Government rail fares review announced

The Government has announced a full review of rail fares that could lead to some tickets going down in price but others rising.

The review was recommended in a Whitehall-commissioned review of rail industry costs by former Civil Aviation Authority chairman Sir Roy McNulty.

His study team said the fares review was necessary to simplify a complex system and to help the management of peak demand, with consideration given to possible changes to off-peak and saver regulation.

The review said: "The study does not recommend an increase in fares revenue overall, but instead envisages some fares increasing and others decreasing correspondingly, within the same revenue total."

What could happen now is that some much sought-after off-peak fares, such as those operating on Friday evenings just as the rush-hour ends, could increase in price.

Trains leaving London on the West Coast line, for example, at around 7pm on Fridays are packed with those taking advantage of cheaper fares, while those leaving at the tail-end of the peak-fare period are comparatively empty.

Responding to the McNulty review, Transport Secretary Philip Hammond said the Department for Transport would conduct "a full review of fares policy, including addressing anomalies in the current system and the potential for much greater use of smart technology".

Rail customer watchdog Passenger Focus said this tinkering with off-peak fares represented a "leap in the dark", adding that "all the experience, all the history shows there will be more losers than winners".

UK rail fares are already the highest in Europe, with season ticket holders having to fork out for an average rise of the RPI rate of inflation plus 3% in January 2012.

In his review, Sir Roy said rail costs should be 20-30% lower than they were in 2008/09. He proposed cost-cutting measures which could deliver savings of between £700 million and £1 billion annually by 2019.

Sir Roy said that rail wages were too high, rail working hours were too short and some ticket offices may have to be "done away with".

The review found 10 main barriers to efficiency. These included the role of the Government in the railways, the franchise system, the fares structure and the way in which "major players in the industry have operated".

There had been "excessive wage drift and inefficient working practices" in the industry, the review said.

In a move that will infuriate transport unions, Sir Roy's team called for a review of many aspects of staffing and working practices and spoke of the need for pay restraint "in relation to both staff and senior management".

Sir Roy said: "It is an imperative on the industry to give taxpayers and passengers a better deal than they are getting at the moment. The problems we have are substantial but they can be fixed."

Sir Roy said rail wages had risen twice as high as those for other industries.

Addressing the House of Commons, Mr Hammond said: "The excessive cost base that Sir Roy has identified is the reason that UK rail fares are already by some margin the highest in Europe, even though levels of taxpayer subsidy are also among the highest.

"And let's be clear about the potential prize: the successful delivery of cost reductions over the next few years on the scale set out by McNulty, would enable us to reduce levels of taxpayer subsidy and, at the same time, put the era of inflation-busting fare increases behind us."

Shadow transport secretary Maria Eagle said she was worried about the Government losing its power to regulate fares.

She said the current system of setting ticket prices "was too complex and left passengers frustrated" but politicians should be able to control fares, adding the link "between the ticket box and the ballot box should not be broken".

She said there were fears discount fares may only be available during a "small window in the middle of the day", while ministers needed to work with union leaders to reduce costs in the rail industry.

Passenger Focus chief executive Anthony Smith said: "Passengers want affordable fares, a reliable, frequent service with a good chance of getting a seat.

"Simply cutting the number of carriages, staff or services risks putting off the very passengers who are fuelling growth on the railways and the wider economy."

The report was welcomed by Network Rail and by the Association of Train Operating Companies but was attacked by the RMT and TSSA rail unions.

RMT general secretary Bob Crow said: "Attacking staff, ticket offices and jacking up fares, while the train operators are handed gold-plated franchises, is just an escalation of all the worst practices of privatisation."

Alexandra Woodsworth from Campaign for Better Transport welcomed the fares review but added that "passengers want action now, rather than having to wait years for any savings to be passed on to them".

She said she was also worried that there could be "cuts in front-line staff".