ScotRail annual fare increase – Frequently Asked Questions

Introduction

Rail fares across Great Britain, including ScotRail fares, are subject to an annual increase which takes effect on the second of January. The reasons behind this increase and details of how it is calculated are explained in the Frequently Asked Questions below.

Why do ScotRail fares increase every year?

The cost of providing ScotRail services, such as wages and energy costs, increases annually.  These increasing costs are met jointly by the Scottish Government through annual subsidy payments and passengers through increased fares.

How is the annual increase calculated?

The level of increase depends on the type of fare.  All ScotRail fares fall into one of two categories, either “regulated” or “unregulated”, which are briefly described below.

Regulated fares: ScotRail regulated fares are:

• all ScotRail season tickets
• all ScotRail off-peak return tickets
• all fares in the Strathclyde area
• standard singles and standard day return tickets in the Edinburgh commuter area, which includes the Fife Circle and lines radiating from Edinburgh as far as Falkirk, North Berwick and Addiewell.

Regulated fares are based on the final fares for the above ticket types set by British Rail, with annual increases since rail privatisation capped using a formula set out in the franchise agreement. Details of the formula used, and annual regulated fare increases are set out later in this blog.

Unregulated fares: All ScotRail fares that are not regulated are automatically defined as unregulated fares, such as advance or Kids for a Quid fares. Unregulated fares are set by the franchise holder on a commercial basis.  The Scottish Government has no role in the setting of unregulated fares.

How much will ScotRail fares increase in January 2020?

Peak time regulated fares will increase by 2.8%, while off-peak regulated fares will increase by 1.8%.

By how much have ScotRail regulated fares increased in previous years?

The Scottish Government assumed responsibility for the letting and management of the ScotRail franchise in November 2005.  Details of annual ScotRail regulated fare increases since then are set out in the table below:

The recent policy of increasing off-peak regulated fares by RPI-1% only applies to ScotRail, off-peak regulated fares increase by RPI in other passenger rail franchises.

Why is the Retail Prices Index used to calculate the regulated fares increase rather than the Consumer Prices Index (CPI)?

The link between regulated rail fare increases and the Retail Prices Index (RPI), rather than the Consumer Prices Index (CPI), is based on a policy decision taken by the UK Government when British Rail was privatised.

However, concerns have been raised about RPI as an accurate measure of inflation. The Office for National Statistics states that:

Overall, RPI is a very poor measure of general inflation, at times greatly overestimating and at other times underestimating changes in prices and how these changes are experienced.

In 2013, the RPI lost its status as a National Statistic. Our position on the RPI is clear: we do not think it is a good measure of inflation and discourage its use. There are other, better measures available and any use of RPI over these far superior alternatives should be closely scrutinised.

Over the years there have been calls for the UK and Scottish Governments to move from an RPI to CPI based formula.  However, changing the basis for the formula from RPI to CPI during the current franchise could reduce expected fare income for ScotRail, as CPI has been lower than RPI for many years.  This would likely result in the Scottish Government having to provide additional financial support to Abellio – as the franchise agreement would likely require the Scottish Government to make good any revenue shortfall due to such a change.

Why use the July Retail Prices Index figure?

Historically, July’s RPI figure was used, as this provided enough time to update rail industry booking and ticketing systems in time for the January change.

How do ScotRail fares compare with those of other passenger rail franchises?

Transport Scotland state that ScotRail fares are “…20% cheaper on average than in the rest of Great Britain.”  This claim is based on figures collated by the Office of Rail and Road.  These show that, on average, a ScotRail passenger pays 12 pence for every kilometre travelled, compared to a British average of 15 pence per kilometre.

However, this does come at a cost to the taxpayer.  The Scottish Government, on average, subsidises each kilometre travelled by a ScotRail passenger by 21 pence, compared to a British average of six pence per kilometre.

It is worth noting that ScotRail, in common with all other British passenger rail franchises, do not use distance based fares.  The figures above are averages and may not reflect individual real-world fares.

The reasons for the disparity between ScotRail fares/subsidies and those elsewhere in Britain are complex, but are influenced by factors including:

• The historic policy of maintaining low rail fares in the Strathclyde area (where a significant proportion of all Scottish rail trips are taken) pursued by the former Greater Glasgow Passenger Transport Executive/Strathclyde Passenger Transport Executive from the early 1970’s until abolition in 2005. All fares in the Strathclyde area are now regulated fares, preventing any significant above inflation increases.
• The need to support several lengthy rural rail routes, that provide important social and economic functions, which are lightly used and require significant capital and revenue support

Alan Rehfisch, Senior Researcher, Transport and Planning