House of Commons - Investing in the railway

Investing in the railway - Transport Contents

2 Government policy on rail

4. In March 2012 the Department published a Command Paper on rail: Reforming our Railways: Putting the customer first.[9] This stated that previous governments "became too involved in the detail of the rail industry on too many occasions", citing issues of train service specification and the deployment of rolling stock.[10] It called for "clarity" on the role of Government, arguing that "ministers need to remain responsible, and accountable to Parliament, for setting a top-level strategic direction for rail and for the use of public funds".[11] It added:

5. The Command Paper made clear the Government's intention to reduce Government subsidy for rail—and a "railway that in time covers more of its own costs".[13] It did not want a "subsidy-free railway, limited only to profitable services", adding that:

The Government has made progress on this ambition. The subsidy of the railway, which had increased in the mid-2000s—attributed in the main to the costs of addressing the maintenance deficiencies revealed by the fatal accidents at Hatfield and Potters Bar—peaked at £7 billion in 2007-08.[15] In 2012-13 the subsidy figure was £4 billion.[16] The Campaign for Better Transport told us that fares revenue will cover 103% of the operating costs (separate to the improvements to infrastructure) of the railways by 2018, compared to 80% in 2009.[17] The reduction in subsidy has led to public concern about the level of fares: since 2004, the average cost of a rail season ticket has risen by 56.3%.[18] The Government has limited the increase in rail fares for 2014 and 2015 to an inflation-only increase: this year the average increase to rail fares was 2.2%.[19] Campaigners have warned that, despite the limits applied to rail fare increases, the cost of a season ticket from Milton Keynes Central to London has risen from £3,958 to £4,888, an increase of £930 (23.5%) in the course of this Parliament.[20] A season ticket from Newcastle to Middlesbrough has risen by an increase of £483 (26.3%) over the same period.[21] When we questioned the Secretary of State on this issue he argued that he had to "bear in mind" that rail passengers received a greater subsidy than motorists.[22]

6. The Government sets out its priorities for the rail for each five year control period in its High Level Output Specification (or as the Minister preferred to call it, the Rail Investment Strategy).[23] The need to increase capacity and accommodate growth in demand was "at the core" of the High Level Output Specification, which forecast average growth during the five-year period as 16% in passenger demand, and 23% in freight.[24] The rail network is required to provide for an additional 120,000 commuter journeys into London and 20,000 commuter journeys into other cities—using passenger forecasts from "recognised modelling systems".[25] The evidence we received from Passenger Focus indicated that the high-level passenger priorities for the railway network were around "capacity, performance and frequency".[26] Jeremy Long, representing the train operating companies through the Rail Delivery Group, suggested that there was a balance to be struck between performance and punctuality, and capacity, arguing that many passengers were more concerned about the latter, than the former.[27]

7. The Campaign for Better Transport cautioned that "the railway in 2019 will still not be linked up closely to other modes of transport and therefore won't give people the door-to-door journeys they need".[28] It called for road and rail investment to be considered together, as part of a route-based transport strategy.[29] We have repeatedly called for this to be achieved through a clear and comprehensive strategy for transport.[30] This view was recently supported by Sir David Higgins, Chair of HS2 Ltd, who argued that only by dealing with transport in a less ad hoc, short term way "can we address the conflicting pressures and trade-offs any transport system faces".[31] Jon Lamonte, representing One North, called for the Department to take a "multi-modal approach", considering rail alongside the strategic road network, and connectivity more generally.[32] Clare Moriarty, Director General of Rail Executive in the Department for Transport, reported that the Rail Executive was looking at how rail could be "properly integrated with the investment that is going into roads".[33]

8. The Government has set out an ambitious investment programme for the classic rail network. The record amounts of funding committed demonstrates a welcome commitment to meeting the high demand for rail, even at a time of limits on public spending.

9. The stated ambition of successive governments has been to reduce the subsidy to the rail network. This has been achieved to date, but given the forecast growth, and need to increase capacity, has prompted the question of to what extent passengers will be required to pay for long-term infrastructure improvements, on top of inflation increases to fares, which principally cover operating costs. Many passengers have no option other than to use the train.

10. We remain concerned that rail policy is considered in isolation, and repeat our recommendation for the Department to commit to a wider transport strategy.

9 Department for Transport, Reforming our Railways: Putting the customer first, Cm 8313, March 2012, p 9 Back

10 Department for Transport, Reforming our Railways: Putting the customer first, Cm 8313, March 2012, p 3 Back

11 Department for Transport, Reforming our Railways: Putting the customer first, Cm 8313, March 2012, p 3 Back

12 Department for Transport, Reforming our Railways: Putting the customer first, Cm 8313, March 2012, p 3 Back

13 Department for Transport, Reforming our Railways: Putting the customer first, Cm 8313, March 2012, p 12 Back

14 Department for Transport, Reforming our Railways: Putting the customer first, Cm 8313, March 2012, p 9 Back

15 Railways: Government support and public expenditure, Standard Note SN/SG/617, House of Commons Library, January 2014; Transport Committee, Seventh Report of Session 2012-13, Rail 2020, HC 329-I Back

16 Office of Rail Regulation, GB rail industry financial information 2012-13, April 2014 Back

17 Campaign for Better Transport (IWR 27) Back

18 Office of Rail Regulation, 2013-14 Annual Statistical Release: Rail Finance, 21 August 2014, accessed 15 January 2015 Back

19 Rail Delivery Group, "RDG comments on 2.2% average increase in 2015 fares", 2 January 2015, accessed 15 January 2015 Back

20 Campaign for Better Transport, January rail fares: Ticket price hikes continue to outstrip wages, January 2015, accessed 15 January 2015 Back