Christian Wolmar

Britain’s least-used stations.

It’s been all quiet on the fares front, despite months of saying that the railway will need a more flexible ticketing policy once things begin to return to normal.

The Department for Transport’s omertà over the issue seemed to have been broken when The Times ran a piece last month suggesting that above-inflation fares would be imposed on rail users because of the losses being incurred as a result of the pandemic.

The Treasury, apparently, was behind these moves. Now, I had thought that while those very clever people who work for the Treasury tend to be blind to the social implications of the decisions they take, at least they know a thing or two about economics.

The first lecture I attended on my Warwick University economics course was about supply and demand. With a few squiggles of chalk on a blackboard, Professor Ford drew a demand curve which showed that when prices go up, demand goes down - and viceversa.

Of course, the proportion in which it goes up or down is not necessarily the same, depending on what sort of product you are considering. You have to take into account another factor, which is the elasticity of demand. In simple terms, this determines the amount of revenue you get.

So, if you put up prices by £1, and the effect is to get £1 more in revenue, then the elasticity is 1. An elasticity of less than one suggests that the produce is inelastic, and therefore putting up the fares will result in an increase in revenue because most passengers will stay using the rails. But if demand is highly elastic, then revenue will fall.

The boffins at the Treasury are therefore suggesting that demand is inelastic - that passengers will use the railway come what may.

But if that is their belief, they are out of kilter in this new world. Passengers will be particularly sensitive to fares, especially if they have an alternative - such as working at home or using the car, which they have suddenly rediscovered thanks to the pandemic.

And, of course, if the politicians are serious about a Green New Deal, then encouraging rail use should be high on the agenda. The next few months will tell us if they have learnt anything from this disaster.