Executive Summary

This paper details the interim evaluation results of the removal of peak fares from the ScotRail network and covers the period from October 2023 to December 2023. The paper consists of an analysis of the impact on travel patterns during the pilot, the impact on rail travellers and an initial assessment of the value for money (VfM) of the pilot.

The initial impact of the Pilot is estimated to be:

• An increase in the number of ScotRail journeys in the range of 1 million – 1.1 million over the first 11 weeks of the trial.
• An estimated increase of around 2.7 million to 3 million ScotRail journeys over six months.

The financial impact of the Pilot, based on the initial evaluation, is currently estimated to be:

• A revenue loss in the range of £4.5 million - £4.8 million over the first 11 weeks of the trial.
• An estimated revenue loss in the range of £10.2 - £10.6 million over six months.
• Additional costs incurred by ScotRail and attributable to the full nine months of the pilot of approximately £2.2 million (e.g. leasing additional carriages, software changes to gate lines, app development, support). These may change before the pilot ends depending on demand.

It should be noted that ScotRail’s passenger figures were already increasing prior to the Pilot launching as rail demand has increased following the impact of the COVID-19 pandemic on travel demand overall. It has therefore been challenging to extrapolate the impact of the pilot within the wider passenger revenue figures. In addition, the timing of the Pilot will affect the interim analysis as there is a seasonality effect on passenger numbers – with rail use generally greater during the autumn months. Therefore, these interim findings should be treated with caution at this stage. Further work is being undertaken to ensure that the final assessment of the pilot is as robust as possible.

The journey growth assessed is 4.2% greater than initially anticipated in the counterfactual estimate and needs to be investigated further in the final evaluation as there appear to have been cases where numbers may have been inflated by passengers buying returns but only making single trips due to the cost of a return ticket being equal or not significantly greater in price to a single ticket, making it a more attractive option for passengers to have the increased flexibility of a return ticket.

There has also been geographic variations across the ScotRail network with the strongest growth in journeys where the fares changes arising from the Pilot are larger (Express (services predominantly between Edinburgh and Glasgow) and West Suburban (services into and around Glasgow from Strathclyde) and lowest where the fares changes have been limited (Far North Line, West Highland Line and services into Oban).

Analysis also shows that there has been stronger growth in journeys at peak times and more pronounced changes during the morning peak. This has been supported by customer research with 18% indicating that that they have shifted some of their journeys from the off-peak into the morning peak. Notably there was previously no evening peak period in the Strathclyde area which may also explain this trend. ScotRail report that there has been an increase in the level of demand on some services but not to the extent, yet, that crowding is a disincentive to make that journey by rail. However, it remains a longer-term concern that overcrowding on peak services could become an issue with the potential mitigations including further rolling stock (if available) and associated costs for this or the need for fare demand management to manage capacity throughout the day.

There is some emerging evidence of behaviour change arising from the Pilot, including shifting of travel from off-peak to peak and mode shift from car to rail suggesting around one-third of existing rail users have made at least one rail journey previously made using another travel mode, with two-thirds of those journeys primarily from car. Of those new passengers identified as switching from other modes, it is assessed that 53% had previously used a car as a driver, and a third had switched from bus. But this should be considered in the context of a 4.3% overall increase in demand – the vast majority of passengers were existing rail users making existing journeys.

The headline Value for Money assessment of a benefit cost ratio (BCR) of 1.18 represents an evaluated economic benefit of £1.18 for every £1 of government financial investment (i.e. the additional subsidy to cover loss of revenue plus additional operating costs outlined above). This is somewhat marginal and is not necessarily a result that demonstrates the best value for money. The final result will be dependent on a range of factors including further impacts of demand and any additional costs incurred over which there remains considerable uncertainty.

Additional work will be undertaken as part of the final evaluation to address the uncertainty in these initial results. There will be a particular emphasis on extending the current analysis to encompass equality issues – existing rail users who are benefiting from reduced fares tend to be in higher income groups and the final evaluation report will assess the impact on lower income groups – considering whether the pilot made rail more accessible to a wider range of people.