Planned increases in regulated fares of RPI+3% in January 2013 and 2014 have been capped at an average of RPI+1%. The level will stay the same in 2015 as well.
The Prime Minister has announced the u-turn on the eve of the Conservative Party conference. The proposal to increase regulated fares by an average of RPI+3% was confirmed in mid-August, when the level of the Retail Price Index in July was announced. But the level of the planned rise was widely criticised, and compared unfavourably with the confirmed postponement of a rise in fuel duty. The Government had previously decided to cap last January’s rise at RPI+1%.
The move signifies a welcome U-turn from the government, having indicated in June that fares would rise at 3% above inflation from January. As inflation was running at around 3%, rail fares were due to increase by 6% on average and up to 11% in the most extreme cases. But that was met with almost universal opposition. Even train operators were against it, fearing it would alienate passengers.
The news has been welcomed by ATOC, whose director general Michael Roberts said:
“The government’s change in policy is a positive move for passengers because it will mean lower than expected fare rises. All the extra money that ministers had instructed train companies to raise through the planned, higher increases in regulated fares would have gone to the government. It is the government, not train companies, that decides how much season tickets should rise on average each year. For almost a decade, successive governments have instructed train companies every year to increase these regulated fares on average by more than inflation. In doing so, ministers have been seeking to cut the contribution from taxpayers towards the running costs of the railway and increase the share paid by passengers.”
Downing Street said that would mean an annual saving of £45 for season ticket holders, while savings for some commuters could be as high as £200 over the next two years. It said the cap would benefit more than a quarter of a million annual season ticket holders.
The Department for Transport added that it hoped to maintain the cap on fares for franchised train operators from January 2015 onwards as the UK moved into a general election year.
Labour argued that the new cap was “meaningless” as the train companies could treat it as a benchmark for average increases, leaving room for much bigger rises on some routes, as long as the median increase panned out at RPI+1%.
The shadow transport secretary, Maria Eagle, said:
“If this U-turn is to genuinely help passengers, then the government must stand up to the train companies and strictly enforce this new cap on every route.”
“The government has spent two years claiming that these eye-watering fare rises were essential to fund investment despite the National Audit Office warning that they were just as likely to boost train company profits.”