Railways: Fares

Baroness Sugg Excerpts

Monday 29th October 2018 Lords Chamber

[Baroness Randerson]

To ask Her Majesty’s Government what steps they are taking to modernise rail fares.

[The Parliamentary Under-Secretary of State, Department for Transport (Baroness Sugg) (Con)]

My Lords, the Government are taking steps to modernise rail fares, including making smart ticketing available for most journeys by the end of this year and requiring alternative, more flexible ticket products to be offered to part-time commuters through recent franchise competitions. We also welcome the industry’s plans to roll out the 26-30 railcard, while the rail review’s recommendations will support the delivery of a railway that is able to offer good-value fares for passengers while keeping costs down for taxpayers.

[Baroness Randerson (LD)]

My Lords, I welcome that progress so far but we are told that in the Budget there is to be £30 billion for roads, while there is no hint of relief for beleaguered train passengers. Does the Minister agree that the Government should abandon the RPI-related hike in regulated fares, which comes as an unwelcome annual new year gift, and maintain fares—at least until the efficiency of the railway improves—by freezing them at their current level? The Chancellor is apparently holding fuel duty for the ninth successive year. If he can freeze fuel duty, surely he can freeze rail fares.

[Baroness Sugg]

My Lords, I certainly do not want to predict what my right honourable friend will say in the Budget shortly but we are well aware that rail fares take a large part of people’s income. That is why we are capping fares in line with RPI for the sixth year running. We want to see fares linked with CPI in future but we do not think it is fair to ask people who do not use trains to pay more than those who do. Taxpayers already subsidise the network by more than £4 billion a year, meaning that 54% of our transport budget is spent on the 2% of journeys that the railway accounts for.

[Lord Watts (Lab)]

My Lords, the Government say that they have cheap rail tickets for young people and for old people. What about the hard-pressed people who are trying to get to work and paying extortionate rail fares?

[Baroness Sugg]

My Lords, we all want to see a fares system that delivers tickets at a reasonable price for everyone. The noble Lord rightly highlights the 26-30 railcard and the discounts for older people. We are looking at how we can make fares fairer. The Rail Delivery Group recently consulted on easier fares, looking at fare structures and ticketing to simplify things for passengers; it received over 20,000 responses and is currently analysing those findings. We look forward to seeing its report.

[Lord Naseby (Con)]

Will my noble friend clarify the situation? Her Majesty’s Treasury announced recently that for those of us who have savings certificates— many millions in the country—the interest on them is no longer to be done on the basis of RPI but CPI. Against that background, is it not sensible for Her Majesty’s Government to consider any rail increases based solely on CPI in the future?

[Baroness Sugg]

My Lords, as I said, we certainly want to move towards the more commonly used CPI measure of inflation but, to be sustainable, income and costs to the rail industry must change in parallel. We are seeing increasing costs across the whole network but for the sixth year running, as I said, we are capping regulated fares in line with RPI. The Secretary of State has written to the rail industry and the unions, asking for their help to move rail to CPI and reduce costs, so that those savings can be passed on to rail users and to taxpayers.

[The Lord Bishop of Winchester]

My Lords, the modernising of rail fares is one aspect of a range of changes needed in our rail service. The Transport Secretary has announced £1.3 billion of investment in spacious trains yet despite this there is still overcrowding, cancellation and delay. Staff operating train services are also unhappy and just last week, on the South Western Railway line that I use regularly, I am afraid that there were regular cancellations and further overcrowding. Can the Minister outline what action will be taken between now and the implementation of the rail review reforms in 2020 to address the urgent issues of rail cancellations, delays and significant overcrowding?

[Baroness Sugg]

My Lords, since privatisation, UK railways have seen a period of incredible growth and passenger journeys have more than doubled. The industry has not been able to keep up with that demand, which is why we are looking at the rail review. It will consider all parts of the rail industry, from the current franchising system to industry structures. That will not stop us continuing to invest in the meantime and seeing more trains with more capacity come on to our lines.

[Lord Rosser (Lab)]

As has been said, the issue is the level of fares. The Government’s line is that their annual new year present to rail users of a fare increase is to finance their rail investment programme. In fact, that is not the case. The reason for the Government’s high level of fare increases each year is to ensure that we remain the European railway network with the highest, or nearly the highest, percentage contribution towards the running costs of our network coming from fares paid by passengers and the lowest, or nearly the lowest, percentage from the Government. That is why our fares are so high. Will the Government confirm that in any new modernised rail fare structure that will unfortunately continue to be the position?

[Baroness Sugg]

My Lords, as I said, we are aiming to move from RPI to CPI. We are continuing with record levels of funding, with around £48 billion expected to be spent on the network from 2019 to 24, but rail fares will continue to play a role in delivering improvements. We are delivering the biggest rail modernisation for more than a century, and it is meaning faster journeys, longer trains, longer platforms and more seats.

[Baroness Ford (CB)]

Will the Minister say whether the Government have any plans to standardise rail fares for people with disabilities? At the moment adults with epilepsy, for example, have free rail travel in London but in many other parts of the United Kingdom they have to pay the full fare. I declare an interest as the national president of Epilepsy Action. Will any action be taken to standardise policy and make it more consistent across the country?

[Baroness Sugg]

I agree with the noble Baroness that consistency will be very important. The Rail Delivery Group is looking at how we can simplify fares. I will take the point the noble Baroness raised back to the department and will perhaps write to her.

[Lord Snape (Lab)]

My Lords—

--- Later in debate ---

[Lord Bradshaw]

The Minister said that fares for those from 26 to 30 will be reduced by one-third with the new young people’s railcard. This is an example of the industry at last realising there is such a thing as market pricing and elasticity of demand. Instead of having a tariff which fits everybody, it should fit the market.

[Baroness Sugg]

My Lords, I absolutely agree. This is an excellent example of industry and government working together to deliver a new product that will benefit passengers.