Budget/Spending Review 2021 - Railways

[LNW-GW Joint]

The only significant paragraph in the Treasury papers about the rail settlement is this one (4.63, p110):
BUDGET 2021: Protecting the jobs and livelihoods of the British people (publishing.service.gov.uk)

Over £35 billion of rail investment over the SR21 period including High Speed Two, rail enhancements and vital renewals to improve passenger journeys and connectivity across the country – focusing on the Midlands and the North

The "SR21 period" will be the 3 years of the spending review, April 2022 - March 2025
Somewhere in the £35 billion will be the spend the Chancellor will allow for HS2, NPR and other rail enhancements in the 3-year period.
Sooner or later someone will be able to identify the individual project spend and work out what it means on the ground.
As expected we'll have to wait for the full Integrated Rail Plan for any detail.

The equivalent money for roads is £24 billion (2020-25).
There is also £23 million for the anticipated outcome of Peter Hendy's Union Connectivity review, whatever emerges from that.

 

[Starmill]

The 50% cut to Air Passenger Duty for trips between UK airports is confirmed too. Particularly bad news for some long-distance rail in Great Britain. The competition gets a £6.50 per trip automatic price cut, while the railway will charge more and more each year.

 

[Watershed]

The 50% cut to Air Passenger Duty for trips between UK airports is confirmed too. Particularly bad news for some long-distance rail in Great Britain. The competition gets a £6.50 per trip automatic price cut, while the railway will charge more and more each year.

Indeed. And fuel duty is frozen yet again. The increased price of crude oil serves as this year's excuse.

Strangely enough, I suspect that the cost of living crisis won't stop rail fares increasing in real terms in January.

The government could hardly make its priorities clearer.

 

[Mag_seven]

The 50% cut to Air Passenger Duty for trips between UK airports is confirmed too. Particularly bad news for some long-distance rail in Great Britain. The competition gets a £6.50 per trip automatic price cut, while the railway will charge more and more each year.

Brilliant message to send out ahead of COP26.

 

[Bletchleyite]

Indeed. And fuel duty is frozen yet again. The increased price of crude oil serves as this year's excuse.

Strangely enough, I suspect that "inflation is high" won't stop rail fares increasing in real terms.

The government could hardly make its priorities clearer.

Road fuel duty isn't going to have much effect, to be honest, as EV use grows and things like congestion/pollution charges hit ICE drivers.

The airline thing is nuts, we should be doubling it, not halving it.

 

[GRALISTAIR]

The 50% cut to Air Passenger Duty for trips between UK airports is confirmed too. Particularly bad news for some long-distance rail in Great Britain. The competition gets a £6.50 per trip automatic price cut, while the railway will charge more and more each year.

Indeed. And fuel duty is frozen yet again. The increased price of crude oil serves as this year's excuse.
Strangely enough, I suspect that the cost of living crisis won't stop rail fares increasing in real terms in January.
The government could hardly make its priorities clearer.

Brilliant message to send out ahead of COP26.

To use a fantastic American phrase - they are really good at "talking the talk" on climate change but zero intent to "walk the walk"

Greta Thunberg was correct (and trust me I ain't no fan of hers.)

The airline thing is nuts, we should be doubling it, not halving it.

Ab-so-lute-ly

 

[Starmill]

To use a fantastic American phrase - they are really good at "talking the talk" on climate change but zero intent to "walk the walk"

Greta Thunberg was correct (and trust me I ain't no fan of hers.)


Ab-so-lute-ly

Indeed. It's appalling.

The only good thing is that there's an opportunity to build up market share between now and April 2023 when the tax cut takes effect. This would need to come at the expense of margin though so of course any such proposal would be blocked for LNER, Avanti, CrossCountry and GWR. Lumo might have a good chance.

 

[northernbelle]

The 50% cut to Air Passenger Duty for trips between UK airports is confirmed too. Particularly bad news for some long-distance rail in Great Britain. The competition gets a £6.50 per trip automatic price cut, while the railway will charge more and more each year.

Agreed this is appalling, but it does assume the savings will be passed on to the ticket buyer.

I do wonder if it's a way of propping up ailing airlines who might be inclined to pocket the difference?

 

[Watershed]

Road fuel duty isn't going to have much effect, to be honest, as EV use grows and things like congestion/pollution charges hit ICE drivers.

The airline thing is nuts, we should be doubling it, not halving it.

If fuel duty had not been frozen for the last 11 years, pump prices would be around 30p per litre higher. If it had risen in line with rail fares, prices would be nearly 45p per litre higher.

Fuel duty is a doomed revenue stream, but at the moment it still generates nearly £30bn per year for the government (plus VAT that's charged on the duty!). By freezing it, the government has lost out on tens if not hundreds of billions which could have been used to pay off debt and make investments - and stands to lose billions more in coming years.

 

[Starmill]

Agreed this is appalling, but it does assume the savings will be passed on to the ticket buyer.

If they're not passed on it increases the airline's margin by the same amount, the resulting increase in profitability would likely push more flights into the schedule. So it would have a similar effect regardless.

 

[Pinus contorta]

It does appear to be business as usual with the air passenger duty ahead of the COP26. Couldn't be clearer.

 

[Starmill]

In January 2011 fuel duty was 58.95p / litre. If we apply RPI to that I get 79.86p / litre today. VAT is then due which to me appears to be 26.23p on top of the current average road fuel prices. So typical retail price would be perhaps 160 - 165p / litre?

 

[Bald Rick]

Fuel duty is a doomed revenue stream, but at the moment it still generates nearly £30bn per year for the government (plus VAT that's charged on the duty!). By freezing it, the government has lost out on tens if not hundreds of billions which could have been used to pay off debt and make investments - and stands to lose billions more in coming years.

that is correct… but … the increase in fuel costs this year has led to increased VAT income on fuel equivalent to a 4p increase in fuel duty. That’s an annual rate of £2.4bn extra income. Politically difficult to increase fuel duty when fuel costs are at a record high. Much easier to freeze it, but pocket the cash from the fuel price rise that was not forecast last time around.

I do agree that the APD cut is bonkers. An automatic reduction in tax income, with a resulting automatic additional expenditure in terms of more subsidy to Avanti, LNER and Caledonian Sleeper.

 

[SuspectUsual]

My (loyal Tory, thick as mince) MP is already telling us the cancelling of the fuel duty increase is “a saving” for us

 

[CdBrux]

The 50% cut to Air Passenger Duty for trips between UK airports is confirmed too. Particularly bad news for some long-distance rail in Great Britain. The competition gets a £6.50 per trip automatic price cut, while the railway will charge more and more each year.

Do you think 6.50 is going to change a decision if fly from Aberdeen to, say, Birmingham or Manchester or get a train?
And certainly from Belfast to anywhere

 

[Nicholas Lewis]

The only significant paragraph in the Treasury papers about the rail settlement is this one (4.63, p110):
BUDGET 2021: Protecting the jobs and livelihoods of the British people (publishing.service.gov.uk)

The "SR21 period" will be the 3 years of the spending review, April 2022 - March 2025
Somewhere in the £35 billion will be the spend the Chancellor will allow for HS2, NPR and other rail enhancements in the 3-year period.
Sooner or later someone will be able to identify the individual project spend and work out what it means on the ground.
As expected we'll have to wait for the full Integrated Rail Plan for any detail.

The equivalent money for roads is £24 billion (2020-25).
There is also £23 million for the anticipated outcome of Peter Hendy's Union Connectivity review, whatever emerges from that.

This on p115 gives GBR a chunk of firepower to get going

4.67 SR21 will support rail services and invest in reforms to help the railways become more customer focused and financially sustainable, as set out in the Williams-Shapps Plan for Rail. This settlement provides £5.7 billion over three years to keep essential rail services running as we emerge from the pandemic and deliver reforms which enable the railway to become a modern and efficient service. This includes:
• £360 million to modernise ticketing and retail systems, including delivering Pay as You Go ticketing to passengers outside of London
• £205 million to begin the mobilisation of Great British Railways, bringing new leadership to deliver a better co-ordinated and higher performing railway.

The other thing to note is Covid support expires this FY so that infers DofT will have a task to get operating expenditure back in balance as ridership is unlikely to fully recover especially the income from season tickets.

 

[Starmill]

Do you think 6.50 is going to change a decision if fly from Aberdeen to, say, Birmingham or Manchester or get a train?
And certainly from Belfast to anywhere

Without a doubt if the Advance tickets are all sold, as is likely. Flat £135.40 single from Manchester to Aberdeen, or £101.90 between Glasgow and Birmingham for example. Easy enough for airlines to undercut that even at £13 tax. The train cannot really match the journey times either so in reality it needs to be cheaper.

 

[Watershed]

that is correct… but … the increase in fuel costs this year has led to increased VAT income on fuel equivalent to a 4p increase in fuel duty. That’s an annual rate of £2.4bn extra income.

...but... purely as a matter of luck. Whereas fuel duty is a much more predictable revenue stream.

Politically difficult to increase fuel duty when fuel costs are at a record high. Much easier to freeze it, but pocket the cash from the fuel price rise that was not forecast last time around.

Perhaps, but of course duty isn't going to rise to keep prices at current levels, once crude oil is cheaper again. Such considerations only ever seem to work one way!

I do agree that the APD cut is bonkers. An automatic reduction in tax income, with a resulting automatic additional expenditure in terms of more subsidy to Avanti, LNER and Caledonian Sleeper.

I'd have thought a targeted cut would make more sense. For example, making it only for flights where the equivalent rail journey is longer than X hours, or only on flights to and from Northern Ireland.

Then again, sense doesn't often come into politics.

 

[75A]

Do you think 6.50 is going to change a decision if fly from Aberdeen to, say, Birmingham or Manchester or get a train?
And certainly from Belfast to anywhere

It wasn't the cost but the time it took, that used to make me fly from Birmingham to Edinburgh for work regularly.

 

[HSTEd]

The Air Passenger Duty thing makes no difference - rail simply cannot compete on journey time, loses by an enormous margin on cost and barely even beats air on convenience these days.

Without modern, high speed, high capacity route to Scotland the flights to Scotland will endure almost indefinitely.

 

[Bletchleyite]

The Air Passenger Duty thing makes no difference - rail simply cannot compete on journey time, loses by an enormous margin on cost and barely even beats air on convenience these days.

Without modern, high speed, high capacity route to Scotland the flights to Scotland will endure almost indefinitely.

What rail can compete on (other than environmental credential) is that it's effective to work on the train, particularly if like TPE's 397s (but unlike say Pendolinos) the interior is designed to facilitate it.

 

[ainsworth74]

The news regarding the Restoring your Railways fund warrants its own thread which can be found here.

 

[TravelDream]

I know some people don't like it, but cutting APD on domestic flights is an essential move if the government is actually going to 'level up' all parts of the UK.

London to Inverness, Cardiff to Edinburgh, Manchester to Newquay, Birmingham to Aberdeen are just not good by train unless you have a lot of time and enjoy a long train trip (I do, but many don't). They are not competitive on time and often not on price.

Then you have routes like Edinburgh/ Glasgow to London. Routes which shouldn't be competitive by air, but are due to relatively slow-running trains and very high prices on the WCML/ECML.

It's also probably stating the obvious, but aviation is heavily taxed and rail heavily subsidised.

People need to be encouraged onto the train, not priced out of the air market.

 

[AY1975]

The only significant paragraph in the Treasury papers about the rail settlement is this one (4.63, p110):
BUDGET 2021: Protecting the jobs and livelihoods of the British people (publishing.service.gov.uk)

The "SR21 period" will be the 3 years of the spending review, April 2022 - March 2025
Somewhere in the £35 billion will be the spend the Chancellor will allow for HS2, NPR and other rail enhancements in the 3-year period.
Sooner or later someone will be able to identify the individual project spend and work out what it means on the ground.
As expected we'll have to wait for the full Integrated Rail Plan for any detail.

The equivalent money for roads is £24 billion (2020-25).
There is also £23 million for the anticipated outcome of Peter Hendy's Union Connectivity review, whatever emerges from that.

I am slightly confused: the Treasury document refers to £35 billion of rail investment, but in his Budget speech the Chancellor referred to £46bn of investment in rail as was also reported on The Guardian website: Budget 2021: key points at a glance | Autumn budget 2021 | The Guardian

 

[yorksrob]

Disappointing that they're cutting tax on air fares when they should be doing more to control the inflationary increased in rail fares.

If also rather see more of the several billion rail budget spent on rolling electrification than high speed 2.

== Doublepost prevention - post automatically merged: 27 Oct 2021 ==

I know some people don't like it, but cutting APD on domestic flights is an essential move if the government is actually going to 'level up' all parts of the UK.

London to Inverness, Cardiff to Edinburgh, Manchester to Newquay, Birmingham to Aberdeen are just not good by train unless you have a lot of time and enjoy a long train trip (I do, but many don't). They are not competitive on time and often not on price.

Then you have routes like Edinburgh/ Glasgow to London. Routes which shouldn't be competitive by air, but are due to relatively slow-running trains and very high prices on the WCML/ECML.

It's also probably stating the obvious, but aviation is heavily taxed and rail heavily subsidised.

People need to be encouraged onto the train, not priced out of the air market.

And not proceed off of rail.

You've suggested that air is already competitive on cost. Why does it need to be made more so ?

 

[MontyP]

I know some people don't like it, but cutting APD on domestic flights is an essential move if the government is actually going to 'level up' all parts of the UK.

London to Inverness, Cardiff to Edinburgh, Manchester to Newquay, Birmingham to Aberdeen are just not good by train unless you have a lot of time and enjoy a long train trip (I do, but many don't). They are not competitive on time and often not on price.

Then you have routes like Edinburgh/ Glasgow to London. Routes which shouldn't be competitive by air, but are due to relatively slow-running trains and very high prices on the WCML/ECML.

It's also probably stating the obvious, but aviation is heavily taxed and rail heavily subsidised.

People need to be encouraged onto the train, not priced out of the air market.

And the way to encourage them onto the train has to be via pricing. There is no tax on rail fares so that can't be cut, so the only alternative is to increase the tax on flying and on petrol.

 

[philosopher]

Do you think 6.50 is going to change a decision if fly from Aberdeen to, say, Birmingham or Manchester or get a train?
And certainly from Belfast to anywhere

No, but for those travelling from London to Edinburgh or Birmingham to Glasgow, where rail can compete both on time and cost, it might.

 

[Cardiff123]

Road fuel duty isn't going to have much effect, to be honest, as EV use grows and things like congestion/pollution charges hit ICE drivers.

The airline thing is nuts, we should be doubling it, not halving it.

Or doing what France has done, and ban domestic flights when the journey can be done by express rail services.
Today's announcements have proven that the UK Govt's commitments to climate change are nothing more than empty rhetoric. Appalling and shameful are understatements.
We've reached the point now where the absolute last chance to take decisive action on climate change will be missed, not my words, but the words of David Attenborough in an interview on BBC News last night. Beyond depressing.

 

[Ianno87]

I know some people don't like it, but cutting APD on domestic flights is an essential move if the government is actually going to 'level up' all parts of the UK.

London to Inverness, Cardiff to Edinburgh, Manchester to Newquay, Birmingham to Aberdeen are just not good by train unless you have a lot of time and enjoy a long train trip (I do, but many don't). They are not competitive on time and often not on price.

Why do people "need" to travel from Manchester to Newquay? Hardly socially or economically necessary. We shouldn't be subsidising frivolous travel on a polluting mode.

Some cases, yes, where there is a mass of people where the rail journey is not attractive (e.g. to/from Northern Ireland, North of Scotland etc.), but not every single potential domestic air route.

 

[thenorthern]

Brilliant message to send out ahead of COP26.

Fuel duty rates won't go up while the Conservatives are in power. It's too much of a vote winner in semi-rural areas where people are dependent on their cars. A large amount of marginal constituencies are semi-rural constituencies where people drive a lot.