Cost of Living: Rail Fares

Lord Hendy of Richmond Hill Excerpts

Monday 6th January 2025 Lords Chamber

[Baroness McIntosh of Pickering]

To ask His Majesty’s Government what assessment they have made of the effect of the level of rail fares on the cost of living.

[The Minister of State, Department for Transport (Lord Hendy of Richmond Hill) (Lab)]

My Lords, before I answer the Question, I must say how sad I am to hear of the death of the noble Baroness, Lady Randerson, who I have known for a long time. I was expecting to see her in her place today for this Question but, sadly and unexpectedly, that was not to be. I will say more at the Second Reading of the Bus Services (No.2) Bill on Wednesday.

I turn now to the Question. We aim to keep the level of fares at a point that works for passengers and taxpayers. The forthcoming 4.6% increase to regulated rail fares is the lowest absolute increase in three years. To further balance rail fares with the cost of living, various concessions, rail cards and promotions are available. In early 2025, we will be holding a network-wide rail sale, giving passengers savings of up to 50% on selected advance and off-peak fares.

[Baroness McIntosh of Pickering (Con)]

I thank the Minister for that Answer. I would like to add my personal condolences on the loss of the noble Baroness, Lady Randerson, who was an outstanding parliamentarian and public servant.

Does the Minister agree that the rail fare increase is a direct consequence of agreeing an increase in train drivers’ pay without agreeing an increase in productivity? Further, can he explain to the House how he expects fare increases and the inflationary increase to achieve the Government’s core goal of fuelling growth in the economy?

[Lord Hendy of Richmond Hill (Lab)]

The pay increase for train drivers and other railway staff, made last July, was in truth very little different from the proposals of the previous Government—although these were manipulated so that the dispute was unresolved for many months, leading to a huge loss in revenue for the railway. The previous Government’s proposals had no productivity conditions attached to them. This Government were not in a position to offer productivity conditions, simply because many of the train companies had not developed proposals that would enable a wage deal to be made.

[Lord Watts (Lab)]

My Lords—

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[Lord Wigley (PC)]

I offer my condolences to the family of the noble Baroness, Lady Randerson, and pay tribute to the work that she did in Wales, not only on cultural matters but on transport matters. She will be greatly missed.

Does the Minister accept that one matter even more important to rail travellers than the cost of tickets is that the trains are running? What is the answer to the shortage of drivers, which is apparently the reason why Avanti West Coast is so often unable to maintain its timetable? What are the Government doing about it?

[Lord Hendy of Richmond Hill (Lab)]

The shortage of drivers, and in some cases train managers and guards, is endemic and a result of insufficient attention being paid over a long period of time—including the period in which the last Government were in control—leaving the train companies without enough staff to staff the service. This Government intend to do something about the numbers of drivers, train managers and guards. We also intend to make running the railway a seven days per week issue rather than, in many cases, a railway where six days are rostered and the seventh day is dependent on people volunteering to work on rest days.

[Lord Watts (Lab)]

My Lords, under the last Tory Government, we saw it become cheaper sometimes to fly to New York than to get a train from Manchester to Euston. Will the Government’s action make train travel affordable for ordinary people? At the moment, we have been left with a legacy where many people cannot afford to travel by train.

[Lord Hendy of Richmond Hill (Lab)]

I thank my noble friend for his question. The truth of the matter is that, although regulated fares are controlled by the Government, there are many other fares on the railways, some of which produce eye-wateringly expensive charges for what used to be the traditional peak period, while others are extraordinarily cheap, even by continental standards. One of the many jobs that this Government have to do in reforming the railways is to rationalise the 50 million fares, making them affordable and understandable for passengers in order to improve revenue and improve demand on the railway.

[Baroness Pidgeon (LD)]

My Lords, it is with great sadness that I lead for the Lib Dems today on this transport Question, given the tragic passing of our noble friend Lady Randerson. She was such a wise person and we will miss her enormously. I hope that the moving tributes from across the political divide and beyond will provide some comfort to her family and friends at this time.

Given that rail journeys remain below pre-pandemic levels, could the Minister outline specific ongoing measures that the Government are considering to incentivise rail travel?

[Lord Hendy of Richmond Hill (Lab)]

I thank the noble Baroness for her warm tribute to Baroness Randerson.

As I said, the Government are to have a rail sale early this year, in which many millions of tickets will be sold at discounted fares. Noble Lords will know that, following Covid, the demand characteristics of the railway have changed: there is still less commuting, despite changes in working practices, and more leisure travel. That gives real opportunities to produce fresh fare scenarios that will incentivise travel. To pre-empt a question that otherwise will be asked, the railway needs to be adequately able to cope with leisure travel for all seven days of the week in order that people can not only travel cheaply but get a seat when they do.

[Lord Moylan (Con)]

My Lords, I echo what the Minister said about the late Baroness Randerson. We will have an opportunity to discuss her sad demise later in the week and return to the subject then.

In the future that the Minister envisages for the reformed railways, will it still be the case that regulated fares are set by the Secretary of State, or does he expect that power to pass to Great British Railways? Will that be in the consultation document that he has promised is going to be issued? When are we going to see that consultation document, given that he told the House he hoped it would be issued before the Christmas Recess, which clearly has not been the case?

[Lord Hendy of Richmond Hill (Lab)]

I thank the noble Lord for his comments on Baroness Randerson.

On the future of the fares structure of the railway, it is overwhelmingly likely that, whoever the Secretary of State is, they will continue to have a strong interest in the fares structure of the railway. However, the proposition is that Great British Railways will be responsible for both revenue and cost, and therefore will have some freedom to set fares. It is true that I had hoped that the consultation document would be available before Christmas, but clearly that was not the case. The passage of the seasons in political time is variable, but I am going to promise that it will be available in the next few weeks.

[Lord Grayling (Con)]

My Lords, the Government promised us that public ownership of the railways would mean lower fares and better performance. We already have four previous franchises run by the state—that is, run by him and his department. Have those four areas experienced lower fares and better performance?

[Lord Hendy of Richmond Hill (Lab)]

The first thing to say is that public ownership of the railways, as the noble Lord knows, is not the only issue that needs to be resolved for the railway to run better. He will also know, because he was there at the time, that two of the companies were taken over at times of great distress in either performance or commercial performance, and that there are companies among those four where better performance and innovative fare structures have delivered a real result, notably the London North Eastern Railway.

The noble Lord must know that the performance of Northern is not very good, but also that it has been in public ownership for six years. I have said from this position before that industrial disputes there have been going on for so long that the management could not immediately enumerate how many they had got. That seems to me to be a failure of the previous Government and of the previous regime, because if you take a railway company into public ownership then you should seek to resolve its performance issues. This Government intend to do just that with those train companies which are already in public ownership but not performing in the way that London North Eastern Railway is.