Rail industry publishes radical proposals for once-in-a-generation reform of fares system

Proposals represent industry’s first contribution to the Williams Review with a call for preparatory work to begin now including government, industry and passenger groups reviewing regulation as well as a series of real-world trials to support a rolling programme of reform across Britain over the next three to five years.

  • Biggest ever rail fares consultation finds eight out of 10 want the system overhauled; nine out of 10 want consideration of smart or electronic tickets, with the potential for price capping; and, eight out of 10 want consideration of fares based on encouraging travel to fill up empty seats.
  • The ‘Easier Fares for All’ proposals explain how updates to regulation would enable the transparent, simpler to understand fares system people want, backed up for the first time by an industry ‘best fare guarantee’.
  • Reform would support: ‘tap-in, tap-out’ pay as you go being rolled out across the country; enable greater local control over fares in devolved areas; and better integration of rail fares with those for other modes of transport.
  • With a new system, commuters working flexibly and travelling in off-peak hours could see savings while overcrowding could be reduced by up to a third on some of the busiest long-distance services.

Britain’s rail companies have published proposals to overhaul the country’s fares system, making it easier to use and bringing it up to date with how people travel today.

The radical proposals put the needs of customers at the heart of change and have been informed by the biggest ever public consultation into what people want from rail fares. They meet a commitment made by the rail industry when launching its consultation to bring forward proposals that are revenue neutral, meaning no change in average fares or taxpayer support.

In all, nearly 20,000 people from across Britain took part - with additional input from over 60 umbrella organisations representing over 300,000 other organisations, authorities and individuals, including businesses, accessibility groups and local authorities.

The consultation, delivered in partnership with independent passenger watchdog Transport Focus, found that eight in 10 people want the current system changed, with respondents calling for a fairer, more transparent and easier to use experience. Responses to the consultation have been used to develop five principles that should underpin reforms to the fares system, including value for money and simplicity.

Based on these principles, the proposals are built with a simple proposition at their core: that customers only pay for what they need and are always charged the best value fare. This would be enabled by the fares system moving to a ‘single-leg’ structure, as currently operates within London, so that customers are able to choose the most appropriate ticket for each leg of their journey.

Amongst other improvements, reforming fares in this way could mean that:

  • Commuters travelling from outside London in to the capital or elsewhere could benefit from the kind of weekly capping system currently available for journeys within London. With pay-as-you-go pricing and a ‘tap-in tap-out’ system, commuters that currently buy weekly season tickets could save money when they travel fewer than five days a week or are able to travel off peak. This supports changes in working patterns, with part time working and self-employment having increased by over a third in 22 years. 90% of consultation respondents wanted consideration (definitely or maybe) of price capping.
  • Long distance and leisure travellers could see demand spread more evenly across the day, potentially reducing overcrowding by up to a third on the busiest services. Updating regulations around peak and off-peak travel would mean ticket prices could be set more flexibly, spreading demand for a better customer experience. This would be supported by a wider range of on the day fares. 78% of respondents wanted consideration of fares that encouraged empty seats to be filled.
  • All customers could have more options and no longer need to commit at the time of buying their outward journey to the time of day when they will return, instead mixing-and-matching different types of single tickets, and making changing travel plans easier. 74% of respondents wanted consideration of fares based on the amount of flexibility required.

If the proposals are developed and adopted, they could enable the industry to offer a ‘best fare guarantee’, so that customers would be assured that they would always be paying the lowest fare available where and when they buy it, which meets their needs.

A reformed fares system would also help make the most of technology like online accounts, smartcards and smartphones to make ticket buying simpler, so that customers are shown fares which match their needs while screening out irrelevant choices that cause confusion.

In addition to improving customer experience, updated fares regulations could help local political leaders have more control over their transport systems, where relevant powers are devolved, enabling them to co-ordinate train fares alongside other local transport. This is difficult now even where those powers are already devolved because rail-only fares are set under different national rules to local travel schemes.

A single-leg structure could act as an enabler to local reform, where control of pricing has been devolved. It could help with the rollout of pay-as-you-go systems or provide local leaders the opportunity to package up fares in a different way more suited to local passengers.

Independent analysis indicates that taken together, making fares easier in the way set out would encourage over 300 million more journeys taking people off the road and on to the railway, increasing revenue to give governments options either to re-invest in lower fares, or in to the network.

Paul Plummer, Chief Executive of the Rail Delivery Group, which represents train operators and Network Rail, said:

“The result of our nationwide consultation is clear – customers have different needs and want an easy to use range of rail fares to meet them. Our proposals can deliver exactly that – creating a system that better fits how people live and work today.

"Rail companies are already working together on plans for real world trials so people can see what our proposals could mean for them. However, current regulation needs to be updated and we want to work with government, who are key to making improvements a reality, to deliver the better fares system the public wants to see."

Anthony Smith, chief executive of independent passenger watchdog Transport Focus which led the easier fares consultation jointly with RDG said:

“Passengers want to see root and branch reform to the outdated and outmoded fares and ticketing system. Trials will provide reassurance and allow passengers to understand the impact of the changes.”

While the industry’s proposals represent the industry’s first contribution to the on-going Williams review in to the future structure of rail, expected to report later this year, rail companies want to work with government now to begin the process of reforming regulation. This means working together to review the Ticketing Settlement Agreement and running a series of real-world fares trials this year. Commercial contracts would then need to be revised and agreed, starting a rolling programme of reform, which, with all parties working together, has the potential to be rolled out operator by operator across the network over the next 3-5 years.

The rail industry is already working together to make improvements where it can to improve the ticket buying process, within the current regulatory structure. This includes removing unhelpful jargon from over half a million tickets, making ticket machines simpler and easier to use, and make advance purchasing available up to 10 minutes before travel on many routes.

Business groups have also responded to the proposals.

Mike Cherry, FSB National Chairman, said:

“Many small businesses rely on the rail network, so it’s key that the current out-of-date fares system is improved.

“The system needs to be brought into line with the more flexible way businesses work. This will allow companies to access the best deals when travelling, as well as making it easier to travel – and businesses to trade - across the regions of the UK.

“We appreciate that the rail industry has brought forward its proposals, and we now call on Government to start taking this work forward.”

Dr Adam Marshall, Director General of the British Chambers of Commerce, said:

“The fares system needs to support businesses across Britain who rely on rail travel to move goods and services and access a skilled workforce. We agree with the industry that the rail fares system needs reforming. Britain needs a modern system that makes travelling simpler, is more flexible for commuters and is fairer for businesses who need to change their travel plans at short notice.”


Notes to editors

1. In October 2017, the partnership railway of the public and private sectors published a long-term plan for change – In Partnership for Britain’s Prosperity. As well as commitments to improve boost communities and the economy with thousands of extra services and new and refurbished carriages, it included a commitment to increase customer satisfaction by developing practical proposals for the reform of fares.

2. The rail fares system: The rules in the fares system date back to the 1990s and aimed to ensure people could still buy tickets between any two stations regardless of which companies’ trains they would be travelling on. Since then, further layers of regulatory requirements have been added through individual franchise agreements, with little or nothing taken away. This has created anomalies which make it increasingly difficult for rail companies to guarantee the right fare.

3. From an overly rigid structure to single leg pricing: There are around 55 million fares in the current system and fares are created as ‘bundles’ (fixed packages of multi-journey tickets), within a restrictive structure and, in some cases, set of prices. The customer has to work out which of the prescribed ‘bundles’ of tickets matches their needs. The result is that they start to trade time of travel against cost, for example buying a peak return ticket because they cannot guarantee a certain time to return. Whilst it often makes sense for customers to change their travel according to the service on offer, sometimes customers have their behaviour altered by the type of ticket – either cutting activities short in order to catch the ‘right’ train, or else wasting time watching the clock until a certain type of ticket becomes valid.

4. Easier fares consultation: Rail companies and Transport Focus launched a joint public consultation in June 2018 in order to better understand what passengers would want to see from an up to date, easier fares and ticketing system under reforms that would aim to be revenue neutral overall with no change in average fares.

5. Consultation outcomes: the rail industry has worked together to develop proposals following three months of intensive activity, with almost 20,000 consultation responses and conversations with over 60 organisations representing over 300,000 other organisations, authorities and individuals, enabling it to build the most comprehensive picture ever of what Britain thinks about rail fares and ticketing. Including:

  • more than eight out of 10 people (84%) want to see the fares system reformed. Fewer than 1 in 10 (8%) thought reform was unnecessary
  • around nine out of 10 people (88%) want changes to how tickets are sold
  • seven out of 10 people (68%) think the cost of fares should reflect the time of day they are travelling
  • eight out of 10 (78%) felt that encouraging the filling up of unused seats should be prioritised
  • a similar proportion (81%) want to be able to buy tickets using online accounts

6. Principles for fares reform: Before devising our proposals, we established some principles for reform based on what people told us in the consultation:

  • Value for money – reflects the feedback that fares should make rational sense and that people want greater transparency over what they pay for and what they get
  • Fair pricing – reflects people’s desire not to have to find workarounds to get the best price and for a guarantee that they are not overcharged
  • Simplicity – making buying simple whilst retaining customers’ choice. Reform is not about taking choice away, it is about innovating to make it easy to find the right fare
  • Flexibility – this reflects people’s desire to see different needs accommodated; they want the ability to tailor fares and deals to what they need
  • Assurance – people want clear, effective, transparent regulation to protect their rights.

7. The changes our proposals enable:

  • The ‘unbundling’ of fares through a move to a single fare as the basic unit of all pricing in the new system, with algorithmic rules underpinned by regulation to allow and encourage the best combinations of return, through and multi-journey tickets. This is similar to the way fares are currently structured within London.
  • Train companies will be able to create discounted, premium, train specific and personalised variations of these fares, for example, charging less at quieter periods, more for first class, less for reduced flexibility, and so on. This ensures that fares are priced appropriately to market and are not simply the sum of their parts.
  • Protection from excessive fares through regulation of key price levels rather than of specific fares types, for example commuter fares, with systems programmed to ensure that the cheapest available fare that meets customers’ needs is offered at the time of sale.

8. What customers wanted: the following table sets out the common themes that customers wanted in their consultation responses and how our proposals could meet their needs.

Customer type What they wanted What we’re proposing
Commuters Fares designed so that it is unnecessary to buy multiple tickets to get the best journey fare

Smart or electronic tickets, with the potential for ‘price capping’

Fares based on loyalty to regular travellers
Our proposals allow for weekly price caps, so that people pay for what they use

Our proposals allow for consistency of logic in how fares are created

Our proposals enable smart technology to give customers the fares that meet their needs and provide incentives for different types of travellers
Leisure and business customers Fares based on time of booking

Fares based on the amount of flexibility required

Fares based on encouraging travel to fill up empty seats

Fares which provide savings for certain groups in society

Fares that reflect both the outward and return journey time of travel
Our proposals allow people to pay a fare based on the trains they actually use, with the ability to mix and match peak and off-peak fares. On long distance and regional journeys, prices better reflect demand throughout the day, helping to fill empty seats

Our proposals allow for targeted discounts, including protected groups who currently have railcards

We recognise the need to protect access to affordable, on the day travel. Our proposals reflect this but allow for much greater opportunity to save money by offering a better range of fares both booked in advance and purchased on the day, with greater flexibility to change plans for people booked on a specific train

9. KPMG analysis of proposals: The Rail Delivery Group commissioned KPMG to analyse the effects of the industry’s proposals. The figures are based on a limited number of anonymous train operator samples and would need validation across the network.

10. Williams Review: Proposals represent industry’s first contribution to the Williams Review with a call for preparatory work to begin now including government, industry and passenger groups reviewing regulation as well as a series of real world trials to support a rolling programme of reform across Britain over the next three to five years. The rail industry’s full submission to the Williams review will be published.

11. Fares trials: To inform changes to regulation, the following fares trials are being developed and rail companies want to work with government to run them this year:

  • Single leg pricing - sale of tickets on a single leg basis so that people can mix and match the best value fares for the outward and return journeys
  • Pay as you go - on a suburban commuter operators coming into London, expanding flexible commuter fares beyond the capital
  • Leg-based pricing - where the price of a rail fare is calculated based on the additive price of the number of legs in the journey

12. Regulatory changes: we are proposing a two-stage approach to reforming regulation:

  • Stage One – The rail industry wants to work with government to reform the way that fares are worked out. This means government replacing the outdated Ticketing and Settlement Agreement (TSA) with a new set of system regulations.
  • Stage Two - With these new system regulations in place, commercial changes will then need to be agreed with operators as part of changing price regulation incorporated in government contracts.

13. What this means in Scotland: our proposals recognise the role of the Scottish Government and Transport Scotland and enable greater autonomy in how fares can be structured, within a Britain-wide system.

14. Regulation for different types of journeys: our proposals consider tying regulation to price levels of types of journeys rather than focusing on specific fare types.

  • Commuter fare regulation:
    • Increases to season tickets and anytime return fares on commuter routes are currently tied to the Retail Price Index (RPI).
    • Under a new fares structure, we propose the price of a 7-day season ticket would be used to set a cap or maximum price. Lower caps could be introduced for off-peak travel or concessionary travel funded by a local authority.
  • Long distance regulation:
    • Currently, in most cases, there is a regulated off peak return fare. The regulation of these fares at very specific time bands of travel has led to underutilised, more expensive services at natural peak times, and typically over-crowded, cheaper services during the ‘shoulder peak’ (immediately before and after peak times).
    • The current regulation works against the interests of customers by distorting the ability to offer competitive prices at the times people most want to travel and restricting the ability to manage demand to reduce overcrowding. We consider that external market forces exert a powerful incentive in this market and this is supported by analysis from KPMG that shows that current long-distance regulation is hampering the ability to ensure that a range of good prices are offered throughout the day.
    • We are however aware of the need for assurance around continuing regulation to protect affordable access to the network, and in particular about protecting access to the walk-up railway. For this reason, we are proposing that for contracted or franchised long-distance services, there could be some regulation of the overall level of revenue that can be raised, while allowing appropriate demand management on individual services, so fares can be adjusted to make journeys more comfortable.

15. Changes to fares: The rail industry is a vital public service underpinned by £10-billion a year in fares. It is ultimately for elected politicians and governments to make decisions about the overall income they expect to be generated by fares versus taxpayer funding. When launching its easier fares consultation, the rail industry committed to bringing forward proposals that are revenue neutral, meaning no change in average fares or taxpayer support. The proposals have been modelled to meet this challenge. This means:

  • fares would not increase on average;
  • the vast majority of people would not pay more, including commuters;
  • many people would pay less, particularly on long-distance routes;
  • some people would see what they pay increase slightly, potentially at the edge of current peak time restrictions although fares at other times would be cheaper

Research to inform the industry’s proposals shows that up to 35% of non-rail users are put off travelling by train due to existing complexity in the fares system. An easier to use range of fares would encourage more people to travel by train, generating increased revenue for government to choose how to spend.

16. Transport for London and fares regulation: Under the Greater London Authority Act 1999 (section 174), the Mayor of London has control of fares and the fares structure of public transport provided by TfL. In addition, there are agreements between TfL and National Rail operators to ensure provision of multimodal fares valid on both systems, within the London area. This has enabled reform in London so that single fares form the basic unit of pricing on TfL services.

17. Local authority funding: Some local authorities fund concessionary travel for routes in their areas. Under our proposals, technology would be used to continue these arrangements in local areas, including in weekly caps for journeys on those routes.


Contact Information

Rail Delivery Group Media Team