Sir Patrick McLoughlin is a former Secretary of State for Transport. He served as a Conservative MP from 1986 to 2019.
Last year, after more than 33 years in the House of Commons, I stood down from frontline politics. During my time in Parliament there was one job I enjoyed more than any other – being Transport Secretary.
I am proud of the upgrade projects which I was able to sign off on, projects that are already making a real difference for passengers including thousands of new trains carriages, more electrification and modernisation of key lines.
But looking back, there is one major change I regret not pursuing: reforming Britain’s labyrinthine system of rail fares.
As I outlined last week, in a speech to rail industry leaders, the rules that govern ticket prices were written in the early 1990s, before the advent of the internet, the smartphone and online shopping. They were written for a world where passengers nearly always bought their tickets at a station and travelled at traditional times of the week – the 9-to-5 Monday to Friday commute or the weekend getaway.
They have helped create a fares system that is fiendishly complex due to layer upon layer of additional ticketing options and requirements being added over the years, with old ones not taken away. This means that there are now estimated to be over 55 million different fares available.
The system is also full of anomalies which baffle and frustrate passengers who have to battle to find the best fare for their journey. The launch of ‘split’ ticketing on Trainline’s website and app in January, which makes the most of these anomalies, is of course good news for a proportion of passengers that make certain types of journeys.
But I believe every passenger who travels by train should have confidence that when they buy a ticket, they are getting the best value fare for their journey. To do this, we have to reconfigure the underlying building blocks of the whole system.
It’s not just important to make buying fares a less bewildering experience and offer better value for money. It is also vital for the future of the railway. Changing work and travel patterns mean that unless the system is modernised ticket revenue will fall. This would be bad news for passengers who could see less investment in new rolling stock, station improvements and better services.
It is also bad news for taxpayers, who would otherwise need to fill that funding gap. It has now come to light that the risk to the public purse posed by ‘split’ ticketing becoming the norm could be up to £1 billion every year.
This drop in fare revenue would mark a return to the age of British Rail, when taxpayers had to fork out billions each year just to run the railway, with little or no money left over to invest to improve services. Passengers saw services get worse and stations deteriorate while they were forced to travel on old, out-of-date rolling stock.
Privatisation has changed all that – greater efficiency and the decision to ask those who travel by rail to pay more towards the costs of running it, has meant that the majority of taxpayer money going to the railway is now spent on infrastructure investment and other improvements for passengers.
But if the fares system remains unreformed and revenue falls as a result, all of that is at risk.
It doesn’t have to be like this.
Train companies have put forward potentially cost-neutral proposals to the Government to reform the regulations that underpin fares. The changes they are proposing would deliver a far easier-to-use, better value system, more suitable for today’s travellers.
Part-time season tickets and automatic price caps for commuters with pay-as-you-go pricing and ‘tap-in tap-out’ payments would be the norm across the country. For business and leisure journeys on long-distance routes, there would be a better range of cheaper, mix-and-match walk-up fares, with less crowding on the busiest trains. And finally, it would mean an end to having to decide at the beginning of the day what time you will be coming back.
The proposals would also allow for local areas to be able to set their own fares, reflecting their own priorities and needs. This would deliver on the pledge made by the Prime Minister last September when he set out his aim for local areas to be able to set their own fares.
And what’s even better is that these reforms are potentially revenue neutral, depending on how they’re implemented, with the possibility of stimulating over 300 million more journeys on services with capacity for growth.
In order to realise this, though, it will be necessary to trial new ticket types to assess the impact on fares revenue and ensure that any reforms are designed to maximise the number of ‘winners’ from any changes.
Looking forward to the next four decades, the nation’s economic competitiveness will depend on people being able to travel with flexibility, and not be boxed in by rigid ticketing options which offer no savings for changing travel times.
People will expect to move seamlessly between trains, buses, trams and autonomous vehicles on one ticket in the certain knowledge that they have got the best price for their journey. In big cities and other areas, local leaders will want the power to set fares according to priorities of the area. All of this requires the wholesale rewriting of the rules that underpin rail fares.
The forthcoming Williams Review and the White Paper that follows provides the chance to deliver all of this. It is an opportunity that must not be squandered.
I believe if we grasp the nettle now, by the time of the next general election we will have been able to deliver a simpler, better value and more logical fares system that makes passengers’ lives easier and simpler, encourages hundreds of thousands of more people to travel by rail and helps the UK meet its carbon reduction targets. All this at the same time as protecting the record levels of investment in rail infrastructure, rolling stock and station improvements.
So, as my successors in the Department for Transport consider their options, I would urge them to get on with fares reform – because one thing I learned when I was in their shoes is that progress can take time but that doesn’t mean it isn’t worth doing.