In a bold move to make public transport more affordable, accessible, and climate-friendly, the Scottish Government has scrapped peak-time rail fares across the ScotRail network. Commuters once paying nearly twice as much to travel during rush hour—like those on the busy Glasgow to Edinburgh route—are now paying off-peak prices all day long.

The policy, framed as both a social and environmental investment, raises some big questions: Could this become a blueprint for the rest of the UK? Will cheaper fares shift commuters from roads to rails? And what might be the unintended consequences, from overcrowding to rising public subsidies?

🚆 Scotland Scraps Peak Rail Fares — What’s the Economics?

💷 Peak-time return (Glasgow–Edinburgh) drops from £32.60 → £16.80🎯 Goal: make trains cheaper, greener, and more accessible🌍 Part of Scotland’s net zero plan to shift people off the roads

ECONOMICS CONCEPTS:

➡️ Subsidies as demand-side incentives

➡️ Market failure due to negative externalities of car use

➡️ Government intervention to promote merit goods

💡 Why Did Peak Fares Exist in the First Place?

🕗 Before 9am & 5–7pm = more expensive🎟️ Idea: price signals manage congestion🚶‍♀️ Working from home = off-peak is no longer off-peak

ECONOMICS CONCEPTS:

➡️ Price discrimination (3rd degree) – charging more at busy times

➡️ Now less effective due to shifting demand patterns

🎬 Slide 3: "📉 Cutting Fares = Greener Commuting?"

🚗 Fewer car journeys = less pollution & congestion🏭 Trains = lower emissions per passenger🌱 Supports Scotland’s net zero goals

ECONOMICS CONCEPTS:

➡️ Positive externalities of public transport

➡️ Internalising the social cost of driving

➡️ Encouraging modal shift to public transport

⚖️ But… Could Cheaper Fares = Overcrowded Trains?

📈 Lower prices → higher demand

🪑 Risk of overcrowding if supply is inelastic

🏦 £40 million cost = big question: Is it worth it?

ECONOMICS CONCEPTS:

➡️ Elasticity of demand – will more people switch from cars?

➡️ Opportunity cost of public funds

➡️ Risk of diseconomies of scale if capacity is exceeded

🚦Should England Follow Scotland’s Lead?

🇬🇧 England still runs peak pricing

🏛️ Nationalisation in progress = opportunity for reform

📊 LNER is already trialling simpler, flat fare systems

ECONOMICS CONCEPTS:

➡️ Market vs government provision

➡️ Public goods and equity of access

➡️ Balancing efficiency vs fairness in transport policy