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The UK's rising train fares: where it all began

2025 marks 200 years since the first passenger steam train opened its doors, but somewhere between Thomas the Tank Engine, The Railway Children and the cancellation of HS2 phase 2, for many, Britain's railways lost their charm. Now on track for reform, experts are questioning whether renationlisation will be the ticket to cheaper fares.​

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The cap on regulated rail fares for services across England and Wales has risen by 4.6 per cent this week, following a government announcement. In Scotland an increase of 3.8 per cent has been announced.

 

The UK has the most expensive rail services in Europe, according to recent research by  campaign group Transport & Environment. Many people blame privatisation for this; “£1.5 billion or more leaks out of Britain’s railways every year in the form of profits extracted by train operating companies and other players,” said Mick Lynch, General Secretary of RMT transport union in 2023.

 

While regulated rail fares rise every year (by 5.9 per cent in 2023 and 4.9 per cent in 2024), the most recent increase comes as part of the Labour government’s plans to renationalise UK rail, bringing most passenger train services under a system of public ownership, known as Great British Railways, by 2027.​​

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This decision followed widespread public demand for a cheaper and more organised public transport service. 

But where did it all begin?

A fragmented industry

 

​Today there are over 20 private passenger and freight Train Operating Companies (TOCs), with tracks and infrastructure owned and managed by Network Rail. All operations are overseen by the Department for Transport.

Steve Ceely, former British Rail employee, reflects on how the industry has changed since the 1970s

"I rather suspect the same sort of complaints are being made today, because I still think communication is poor on the railways,” says Steve Ceely, former employee of British Rail passenger liaison department. Ceely hopes to see renationalisation fix repair issues of poor communication and route organisation:

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“Often you’re just told ‘train cancelled’ and you don’t get a reason why, or if you do get a reason, it doesn’t really make sense.”

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“This issue has gone on for a very long time, the annual fare rises, which simply don’t need to happen,” says Michael Solomon Williams, Head of Campaigns at Campaign for Better Transport, “the government should recognise the wider benefits of rail and fix fares for good”.

 

Campaign for Better Transport is a national charity which advocates for the social and environmental benefits of public transport. In recent months, the charity has been campaigning against the government’s decision to continue to freeze fuel duty, keeping driving costs low, while fares on public transport increase.

 

“Our main ask is for more government action,” says Williams, encouraged by Labour’s plans for renationalisation, “we think the GBR bill should provide a really unique opportunity to actually deal with this; once the private operators are folded in, all eyes will be on government”.

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A live YouGov poll shows that, overall, the public is in favour of renationalisation, as long as it does not result in more fare increases.​​

Empty Train Station

Proceeding with caution

 

While a renationalised railway may lead to better organisation and communication, think tank research suggests it might not be the ticket to price decreases. 

 

“The fundamental thing is that our railways are a hugely expensive operation to run, and there isn’t any very obvious way of cutting these costs,” says Len Shackleton, from the Institute of Economic Affairs (IEA). 

 

Shackleton’s research points to the historic aspect of UK rail’s inefficient “over-engineering” as the reason behind its high costs. The model is old-fashioned ‘heavy rail,’ which involves a huge investment in manual checks, safety and signalling. Unlike almost any other railway in the world, UK rail was invented by the private sector, constructed using different technology in different regions and, over time, linked.

 

Another expensive aspect of UK rail is the complicated landholding system. “This was the reason why HS2 was colossally expensive,” says Shackleton, “unlike Spain or Italy, they had to negotiate every inch of the way, because the land was all privately owned”.

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'A red herring'

 

When it comes to private company profits as a reason for renationalisation, Shackleton says that some of the figures circulating are misleading, for example Mick Lynch’s 2023 statement that “£1.5 billion or more leaks out of Britain’s railways every year”.

 

“If you look at the figures, the maximum amount that’s been paid out in dividends has been something in the order of 3 per cent”, says Shackleton, “which is trivial. If this was a sector which was paying out 20 per cent of its revenue in dividends, it would be a different story”.

 

Many people hope that renationalisation will pave the way for higher financial contribution from the government, easing pressure on passenger fares.

 

Recent IEA research highlights that last financial year the government subsidised the railways £12.5bn, already exceeding the £11bn of passenger revenue. An even higher state contribution may be unlikely in the current economic climate, with a £22bn fiscal black hole.


“I think four or five years down the road, when fares don’t come down, people will say ‘ah, why don’t we privatise the railways again?’” says Shackleton, “this nationalisation thing will be an ongoing dance”.

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