Lauren Maher is the Communications Manager at the Centre for Policy Studies
Rail has been at the heart of British society since the first railway opened in 1825. However, almost overnight in March 2020, it was plunged into an unprecedented revenue crisis. Without the Treasury footing a £14 billion bill, the entire network would not have survived.
Now, 60 years after the Beeching Cuts and 30 years since the end of the nationalised British Rail, the network faces another defining moment: one which the Government must capitalise on.
As a new paper from the Centre for Policy Studies argues, the most important thing to recognise is that the old way of doing things won’t work anymore. It’s not just that passenger figures haven’t returned to pre-pandemic levels; it’s that the way people travel and commute has fundamentally changed.
New figures we reveal today show that the number of passengers commuting every day at peak time – in other words, coming in Monday to Friday, week in, week out – is just 15% of the pre-pandemic total. Most commuting now takes place Tuesday to Thursday; passenger levels are 20% lower on Mondays and 50% lower on Fridays than they were at the start of 2020.
So how can we protect the network’s future while also minimising the burden on taxpayers? At current levels the annual subsidy is still an extraordinary £6 billion, equivalent to an extra penny on income tax.
In a report published today by the CPS, rail expert Tony Lodge highlights the urgent need to radically overhaul the network and save it from a future of decline and underinvestment, propped up by the taxpayer.
While the commuting figures might seem gloomy, rail hasn’t been completely abandoned. Instead, passengers now demand a lot more: they expect to see a world-beating rail offer that is great value for money, offers choice and is supported by technology that can adapt to an evolving operating environment. There has also been a much stronger recovery when it comes to long-distance leisure routes than short-distance commuting – a trend that should be embraced and supported.
The first step the Government must take to modernise the rail network is to overhaul the current ticketing model. It is extraordinary that if I buy a rail ticket I have to navigate 2,700 types of tickets, 1,000 unique names and 600 restrictions.
At the heart of the report is a proposal to create a simpler, fairer and more flexible digital ticketing system. By introducing a cloud ticketing system, the Government would be able to streamline the process for passengers and abolish sky-high peak prices. Crucially, by incentivising a return to rail by making it much easier to purchase a ticket, the Government will be on a much stronger footing to recoup lost revenue and restore the financial sustainability of the network – for example by using loyalty schemes to incentivise people to buy repeatedly.
However, radically reforming rail must go further than introducing a new, digitised ticketing system. As the Government prepares to lay the legislation to establish its new public body, Great British Railways, it must truly commit to using it as a vehicle to drive competition and boost private investment across the network.
As our figures illustrate, open access competition on the East Coast Mainline – a policy championed by the CPS, and endorsed by the Competition and Markets Authority – has resulted in lower fares and greater passenger satisfaction, as well as a stronger rebound in usage rates post-pandemic. It is paramount that the Government seizes the opportunity to use GBR to replicate this success across the country. Doing so will be instrumental to reducing reliance on taxpayer funded subsidies and setting a precedent of boosting private investment across the network. That means having multiple operators competing for customers not just on the West Coast Main Line but the high-speed networks too.
While driving private investment in railways lines is crucial to delivering for passengers, efforts must also be made to boost rail freight. There are obvious economic benefits to being able to transport more goods; however, redirecting road activity to the rail network will also be crucial to reducing the country’s carbon emissions. For a Government whose central pillar of its post-pandemic economic recovery is green growth, this is a win-win. That’s why we suggest an ambitious target of trebling the volume of private sector commodities and raw materials carried via rail freight.
Britain’s railways have been through many landmark reforms over the years. The Government has once in a generation opportunity to capitalise on the changes caused by the pandemic and create a rail model that is fit for the future in line with new working practices. Failing to act urgently and implement the reforms we have set out will not only subject the industry to a future of decline but result in an additional burden on taxpayers to the tune of £6 billion a year, equivalent to an extra penny on income tax. Now is the time to step up and make sure we protect and grow an iconic part of British heritage and our economic fabric.