ScotRail peak fares suspension ‘could be significantly more expensive than politically expected’ as £60m-a-year cost revealed

Slashing ticket prices could cost £60m a year unless more people travel

The impending trial suspension of ScotRail peak fares will cost more than £60 million a year unless the move attracts more passengers, The Scotsman has learned.

A report released following a Freedom of Information (FOI) request admits the experiment “could be significantly more expensive than politically expected”. Announcing the six-month pilot in December, the-then deputy first minister John Swinney said £15m would be provided for the scheme – the equivalent of £30m for a full year.

The radical move, which is due to start in October, is to make rail “affordable and attractive to travellers”, he told MSPs. Peak hour fares on some routes are expected to be halved, with an Edinburgh to Glasgow day return reduced from £28.90 to £14.90.

ScotRail's peak fares will be suspended for six months from October. Picture: John Devlin

The Scottish Government announcement came at a time when ScotRail trailed other British train operators in recovering from Covid travel restrictions and major shifts in commuting patterns.

Between October and December, it had the lowest proportion of passengers compared to before the pandemic – 58 per cent. That increased to 71 per cent between January and March, but ScotRail said peak hour travel remained under 65 per cent of pre-Covid levels.

Ministers have already pumped hundreds of millions of extra pounds into ScotRail to keep trains running through the pandemic when revenue fell to a low of just 8 per cent of normal levels when people were discouraged from taking public transport. It effectively doubled annual support to £1 billion.

ScotRail’s finances have since been further squeezed by the cost-of-living crisis, prompting ministers to delay this year’s fares increase from January to July, and to a below-inflation 4.8 per cent rise.

Alex Hynes, managing director of Scotland’s Railway, which comprises ScotRail and track and signalling body Network Rail Scotland, has warned of the likely permanent impact of the fall in commuting. He said the reduction had been greater than south of the Border because of the higher take-up of hybrid and flexible working in Scotland.

However, a senior rail insider has told The Scotsman there could be unintended consequences of suspending peak fares, such as extra costs and overcrowded trains. They also said the move had not involved Scottish Rail Holdings (SRH), the Scottish Government body set up to oversee ScotRail when it was nationalised last year.

They said: “The peak fares decision was taken with no input from SRH – an economist in Transport Scotland wrote the proposal for the ministers, with no mention of costs and no engagement with frontline staff as to how to make it work.

“The peak fare abolition will obviously impact on revenue, but probably on cost too. Passenger volumes will change, such as shoppers may travel earlier, and there may be overcrowding at times, which ScotRail will be under pressure to address with lengthened trains.

"There are some electric trains that are leased on a ‘pay-as-you-go’ basis that may have to be in traffic every day to do this, at considerable expense."

A report by SRH chief executive David Lowrie to its March 2 board meeting, released following a FOI request, said a gap in its budget “could be created or exacerbated" by the fares trial.

It also stated: “The cost of the trial could be significantly more expensive than politically expected. The difference between peak and off-peak average yields for the peak journey volumes is equivalent to more than £60m per annum.”

Mr Lowrie’s report to SRH’s March 30 board meeting stated it “has been asked to progress the formulation of a practical peak fare removal trial and some additional resources are being brought in to assist this”.

First Minister Humza Yousaf announced in April the pilot would start in October, in what Mr Hynes described as the “biggest change to pricing in a generation”.

Mr Yousaf told MSPs: "The evidence from this pilot – and our wider fair fares review – will allow us to bring forward further targeted measures, from next year onwards, to ensure that the costs of transport are more fairly shared."

The Scottish Government’s Transport Scotland agency, which oversees SRH and ScotRail, said there were “no further updates” on the scheme. The-then transport minister Kevin Stewart said in April that work on the “precise methodology and design” was being finalised.

ScotRail said: “We currently have excess capacity across the network, and we’ll respond as appropriate where the demand exists, where it provides value for the taxpayer, and where we have the drivers and conductors to operate trains.”

The trial was met with widespread support, but some politicians have sounded a cautionary note.

Liam Kerr, when he was the Scottish Conservatives’ net zero, energy and transport spokesperson, told a Rail Industry Association fringe meeting at his party’s Scottish conference in April: "My concern is that in the newly-nationalised environment of ScotRail, how do we drive investment in the railway if we cheapen fares, because you are either going to have tax people more and hypothecate, which can't happen, or you cannibalise from a different portfolio, which isn't going to happen, or you cannibalise from within the budget, which would reduce the quality of the product."

Graham Simpson, the party’s transport spokesperson, said on Tuesday: "I hope the no peak fares pilot is a success. Peak fares are too high, indeed ScotRail fares in general are too high.

"We need to get more people onto public transport and one easy way to do that is to make it more affordable. It's basic economics – get more people to use the service and the money hopefully will go up. That's my rationale."

Passenger watchdog Transport Focus compared the trial with the UK Government’s £2 cap on single bus fares in England outside London, which had increased passenger numbers. Scotland-based senior stakeholder manager Robert Samson said: “Our recent research on what matters to rail passengers identified the price of rail tickets offering value for money is an important criteria for passengers. We have previously looked at the barriers to rail travel and cost was seen as a barrier, so the pilot could also increase rail patronage.”

Professor Iain Docherty of the University of Stirling, one of Scotland’s leading transport academics, said: “This is a brave move given the changed commuting patterns since Covid, but if successful it could pave the way to wider fares reform and efforts to attract a significant shift from car to rail.”

Kevin Lindsay, Scotland district organiser of train drivers’ union Aslef, said: “We campaigned to get the peak fares removed. I've called it a tax on workers. We welcome the trial, but six months is not long enough – we believe [peak fares] should be scrapped.

“We will work with ScotRail to ensure additional trains can run on routes that become very popular to ensure we tackle any potential overcrowding.”

Mick Hogg, Scotland regional organiser of the Rail, Maritime and Transport union, ScotRail’s largest, said: “This is long overdue and would make our railway more affordable and more attractive for people throughout Scotland to ditch their cars and use Scotland’s railway as a greener form of transport – let’s hope the trial becomes a permanent feature."

Scottish Labour transport spokesperson Alex Rowley said: “This pilot is welcome, but we also need a long-term plan to drive down fares and boost passenger numbers permanently.”