UK rail commute could cost 13% of annual salary after latest price hike

05 January 2018 Consultancy.uk

British commuters look to have had their consumer power further curbed by the annual spike in the price of rail travel. According to a new study, after the highest increase in five years, travellers could forfeit more than 10% of their salary, compared to fractional prices in Europe.

British commuters face fresh rail fare increases as they return to work this week, now spending up to five times as much of their salary on season tickets as passengers across Europe, as found by new research from the Trade Union Congress (TUC). Fare rate rises were announced for the start of 2018, and while these raises tend to attract the ire of the general public annually, this year is exceptional. In the largest fare increase in half a decade, ticket prices will grow a third faster than wages will over the coming 12 months.

UK wage stagnation has been cited by numerous studies throughout 2017 as being a major strain on the economy. Slower growth than expected last year was partially attributed to cautious consumers, who had restricted their spending due to flat-lining incomes coupled with rising inflation. Enlarged expenses such as the price of a daily commute are likely to add to that pressure over 2018, and leading economists have already forecast even slower growth of 1.5% for the year.

The TUC’s analysis of British and continental wages, paired with the ticket prices of respective networks, suggests that someone on an average salary travelling from Chelmsford to London will have to pay out 13% of their wage for season tickets at £381 a month. By contrast, comparable commutes would cost a mere 2% of the average salary in France, 3% in Italy, 4% in Germany, and 5% in Spain and Belgium. Wages are set to grow by only 2.6% in 2018, while season tickets will go up by 3.6% – over a third faster than wages.

UK rail commute could cost 13% of annual salary after latest price hike

The hike in pricing is the latest episode in a seemingly endless saga – as ticket bills once again jumped higher than inflation. In January 2017, it was announced fares for passengers were to rise a further 2.3%, topping of an above-inflation increase of ticket costs of 25% since the mid-1990s, when British Rail was first privatised. Meanwhile, reports from across the country suggested huge hikes in the cost of season-tickets since 2010, with the largest increase of 43% coming for commuters between Tame Bridge Parkway near Walsall and Nuneaton. In the same period median gross weekly wages meanwhile increased by just 8%.

Commenting on the study, TUC General Secretary Frances O’Grady said, “Many commuters will look with envy to their continental cousins, who enjoy reasonably-priced journeys to work. Employers can help out by offering zero-interest season ticket loans, or offering more flexible work hours and locations, but ultimately the government need to take our railways back into public hands.”

The Department for Transport cited heavy investment in railways as the reasoning behind the latest increase, stating,  “We are investing in the biggest modernisation of our railways since the Victorian times to improve services for passengers - providing faster and better, more comfortable trains with extra seats.”

According to the most recent analysis from BCG’s Rail Performance Index, UK railways are the 8th best performing rail system across the Europe thanks to a weighted average in which quality of service and pricing only accounted for part of its overall scoring. According to the findings, Great Britain had the third highest safety rating of 25 nations listed in the index, and scored a ‘good’ rating for intensity of use, due to its relatively regular level of freight utilisation across its rail network. However, BCG’s analysts also found that the British rail system as a whole had continued to deliver sub-par returns on public subsidies, with increased state spending on privately owned networks having a below-average impact on performance improvement.

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