93c Venner Road,
Sydenham,
London SE26 5HU.
0208 659 7713
E-Mail A_Baron@ABaron.Demon.Co.UK
October 3, 2000
Dear Mr Livingstone,
I am writing to you in connection with the funding of the
London Underground and public transport in London in general.
You have made the funding of the Underground a priority, and
rightly so, your suggestion being that low interest bonds
should be issued to the public. In this connection I enclose
a page from a book I came across recently while researching
an entirely different matter. This book points out that
public debt in then Palestine was liquidated by the
redemption of stock which was bought up specifically for that
purpose. Your method of funding the Underground is clearly
superior to the initiatives of private finance, the main
benefactors of which are always financiers. There is though a
method of funding it which you and everybody else seems not
so much to have overlooked but never to have considered, that
is to abolish fares in London altogether and to put the
entire transport system or at least the Underground and buses
on the rates.
There would of course be many objections to this, the
principal one being that it would send rates in London
through the roof, but would it?
My contention is that
a) although a totally subsidised transport system would
increase residential and business rates significantly, the
overwhelming majority of, and possibly all, ratepayers, would
more than recoup such additional outlay through the
elimination of fares; employers in particular could be
given special tax concessions or the London weighting
allowance could be amended to account for this.
b) to subsidise the transport system completely would result
in massive savings all round by the elimination of revenue
collection and all the expensive trappings thereof.
Let me deal with these in order. In the first place all
public transport systems are subsidised, the only question is
by how much. A system which receives hundreds of millions of
pounds of subsidy a year as transport in London, does
obviously recoup only a percentage of its revenue through
fares. Let us say that the average 9-5 commuter spends thirty
pounds per week on fares, which is around fifteen hundred
pounds a year or an incredible twelve and a half per cent of
the average wage. Putting all fares on the rates would mean
that commuters could take home thirty pounds a week less
without being any worse off. In practice this could be
recouped through a special tax allowance or some such
mechanism.
Pensioners and other travel concessions would cost nothing.
Currently, pensioners, who have free travel passes for use on
buses, are issued with these passes, and the cost of them is
then recouped from the local authority by the operator.
Obviously some sort of internal accounting is necessary when
it comes to running government and local government
departments, but this sort of accounting is sheer lunacy.
Another point you might like to ponder Mr Livingstone, as
someone who is often satirised for his concern over minority
rights, is that pensioners are a minority and in many ways an
oppressed one. A lot of older people, trapped in their own
homes, literally sit and vegetate, waiting to die. Making
transport totally free would encourage them to lead active
lives, which would in all probability be reflected in reduced
National Health costs over a period.
The second point is that with an entirely free transport
system the cost of actually running the system would be
greatly reduced. On July 25, a BBC news report said that the
new Gestapo type approach to travel which involves plain
clothes ticket snoops following people to their places of
work has been such a great success that Connex Trains are to
recruit a further one hundred such spies. Yes, one hundred.
Every year there are literally hundreds of thousands of
prosecutions and on the spot fines levied on "fare cheats".
Prosecutions cost money and take up valuable court time,
including police time, which could be used for more
productive means, like processing people accused of serious
criminal offences.
Every station on the Underground and on the main line network
has a ticket office and staff or at the very least ticket
dispensing machinery, which is expensive to run. I dread to
think how much the automatic gates at Underground and main
line stations cost to operate. With a totally subsidised
transport system all these will be unnecessary and the
surplus labour could be directed into more fruitful avenues.
The cost of operating and policing a ticketing system is
astronomical.
I realise that many objections would be raised to the above
proposals, but most such objections are "moral" rather than
economic, the idea being that people should pay for a service
because it is morally reprehensible that they should travel
or get anything for free. Of course, running a transport
system on the rates means that it is not free but that
ratepayers and/or taxpayers pay for it. But they are paying
for it in large part already with the added disadvantage that
the method of payment is both extremely complex and
inefficient. In general if something is to be subsidised it
should be subsidised completely and given away "for free".
A good example is the Internet; many Internet Service
Providers offer a totally free service for subscribers. And
although there are commercial websites - usually sex-oriented
or related to financial services - the amount of material
available on the Internet/Web totally free is staggering,
including government and local government publications,
photographs, artwork, encyclopaedias, and so on.
One further point you might like to consider re the above
transport proposals is the impact on the motorist. With a
totally subsidised transport system, the volume of traffic on
the roads is sure to come down considerably. People would
think twice before driving, and some people would dispense
with their cars completely. This would lead to further
economies, and would undoubtedly clean up the air in London
considerably. Who knows, it might even save lives? You are
probably just about old enough to remember the "pea soupers"
that London used to be renowned for. The pollution problem
isn't that bad nowadays but it could certainly be further
improved by reducing the volume of traffic on the roads, and
nothing would do this more efficiently than a totally
subsidised transport system.
The following figures are extracted from "London Regional
Transport Accounts" for the 15 months ended March 31, 1985
and "The London Regional Transport Annual Report" for 1994-5.
The 1985 figures were as follows:
income including grants: total 1,102 million which was made
up of i) traffic and other income 735 million
ii) grants and benefits 367 million
total grants were 27% of total expenditure for the period
staff: buses 26,700
Underground 22,300
central services: 4,900
bus engineering: 1,900
investment including Docklands Railway: 240 million
1994-5 figures were as follows:
in 1994-5 London Regional Transport sold its ten remaining
bus operations which now run under contract.
London Underground had 17,505 staff, around four and a half
thousand less than in 1985.
the grant from the Department of Transport was 686 million
total sales were 1,012 milion
traffic revenue was 947 million; other revenue was 65
million; total: 1,012 million
average number of employees for buses were 638 for LT Buses;
1,049 for other operations
operating costs were 960 million
a lot of money was allocated here for investment, principally
new lines, which were then under construction.
bus sales revenue was 240.7 million
grants received were 686.3 million from the government made
up of i) 273.4 million for core business
ii) 412.9 million for new lines
fares collected and other external revenues: 991.6 million
total sales revenue 1,155.2 million including 22.5 million
from advertising; 31.5 million from rents
free travel for the elderly and disabled came to 92.4
million.
Working on the basis of the 1994-5 figures, the 947 million
traffic revenue and assuming the population of Greater London
to be around 6 million, that makes a total subsidy of 947
million divided by 6 million = 157.83 pounds per annum or
3.03 per week per person (every single person including the
infirm and babies). For a single person household this means
that the additional subsidy necessary to give free transport
on the Underground and buses works out to 3.03 per week. Even
if you were to double that for mainline local commuter
services that would still be only a shade over 6 pounds per
week. A travel card costs 4.10 from Zone 4.
And as I said, in real terms the cost would fall dramatically
as ticket machines, inspectors and all the trappings of
revenue generation and "protection" fell.
Although a lot of work would have to be done on the logistics
of this, a free public transport service is certainly
feesible. On New Year's Eve a brewery generally sponsors all
underground and bus travel after midnight, so if it can be
done one night a year...
Yours sincerely,
A Baron
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