Have train fares gone up or down since British Rail?

Ticket machine

It is 20 years since rail privatisation was set in motion. Are fares higher or lower today than they were under British Rail?

January is the traditional time of year for teeth gnashing from rail passengers as fares rise again.

Twenty years ago, the wheels of rail privatisation were set in motion. In January 1993, John Major's government enacted the British Coal and British Rail (Transfer Proposals) Act 1993.

At the time, the message was that fares would rise no faster under the new privatised railway than under BR. It was suggested that they might even fall.

"I see no reason why fares should increase faster under the new system than they do under the present nationalised industry structure," Transport Secretary John MacGregor told the House of Commons in February 1993. "In many cases, they will be more flexible and will be reduced."

So two decades on, what has happened?

Since the last set of British Rail fares were published in June 1995, inflation measured by the Retail Prices Index (RPI) has been 66%, according to research by fares expert Barry Doe for Rail Magazine.

Doe's figures show a huge variation in fares since privatisation.

A single from London to Manchester has gone up by 208%, up from £50 in 1995 to £154 today. That is more than three times the rate of inflation.

But a season ticket for the same journey has risen by only 65% - just less than inflation.

Comparison of increase in fares since 1995

Doe's research considers walk-on fares, which include season tickets, but not tickets that are bought in advance. Advance tickets are cheaper but there is no solid data on the cost or number sold.

Peak-time single tickets have risen sharply. For example, a single from London to Glasgow, which was £65 in 1995, is now £169 - a rise of 160%. A single to Exeter was £37.50 but is now £114.50 - a rise of 205%. London to Swindon has gone from £20 to £58.50, a rise of 193%.

Percentage increase in fares since 1995

Yet at the same time, season ticket price rises hover just below or slightly above the rate of inflation, with an increase of between 55% and 80%. A season ticket from Nottingham or Norwich to London has risen by 55% and 63% respectively.

Like season tickets, the price of off-peak returns has been capped by government since privatisation. A return - coming back within a month from London to Birmingham costs £49 today compared with £31 in 1995 - a rise of only 58%, well below the rate of inflation. This is with Virgin, the same company that operates expensive singles to Glasgow and Manchester.

There are anomalies. Train operator C2C, for example, operates the line from London to Shoeburyness, in Essex. The cost of the journey is far cheaper in real terms across all ticket types than it used to be. A single has risen by just 17%, while a season ticket has gone up by 57%.

At privatisation, it was felt that certain customers needed protection, says Mark Smith, founder of website The Man in Seat Sixty-One, who used to set fares at the Department for Transport.

The theory was that at certain times of day, such as during rush hour, the market would not operate a level playing field.

Ever since, the government has protected season tickets and off-peak returns. Before 2004, rail operators could only raise regulated fares by inflation -1%. From that year, this became inflation +1%.

Meanwhile, other fares were unregulated, meaning the train companies were allowed to set them as they wished.

The feeling was that those travelling long distance in peak time would be mainly business travellers who could afford it. But the system has led to massive variation, says Doe.

"Because operators were forced to introduce capping, they were forced to put unregulated fares up a lot." Commuters have been "featherbedded" but other passengers have been hit hard, Doe argues.

There is a double reason why unregulated fares rise faster than regulated fares, says Christian Wolmar, author of Broken Rails.

Previously in the Magazine

Searching for the most expensive train journey

Rail fares rose by 6% in January 2012. The Campaign for Better Transport suggested that season tickets for commuters around London cost more than three times those of their Spanish and German equivalents, and 10 times more than those in Italy.

First because they can, he says - there is no government control. But second, the rail companies keep all the money they make on price increases on unregulated journeys. On regulated fares, the government receives the above inflation increase.

"The system has an incentive to put unregulated fares up by more than the amount of regulated fares because the train companies retain all the money," Wolmar says.

But the Association of Train Operating Companies (ATOC) says that Doe's figures miss out the million advanced tickets it sells a week.

"Mr Doe's table quotes London to Edinburgh as costing £152 for a single," an ATOC spokesman says. "But one check of the East Coast website and you'll find that you can make that journey for less than £29. That's significantly cheaper than in 1995."

It points out that only between 2% and 4% of tickets sold are the flexible Anytime tickets, such as the single ticket measured by Doe.

ATOC admits it doesn't have figures on the proportion of tickets sold that are "advance". According to Lennon rail ticket sales database, about 4% of tickets sold between November 2010 and November 2011 were "advance".

So while few people travel on the most expensive single or on advance tickets, most rail users use season tickets or off-peak returns.

There are no figures showing the average cost per passenger mile.

ATOC says that in 1994-95 the average cost of a single journey was £4.82 compared with £4.95 in 2011-12. This is a rise of 2.7% when adjusted for inflation, the spokesman says. But combining all journeys both long and short, it doesn't give a breakdown of which journeys are rising in cost and which are falling.

Train platform

The organisation adds that four out of five journeys today are made on a rail card or advanced ticket.

Advance tickets are all very well, but don't suit everyone, says Christian Wolmar, author of Broken Rails.

"They (the train companies) have people over a barrel," Wolmar says. "If you have to travel at 8.30 in the morning you have to. You don't have the choice of waiting for the 9.30."

But Smith believes privatisation has delivered a more intelligent fare structure.

People might assume that fares would have gone up slower under British Rail, says Smith. But for commuters, the reverse might have been true as there was no capping of fares under BR, he points out.

On longer distance routes, he says, price variation has allowed the rail companies to compete with both coach companies on the bargain advance tickets and airlines for the expensive peak time seats.

"In practice it's been a success. It's been one of the factors at getting more people travelling longer distance by rail while at the same time raising more revenue. So in some ways privatisation has been a good thing."

There is more to a railway's success than just low fares. Other measures are safety, punctuality, comfort, frequency of service, convenience and simplicity. On many of these, the privatised railways have a good record.

On simplicity, the network seems to get a big fail from commentators. Triangular journeys (returning via a different route) are harder now than under British Rail, says Smith.

South West Trains

And some fare rises are exceptionally complicated, according to Doe's research. In a few cases, off-peak returns have risen hugely even though these fares, in theory, are regulated. A London to Leeds return is now £154, up from £55 in 1995.

Start Quote

There were far fewer trains under British Rail and more of them ran late”

End Quote Rail Minister Simon Burns

Doe says these big rises occur when a train operator gets around the government cap by removing the super saver and replacing it with a more expensive super off-peak ticket, before then bringing in a more expensive saver, known as off-peak return.

Confused? Most people are, says Matthew Engel, author of Eleven Minutes Late. Visitors to Britain are regularly forced to pay more than they should simply because they don't understand the multiplicity of ticket types and conditions, he says. "I'm convinced the train operating companies have not allowed any rationalisation because they make money from this. They know that there's only Barry Doe who understands (the correct fare)."

Critics argue that privatisation has led to big fare rises despite increased public subsidy. Money has had to be found for salaries and dividends, they claim. And no-one knows why rail infrastructure costs so much more in Britain than the rest of Europe.

According to ATOC, train companies make only "modest" profits, averaging 3% of revenue.

Total government subsidy for the railways increased from £2.17bn in 1992-93 to £2.59bn in 2002-03, according to figures from the Office of Rail Regulation. It peaked in 2006/07 at £6.3bn, before falling back to £3.9bn in 2011-12.

Electric Locomotive, British Railways Class 84

Rail Minister Simon Burns says privatisation was "the right decision 20 years ago and is the right decision for today's railways."

Under British Rail there was a lack of investment that today's privatised railway has had to make up for, he argues.

"There were far fewer trains, more of them ran late, when they arrived at all, and since privatisation passenger satisfaction has improved significantly."

Re-nationalisation is not a possibility in a cash-strapped country. But Doe's research raises the question of fairness. Are commuters being overprotected?

Most of them don't work out how many miles a year they do, he says. "Brighton to London is 500 miles a week." But there's no appetite to tinker with the status quo, Doe says. Commuters are a "big lobby group" who neither the Conservatives or Labour want to antagonise.

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  • rate this

    Comment number 41.

    You would normall expect privatisation and competition to lead to higher standards and lower prices. The profit motive is stonger than any other force in a market. The troublewith Rail privatisation is there is no real competition. just a set of local, temproary monopolies, and huge extra costs associated with regulation and management. All of the costs and none of the benefits.

  • rate this

    Comment number 40.

    I'm glad this study ignores advance fares; I'm not surprised "there is no solid data on the cost or number sold" as I suspect there are a token number of these actually on offer, at least the halfway affordable ones.

  • rate this

    Comment number 39.

    @11 @20 Worth remembering that in 1947 some of the private railways were teetering on the verge of bankruptcy and the rest weren't that far off. The private companies may have protested against nationalisation but that was to get as much compensation as possible. None of them really wanted nationalisation to be dropped.

  • rate this

    Comment number 38.

    I suggest legislation to cap and force reduction in fares to no more than the cost of inflation since privitisation, and total removal of taxpayer subsidy. The companies either survive, in which case they are fit to run a train operation, or go bankrupt, and the government takes the assets to save the service.

  • rate this

    Comment number 37.

    Money is easy to hide, Say I own a rail company , I loan the company £200mm from parent co at super high interest rate, then I have to pay branding rights, and head office mgmt fee... The train operator may not make much but my god does their parent company! Ask yourself why was Brandson so alrmed at loosing a business which makes ~3% profit?

  • rate this

    Comment number 36.

    "Is this a joke? Seriously?. . . . . . 'modest profits'?. . . . . . Well, wheres all the money going then, because it's certainly not in the 'comfort' of a train ride"

    My guess would be vast sums of the profit are being syphoned off and channelled through some tax avoidance scheme and into executive pay-checks/bonuses/'expenses'...

  • rate this

    Comment number 35.

    "the tax payer subsidy is greater than when the railways was in public ownership"

    What was the tax payer subsidy PRIOR to nationalisation? Zero.

    Back then our railway system not only worked, but it was the envy of the world and it was all created by private enterprise.

    Oh & people also seem to have forgotten the endless strikes that were a permanent fixture of the BR days.

  • rate this

    Comment number 34.

    I have travelled from Surrey into the City Of London for the last 15 years. The service on my line is probably the best it has ever been. The trains are clean, on time and very reasonably priced. Monthly season ticket approx £160.
    Maybe I am lucky but I certainly take my hat off to Southern who operate my service. Trains have even been pretty good in the snow. Beats driving economically for sure.

  • rate this

    Comment number 33.

    This isn't privatisation.

    Firstly, companies have to bid to the government to run a line. The government, not the private companies, sets the price of a lot of the tickets and I'm sure there are also numerous other regulations they have to abide to. Finally, the companies do not even own the tracks they run on. How is this privatisation?

    The current system is the worst of both worlds.

  • rate this

    Comment number 32.

    The rail system is an excellent example of privatisation having disastrous consequences for ordinary people. The sad fact thst the current government is doing the same to the health system and to education. Ordinary folk will rue the day!

  • rate this

    Comment number 31.

    Is it any surprise the only rail line in this report that has had a reduction is the one from the City of London to affluent Kent.

    "We are all in this together" will come back and bite Cameron on the ass as much as Brown's "No more Boom and Bust".

  • rate this

    Comment number 30.

    Before privatisation, commuter fares were charged only in the morning. This meant it was possible to travel cheaply later in the day. Now, anyone passing near London between 3.30 and 7pm is likely to be charged a full fare, even if he or she is only crossing London to get to somewhere else. And many cross-country trains don't have discounted seats even if bought in advance.

  • rate this

    Comment number 29.

    When the conservatives privatise something it is usually at the behest of one of their own - we let these charlatans do what they want, all in the name of PROFIT.

    They blatantly LIE to the electorate as they know we are toothless, and their contempt for the working class would be laughable if it wasn't so serious.

    all that is hopefully away to change in Scotland.

  • rate this

    Comment number 28.

    Is this another insidious paen to the public sector from the public sector BBC, masquerading as news and offering a nice side-swipe to private industry?

  • rate this

    Comment number 27.

    How about figures showing the journeys which commuters make on a daily basis rather than longer journeys. It is the daily commute the majority of people do and affect their budgets. It's not possible to get a discounted fare by booking ahead to travel daily in rush hour.

  • rate this

    Comment number 26.

    Why not have consistent flat rate fares, instead of sporadic price hikes, where you might pay £5 if you book online in advance, but £50 for exactly the same journey if you buy on the day at the station?It's not feasible to plan every journey months in advance.And there's never any flexibility if a train is late and you miss a connection, because they're all run by separate private firms.RUBBISH.

  • rate this

    Comment number 25.

    I travel occasionally from Cardiff to Reading, and despite staying on the same train it is cheaper to break the ticket at Swindon and get two separate tickets, which shouldn't be the case. The most bizarre ticket though is Cardiff to Hereford, looked at a cost for an early train next week, costs £26, not bad, however, it is cheaper to get a ticket to Wrexham (£13) which is twice the distance!

  • rate this

    Comment number 24.

    Agree with Dr_Ads - If Labour had not nationalised what was essentially a privately run system it would not have suffered from a lack of investment for so long and would NOT now require such massive sums of money to get it working again!

  • rate this

    Comment number 23.

    "Tories sell off the railways to their friends/paymasters in the city for peanuts"

    Again you're forgetting that Labour bought off the railways for their friends/paymasters in the unions for peanuts.

    Neither were the correct thing to do.

  • rate this

    Comment number 22.

    I can now charter a learjet to london cheaper than I can get 3 people there on a train.

    Or I can hire a rolls and a driver and trouser a few hundred quid.

    Something is badly wrong!


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