Don’t expect rail fare hikes to magically solve the nightmare of the morning commute

Rail fares are too cheap. It’s a tough argument to sell when we have just learned that fares will rise by another 3.6 per cent from next January. But my colleague, The Independent’s travel editor, Simon Calder nevertheless advanced it last week.

“Fares for overcrowded trains need to increase much faster than inflation, with price cuts to tempt travellers onto less busy services ... An overhaul of season-ticket fares would see commuters who insist on arriving in London between 8am and 9am paying significantly more,” he wrote, claiming that the reason for overcrowding on these peak-time commuter trains is mainly because they actually charge too little. Remove government price controls and the overcrowding problem will, apparently, resolve itself as commuters respond to financial incentives.

I’m not so sure. And here I have to hold my hand up. I am one of the people Simon mentions who “insists” on travelling into central London at peak time.

I get the 8.16am from my village in Surrey, arriving at London Victoria at 8.45am. Yet I don’t insist very hard. In fact, my heart’s not really in it at all. To be honest, I’d much rather travel in earlier, or later, to avoid the crowds. It would be more pleasant to have a seat than to stand in the train’s aisle for half an hour.

But that’s not an option. Let me explain. I drop off my two children at a local nursery in the morning and my wife picks them up in the evening. My wife, who also commutes to London for work, cannot leave work in the evening before 5pm. With an hour’s commute from her office, the earliest she can pick up our two children is 6pm.

Ofsted states that a child should not spend more than 10 hours in each nursery session. Which means (working backwards from the earliest possible pick-up time) that I cannot drop off my children at the nursery before 8am, otherwise they would go over the 10 hours. Factoring in the distance between the nursery and the train station, this means the earliest train I can get is the 8.16am, which means I travel in during rush hour.

So why am I boring you with all this? Because the hypothesis that rail price deregulation will magically solve the problem of over-crowded South East commuter trains ignores this kind of constraint.

And it’s not just my personal constraint. The vast majority of suburban London commuters have no choice but to use the train. London, for obvious reasons, is not a city to which one drives to work. And if you live in the outer suburbs, the Tube or buses are not a viable option. We are, so to speak, railroaded. My own train route, incidentally, is operated by the disaster-zone known as Southern Rail. If there was an alternative form of transport, believe me, people would take it.

What about the timing of the commute? Couldn’t we take earlier or later trains? The thing is, when I look around my train carriage in the morning I don’t see lazy people who are simply getting the 8am train because they can’t be bothered to get up earlier. I don’t see masochists who could get the quieter 9am train but who prefer standing with their face in another person’s armpit on the over-crowded train. I see people, mostly like me, without a choice.

Raising prices might discourage a few from travelling at peak time. But I strongly suspect demand overall for rush hour commuter rail would prove relatively insensitive to higher fares – certainly not sensitive enough to make a substantive difference to overcrowding.

There’s some evidence to support this. A Transport for London report found that those in suburbia had a low propensity to change their travel behaviour. Another TFL report noted that rail travel in the capital was up 50 per cent in the decade to 2013, despite fares rising 15 to 20 per cent. Not much sensitivity to price there.

There are structural factors in this market which are much more important than rail fares in delivering overcrowding. An excessive concentration of companies’ headquarters and administrative offices in central London and the South East in general has inflated demand for local rail services. High and rising house prices in the capital have also compelled people to live further and further out, putting more pressure on long-distance commuter lines. Official data shows the average commute-to-work time for people who work in central London is 57 minutes, with a third travelling for more than 90 minutes.

Commuters not only often face inflexible child care but rigid employers, too. Research suggests that although more than half of employers claim to offer flexi-time, most employees do not take it up – either because they are ineligible, or because they are unaware of the possibility.

Choosing which train to take to work is not like choosing which short-hop flight to book when planning a holiday where the evidence shows people really are very price sensitive. People’s daily commute options are severely limited by other factors. And without addressing these other factors – whether by forcing employers to be more accommodating on flexi-time, making efforts to iron out regional economic imbalances, or sorting out housing stress – allowing train companies to hike peak commuter fares would merely pad their profits rather than result in a more efficient use of the rail network.

Even some train operators interviewed in an official Department for Transport study into the case for “peak spreading” through lifting fare caps made that very point. Rail regulators told the same researchers that “the peak period is largely fixed because people don’t have flexibility in when they work”.

The bigger lesson here is the danger of making an argument for a policy change – whether on rail fare regulation, increases in the minimum wage or caps household energy bills – based on a simplistic appeal to the micro-economic tools of supply and demand.

Markets do not operate in isolation, they are connected. One has to consider the availability of potential “substitutes” (or lack of them). One has to consider “elasticities” of demand and structural market “rigidities”. One needs context and detail. Otherwise your analysis, like the unfortunate 5.40am Waterloo to Guildford train last week, will end up derailed.