Memorandum submitted by the London Travelwatch
In June 2004 the London Transport Users Committee
(LTUC) [3]published
a research paper entitled Fare deals for London?—the pricing
of rail travel in the capital. This paper sought to address a
number of the issues to which the Select Committee's inquiry is
directed. Its full text can be found at www.ltuc.org.uk/publications.
The LTUC study looked at National Rail (NR)
and London Underground (LUL) fares across the London area, as
at January last year. It found that there was a wide variation
in the cost of travel for similar journeys within London and argued
that on equity grounds there was a substantial case for reforming
the fares and ticketing systems in London into a single structure
covering both National Rail and London Underground services.
The summary of findings concluded that:
COMPARING NATIONAL
RAIL AND
UNDERGROUND FARES
— On average, peak return fares cost
more for National Rail journeys than Underground journeys, except
for journeys under five miles (where there is little difference),
and particularly for the longest journeys. However, there is a
wide degree of variation in the fares for individual journeys
of similar lengths.
— Off-peak returns and seasons cost
slightly more on average for Underground journeys than for National
Rail journeys, but again individual journeys vary widely.
DIFFERENCES BETWEEN
TRAIN COMPANIES
(TOCS)
— Some TOCs differ noticeably from
the general pattern for National Rail fares, but variability in
fares within each TOC's ownership is equally important. The large
number of Travelcard fares probably contributes to the variability
within TOCs whilst damping down the differences between TOCs.
— Some TOCs price their point-to-point
fares just below the level of the equivalent Travelcard, but others
do not. Together with differences in the portfolios held, and
with the effects of clustering, this may explain some of the fare
differences between TOCs. (Each company's "portfolio"
is the set of journeys which it is responsible for pricing. "Clustering"
is the practice of setting a common fare to/from a group of adjacent
stations.)
JOINTLY-SET
FARES
— Jointly-set (ie through Underground-TOC)
peak returns are slightly more expensive than National Rail peak
fares, although individual fares vary widely.
— Off-peak, jointly-set returns have
only a very weak relationship with distance, and their relationship
with LUL and NR fares is inconsistent.
— Jointly-set seasons are similar to
LUL seasons on average, costing more than NR seasons, but again
individual fares vary widely.
ROLE OF
TRAVELCARD
— The cheapest fare for many journeys,
particularly seasons, is a Travelcard. Hence many journeys of
very different lengths have similar fares.
— The likelihood of a Travelcard being
the best fare for a journey varies between the TOCs "owning"
(ie setting) the fares in question.
Often, a point-to-point fare (ie between two
named stations) is offered which exceeds the Travelcard price
(which is based on zones) without offering additional benefits.
However, the uninitiated passenger or someone purchasing a ticket
over the internet (where Travelcards are unavailable) would not
know that it would be cheaper for them to purchase a Travelcard.
Separately from this study, we can report that
certain train operators regard the mechanism for changing the
allocation of revenue from Travelcard sales as extremely cumbersome
and lengthy, and claim that in certain cases they have been deterred
from introducing innovative services as a result.
TOWARDS A
UNIFIED FARES
SYSTEM?—THE
CASE FOR
REFORM
These findings suggest that overall, there is
substantial scope to integrate National Rail and London Underground
fares within a unified structure. However, in order to implement
such a policy while holding the general level of fares constant,
the cost of peak returns on NR would generally fall while those
on LUL would rise. For off-peak fares and for seasons, NR fares
would rise and LUL fares would fall. But these are only averages,
and the effects on individual fares would be quite varied, given
their wide range at present. Many return journeys are, in practice,
already at similar rates on both LUL and National Rail, thanks
to a Travelcard often offering the cheapest fare for a journey
on either network.
It is important also to take into account
the current policy of pricing Zone 1 (central London) travel more
highly—which tends to inflate LUL and jointly-set fares.
Suburban LUL fares are therefore likely to be cheaper than the
LUL benchmark (on average), while those including Zone 1 travel
are likely to be more expensive. If that policy were continued
under a unified system, the NR fares would presumably have to
follow suit.
In addition, the current "free transfer"
on the Underground for cross-London National Rail fares would
logically be superseded (at least on fares within the London zonal
system) by payment for the zones crossed en route.
It is clear that the effects on individual
fares would be complex, and further research is required if the
effect of these factors is to be more fully understood.
Transport for London (TfL) has recently
conducted a "longer term fare policy review". The purposes
of this were, inter alia, "to develop a set of objectives
for TfL fare policy" and "to put forward a coherent
set of policies and priorities for TfL fares and ticketing, consistent
with the Mayor's overall transport strategy." The key issue
in this exercise was described as "how best to develop and
take forward TfL's vision of a simple, unified fares and ticketing
structure for all forms of public transport in London" (see
TfL Board agenda item 6, Longer Term Fare Policy Review, 29/7/03).
In the course of this review, TfL identified
the differences in fare structure between its services and those
of the National Rail system (then overseen by the Strategic Rail
Authority (SRA)) as being the "foremost" issue to be
tackled. It was hoped that a forthcoming SRA consultation on fare
policy "would provide an opportunity to rectify these problems
and perhaps reduce the fare-setting powers of the private companies"
(ie the TOCs). But in the event, although the SRA's review led
to some simplification of its fares regulation policies, notably
the abolition of the link between individual operators" train
service performance and the level of permitted fares changes,
the opportunity to introduce a more radical realignment was not
taken.
In particular, each train company retains the
freedom to set the level of the fares it "owns", provided
these do not conflict with a high-level (and, some would argue,
unduly minimalist) strategy determined formerly by the SRA and
now by the Department for Transport. There has been no conscious
effort to achieve consistency across the London area, or to identify
and eliminate anomalies. And by setting a cap of RPI+1% for regulated
fares over the following three years (ie from January 2004), despite
the declared intention of TfL to limit overall increases in Travelcard
prices to the rate of inflation, the SRA embraced a policy which
is likely to preserve rather than reduce the difficulties already
encountered in aligning National Rail fares coherently with the
price of this highly successful integrated multi-modal ticketing
product (including the pricing of other "add-on" NR
tickets of which Travelcard forms part).
The Mayor's statutory Directions and Guidance
to the Strategic Rail Authority in relation to the provision of
railway services for Greater London (January 2003) required the
SRA, inter alia, to " . . . introduce a system of
fare setting and regulation for London that will enable fares
and ticketing on London's suburban network to be made simpler
and more transparent . . . " and " . . . provide a consistent
fare setting framework for Tube and National Rail services . .
. " And the London rail partnership agreement between the
SRA and TfL (December 2002) contained a specific commitment on
the part of both parties jointly to "review the impact of
their respective fares and ticketing proposals on the policies
of the other party in order to develop a simpler, more integrated
and consistent fare structure for Greater London." But subsequent
progress was limited, and the abolition of the SRA in 2005 has
further complicated the situation.
Ministers have agreed in principle that
a unified fares and ticketing system for the London area is desirable
and have set a target date of January 2007 for achieving this.
But at present the obstacles remain formidable. TfL successfully
argued (with LTUC's support) for it to be given an enhanced role
in specifying and procuring rail services in and around London.
One advantage of this would be to align responsibility for fares
and ticketing across the modes, and greatly simplify the means
of achieving a more acceptable outcome. But the relevant provisions
of the Railways Act 2005 have yet to be activated, and their ultimate
effect is unclear.
Irrespective of whatever further institutional
change may occur, the arguments for consistency and clarity in
pricing are strong, and will remain so. The battle to bring what
was then British Rail within the Travelcard scheme was fought
and won in the 1980s, against odds seemingly as great as (and
organisational inertia no less powerful than) those which exist
today.
LTUC's purpose in commissioning its research
paper "Fare deals for London" was to explore more fully—and
to illustrate more clearly—than had previously been attempted
the extent of the anomalies with which the existing pricing arrangements
are riddled. We have commended its findings to London's elected
leaders, and to those who manage its rail systems. We believe
that the evidence it contains makes a compelling case for change,
simply because of the extent of the disparities it reveals and
the lack of logic underpinning them. We are keen that the debate
on this issue should continue, and we have been pleased to be
able to offer evidence which will allow this to be done on a more
informed footing.
3 October 2005
3 London Travelwatch were formerly known as the London
Transport Users Committee (LTUC). Back
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