Transport costs – what the Politicians don’t say

uk trainsMany pledges have been made on the campaign trail, but one big question remains unanswered regarding transport, who pays? writes Dr John Disney from Nottingham Business School.

Pledges to freeze rail fares or limit fare rises to the Retail Price Index (note, not the lower Consumer Price Index) are likely to lead to claims for increased subsidy from train operators who have taken on franchises under different arrangements. Such changes in fares policy can only be implemented when a thorough review has taken place of rail franchising and that will take several years to complete.

Furthermore current capping only applies to “regulated fares”. In recent years many off peak restrictions have been altered requiring many passengers to purchase a full price “Anytime” ticket. These are generally not regulated and have increased much faster than inflation since rail privatisation.

Many small businesses find the cost of peak time rail travel to London from the provinces prohibitively expensive; one Anytime Return can cost 50% of a weekly season ticket.

Parties pledging to retain free off peak bus travel for senior citizens and disabled persons have not mentioned whether this will be achieved by reducing the reimbursement rate to bus operators. This leads to marginal routes being withdrawn (especially in the evenings and at weekends) and fares for paying passengers being increased. The knock on effect for young people is devastating: fewer buses in the evenings and weekends when they need them to access employment opportunities and higher fares. Some operators now only offer a 25 or 33% discount for child fares (as opposed to the traditional 50%) and some only offer child fares to 13 year olds and older if they register for an eligibility card, otherwise they are charged full fare.

Fuel duty is considered toxic by many politicians following the fuel price protests instigated by a militant minority. However it will have to be addressed sooner rather than later by the next government as it is fiscally and environmentally unsustainable to maintain the current freeze on duty rates especially as vehicles become more fuel efficient (although lower pump prices driven by the fall in crude oil prices led to a significant increase in the volume of fuel sold in February). Lower prices also lead to a fall in VAT revenue; it would be unfair to increase the universal VAT rate to compensate for the loss of VAT revenue from road fuel.

The “Rural Fuel Duty rebate” is an expensive to administer scheme to provide a small benefit (5p per litre) to a very small number of consumers ; those on the mainland will still find it cheaper to fill up if they visit their nearest large town. It would be better to exempt rural fuel retailers from Business Rates to encourage more small motor garages to retain fuel sales rather than concentrating on repairs and vehicle sales.

Reducing Air Passenger Duty on domestic flights gives airlines an unfair competitive advantage over rail operators who have to pay high track access charges and weakens the case for High Speed Rail.

Transport costs are a political hot potato because it is a very price sensitive industry and also publicises its costs very prominently as opposed to the communications, domestic energy and hospitality industries who obscure their charges with an often impenetrable smokescreen.

Dr John DisneyDr John Disney
Nottingham Business School
Nottingham Trent University

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