ScotRail peak fares loom as Scottish Government pilot ends

City and town centres undoubtedly need all the help they can get right now in terms of footfall, and the Scottish Government’s bold pilot initiative on peak fares had raised some hopes on this front.

The pilot scheme has certainly not been a failure. However, it is disappointing that it did not produce the scale of growth in demand for rail travel which could have provided confidence that the temporary arrangements could continue without an undue burden. This is a crucial consideration, at a time of huge pressure on public finances in Scotland as a result of the UK’s poor economic performance and policy choices at Westminster.

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My column on the hot topic of peak fares in The Herald last month observed: “The crucial point, however, and that which looks to have sounded the death knell for the brave move to remove peak fares, is that the 6.8% increase in demand during the pilot scheme was just not enough. The Scottish Government calculated that a 10% increase in demand for ScotRail services was required to ensure the cost of removing peak fares was paid for through the growth in rail travel generated.

“Transport Scotland puts the cost of the full-year subsidy that will have been provided by the Scottish Government for the removal of peak fares by the time the pilot scheme ends on September 27 at about £40 million.”

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And the column highlighted the difficulty of committing to such expenditure on an ongoing basis in the current circumstances.

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It observed: “You only need to look at the hue and cry recently over the Scottish Government’s warning about the impact on other areas of it having to find £77.5 million to settle a pay dispute between local authorities and refuse workers, to ward off strikes, to see this.”

That said, the column highlighted the fact that it would be good to see peak fares removed again at some point in the future, if the opportunity were to arise.

Meanwhile, there was some positive news last month on investment in Scotland’s real estate sector, in the form of research from global property adviser JLL.

This painted a very different picture to the narrative favoured by some that the SNP Government has somehow made Scotland an unattractive place to invest.

JLL’s research revealed Scotland’s real estate sector bucked the trend of decline elsewhere in the UK in the first half of 2024 in terms of attracting investment.

And JLL highlighted a positive outlook in Scotland for investment in this sector, taking in commercial and industrial property and residential development including student accommodation and retirement homes, during the rest of this year and into 2025.

The Scottish property market attracted £770 million of investment in the opening six months of 2024, a 4% increase on the average for the first halves of the previous 10 years and 30% higher than in the corresponding period of 2023.

JLL observed the UK as a whole “saw a 25% dip in investment in the first six months of the year when compared to the 10-year average.

The research formed the basis of another of my columns last month in The Herald.

This observed: “There are those who at times seem determined at every opportunity to present Scotland as an unattractive place in which to invest, and some of them even appear to delight in so doing.

“They are a noisy bunch, producing a cacophony and attracting attention disproportionate to their numbers.

“Their narrative is a familiar one - it is all the Scottish Government’s fault and the SNP has put people off investing in Scotland.”

The column continued: “This carping is often heard in the context of property investment. And it frequently seems to come from a desire to ensure unfettered returns, for example in the build-to-rent market, or is triggered by a certain political viewpoint, or both.

“And the noise is so persistent and so loud that people unfamiliar with the details could be forgiven for taking it as gospel. Thankfully, there are enough hard facts and figures to enable people to form their own view of the state of the property market in Scotland, if they can concentrate amid the near-deafening volume from the lobbyists and the politically motivated.”

Among other big news last month was Sidara, the Dubai-based group, walking away from a possible takeover of Aberdeen oil services company Wood, flagging rising geopolitical risks and financial market uncertainty.

One of my columns in The Herald on Sunday focused on Wood, in the context of the sharp decline in the number of major Scottish companies listed on the stock market in recent decades.

The column emphasised that we should not underestimate the effect on Scotland of losing the headquarters of the two big, formerly Edinburgh-based clearing banks.

Royal Bank of Scotland was bailed out by the UK Government amid the global financial crisis. More recently, it has been renamed NatWest at parent company level and it is now run from London. Bank of Scotland merged with Halifax to form HBOS, which was then, in the teeth of the financial crisis, acquired by Lloyds in a rescue takeover.

The column observed: “Other major names in corporate Scotland which featured on the stock market in decades gone by but do so no longer include Stakis, Kwik-Fit, ScottishPower, and Scottish & Newcastle, which were all acquired, and General Accident, which was swallowed up in a merger deal.

“Major quoted company headquarters are generally important to both Scotland’s reputation on the international stage and the nation’s economy.”

It went on: “In this context, therefore, it is good to see Wood retain its independence. The company is a key employer in Scotland. It employs around 4,500 people in Aberdeen and in its North Sea operations. Obviously, it remains to be seen what happens now.”

This article was first published in The Herald's Business HQ Monthly supplement