‘Five ways to bring rail fares down with public ownership’

Transport Secretary Heidi Alexander has said, “We’re going to wave goodbye to 30 years worth of inefficiency, waste, passenger frustration, and we’re going to step really confidently towards a new future for the railways.”

Three-quarters of people in the UK support public ownership and it’s really exciting that the government is taking rail franchises into public hands.

As we wave goodbye to privatisation, a key expectation is that public ownership will reduce the UK’s outrageous fares, the highest in Europe.

On Wednesday, the inflation figure for July will be announced, traditionally used to determine how much fares will rise the following year. It has been speculated that fares could rise by 5.5%, which would be, passenger groups agree, totally unacceptable.

It’s time to throw that tradition out of the window, along with the failed privatisation experiment.

However, cheaper, simpler fares won’t happen by accident. Bringing rail franchises into public hands is necessary but not sufficient to deliver the “new future” that passengers in England, Wales and Scotland are desperate for.

Public ownership must be a clear success and it must be seen as such.

That’s why this week We Own It has launched a rail vision, written by experts and campaigners, calling for a package of reforms around public ownership. This new report offers five ways to reduce fares.

Have a clear vision for cutting fares, including through commercial freedoms for Great British Railways and a new nationwide railcard

“More than anything else, passengers want to see Europe’s highest fares start coming down” says rail historian Christian Wolmar in our report. He points out that the new Great British Railways chair will have the role of setting fares and says “In France and Germany, the railways are state owned, but the railway managers have a lot of freedom to make commercial decisions to try to attract passengers.”

Jonathan Bray, former director of Save Our Railways suggests we need a new national railcard. “How about a GB version of Germany’s Bahn Card or the Swiss half fare travelcard, where, for an annual fee, passengers can get a third or a half off rail fares?”

Eliminate wasteful competition on the railway

Ending privatisation will save between £1.2 and £1.5 billion a year in profits and waste, according to Transport for Quality of Life, the RMT and the last government’s Williams-Shapps Plan for Rail. These savings could and should be used to deliver a fare reduction of around 18% – a great start.

At the same time, we must fend off the private companies who are trying to cling on to their old profits in our new railway. The government estimates open access operators undercut the revenues of publicly owned operators by £229 million per year. They also free ride on public sector investment in training and depots. Roger Ford from Modern Railways has called for a moratorium on new applications.

Emily Sullivan from the Association of British Commuters says we need to say goodbye to 1993 competition law to make the most of our new railway. Public ownership should prioritise economic, social and environmental benefits – like improving access for disabled passengers, increasing services for rural communities through cross subsidy from busier routes and of course, reducing fares. That means a clean break with wasteful competition.

READ MORE: ‘Why Labour must be focused on breaking Britain’s bottlenecks’

Create Great British Trains and save money on rolling stock

Rolling Stock Operating Companies (ROSCOs) which own the trains themselves and lease them out have extracted billions in profits – up to 25% of every ticket sold, according to Dr Grace Brown from the University of Glasgow. Research in Scotland suggests publicly funded rolling stock would be at least 40% cheaper, saving at least £362 million. Money can be ploughed back in to cut fares by around 4%.

The government should set up a publicly-owned rolling stock company, Great British Trains, to directly purchase and own all new trains in our railway system as contracts end and old trains are decommissioned.

Invest like Switzerland to boost capacity and reduce fares

The government must invest at the level of other European countries, expanding lines and reducing fares so that taking the train becomes the easy option.

Rail expert Jonathan Tyler calls for a regular clockface timetable like Switzerland, which consistently appears at the top of railway rankings. Currently, Switzerland invests around €477 per capita compared to Britain’s measly €116. We need to catch up, and investment pays for itself – every £1 spent generates £2.50 of economic value.

Give passengers a democratic voice

Just as trade unions represent workers, the people who use the railway need their own independent, democratically accountable organisation to represent them. This would create a political force, represented within Great British Railways, invested in driving growth, improving services and reducing fares on the railway.

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Early success in reducing fares

Northern, TransPennine Express and LNER, already in public ownership, have been working together to cut some fares by up to 50%. The price of a ticket from Harrogate to Manchester has been cut from £33.90 to £14.10. Travelling from Burley to Manchester previously cost £32.60 and now costs £10.10. Impressively, these publicly owned companies have simultaneously generated £200,000 in new revenue from more people now choosing to travel by rail.

This is the kind of success the government must build on. MPs can read our rail vision here and attend our drop-in at parliament with the experts who wrote it on Thursday 4th September.

This Labour government cannot afford to be unambitious about our railway and risk the flagship policy of public ownership. The Railways Bill this autumn must deliver lower fares and a railway this country can be proud of.

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