It’s not fare: costs, cuts and consumers

To be fair, the article was about fare rises on public transport, but one could be forgiven for wondering which scenario of gloom was in the spotlight at that moment. Most of us who are involved in veterinary practice are fortunate not to have to worry about the personal cost of commuting by public transport, but, for those who do have to factor these costs into their family budgeting, an average rise in bus fares of 33 per cent over the past five years and an average increase of 40 per cent in rail fares over the same period, is hardly insignificant. When rail costs are already so high, a 40 per cent increase on a season ticket costing around £3,000 represents a huge hike on post-tax costs.

Most of us run a car and motoring represents the second largest cost centre for many businesses. Insurance premiums have doubled and petrol costs have increased by almost 30 per cent, but wages have failed to keep up with above-inflation increases in motoring costs and fares.

For those running businesses, the low increases in wage costs have been something of a saving grace in recent times. However, those of us who remember the inflationary spirals of the late 1980s will be all too aware of the disruption and instability caused by valued staff job hopping to secure pay increases that were otherwise unattainable and few of us would wish to see a return to the disastrous days of the three-day week. For employees, however, the pain is both immediate and unsettling and affects the whole family. Of course, none of this is new and commuters have already endured eight years of above inflation transport cost rises and these same commuters have already re-jigged their family finances on several occasions in the past. Elasticity is not a constant.

Motoring organisations have had more success than railuser groups by pressurising the Government to delay planned tax and duty increases, but the increase in petrol prices has exceeded 26 per cent, and 20.6 per cent for diesel, since 2008 and fuel duty has been increased five times since then and was cut only once in the 2011 budget. Insurers blame the doubling of car insurance premiums since 2008 on fraudulent personal injury claims, but, with an average annual comprehensive premium of £844.86, you can see the difficulties mounting for cash-strapped families. Without doubt, something has to give and it would appear that routine costs, such as servicing the car and taking holidays, are among the first to suffer while salaries fail to keep up with other inflationary rises.

What is the likely knock-on from this? Apart from the obvious effect on businesses and employees in those sectors seeing cutbacks, we have seen the average number of car journeys undertaken per driver fall from 410,000 in 2008 to 397,000 in 2011 and there will come a time when commuters will find the increases in travel costs are affecting their ability to get – or even keep – a job.

For many, the swingeing increases in property valuations in the late 1990s encouraged them to move out of the cities and take advantage of lower rural prices up to 100 miles away from their places of work and increases in travel costs will hit these people hardest. This, of course, ignores the fact that governments have, over the past decade or so, begun a process of disengagement from direct subsidies for rail infrastructure, requiring the rail companies to fund the necessary improvements themselves. In the first weeks of the new year, Network Rail published its plans for the investment of billions of pounds in rail infrastructure, but commuters are in little doubt over who will fund these developments – and it is unlikely to be the shareholders.

Money and health

Tens of thousands, inspired by Team GB’s success in the Olympics, have turned from four wheels to two in an attempt to combine cost savings with a health and fitness benefit. However, little or no investment has occurred in the infrastructure, several councils have levied “parking” charges on cyclists and the Mayor of London plans to double the cost of using the Barclays cycle hire scheme for daily, weekly and annual costs, in 2013.

It was Anthony Smith, chief executive of Passenger Focus, a commuter action group whose quote “We cannot go on like this, with arbitrary and inexplicable fares rises” featured in The Timesand the reality is the nation cannot continue to stumble onward without some form of workable plan both for the immediate and the longer term future.

The brinkmanship of the fiscal cliff situation in the US has demonstrated that political point scoring must come second to national necessity if our elected leaders are to shoulder the responsibility of leading their countries forward instead of into a new dark age. With some Faustian inevitability, it will be the markets, whose behaviour – or lack of it – led us to the brink in the first place, that will pass judgement on the politicians’ success in averting financial meltdown. On the macro scale, the world’s greatest economies cannot continue to borrow money. The US deficit sits at 16.4 trillion dollars, and a market-led recession following US politicians’ inability to work together would almost certainly tip the world economy over like a stranded beetle.

On the micro scale, we cannot go on borrowing because the UK banks won’t lend the money the taxpayers have given them and simple housekeeping says that as the money flowing out of the family purse continues to exceed the money flowing in, it will soon end in tears.

On the high street, the euphoria of the January sales subsided, retail confidence returned to its autumn levels and we fool ourselves if we choose to believe this will have no lasting effect on the way in which we conduct veterinary practice. In some areas, the difficulties have already arrived and, where rising unemploy ment has had most recent impact, the effect on these families’ elective spending on veterinary services is already being felt. Longer term, the issue of whether or not to replace the family pet may well be governed by the amount of disposable income in the family purse and that is a major issue for the profession to factor into its planning.

Most importantly, it’s not a question of doom and gloom, but of actually doing the planning to ensure that practices continue to meet the changing needs of the pet-owning consumer. To achieve that, there needs to be some serious planning done at all levels, from how many vets we train in the future right down to which services we should offer.

When interviewed, president Obama said: “Democracy’s always been messy and we’re a big, diverse country that is constantly arguing about all kinds of stuff. But eventually, we do the right thing.”

When interviewed, Anthony Smith said: “We cannot go on like this.”