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UK’s higher-earning contractors to benefit most if government offers free or discounted public transport in response to inflation

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If the UK government follows the lead of other European nations by offering free or discounted public transport and energy costs in response to inflation, it seems higher earners could be the ones to benefit most

By Philipp Stadle via Scoop.me

Some nations in Europe, including Spain, Germany and Austria are offering citizens free or discounted public transport to ease the Cost of Living crisis spurred by increasing inflation, interest rates and energy prices.  

In Germany, residents are enjoying unlimited use of public transport for only €9 (£7.60), a scheme that runs from June to the end of August. Meanwhile in Austria, the KlimaTicket (‘climate ticket’) offers residents unlimited travel on public transport across the country for about €1,000 for the year, according to inews.

For example, in Spain passengers can use the trains of the state railroad company free of charge until the end of the year. The only exceptions are long-distance trips and tickets for single journeys. With this measure, Spain wants to relieve the burden on commuters in particular.

From September 1, Spaniards, for example, will be able to travel on public transport for free. Multi-trip tickets for trains operated by the state railroad company RENFE will be completely free. This was announced by the Socialist government in response to inflation.

The free tickets will apply to both local and longer-distance travel. Only long-distance travel and single-trip tickets are excluded. So anyone who “buys” several journeys at once will be able to do so free of charge in Spain from September. In this way, the government of Prime Minister Pedro Sánchez aims to ease the burden on commuters in particular. The measure is to apply until the end of the year.

Would UK’s higher earners benefit the most?

Official data suggests people who use Britain’s railways, some of the most expensive fares in Europe, to commute are some of the country’s highest earners. Making railways free to use risks subsidising these already well-off commuters, warns Jonny Marshall, senior economist at The Resolution Foundation.

“Subsidising train travel in the UK often ends up with people who commute into London getting most of the benefit, because that is where most of the high cost is,” he told inews.

Subsidising bus use would reach more rural citizens, but the UK’s bus network is so fragmented and patchy that even ultra-cheap fares may not increase use, he warns.

Spain cuts local transport fees by 50%

“I know that salaries are covering less and less of the costs and that it is difficult to make ends meet by the end of the month,” said Prime Minister Sánchez, explaining the temporary switch to free public transport.

Sánchez has been prime minister since 2018. His socialist Workers’ Party PSOE currently governs in coalition with the left-wing Podemos party. The free multi-trip tickets are the second relief the Spanish government has implemented in public transport. Spain had already previously pledged to reduce public transport fees by 50%.

I want the people of Spain to know that I am aware of the daily difficulties most people face.

PRIME MINISTER SÁNCHEZ.

Spain & Portugal cap energy prices

Spain is leading the way in fighting inflation in another area as well. Together with Portugal, the two Iberian states are the first European countries to set a legal cap on energy prices.

Specifically, the two socialist governments in Spain and Portugal are capping the price of gas used to generate electricity. This is also intended to lower the price of electricity. Spain and Portugal expect that private households will have to pay 15 to 20% less for their electricity as a result of the government price cap. The measure is limited to one year and is expected to save an average household a total of €660.

The UK government has announced a package of support known as the Energy Bills Rebate to help households with rising energy bills, worth £9.1 billion in 2022-23. This includes:

  • A £200 discount on their energy bill this autumn for domestic electricity customers in Great Britain. This will be paid back automatically over the next 5 years.
  • A £150 non-repayable rebate for households in England in council tax bands A to D, known as the Council Tax Rebate.
  • £144 million of discretionary funding for billing authorities to support households who are in need but are not eligible for the Council Tax Rebate, known as the Discretionary Fund.

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