Sign up to newsletter

Magazine subscription

Opinion: Rail fare freeze is good news for small business owners

Up, up and up. In recent years, this seems to be the only direction for rail fares across the UK.

In face of the ongoing rise in our travel costs and the impact this has in particular on small businesses, all the major parties from this election had pledged freezes to rail fares in their manifestos.

Just last January, regulated rail fares increased 2.5 per cent, pushing the price of tickets up higher than ever before. With trains one of the most frequently used methods of transport getting to and from meetings with potential clients and partners, small businesses will face a tough time absorbing this often unavoidable cost. Many small business owners (SMBs) are already struggling in a tough economic climate, and this continuous hike in fares would have undoubtedly hit their budgets hard, making travel costs a key issue of this election.

Another key focus during the election campaign was championing small businesses in the UK. Unsurprising since they account for 99.3 per cent of British business and generate 48 per cent of private sector employment (Federation of Small Business), their importance to the UK economy cannot be overlooked. The Conservative small business manifesto promises to increase the number of business start-ups to 600,000 per year by 2020 and to encourage companies to expand with the “Help to Grow” scheme, showing that the Government recognises the vital impact of the once humble SMB. 

However, until the new Government implements the rail fare cap, the bottom line is that business travellers and small businesses will see their train travel costs continue to rise. For SMB owners, face-to-face meetings with new business hopes and existing clients are imperative for building a relationship, and the old-school approach is still the most effective.

According to a survey conducted by Vanson Bourne and Concur it found that, 98 per cent of the UK sales executives we surveyed said face to face meetings were ‘vital’.  Even more significant, 86 per cent believe that increasing the number of business trips they make to see potential customers would enable them to grow sales. With a large number of employees reliant on the UK network to travel to and from meetings, soaring rail fares can only negatively impact SMB growth.

There is evidence that this is the case. The fluctuating economic climate in Europe and rising costs of rail travel have resulted in companies adopting a more cautious and circumspect approach to business travel.  Our study showed that more than  three-quarters (78 per cent) of UK salespeople are currently subject to restrictions on the amount of money they can spend when travelling on business, with the majority (62 per cent) having formal restrictions written into a contract.

One of the biggest challenges facing SMBs when rail prices go up is a lack of visibility into the cost implications on their bottom line. Businesses need to be able to track their   company spend on expenses and provide insight into where the business can save money. This information provides an overview of how business trips directly correlate to sales. Ultimately, it helps SMB owners answer two questions: how much is rail travel costing me, and is it worth it?

Despite the steady increase in fares in recent years, rail travel remains the most convenient way for the majority of business travellers to get around and passenger numbers have continued to grow. The new Government right now settling into office have committed to ensure that certain rail fares would rise by no more than inflation during the next term. With the exception of the rail operators, this is a huge positive for UK businesses, and for commuters.

Businesses up and down the country have been ‘feeling the pinch’ in recent years, and our data shows that rail travel is a major expense. SMBs will certainly welcome the news that the cost of travelling intercity by train to meet customers, prospective clients and partners will not skyrocket in the next five years. This will allow businesses to maintain these vital relationships and inspire confidence that the politicians promising to support small business owners mean what they say.

David Vine (pictured) is managing director for UK small businesses at Concur

Comments

We are finding savings on 40% plus of journeys and average savings of 40% on those journeys by split ticketing. Give your regular journey a try at Trainsplit.com

Mike@Raileasy's picture
Mike@Raileasy (not verified)

Bear in mind tha with a freeze rail costs are just paid for by taxes (including business taxes) instead of through the fare box. It introduces a lot of distortions and cross-subsidies.

David Starkie's picture
David Starkie (not verified)

Add new comment