Party would reduce price of season tickets by a third and give free rail travel to those aged 16 and under

Labour has announced what it is billing as the biggest ever plan to cut rail fares, promising that in government it would immediately reduce the price of season tickets and other regulated fares by a third, and introduce a wider simplification of the ticketing system.

The plans – which would only affect fares in England as those in Wales and Scotland are devolved – would also seek to ensure part-time workers do not have to pay more per journey than season ticket holders, while those aged 16 and under would get free rail travel.

It comes a day after train operators announced an average 2.7% increase in rail fares in January, prompting dismay from passenger groups. The increase also affects regulated fares, about 40% of the total, including most commuter season tickets as well as some long distance off-peak fares and peak urban trips.

Labour, which plans to renationalise the rail system over the long term, would cut these fares by 33% from January “to tackle the crisis of unaffordability on the railways”, with the party saying this would save the average commuter £1,097 a year.

For part-time workers, changes to the fare system would ensure they would not pay more on the trains per day than commuters with all-week season tickets, while those aged 16 and under would travel for free.

The party is also promising “a London-style ticketing system across the nation” to simplify prices using zonal fares, which would be applied to all types of public transport, and allow contactless payments.

Labour say these changes would cost about £1.5bn per year. The funding would come from a wider change planned by the party to create a sustainable transport fund from the revenues bought in by vehicle excise duty, or VED, which is based on emissions.

While income from a particular tax is not normally reserved by the government for use in a certain way, known as hypothecation, under an existing Conservative plan, from 2020 this would happen for VED, with the income reserved for road building and maintenance projects. VED is due to raise £6.5bn in the 2019-20 financial year, according to the Office for Budget Responsibility.

Introducing the new rail fares policy, Jeremy Corbyn said: “Travelling by train is my favourite way of getting around the country but for too long a fragmented and privatised rail system has ripped off passengers.

“Taking back control of our railways is the only way to bring down fares and create a railway network that is fit for the future. Labour will bring about real change on the railways because we are on the side of passengers.”

Andy McDonald, the party’s shadow transport secretary, said: “Privatisation has created one of the most complex, exploitative and expensive ticketing systems in the world. Labour will scrap the bewildering and outdated fares and ticketing system that discriminates against part-time workers, discourages rail travel and excludes the young and low paid.”

The announcement comes a day after Labour pledged a major increase in investment for walking and cycling journeys, with funding for active travel rising from £7 to £50 per person per year within the next parliament.

Other ambitions for the five-year period include doubling the number of cycle trips, building 3,000 miles of safe Dutch-style bike lanes, and creating secure walking and cycling routes to 10,000 primary schools.