Report calls for an end to rail fare price controls


An end to ticket price regulation on the rail network would help tackle train overcrowding and reduce costs for the taxpayer, according to a new report from the Institute of Economic Affairs (IEA).

Removal of price controls would allow train companies more freedom to tempt passengers away from travelling in the busiest periods through more attractive fares, helping to limit severe congestion seen during peak periods - according to the Fair Deal for the Taxpayer study.

However the proposal to end the Government's price controls - which this year limited fare rises to July's Retail Price Index (RPI) inflation measure of 2.5% - was branded ‘utter nonsense’ by trade unions.

Dr Richard Wellings, head of transport at the IEA, said current government controls had ‘artificially pushed up demand’ for certain services while pegging fares to the Retail Prices Index only exacerbated problems for passengers.

The educational charity and free-market think-tank added that price flexibility would reduce the rail industry’s dependence on government support by making improvements to the network commercially viable.

Dr Wellings said: ‘Rail passengers and taxpayers continue to be left out of pocket thanks to the continual intervention of politicians in the sector. Far from protecting rail users, price controls have distorted demand, leading to intense overcrowding on certain routes whilst other services are left underused.

‘Rather than proposing expensive infrastructure projects, which are extremely costly to the taxpayer, politicians should simply give train companies the freedom to set prices so that demand for rail travel can be spread more evenly.’

Responding to the report, Mick Cash, general secretary of rail union RMT, said: ‘The idea that complete deregulation of fares would solve the crisis on Britain’s railways is pure and utter nonsense and would simply allow the greedy train companies to restrict services and whack up the prices on the profitable routes in an all-out free-for-all.

‘The only workable solution to surging rail demand is to invest in staffing and capacity to meet the growing passenger numbers. By taking the railways back into public ownership, and ending the racket of profiteering, we could free up the investment funds needed to build up capacity and end the fares rip-off. That is the only route out of the current shambles.’

A Department for Transport spokesman told reporters: 'Peak commuter services are often the only way for commuters to travel into work and operators have the powers to use flexible off-peak pricing to encourage passengers to travel at less busy times.

'As part of its long-term economic plan the Government is investing heavily in the nation's rail network to provide more trains, more seats and more services for passengers to address overcrowding.

'Fares play an important part in this process, but the Government recognised the financial pressures hard-working families are facing and capped regulated rail fares at RPI+0% for the last two years.'

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