Scottish Government's ScotRail peak train fares call: what drove it?

And it has no doubt benefited many people amid the cost of living crisis, to the tune of hundreds or even thousands of pounds, as the Scottish Government itself acknowledged on Tuesday when it announced the impending return of peak fares.

Furthermore, at a time when city and town centres are struggling, particularly given the prevalence of home and hybrid working, the abolition of peak fares looked like something which could over time play a valuable part in boosting footfall. It looked to have some potential to increase office working, even if many people’s patterns are now set, and also to tempt more people into city and town centres for shopping, eating and drinking, and other leisure activities.

Frequent commuters between Glasgow and Edinburgh have been among the main beneficiaries of the pilot scheme.

Sadly, however, the increase in rail use generated by the pilot was not sufficient to make the abolition of peak fares self-financing on an ongoing basis.

The Scottish Government estimates the pilot scheme boosted demand for ScotRail services by around 6.8%.

Transport Scotland, an agency of the Scottish Government, noted this represents around four million extra rail journeys over nine months. It observed that two million of these are journeys that would previously have been made by “private car”.

This sounds like a good result. And in many ways it is.

However, Transport Scotland noted “this is in the context of around five billion annual private car journeys in Scotland and represents a reduction of less than 0.1% of car-based carbon emissions”.

Transport Scotland concluded that its analysis “shows that while there has been a limited increase in the number of passengers during the pilot, it did not achieve its aims of encouraging a significant modal shift from car to rail”.

The crucial point, however, and that which looks to have sounded the death knell for the brave move to remove peak fares, is that the 6.8% increase in demand during the pilot scheme was just not enough. The Scottish Government calculated that a 10% increase in demand for ScotRail services was required to ensure the cost of removing peak fares was paid for through the growth in rail travel generated.

Transport Scotland puts the cost of the full-year subsidy that will have been provided by the Scottish Government for the removal of peak fares by the time the pilot scheme ends on September 27 at about £40 million.

In less difficult times for Scotland’s public finances, which are under great pressure at the moment because of UK-wide factors, it might have been possible to absorb this cost.

However, the public finances are excruciatingly tight, and the Scottish Government must balance other key priorities.

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In this respect, the disappointing decision to resume peak fares is entirely understandable.

Cabinet Secretary for Transport Fiona Hyslop said on Tuesday: “The pilot primarily benefited existing train passengers and those with medium to higher incomes. Although passenger levels increased to a maximum of around 6.8%, it would require a 10% increase in passenger numbers for the policy to be self-financing.

“The pilot will have been welcome in saving many passengers hundreds and in some cases thousands of pounds during the cost of living crisis but this level of subsidy cannot continue in the current financial climate on that measure alone.”

This is a fair enough point, given the tough choices which are already having to be made on the public finances in Scotland mainly as a result of decisions taken at UK government level in recent times. Labour has signalled that it is sticking with the UK fiscal constraints put in place by the Conservatives, so the situation looks likely to remain difficult indeed on this front.

The Tories, of course, presided over a grim economic performance for a protracted period, with their austerity and hard Brexit hammering the UK and continuing to do so, and that has taken a heavy toll on the public finances, which it is crucial to realise is very much ongoing.

Of course, the Scottish Government has choices over public spending.

However, you can see immediately that the decision not to commit £40m a year to remove peak rail fares permanently makes political sense in the current environment. You only need to look at the hue and cry recently over the Scottish Government’s warning about the impact on other areas of it having to find £77.5 million to settle a pay dispute between local authorities and refuse workers, to ward off strikes, to see this.

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The cost of a return between Glasgow and Edinburgh for those travelling at peak times will be £31.40 from late next month. Under the pilot, this currently costs £16.20, the same as an off-peak return.

However, the cost of an anytime return before the pilot was £28.90. While £31.40 represents a significant increase, UK inflation has been dismally high.

For those who have started commuting between Glasgow and Edinburgh during the pilot, the increase in the cost of travel at peak times will understandably be most unwelcome.

That said, the Scottish Government had always made plain the removal of peak fares was only a pilot project.

And those who chose to commute between Glasgow and Edinburgh for work at peak times prior to the pilot would have had to factor in the annual cost of this when they took up the job, in terms of how much after-tax income would be required for travel.

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People might point the finger, in the context of the return of peak rail fares at ScotRail, at free bus travel provided for under-22s in Scotland.

This cost is greater than that of removing peak rail fares at ScotRail, on the Scottish Government’s own calculations.

In response to a request last year under the Freedom of Information (Scotland) Act, the Scottish Government said that, between January 31, 2022 and February 3, 2023, it spent £102,378,600.88 on the young persons’ free bus travel scheme.

It said this broke down into £97,166,918.69 of operator reimbursement costs and £5,211,682.19 of operational set-up and maintenance costs.

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The Scottish Government said: “In the financial year 2023/24, the scheme is expected to cost up to an estimated £189.5 million in claims.”

In response to another request under the Freedom of Information (Scotland) Act this year, it declared the total cost of the young persons’ free bus travel scheme up to February 5, 2024 was £222,946,885, comprising £216,505,196 of operator reimbursement costs and £6,441,689 of implementation and ongoing operating costs.

So free bus travel for under-22s does cost a substantial amount of money.

However, youth mobility is an important thing, in a societal and economic context, especially given what young people had to endure in terms of restrictions during the coronavirus pandemic.

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The aims of the scheme, particularly those around reduced inequalities and inclusive economic growth as well as climate considerations, are commendable.

The analysis of the ScotRail peak fares removal pilot concluded, as Ms Hyslop observed, that it was mainly those on middle to higher incomes who benefited.

This is no bad thing in itself, especially given pressures on people on middle incomes, and it is to be hoped that we might at some point in the future see peak fares removed again. The benefits of not having eye-watering peak fares are clear.

However, given the current situation around the public finances and the tough UK economic backdrop, it is easy to see why the Scottish Government decided it could not continue to subsidise the removal of peak fares right now.