landowners' and the two groups are not necessarily the same.

JJ said...

"As to 'giving to the taxpayer', no, mainly they give to 'landowners' and the two groups are not necessarily the same."

No doubt, but what I mean is that aren't the wages and the number jobs that exist in London only as high as they are because of the economies of agglomeration? And it is the railways which massively help to create these. So these "taxpayers" benefit in that way. Of course taxpayers as a blanket term is wrong and there winners and losers, but even with our current inefficient tax system surely funding railways from tax revenue is a net positive?

Also Mark I'd love your take on this

Mark Wadsworth said...

JJ, I am a huge fan of transport possibilities, whether that is road or rail or anything else. The economy would grind to a halt without them. So yes, funding road and rail, even from the worst taxes is still an overall win.