The news this morning was once again all about train-fare rises. The 10th year, apparently of above-inflation rises. So I’m reposting, for the benefit of the BBC, what I wrote when they were announced in August.
The effects are not just stress and misery on the journey. This underpriced peak-hour rail drives up house-prices along the rail corridors, and sucks life and employment out of the towns. It also makes people unhappy. People make bad decisions about what makes them happy. They overvalue big houses, and undervalue time not spent on an hour-long commute into town. They overvalue money, and undervalue social contact and family time. And they’re aided and abetted in this happiness-destroying cultural artefact by heavily subsidised commuting.
If the crippling over-dependence of the country on London is to be addressed, the market must be allowed to do its work on rail fairs. Shifting economic activity out of London is to be desired. Britain does not benefit from shifting millions into town and out again every day, when with a bit of thought, much of this economic activity could happen in Reading, or Northampton or Brighton or Hull. Making it easy to live in Cambride and work in London doesn’t help Cambridge or its economy.
You may FEEL you have no choice but to buy the season-ticket, and in the short-run you’re probably right. But in the longer term, every person deciding the commute isn’t worth it, and seeking a job locally helps the local economy. Every person moving nearer their place of work reduces stress at peak hours on the transport system. In the long run, people respond to economic incentives. It shouldn’t be the government’s role to insulate people from the reality of their choices.
So, you want to get into central London by 9am? Why not do what I did when I lived in London, and live in a grotty part of town instead, within cycling distance? OH! You want a big house out of London? So you want ME to subsidise your big house by keeping your rail-fare down? Is that fair? It’s not like you’re without choices: there are no solutions in economics, only trade-offs. Compromise on your house, or compromise on your job. Or accept the real cost of rail-fares. You want a seat, guaranteed? Buy a first-class ticket. Overcrowding in cattle-class in the carriages is merely evidence that the price is wrong.
If there was a free market, rather than fares being regulated, peak hour journeys would certainly be more expensive, and off-peak would probably be cheaper. Lower house-prices in the commuter-belt would offset this somewhat. So renegotiate your hours. Capacity-smoothing fares make sense. Ultimately the problem is one of mis-priced resources, especially space on the world’s second busiest rail network. Like the Roads, the Rail Network is overused at peak times and underused off peak. Prices reflecting this are a step in the right direction.
Sorry, rail commuters, your fares are not going down any time soon. I don’t mind paying for a rail ticket when I buy a ticket. I do mind paying for rail tickets I’m not using, subsidising people to drive up the price of a house I want where I live, when I fill in my tax-return. The fare rises are necessary, and will have positive economic effects, if you let them. It’s not all bad news.