Letter To Ken Livingstone
Re Free Public Transport

                                                  93c Venner Road,
                                                  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

  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

  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

  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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