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SIMON LAMBERT: Forget 'millennial railcard' gimmicks, here's an easy way to ease the pain of commuters paying £4,000 a year to get the train to work
It was like taking a butter knife to a gunfight.
Britain’s long-suffering commuters have a problem with sky-high train fares, so what did the Government deliver? An extension of what used to be called the Young Person’s railcard up to the age of 30 from the current 26.
What was so disappointing is there is a simple solution that could at least ease the pain of people paying thousands of pounds a year to get to work – officially allow people to salary sacrifice their season tickets.
They could then pay out of untaxed income – saving them a meaningful sum of money.
At a time when the Government needs policies to help working people, it would certainly be popular.
In contrast, a ‘millennial railcard’ that is severely limited by small print, did little to placate those learning this week that rail fares will go up by another 3.4 per cent from 2 January.
Some will go up by even more than that.
The overall figure is because the Government maintains some control over rises but still allows regulated train fares, which includes season tickets, to increase with retail prices inflation – despite this no longer being an official national statistic.
The RPI figure that sets this is August’s, which came in at 3.6 per cent.
So things could theoretically have been slightly worse, although this will be small comfort as commuters are still being squeezed. The price hike compares to official consumer prices inflation at 3 per cent and wages rising by 2.2 per cent.
Yet, those percentage figures don’t tell the real story. For that you need to look at the astronomical sums that people are paying just to get to work, particularly those commuting into London.
A quick straw poll of friends, family and colleagues revealed the following figures for those whose train journeys into London are all less than an hour: £2,700, £3,092, £4,500, £4,850 and £6,940.
I am lucky in that I live in London and cycle to work almost everyday, so my commute costs hardly anything. If I moved back to my home town in Hertfordshire, a 25-minute train journey from St Pancras, my commute would cost £4,512 a year.
That would be high but not outlandish. It is now commonplace for people to pay £4,000 a year for the pleasure of going into work.
Look at that in terms of how much salary you need to pay for the ticket and it seems even worse. That £4,000 would cost a basic rate taxpayer £5,900 pre-income tax and National Insurance and a higher rate taxpayer £6,900.
To put this into context someone who drove a 30 mile round trip to work each day would spend about £100 a month on petrol, or £1,200 per year.
Policymakers made driving into work in many major cities as tough as possible in order to get people off the roads
Allowing commuters to pay for season tickets from pre-tax wages won’t solve all the problems we have with our railways, but it will at least ease the pain.
It would cost the Government a relatively small amount of tax and allow workers to put the money they save into pensions, house deposits, savings, or simply to spend it and help stimulate the economy.
Such a move would also be green. Remember, after all, that we are supposed to be encouraging people to take the train rather than drive as it is better for the environment and air pollution.
Train bosses love to tell us of the railway’s current ‘popularity’, but realistically people who commute use them because they have to and we made driving into work in many major cities as tough as possible in order to get people off the roads.
This does seem to have been a point lost in the current Government’s decision to cease promoting railways as a social good and instead push more of the cost onto passengers, while allowing private firms to reap profits, enrich executives, and pay out dividends to shareholders
The other advantage of my plan is that would be easy to put in place.
A salary sacrifice system for this already exists with childcare vouchers and could be quickly adapted for commuter season tickets.
I think this is a better policy idea than the railcards for under-30s, and if the Chancellor wants to steal it, he’s welcome.
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