UK Rail Passenger Numbers Discussion

[Nicholas Lewis]

Whilst this is true at broad level, the ‘risk of driving customers away’ is variable.

For example there are lines out there that bring in less revenue than 10% of their marginal operating cost. In broad terms if you halve the service, you save 50% of that marginal cost. Even if you lost all the revenue you would still save net 40% of that cost. so you are still much better off in cash terms than you were before. (In reality you wouldn’t lose all the revenue, or even half of it.)

In a way the strikes have (unfortunately) helped to illustrate this. On RMT strike days typically only 20% of the service runs, and yet around 40% of the revenue still comes in. And this is on days with services for only 11 hours, and a clear ‘travel only if necessary‘ message which will naturally put off many intending passengers. There is a potential scenario where a network a little larger than what is provided on RMT strike days, and open for the full day, would bring in around 70-80% of revenue but reduce costs by about 50%. I must stress that I do not advocate this in any way, but you can see how that line of thinking can develop, unfortunately (and unintentionally) assisted by the unions.

Of course none of us support or advocate such a solution but with DfT budget constrained its unfortunately the only way forward although as you postulate below political considerations will temper the worst case but that then needs to spread the pain elsewhere where its not warranted.

There are of course broader socio-economic reasons why it is not desirable to reduce services, and that must also be taken into account in any decision process. As will politics.

 

[HSTEd]

Here's a comparison done a couple of years ago which suggests that rail can stay ahead of a BEV in the decarbonisation stakes, but only for electric traction. As I recall, the grams per passenger km figures used average seat occupancies (pre-Covid, of course).

View attachment 126366

The reality is electrical system decarbonisation, which will have to occur regardless, will render the point-of-use emissions from both technologies largely negligible.

The time when the railway could count on the "environmentalist agenda" to make up a big part of its case for people to use it is rapidly coming to an end.

The railway will have to find itself a new value proposition.

 

[The Ham]

The reality is electrical system decarbonisation, which will have to occur regardless, will render the point-of-use emissions from both technologies largely negligible.

The time when the railway could count on the "environmentalist agenda" to make up a big part of its case for people to use it is rapidly coming to an end.

The railway will have to find itself a new value proposition.

Point of use emissions are the easiest to define, however rail is still going to be the greenest way to travel.

OK diesel use within rail is going to have to fall a lot (but then so it's road use of diesel), however in the short/medium term we're going to need to switch a lot of (home) gas use to electric as well as electric for all those EV's.

As such there's still going to be a need to be aware of the kWh use, as whilst it many not directly produce carbon there's likely to be some lag in the ability to build enough generation if we were to not keep using rail (or better still increase it's use).

That's before we consider any road non electric use (looking at grey/blue hydrogen as well as any ongoing diesel use) which is likely to either produce carbon emissions or require CCS.

If course there's many good reasons to encourage rail use over car use. Construction materials for the vehicles for EV's are going to be higher per passenger km than they are for rail vehicles. As whilst a coach require more materials than as car, with a rail coach at usage of >200,000 miles per year and cars not often don't that in 15 years and a rail coach carrying often over 21 people at time (even if you average it - there may be some lines where it's lower but they are the exception) whilst cars very rarely carrying more than 3 for any significant percentage of the distances traveled (the average is about half of this - there maybe exceptions to this, for example 3 kids being taken to school near to where a parent works - however again that's the exception).

Likewise there's the land use of rail, it's much smaller than road. If boring else just look at the amount of space required to park cars in cities. Road parking in London takes up the same space as Hyde Park and another Hyde Park, and another until you've got 10 of them:

Outrageous space taken by parking compared to size of a park

Car parking spaces across London cover an area 10 times that of a famous Central London park

www.mylondon.news

That's just on street parking, in addition to that would be a load of car parks and drives.

The reason that cars take up so much space is that they are sat unused for 95% (on average) of the time (used for 72 minutes a day).

Outside of London there's often more than 1 space for each car in an area by the time you count up all the success, car parks and on street parking spaces. In the US this averages at about 8 spaces per car and whilst we are better in the UK is likely to be 3-4 spaces per car.

Now if you compare that with rail, especially on a per person moved basis, rail would be much lower.

The less land we need for transport the more land we can leave wild (or rewild). Also where rail works best is within or between high density settlements, which would further reduce our land requirements.

If you look look at the capacity of Butlins at Minehead and the population of the town and then compare the land required for both and it's clear that the town is a much lower density, a significant amount of that is down to the lack of cars allowed on site at the Butlins.

Now whilst it's unlikely that people would be able to live in such a setup, it does highlight that you don't need all flats to get decent housing density if you can reduce car parking numbers (again it's not likely that you could get it that low in normal living).

 

[Bald Rick]

Here's a comparison done a couple of years ago which suggests that rail can stay ahead of a BEV in the decarbonisation stakes, but only for electric traction. As I recall, the grams per passenger km figures used average seat occupancies (pre-Covid, of course).

View attachment 126366

The electric side of that graph is a little pessimistic, both for road and rail. For example, anyone who has used an EV charged up in the last week has been doing so at a marginal rate of about 20g CO2/km, assuming they are driving on their own. Electric rail will be smaller still. With grid decarbonisation continuing at pace, these sort of figures are going to be more and more likely. But, and I couldn’t put it better myself…

The reality is electrical system decarbonisation, which will have to occur regardless, will render the point-of-use emissions from both technologies largely negligible.

The time when the railway could count on the "environmentalist agenda" to make up a big part of its case for people to use it is rapidly coming to an end.

The railway will have to find itself a new value proposition.

 

[E27007]

I attach a report by The Taxpayers Alliance, the report was published in December 2022.
The report deals with pre and post Covid railway subsidies in the UK . table 1 in the report compares several years of figures, table 1 shows a rather alarming estimate for 2022 - 2023 as the average fare per journey being £6.12 and requiring £7.51 per journey in subsidy.
How accurate is the report?

 

[Stephen42]

I attach a report by The Taxpayers Alliance, the report was published in December 2022.
The report deals with pre and post Covid railway subsidies in the UK . table 1 in the report compares several years of figures, table 1 shows a rather alarming estimate for 2022 - 2023 as the average fare per journey being £6.12 and requiring £7.51 per journey in subsidy.
How accurate is the report?

Had a quick look at Table 1, the past numbers are from the ORR rail finance info. Open access is included in some of the figures but won't make much difference. The estimates unclear exactly how they've been projected, but with 2 quarters of real data it's a bit under half so expects some further growth which seems reasonable enough.

A scan of the rest the only thing I'd say is inaccurate (rather than opinion of an organisation with unclear backing) is "Therefore, any pay increases in the rail industry over and above forecast average earnings (5.4 per cent in 2020-23 and 3.5 per cent in 2023-24)3 will have to be met by the taxpayers in the form of increased subsidy." I think the over and above forecast average earnings is irrelevant, the government has to cover the gap so any increase will raise subsidy than it otherwise would and overall subsidy will depend how all other costs increase relative to income.

 

[43066]

I attach a report by The Taxpayers Alliance, the report was published in December 2022.
The report deals with pre and post Covid railway subsidies in the UK . table 1 in the report compares several years of figures, table 1 shows a rather alarming estimate for 2022 - 2023 as the average fare per journey being £6.12 and requiring £7.51 per journey in subsidy.
How accurate is the report?

I’d like to know which “independent pay review body” they are referring to?

There isn’t one for rail, so presumably someone has erroneously cut and pasted that phrase from a different report dealing with another sector?

Given that a mistake like that has slipped through the net, I rather doubt the rest of it is worth reading!

 

[The Ham]

I attach a report by The Taxpayers Alliance, the report was published in December 2022.
The report deals with pre and post Covid railway subsidies in the UK . table 1 in the report compares several years of figures, table 1 shows a rather alarming estimate for 2022 - 2023 as the average fare per journey being £6.12 and requiring £7.51 per journey in subsidy.
How accurate is the report?

The passenger numbers side of this table are reasonable, with 2022/23 appearing to be based on actual data plus about 5% per quarter growth.

So far so good, however if that sort of growth carried on for just 4 more quarters, we'd reach 2019 levels of rail use in 2023/24 hardly "not any time soon" as the report states.

Yes that's potentially a big ask in the current climate, however resolve the strikes and it could be well below what we see (as a comparison Q1 to Q2 saw growth of 8.87%, so 5% isn't unrealistic but could also be smaller than it's seen with strikes resolved).

The costs for rail support in 2022/23 had gone down by £2bn whilst fare income had gone up by £3.2bn and passenger income is up by a further £0.2bn (total of £3.4bn), which implies costs have gone up by £1.4bn.

The £1,000 per taxpayer cost of the railways during Covid is a spin, it's a fairly accurate figure (closer to £930), however it's a 3 year figure, and doesn't account for the fact that per household government income is circa £30,000 a year. As such it makes people think "out if my £27,000 I am paid I'm paying £1,000 to keep the railways going" when this year is closer to £200 and even then a fairly small share of that per taxpayer amount would be directly due to them.

However if we see a slight improvement in owner numbers and income over the expected numbers the levels of support fall quite quickly.

The likely best way to reduce costs is, bizarrely, to pay the staff more to end the strikes.

Whilst this would of course cost more, at least some of this would be returned to the government through PAYE taxes. Whilst the extra income from the passengers would more than cover the rest.

For example an extra £0.2 swapping from support to fare income would swap the numbers from £7.51 in support to £7.38 (a reduction of 13p). That may not feel like much, however it's also only an extra 2.2% in extra fare income.

Given that the gap between what's on the table and what is likely to be accepted is probably fairly close, but the extra possible to be earned from fare income is likely to be quite a bit more than this.

An extra 2.2% in fare income would allow (bearing in mind that less than 40% of costs are pay) an offer of 5% and it still result a small fall in government support (assuming other costs stayed the same).

Is it likely that there's 2.2% of extra fare income if the strikes were ended, almost certainly. An extra 5% is still fairly likely and even an extra 10% isn't too far beyond achievable to make it too unlikely. However next year, with pre Covid levels of use entirely possible, and hopefully a more stable level of service it could be that income grows further still, further reducing the level of support needed.

 

[Bald Rick]

How accurate is the report?

Numbers wise, it’s there or thereabouts.

 

[ComUtoR]

With the report quoting 27% staff costs, what is the breakdown of other costs ? Thats a big chunk of money not being discussed :/

 

[Starmill]

Whilst the extra income from the passengers would more than cover the rest.

That sounds like a heroic assumption to me. On what are you basing that?

 

[The Ham]

That sounds like a heroic assumption to me. On what are you basing that?

Did you not read to the end of my post:

An extra 2.2% in fare income would allow (bearing in mind that less than 40% of costs are pay) an offer of 5% and it still result a small fall in government support (assuming other costs stayed the same).

Is it likely that there's 2.2% of extra fare income if the strikes were ended, almost certainly. An extra 5% is still fairly likely and even an extra 10% isn't too far beyond achievable to make it too unlikely.

Those figures are based on zero tax retuning to the government and pay being 40% of costs (which is higher than the figures quoted in the report).

With the report quoting 27% staff costs, what is the breakdown of other costs ? Thats a big chunk of money not being discussed :/

Historical it was about 1/3 pay, 1/3 lease costs and 1/3 other costs (including, but not limited, to head office costs, station costs, maintenance of trains).

Of course things may have changed, but it's likely to still be a fairly useful guide.

 

[Starmill]

Did you not read to the end of my post:



Those figures are based on zero tax retuning to the government and pay being 40% of costs (which is higher than the figures quoted in the report).



Historical it was about 1/3 pay, 1/3 lease costs and 1/3 other costs (including, but not limited, to head office costs, station costs, maintenance of trains).

Of course things may have changed, but it's likely to still be a fairly useful guide.

I did. I'm challenging the 2.2% increase being sufficient to put 5.9% onto headline salary (+NI+employer's pension).

 

[yorksrob]

I attach a report by The Taxpayers Alliance, the report was published in December 2022.
The report deals with pre and post Covid railway subsidies in the UK . table 1 in the report compares several years of figures, table 1 shows a rather alarming estimate for 2022 - 2023 as the average fare per journey being £6.12 and requiring £7.51 per journey in subsidy.
How accurate is the report?

The table is interesting.

Between 2018-19 and 22-23, subsidy has more than doubled from £4.7bn to £11bn, yet over the same period passenger revenue has only dropped from £12.1bn to £9.9bn, so this increase in subsidy can't all be put down to lower passenger revenue.

There needs to be some analysis of where this additional subsidy is actually going.

 

[Ken H]

The table is interesting.

Between 2018-19 and 22-23, subsidy has more than doubled from £4.7bn to £11bn, yet over the same period passenger revenue has only dropped from £12.1bn to £9.9bn, so this increase in subsidy can't all be put down to lower passenger revenue.

There needs to be some analysis of where this additional subsidy is actually going.

Inflation

Inflation does not hit everything at the same rate. The railway may have had extraordinary cost increases. Fuel comes to mind tho there may be others.

 

[The Ham]

I did. I'm challenging the 2.2% increase being sufficient to put 5.9% onto headline salary (+NI+employer's pension).

2.2% of £9bn is £0.2bn

40% (which is much higher than the 28% cited in the report as staff costs) of £23bn (£22.8bn being the total 2031/22 rail costs) is £9.2bn (that's all staff costs, so includes NI, Pension, etc).

£0.2bn is ~2% of £9.2bn, as such, even if the current pay offer was 3% (I believe that it higher than this) the extra £0.2bn of income would cover the difference to a 5% pay rise.

If you do 28% of £23bn then staff costs are £6.44bn and so £0.2bn would be 3.1% and so if the current pay offer was 3% then this becomes more than the 5.9% you highlighted.

That's only looking at the railways, and a fairly small increase in income (created from there being no further strikes). In terms of government costs/income even PAYE taxes income of 33% it would generate extra taxes of £66 million on the extra £200 million paid out to staff. It maybe a little lower if there's part time staff where not all the increase would be taxable, although some of that could be offset by those paying 43% due to being on higher rates of tax.

Whilst not counted in the subsidy calculations, it is extra money passing through HMRC which could be used to cover the costs in the DfT which other tax payers don't have to pay for. That's before you start trying to account for VAT payments on goods and services that the increases pay is used for or future taxes paid on income or profits from the spending.

Of course, just assuming 2 strike days a month running at 60% of income for those two days is a 2.27% fall in income for the whole month. That's before you account for those who are put off using rail for the whole month due to not being sure when trains will/won't run.

 

[Bald Rick]

There needs to be some analysis of where this additional subsidy is actually going.

It’s a fair point, and that has been done.

remember that these are actual figures, not adjusted for inflation. So whilst costs have increased by inflation (more so in some cases) - revenue hasn’t. If revenue had increased in line with inflation, it would now be £15.3bn and the subsidy would ‘only’ be £7.9bn.

 

[yorksrob]

It’s a fair point, and that has been done.

remember that these are actual figures, not adjusted for inflation. So whilst costs have increased by inflation (more so in some cases) - revenue hasn’t. If revenue had increased in line with inflation, it would now be £15.3bn and the subsidy would ‘only’ be £7.9bn.

Ah thanks.

I understand that part of the issue is that Government is expecting the railway to continue on the same budget next year without any increase in subsidy to take account of inflation.

This is clearly unrealistic.

 

[Bald Rick]

Ah thanks.

I understand that part of the issue is that Government is expecting the railway to continue on the same budget next year without any increase in subsidy to take account of inflation.

Nearly, but not quite.

This time last year, when cost budgets were set for the current year, indicative cost budgets were also set for next year. These are different to last year, and the differences vary by TOCs in % terms (as different TOCs have different cost profiles, eg new rolling stock arriving, etc).

AIUI, what’s happens is that those indicative budgets for next year, set last year, have been held, and not inflated.

 

[yorksrob]

Nearly, but not quite.

This time last year, when cost budgets were set for the current year, indicative cost budgets were also set for next year. These are different to last year, and the differences vary by TOCs in % terms (as different TOCs have different cost profiles, eg new rolling stock arriving, etc).

AIUI, what’s happens is that those indicative budgets for next year, set last year, have been held, and not inflated.

Cheers. Unfortunately I suspect that that won't help the squeeze on rolling stock.

 

[Bald Rick]

Cheers. Unfortunately I suspect that that won't help the squeeze on rolling stock.

or service provision.

 

[yorksrob]

Inflation

Inflation does not hit everything at the same rate. The railway may have had extraordinary cost increases. Fuel comes to mind tho there may be others.

Yes indeed. It would be interesting to see what proportion is due to inflation.

However, reducing passenger services due to increasing inflation of costs, feels like a less compelling argument for the politicians than reducing services because "the passengers aren't coughing up enough" which is the current narrative.

 

[The Ham]

Yes indeed. It would be interesting to see what proportion is due to inflation.

However, reducing passenger services due to increasing inflation of costs, feels like a less compelling argument for the politicians than reducing services because "the passengers aren't coughing up enough" which is the current narrative.

The problem is by reducing services (especially on long distance services which historically were amongst the profitable TOC's - although how much of that was down to running long trains which is a commonality which is shared with SWT/SWR which also did well) is that it restricts the ability for the railways to run an attractive service and so could actually be costing more in support than if nearly every service was running.

In mindful that Covid did highlight that by running fewer trains in the network that it was a lot easier to recover if there were problems. If anything this highlights that HS2, NPR and Crossrail were probably 10 years too late in starting as well as that we should be looking for other schemes to increase our ability to run more services.

 

[yorksrob]

The problem is by reducing services (especially on long distance services which historically were amongst the profitable TOC's - although how much of that was down to running long trains which is a commonality which is shared with SWT/SWR which also did well) is that it restricts the ability for the railways to run an attractive service and so could actually be costing more in support than if nearly every service was running.

In mindful that Covid did highlight that by running fewer trains in the network that it was a lot easier to recover if there were problems. If anything this highlights that HS2, NPR and Crossrail were probably 10 years too late in starting as well as that we should be looking for other schemes to increase our ability to run more services.

Indeed. If they reduce rolling stock availability on the ECML, it will show their incompetence.

 

[The Ham]

Indeed. If they reduce rolling stock availability on the ECML, it will show their incompetence.

Indeed, whilst the average for the UK is 2009 in terms of passenger km LNER are at 2014, whilst if there's a repeat of the last two quarters in the next two quarters passenger numbers will be the same as 2019.

If you compare Q1 plus Q2 of 2019/2020 with Q1 plus Q2 of 2022/23 LNER is at 97% of passenger km travel.

As such any cuts to LNER will beppolitical and nothing to do with lack of use.

 

[Starmill]

Indeed, whilst the average for the UK is 2009 in terms of passenger km LNER are at 2014, whilst if there's a repeat of the last two quarters in the next two quarters passenger numbers will be the same as 2019.

If you compare Q1 plus Q2 of 2019/2020 with Q1 plus Q2 of 2022/23 LNER is at 97% of passenger km travel.

As such any cuts to LNER will beppolitical and nothing to do with lack of use.

Of course it is political. The decision is being made to cut rolling stock back on long-distance major routes e.g. CrossCountry and LNER giving up their older fleets, in order to preserve any train at all for little used services on secondary routes e.g. the Cleethorpes - Barton-on-Humber service. This is inherently a political decision.

 

[yorksrob]

Of course it is political. The decision is being made to cut rolling stock back on long-distance major routes e.g. CrossCountry and LNER giving up their older fleets, in order to preserve any train at all for little used services on secondary routes e.g. the Cleethorpes - Barton-on-Humber service. This is inherently a political decision.

I would say that long distance rolling stock is being cut to keep rail subsidy down, in order to save funding for other areas, such as road building.

You are correct that it is a political decision though.

 

[Bald Rick]

It’s reasonable to assume that any reduction in long distance fleets will be through reducing services that don’t cover their marginal costs. This is to limit the increase in subsidy that would otherwise be required compared to previously expected budget guidelines.

 

[yorksrob]

It’s reasonable to assume that any reduction in long distance fleets will be through reducing services that don’t cover their marginal costs. This is to limit the increase in subsidy that would otherwise be required compared to previously expected budget guidelines.

Or shoving out short Azumas on diagrams which used to have full length trains.

 

[Bald Rick]

Or shoving out short Azumas on diagrams which used to have full length trains.

That might be happening now, but that’s because the service level is still the same.