LEADING ARTICLE: Transport policy hits the buffers

Yesterday Dr Brian Mawhinney reversed his party's long-standing policy on rail fares. All Tory transport secretaries since Margaret Thatcher came to power in 1979 have sought to reduce the rail subsidy by putting fares up beyond the rate of inflation. John Moore, briefly the holder of this troublesome office in the mid-Eighties, put it thus in 1986: "I want to see a lower proportion of the costs [of the railway] met by the taxpayer, and you should increasingly seek to reflect in your fares structure the costs of provision and improvements in quality of service."

Now Dr Mawhinney proposes a different view. Most fares will, in the privatised future, be regulated and they will be restricted to rises in line with inflation until 1998 and by inflation minus 1 per cent for the four subsequent years. In flinging the points across to this new track with such bravado, the transport secretary appears surprised that we, the travelling public, are confused.

It is not, of course, that anyone is complaining about the idea of lower fares. The fact that this ought, over time, to help persuade some people to use rail rather than cars, especially in the densely populated South- east, is an unquestioned public good. The problem with the pre-Mawhinney policy is that it recklessly ignored the social and environmental costs of a high fares policy - a subject on which public opinion is at last moving, in response to deteriorating urban air quality, congestion and the realisation that there is a limit to the extent to which problems of mobility can be addressed by building more and wider roads. The perennial question, however, is the relationship between the cost of any given policy on rail fares and its potential benefits.

It is in the calibration of such costs and benefits that transport policy is forged. The fact that Dr Mawhinney was so evasive yesterday about the costs of his new generosity with subsidies is proof that what is happening here has precious little to do with a considered transport policy. It is simply a crude attempt to buy popularity for rail privatisation and as such is based on a blatantly false premise.

In arguing that the new fare-capping arrangements will not require extra subsidy, Dr Mawhinney said: "The new fares level is very likely to produce more passengers and if that happens the level of subsidy is likely to go down." If that were true, the Government would also have to admit that its previous policy of putting up fares by more than the rate of inflation was both a waste of money and a deterrent to rail travel.

In fact, the demand for rail travel is relatively inelastic in the face of changes in the price of tickets. The industry rule of thumb is that for every £1 forgone through not raising fares, about 40p extra subsidy is required as only 60p worth of new passenger income will be attracted.

It is greatly to be regretted that Dr Mawhinney should have involved himself in bogus mathematics to rescue a privatisation which, given the loss-making character of most of the industry, was always going to be the most difficult on the Government's agenda.

The real implication of yesterday's announcement is that the transport secretary, having won acclaim for opening up his party's thinking on transport policy, has now sided with those who do not really have much confidence in rail privatisation. Or perhaps he is just dreaming of the reshuffle and hoping that Virginia Bottomley will be left holding the guard's flag when this unhappiest of privatisations finally heads out of the sidings.