All of the IETs I've had into Paddington over the last year have been wedged. These have been on Sundays though, so peak fares don't apply. I'd be interested to know what loadings are like during the peak (when the contactless fare is an eye-watering 84p/mile) and off peak (when it is still pricey at 34p/mile but better value than the 50p/mile fares for similar length single journeys in North Wales). I suspect that there is some spare capacity and that peak fares can come down without causing overcrowding - it may even be a profitable move.
If we're purely looking at what is a reasonable price (without considering how to extract funding from the Treasury), I'm going to set the bar at 30p/mile for single journeys, 25p/mile for period returns and 20p/mile for day returns (for the return tickets don't forget to count the miles in both directions).
We could always go back to the Railway Regulation Act 1844, which limited Third Class fares to 1d/mile. Allowing for inflation at the RPI, that's 56p/mile. By the time it was raised in 1914, it was the equivalent of 52p/mile. So somewhere around that mark is somewhat justifiable, if one must have a cap.
To look again at the most extreme example (Fort William to Inverness), the only people who would do that journey by rail are those who are deliberately going out of their way for their own amusement (i.e. tourists and enthusiasts). Do you really want to charge the crow-flies rate to them, or should they pay for the considerable mileage they've actually been enjoying the scenery for? Like with York-Whitby a bus exists to cut off the dog leg. You can catch that if you want the shorter & cheaper route.
One really ought not to be encouraging people to make circuitous journeys by rail simply because the stations happen to be close as the crow flies! You quote Fort William to Inverness, but Mallaig to Kyle of Lochalsh would be even more egregious. There may be something still more extreme out there.
Many transport networks (and pricing structures more generally) have minimum fares or charges. You could calculate all fares as the minimum fare plus the price per mile, or you could base the fare solely on the price per mile but make that subject to the minimum. You don't necessarily have to have absurdly cheap fares.
I'd suggest that if a bus fare cap is to be part of the national transport strategy, then that cap also ought to act as a floor on rail fares. With joined-up thinking, the result would be very few people taking short train journeys, or long ones by bus.
I will say, I don't think that a fare cap is good policy unless it's set so high as to be useless - whether it's per mile or total. In practice, the barrier to people using trains more isn't so much price, as the fact that they don't go where people want, when they want. The example upthread of a poster with
free rail travel choosing not to take the train is quite telling, I think.
