Capping rail fares won’t help passengers
10 April 2015
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Remove government interference from the setting of rail fares
Commenting on David Cameron’s pledge to cap rail fares for five years, Mark Littlewood, Director General at the Institute of Economic Affairs, said:
“The decision to ‘cap’ rail fares to inflation-only increases is severely misguided. As it is, price controls on rail fares have led to severe overcrowding on certain routes and at certain times, whilst rail companies are prevented from offering more flexible fares to tempt customers into changing their travelling habits and ease congestion.
“Pegging rail fare rises to inflation could exacerbate this problem and leave taxpayers out-of-pocket if industry costs rise more quickly than overall inflation.
“Rail subsidies and taxpayer support of this kind are highly regressive. Commuters on average tend to be much richer than non-commuters, and as a component in the average family’s weekly living costs, rail fares are tiny compared to the costs of motoring. We should instead seek to deregulate fares and put them beyond political interference. That way demand for rail travel can be spread more evenly, with less pressure on the taxpayer.”
Notes to editors:
To arrange an interview please contact Camilla Goodwin, Communications Officer: 0207 799 8920 or 07821 971 443.
For more information, read Dr Richard Wellings’s Fair Deal for the Taxpayer: Why rail fares should be liberalised and the chapter Rail: ‘Privatisation of the railways is to blame for high fares’ in Smoking Out Red Herrings.
The mission of the Institute of Economic Affairs is to improve understanding of the fundamental institutions of a free society by analysing and expounding the role of markets in solving economic and social problems.
The IEA is a registered educational charity and independent of all political parties.
“The decision to ‘cap’ rail fares to inflation-only increases is severely misguided. As it is, price controls on rail fares have led to severe overcrowding on certain routes and at certain times, whilst rail companies are prevented from offering more flexible fares to tempt customers into changing their travelling habits and ease congestion.
“Pegging rail fare rises to inflation could exacerbate this problem and leave taxpayers out-of-pocket if industry costs rise more quickly than overall inflation.
“Rail subsidies and taxpayer support of this kind are highly regressive. Commuters on average tend to be much richer than non-commuters, and as a component in the average family’s weekly living costs, rail fares are tiny compared to the costs of motoring. We should instead seek to deregulate fares and put them beyond political interference. That way demand for rail travel can be spread more evenly, with less pressure on the taxpayer.”
Notes to editors:
To arrange an interview please contact Camilla Goodwin, Communications Officer: 0207 799 8920 or 07821 971 443.
For more information, read Dr Richard Wellings’s Fair Deal for the Taxpayer: Why rail fares should be liberalised and the chapter Rail: ‘Privatisation of the railways is to blame for high fares’ in Smoking Out Red Herrings.
The mission of the Institute of Economic Affairs is to improve understanding of the fundamental institutions of a free society by analysing and expounding the role of markets in solving economic and social problems.
The IEA is a registered educational charity and independent of all political parties.
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