IT is often forgotten just how great the taxpayer subsidy to some train operators has become, and just how massively this varies around the country. Take four franchises due to be replaced by 2014: NXEA Greater Anglia gets 83 per cent of its costs from fares and 17 per cent from subsidies; for First Great Western it is 76-24; for TransPennine Express 43-57 (with taxpayers contributing more than passengers); and for Northern passenger revenues are just 22 per cent, with taxpayer handouts an astonishing 78 per cent (in some remote parts of the UK, it would probably be cheaper for the taxpayer to pay for taxis for all passengers).
There is a huge difference between the economic and social impact of commuter railways in London and the south east, a vitally important part of the infrastructure; the impact of long-distance lines; and that of railways in other parts of the UK, which are often far less important to local economies than rail is to London and the south east. All three categories must be treated differently.
It is equally clear that the current system doesn’t work: commuters in and around London often face horrendous travelling conditions and fares are rocketing. Yet for the UK as a whole there are now massive subsidies going to the industry, which is a bizarre mish-mash of public and private as a result of years of partial renationalisation and endless tinkering.
Sir Roy McNulty’s study on the industry was spot on: he found that costs ought to be 20-30 per cent lower, and that there is an efficiency gap of 40 per cent against four European comparators. McNulty argues that the industry should be aiming to achieve a 30 per cent reduction in costs per passenger-km by 2018-19, a goal backed by the transport secretary yesterday.
The real question is how this can be delivered. The government’s big idea, as proposed in yesterday’s consultation, is the decentralisation of decision-making, though it hasn’t decided exactly what that means. It needs to make up its mind, and fast. Forget useless, extraordinarily costly white elephants such as High Speed 2: this government will be judged by millions of commuters on how it reforms the railways to reduce overall costs, while improving the daily experience for long-suffering passengers.
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