Train ticket prices could fall by 56% if rest of UK followed Scotland in scrapping peak-time rail fares

This week it was announced that Scotland is to abolish peak-time rail fares for a six-month trial, with the only “walk-up” fare for immediate purchase and departure to be the cheaper off-peak ticket.

Train operator ScotRail and the Scottish government are facing a 30 per cent slump in rail commuting due to changes in lifestyle since the Covid pandemic.

So they are cutting fares for rush-hour journeys in the hope that it will encourage people to ditch the car and travel by rail instead.

Savings for rush-hour commuters will range from 20 to 48 per cent, with passengers between Edinburgh and Glasgow seeing the price almost halve, falling by £14 to £14.90.

The experiment has been generally welcomed – with rail passengers elsewhere asking if it could be extended across the UK. For travellers who have no choice but to travel during rush hours, abolishing peak fares would mean these cuts in return prices:

But it is a complex issue. These are the key questions and answers.

Remind me about peak fares?

During much of the history of passenger railways in the UK – stretching back almost 200 years – the peak fare has been the only fare. Today, they are known as “Anytime” tickets. They can be used at any time on the day shown on the ticket, and also allow passengers to break the journey as much as they like – so between Brighton and London you could stop off at Gatwick airport, East Croydon and Clapham Junction if you so wished.

In practice, the vast majority of travellers simply want to go direct to their destination. If they have the temerity to travel during the morning (and often evening) rush hours from Monday to Friday they are obliged to pay an annoyingly high fare. One such example of many: £135 for a journey of just over an hour from Leicester to London St Pancras.

Off-peak fares are designed to persuade some travellers to avoid rush-hour services, thus reducing crowding, and to entice additional passengers.

More recently, Advance tickets have become widely available – undercutting “walk-up” fares in return for committing to a specific train and giving up the right to break a journey (which hardly anyone uses anyway).

There are no fixed rules. Times vary across the UK and from one train operator to another.

Most rail journeys are in southeast England, predominately to and from London. Generally the first off-peak train will get you to the capital some time after 9.30am – though on (for example) Avanti West Coast you cannot reach London before 11.30am between Monday and Thursday. However, this train operator now counts Friday as all off-peak, along with Saturday and Sunday.

A safe rule for morning journeys is: if you catch a train after 9.30am, it should be off-peak.

Afternoon restrictions are more complicated. Firms often block out trains leaving London (or other big cities) roughly from 4pm or 4.30pm to 6.30pm or 7pm. Others have no restrictions. And for some journeys the peak rules are eased or lifted if you are travelling to or from more distant destinations.

For example, the 5.30pm train from London Euston to Preston has a peak fare of £189.30 – but passengers travelling on exactly the same train 14 minutes further to Lancaster qualify for an off-peak fare of £80.70. Go further, pay 57 per cent less.

Sounds complicated...

It gets worse (or, actually better, if you are hoping to save money). Some firms have super off-peak tickets that are more time-restricted than off-peak tickets. The general aim is to smooth out the “cliff edge” fall in rail fares. For example on Great Western Railway from Bath to London Paddington, the sequence of times and tickets for morning trains falls like this:

One of the many complexities in abolishing peak fares is: what off-peak fare would you use? On some routes there are multiple operators (such as Birmingham-London and York-Newcastle with three), each with its own fare structure.

ScotRail’s network has less complexity.

Doesn’t Scotland also offer better-value tickets?

That is certainly a popular view. Even at peak fares, the 47-mile trip between Edinburgh Waverley and Glasgow Queen Street costs £16.90 one way. Basingstoke in Hampshire to London Waterloo is exactly the same distance and a similar journey time of 45–50 minutes. Yet a one-way ticket costs £28.30, two-thirds more.

So what is Scotland doing that the rest of the country is not? Pumping in more taxpayer cash. In 2019, according to the figures The Independent has analysed, fare revenue covered 44 per cent of ScotRail’s income with the government providing the rest. In Britain as a whole, tickets provided 62 per cent of the cash to train operators – a significantly higher proportion.

Since the Covid pandemic, rail fare revenue has slumped across the UK, with taxpayers making up the shortfall.

Will cutting fares by abolishing peak tickets stimulate demand?

Yes, but the crucial question is: will additional earnings from new passengers make up for the cash forgone by the train operator?

The immediate beneficiaries of the ScotRail experiment will be travellers who have no choice but to travel between Glasgow and Edinburgh on trains where peak fares currently apply. They will save £14 per round-trip. The next cohort of people who will benefit: those who currently use off-peak trains but would prefer to travel on peak departures. From 2 October until the end of March, they can do so at no extra cost (and make the busiest trains of the day even busier). So far, no actual benefit beyond cheering up some passengers.

Success depends on enticing enough new travellers on board to make up for the giveaway to existing customers. Candidates comprise motorists enticed out of their cars and onto the trains; commuters who currently use buses because rail fares are too high; and people persuaded to make additional journeys thanks to the cheaper tickets.

There may, in turn, be a longer-term benefit if (for example) drivers learn how much more productive and relaxing it can be going by train. And of course the Scottish government also has environmental goals that go beyond strict financial arithmetic.

No one knows how it will turn out, which is why this is strictly a six-month trial. Train operators elsewhere in the UK will be watching closely.

Are there any alternative reforms?

Yes, and they are being quietly introduced by innovative train operators. This is all about “walk-up” tickets which people buy on the day, shortly before boarding a train. Many people (including me) typically buy on smartphones on their way to the station.

So some train operators are offering Advance fares as little as 10 minutes before departure for prices that always undercut the Anytime ticket. For example, for an imminent train from Liverpool Lime Street to Manchester Victoria, Northern Rail is currently offering an Advance fare of £9.90 rather than the off-peak single of £17.20 (or Anytime fare that is just 40p more).

Were this happy state of affairs to prevail across the nation, (almost) everyone would be happy. But because the railway is such a huge financial burden on the Treasury, successive chancellors have been loathe to make wide ranging changes to the fares system. Which is why rail pricing is such an almighty mess.