The cost to taxpayers of running the rail system has fallen sharply but at the expense of continuing above-inflation fare increases and overcrowding, according to a government watchdog.

Many commuters are also set to suffer more overcrowding until fresh investment provides new carriages on busy routes, warns the report by the National Audit Office, published on Wednesday. In 2006, the last date for which information was available, trains travelling to and from London at peak times were carrying 3.5 per cent more passengers than they were designed to carry.