Rail 2020 - Transport Committee Contents

5  Fares and ticketing

66. The McNulty report identified numerous problems with rail fares and ticketing:[99]

  • the fare structure is outdated, complex and illogical: "hard for the uninitiated (or even the initiated) to understand";
  • "the current structure does not do some of the important things that a pricing structure should do - it does not send efficient pricing signals to the market, it does not help operators sufficiently to manage peak demand or match capacity to demand efficiently and, although fares overall are high relative to other countries, it appears that some fares are set below the level which passengers would be prepared to pay"; and
  • the industry is lagging behind with the implementation of smartcards and other modern methods of selling tickets.

67. Alongside the rail Command Paper the Government published a consultation paper on fares and ticketing which picked up on McNulty's criticisms. It also drew on research by Passenger Focus into consumer views on ticketing.[100]

68. Witnesses offered widespread support for reform of fares and ticketing. There was particular enthusiasm for the more widespread introduction of smartcards, building on the experience with Oystercards in London, or other ticketing innovations.[101] It was suggested that simpler fares could increase passenger confidence and be linked to the promotion of integrated public transport.[102]

69. Network Rail argued that fares and ticketing could offer "some assistance" in managing demand for rail services, helping to reduce peak demand. For example, "people may be encouraged to work one or two days a week from home if they could receive money back on their season ticket".[103] However, the Campaign for Better Transport cautioned against using demand management to increase fares on peak-time trains as "most commuters have no choice but to travel at the busiest times".[104] These comments were echoed by the rail trades unions.[105] The unions also cautioned against over-reliance on technology for buying rail tickets, arguing that most passengers valued face-to-face contact.[106]

70. The ideas proposed in the Government's consultation paper on rail fares and ticketing have merit and we look forward to firm proposals being brought forward. However, we have concerns in three areas which the Government must address.

71. Firstly, the Government's policy on the pricing of regulated fares is unclear.[107] In 2010 the Chancellor of the Exchequer announced that for three years from 2012 regulated rail fares would rise by RPI+3%, in order to help reduce the rail subsidy and contribute to deficit reduction. However, the Government has been unable to implement this increase because of the outcry from rail users, increasing fares by RPI+1% instead. We welcome the decision not to proceed with RPI+3% increases but are concerned about where that leaves the Government's fares policy, especially at a time when it is attempting to reduce the cost of rail to the taxpayer. We recommend that the DfT set out a long-term policy on regulated fares.

72. Secondly, although there are opportunities to use flexible ticketing to manage the demand for rail travel more effectively - for example by selling season tickets which provide discounts to part-time workers - there are clear limits to what demand management can achieve. Many lower-paid workers have no choice but to travel at peak times.[108] Higher prices at peak times might make a difference to demand at the margin but would for the most part be a tax on commuters who have no effective choice over how or when they travel. We recommend that the Government rule out forms of demand management which would lead to even higher fares for commuters on peak time trains.

73. Finally, nine years after Oyster cards were first introduced in London, it is surprising that smartcard technology has not been implemented across the rail network.[109] Steve Howes of ATOC conceded that implementation of smartcards had been slow but effectively blamed the Government for requiring the railway to use ITSO technology rather than the Oyster system.[110] He said that train companies had concentrated on other developments, such as print-at-home tickets.[111] In our view, there is likely to be considerable demand for smartcards or other ticketing innovations on the railway, incorporating the various forms of railcard, and enabling greater interoperability with other forms of public transport.[112] The Rail Delivery Group has an opportunity to step up to the plate and show its effectiveness by spearheading the swift implementation of innovative ticketing technology throughout the rail system - certainly by 2020, preferably by 2015. We call on the RDG to respond to this recommendation by explaining its plans in this area and providing a clear timescale for implementation.

99   McNulty summary p38 Back

100   Ticket retailing website usability, Passenger Focus, Jul 11. Back

101   For example ROR 10 (pteg) paragraph 2.21 Back

102   ROR 13 (Susan van de Ven), 16 (South Yorkshire Passenger Transport Executive) and 18 (TravelWatch NorthWest). Back

103   ROR 12 paragraph 4.2. Back

104   ROR 22 (Campaign for Better Transport) paragraph 4.4. Back

105   ROR 24 (trades unions) paragraphs 54-57. Back

106   Ibid, paragraphs 58-60. Back

107   For more information about which fares are regulated see Fares and Ticketing, Annex A. Back

108   Q270. Back

109   For example see Passenger Transport, issue 46, 30 Nov 12, p13 for recent examples of the piloting of new technology in this field. Back

110   Qq278-80. Back

111   Q277. Back

112   See Q264 on recent migration from paper tickets towards other formats. Back

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Prepared 4 January 2013