Passenger Numbers, Autumn 2022

[Nicholas Lewis]

But numbers are not continuing to climb, in comparison to how matters were three years ago. Yes they are climbing in comparison to last month, but they always do at this time of year. Compared to 3 years ago, the trend has been flat (or nearly so) for a while.

A proxy for commuting is whats happening in the commercial office property market and Savills latest view is

Across the UK ‘Big 6’ office markets, looking at deals over 10,000 sq ft only in 2021 and H1 2022 produced a net reduction of 8% in space occupied by companies that have moved to new premises within these individual markets. This supports the notion that occupiers are seeking to reduce their office provision to adapt to hybrid working.

https://www.savills.co.uk/research_articles/229130/333750-0

The challenge for the industry is to right size resources to this new paradigm without undermining the service offering to entice people to want to select rail for their journey. What I can't quite understand is how for a decade in BR's Southern Region we were told it was resourcing the high peak that drove our cost base all those one journey trains and crew extra stabling sidings etc so the industry should be able to eat into cost base with lower commuting.

 

[yorksrob]

A proxy for commuting is whats happening in the commercial office property market and Savills latest view is



https://www.savills.co.uk/research_articles/229130/333750-0

The challenge for the industry is to right size resources to this new paradigm without undermining the service offering to entice people to want to select rail for their journey. What I can't quite understand is how for a decade in BR's Southern Region we were told it was resourcing the high peak that drove our cost base all those one journey trains and crew extra stabling sidings etc so the industry should be able to eat into cost base with lower commuting.

Unfortunately cuts are being imposed across the board, including for services that have rebounded due to leisure.

As many of us feared, the cuts are being based on revenue, rather than passenger numbers.

 

[Bald Rick]

But passenger numbers three years ago were unusually high by historical standards.

As were railway costs. And they’ve gone up since.

 

[yorksrob]

As were railway costs. And they’ve gone up since.

But proportion of subsidy compared to revenue was historically low and still is.

 

[Bald Rick]

But proportion of subsidy compared to revenue was historically low and still is.

It wasn’t! It was high and rising. See Roger Ford‘s articles on the issue. It’s much higher now of course.

 

[davetheguard]

Though it's odd that the DfT is insisting on cutbacks as numbers continue to climb. There's no logic to it.

Unfortunately there is a logic to it under the present crazy set up which has been created by Government since Covid.

The DfT have all the costs of the rail industry. But get none of the railways income, even when passenger numbers grow. As such they have an incentive to cut services.

The Treasury get all the ticket income, another part of the same Government, but hey two different sets of budgets.

Only Government can change this split, and put costs and income in the same place. Until they do that, there is real danger for the railway.

 

[Dai Corner]

Unfortunately there is a logic to it under the present crazy set up which has been created by Government since Covid.

The DfT have all the costs of the rail industry. But get none of the railways income, even when passenger numbers grow. As such they have an incentive to cut services.

The Treasury get all the ticket income, another part of the same Government, but hey two different sets of budgets.

Only Government can change this split, and put costs and income in the same place. Until they do that, there is real danger for the railway.

But as they make a loss, the treasury would still decide what subsidy to give, taking into account all the other demands on taxpayers' money.

 

[Bald Rick]

the treasury would still decide what subsidy to give

Thats a very easy decision fir Treasury at present.

 

[Bikeman78]

But as they make a loss, the treasury would still decide what subsidy to give, taking into account all the other demands on taxpayers' money.

What's your solution then? Should we shut it all down? Apart from binning rolling stock and running fewer trains, how else can the railway reduce costs? Or grow revenue?

 

[Dai Corner]

What's your solution then? Should we shut it all down? Apart from binning rolling stock and running fewer trains, how else can the railway reduce costs? Or grow revenue?

I don't have any miraculous solutions I afraid; I was merely suggesting that changing the way internal Government accounting is done wasn't one.

 

[43096]

It wasn’t! It was high and rising. See Roger Ford‘s articles on the issue.

Which shows just how dysfunctional the railway is. Normal business practice is for revenue to increasingly outstrip costs as revenue rises, but not on the railway. Costs increasing in excess of revenue is indicative of a badly run business and is a chunk of why the industry is in the crisis it is as revenue has fallen.

 

[yorksrob]

It wasn’t! It was high and rising. See Roger Ford‘s articles on the issue. It’s much higher now of course.

Isn't it the case that in 2019, we were still towards the 2/3 farepayer, 1/3 taxpayer ratio, whereas in the past it was nearer to 50/50 ?

 

[43066]

Costs increasing in excess of revenue is indicative of a badly run business and is a chunk of why the industry is in the crisis it is as revenue has fallen.

With rolling stock leasing company profiteering being as significant or more so than staffing costs since privatisation. Yet people on here only ever bang on about staff costs and unions..

 

[davetheguard]

But as they make a loss, the treasury would still decide what subsidy to give, taking into account all the other demands on taxpayers' money.

The point I was making was that if the costs and the income went to the same place, there would be a point in growing revenue, to reduce the loses.

But with the DfT just paying out the subsidy and getting none of the income (whether it is growing or not) they have no incentive to "grow the business" by potentially restoring frequencies slashed during Covid: if they did so, their costs would go up but they wouldn't see any of the extra income potentially generated by more frequent trains (because that money goes direct to the Treasury).

The only incentive the DfT currently have is to reduce the costs to their budget by cutting services. That needs to change.

 

[Peter Sarf]

The point I was making was that if the costs and the income went to the same place, there would be a point in growing revenue, to reduce the loses.

But with the DfT just paying out the subsidy and getting none of the income (whether it is growing or not) they have no incentive to "grow the business" by potentially restoring frequencies slashed during Covid: if they did so, their costs would go up but they wouldn't see any of the extra income potentially generated by more frequent trains (because that money goes direct to the Treasury).

The only incentive the DfT currently have is to reduce the costs to their budget by cutting services. That needs to change.

This is a good point. But it is undermined by the apparent rise in subsidy despite a growing demand over the past decades. Now that demand has fallen costs are even more under scrutiny. I think in government there are plenty who would like to see the back of the railways. I doubt as many of them see the roads as a subsidy nightmare.

 

[Bald Rick]

Isn't it the case that in 2019, we were still towards the 2/3 farepayer, 1/3 taxpayer ratio, whereas in the past it was nearer to 50/50 ?

It was only close to 50:50 in the depths of the post Hatfield recovery, when revenue collapsed and costs shot up.

It has been shifting from fare payer to taxpayer since 2017/18.

 

[yorksrob]

It was only close to 50:50 in the depths of the post Hatfield recovery, when revenue collapsed and costs shot up.

It has been shifting from fare payer to taxpayer since 2017/18.

If it's been shifting towards the fare payer since Hatfield, they should let it shift back a couple of years whilst the network recovers.

This is presumably what sensible countries in Europe are doing with their various offers.

 

[43096]

With rolling stock leasing company profiteering being as significant or more so than staffing costs since privatisation. Yet people on here only ever bang on about staff costs and unions..

It's probably not the traditional ROSCOs that are the biggest issue with increasing leasing costs: any DfT negotiated train contract is going to be a big part of the problem. IET was massively over-priced both on an absolute basis (i.e. it was procured in the most expensive way possible) and on value-for-money (i.e. the quality of what the passenger got).

Staff-wise, you'd suspect there are roles that were nice-to-haves during the good times, but need to be looked at again now. Given the shortages, self-evidently train crew aren't in that category.

 

[Bald Rick]

If it's been shifting towards the fare payer since Hatfield, they should let it shift back a couple of years whilst the network recovers.

This is presumably what sensible countries in Europe are doing with their various offers.

The point is that it had already shifted back to higher taxpayer funding before Covid. This was largely driven by two things:

1) the cost of all the recent new rolling stock, much of which is providing additional capacity for forecast growth*
2) the cost of providing additional services, particularly outside London and the South East.

That was all before Covid punched a multi billion hole in the revenue line

* revenue growth that has not come, obviously. Compared to 2019, we should now have around 10% more passengers, and something like 20% more revenue, to pay for that extra capacity. Instead we have around 20% less of each.

 

[philosopher]

Isn't it the case that in 2019, we were still towards the 2/3 farepayer, 1/3 taxpayer ratio, whereas in the past it was nearer to 50/50 ?

What is the current subsidy : farepayer ratio and how does this compare to other European countries?

 

[yorksrob]

What is the current subsidy : farepayer ratio and how does this compare to other European countries?

Google comes up with ORR stats for 20-21, but that will be heavily skewed.

 

[Bald Rick]

What is the current subsidy : farepayer ratio and how does this compare to other European countries?

This financial year it’s expected to turn out, very roughly, at about £8bn from farepayers and about £12-13bn from Govt. The latter figure excludes capital costs of HS2, Crossrail, and a few other things.

 

[Bikeman78]

I don't have any miraculous solutions I afraid; I was merely suggesting that changing the way internal Government accounting is done wasn't one.

Yes fair enough, I didn't mean to have a go at you. I find it dispiriting that the only way the railway seems to be able to come close to breaking even is by running severely overcrowded trains.

 

[uglymonkey]

Also Its not consistent loading throughout the week. I get one of the last remaining seats at Baldock on a Tuesday, On Thursday Train is about 1/2 full.

 

[Bald Rick]

Yes fair enough, I didn't mean to have a go at you. I find it dispiriting that the only way the railway seems to be able to come close to breaking even is by running severely overcrowded trains.

It was ever thus.

 

[yorksrob]

This financial year it’s expected to turn out, very roughly, at about £8bn from farepayers and about £12-13bn from Govt. The latter figure excludes capital costs of HS2, Crossrail, and a few other things.

And to put it in context, the UK defence budget in 2021 was £71bn, health and social care £191bn, education £100bn, social care & pensions £298bn.

So for a nationwide service that around half the population will make use of at some stage, the rail budget is by no means a bloater.

== Doublepost prevention - post automatically merged: 6 Oct 2022 ==

It was ever thus.

Although it would help if we didn't have pointless train leasing costs inflating the price of every additional carriage.

 

[Dr Day]

I find it dispiriting that the only way the railway seems to be able to come close to breaking even is by running severely overcrowded trains.

Yes. Many people don't seem to appreciate this. An awful lot of rail services, not just the very rural 'basket cases' still need an awful lot of subsidy because the costs of maintaining and operating the infrastructure and the trains goes nowhere near the revenue received. Hence the focus on costs, and whether to continue subsidising heavy rail when in some cases lower cost alternatives such as light rail or buses could provide an overall more effective transport solution (socially, financially and economically) to get more people where they need to go. Even if fares were slashed, the rail network is still limited in what it can do (by itself) to serve many door-to-door journeys people make.

Getting back on topic, it certainly feels like we have reached a 'new normal' in terms of the main drivers of demand for travel which are generally external to the railway such as when and where people work, shop, socialise, do business etc. The question now is whether the railway can re-shape the things within its control (most costs/timetables/fares etc) to supply that new profile of demand for a palatable level of subsidy.

 

[yorksrob]

Yes. Many people don't seem to appreciate this. An awful lot of rail services, not just the very rural 'basket cases' still need an awful lot of subsidy because the costs of maintaining and operating the infrastructure and the trains goes nowhere near the revenue received. Hence the focus on costs, and whether to continue subsidising heavy rail when in some cases lower cost alternatives such as light rail or buses could provide an overall more effective transport solution (socially, financially and economically) to get more people where they need to go. Even if fares were slashed, the rail network is still limited in what it can do (by itself) to serve many door-to-door journeys people make.

And a lack of willingness to look at why those costs are so high - eg leasing costs etc

I don't really see the relevance of the point about the railway being limited in what it can do. People have known for nearly two hundred years that the railway doesn't do a door to door service, yet with competitive fares and a decent service, passengers still turn up.

 

[TheDisruptor]

As a passenger on the EMR network I am not seeing packed out trains.

 

[baz962]

As a passenger on the EMR network I am not seeing packed out trains.

Not all no. But as a very regular user of EMR I have been on empty ones and some that struggle to get everyone on.