The latest edition of the Weekly Policy Update looks at the rising cost of rail travel, an EU Trade Commissioner’s prediction over the consequences of a ‘Brexit’ from the eurozone, BP’s views over the future of shale gas extraction in Britain, and details of a forthcoming Financial Conduct Authority review of the corporate banking sector.
Falling rail subsidies lead to greater passenger share of travel costs
The Office for Rail Regulation have announced that over the course of the last four years, rail subsidies have dropped by almost a sixth, even in the face of rising passenger numbers.
Figures have shown that in the last year alone, subsidies from the taxpayer have dropped by around 8%, meaning that the £8.2bn of rail revenue is made from passengers. This accounts for over 60% of total yearly revenue, up from 55% in 2011.
State funding accounts for 24% of total rail costs – a dramatic fall of 28% since 2011.
In this period, there has been a 17% increase in the amount of passengers using rail services, but costs have remained consistent at around £12.7bn per year.
The ORR’s chief executive, Richard Price, said: “There has been substantial growth in the use of the railways in the past four years. Passengers are increasingly the main funder of the railways and must be central to developing plans for future services and investment.”
Mike Ashton, Chief Executive of Herefordshire & Worcestershire Chamber of Commerce, added: “The figures have shown the centricity of a strong rail network to economic prosperity. It is essential that the Worcestershire Parkway Regional Station is delivered swiftly, giving Worcestershire the world-class rail infrastructure it needs to become a leading region in the British economy.”
EU Trade Commissioner claims that ‘Brexit’ would have disastrous consequences
Leading EU Trade Commissioner, Cecilia Malmstrom, has said that Britain leaving the EU would have major consequences for Britain and the wider eurozone.
Ms Malmstrom, who has been in London this week to give updates on the Transatlantic Trade and Investment Partnership (TTIP) – an EU-US free trade deal – voiced her fears over a British EU membership referendum in an unusually candid and frank manner for an EU diplomat.
The TTIP, which has garnered significant differences of opinion, would remove tariffs on US imports and EU exports to the states, with some commentators arguing that it could add up to £10bn to the British economy each year, and up to €100bn to the eurozone.
On the other hand, the proposed trade agreement has been met with severe scepticism and outright hostility by others, notably Len McClusky and the Business Secretary, Vince Cable, on the basis that it could lead to significant privatisation of public services.
Speaking on Britain’s position within the EU, Mike Ashton, Chief Executive of Herefordshire & Worcestershire Chamber of Commerce, said: “It is important that businesses have clarity and confidence over the future of Britain, be that in or out of the EU. The majority of our members have consistently favoured remaining within the union, but, as the Conservatives have promised, we are destined for a referendum, then it should be held before the proposed date of 2017, which is too long for businesses to be left in the lurch.”
No fracking boom for Britain, says BP
BP, who this week released their Annual Global Energy Outlook, dismissed the future of shale gas extraction Britain, arguing that it, and in particular, fracking, will play a very insignificant part in the future of British energy solutions.
The oil company believes that, irrespective of the large depositories of shale gas around the world, the fracking boom will remain confined to America, where conditions are favourable to the extraction methods.
Commenting, Mike Ashton, Chief Executive of Herefordshire & Worcestershire Chamber of Commerce, said: “Fracking does hold the potential to alleviate some of the current uncertainty that we face around the future of energy in Britain. It is imperative that businesses have confidence in a long-term strategy surrounding energy, and the part fracking could play in this should at least be explored.”
FCA set to investigate competition in investment and corporate banking market
The Financial Conduct Authority (FCA) is set to launch their first investigations into the investment and corporate banking markets – specifically looking at levels of competition.
The UK’s financial regulator has said that a lack of clarity over prices and levels of services is the main reason behind the investigation, which it hopes could bring about big benefits for clients.
The FCA also said that following discussions with stakeholders and firms, there were "unanswered questions about potential conflicts of interest and value for money in this market".
It said feedback received so far included concerns around transparency, conflicts of interest, and the impact that bundling services together has on competition - including new firms' ability to enter the market.
Terms of reference for the investigation will be published in spring.