Posted 29th November 2011 | 4 Comments

Train operators prepare to deal with fares u-turn

THE CHANCELLOR is expected to announce today that regulated rail fares will go up by RPI+1 per cent in January, rather than the previously-announced RPI+3 per cent. It's still not clear whether the official u-turn will be continued in the following two years, but in any case English train operators now face the task of changing their fare databases in little more than a month.

It has been widely leaked that the lower fares increase will form part of George Osborne's autumn spending statement today, and assuming that the leaks are right January's fare increase, at least as far as regulated fares are concerned, will be 6.2 per cent rather than 8.2 per cent.

Consumer groups have welcomed the prospect, although many commentators remain critical of the level and complexity of rail fares in Britain, even after the predicted u-turn.

As things stand, operators are still going to be able to 'flex' their increases, so that some fares can be increased by as much as an additional 5 per cent, so long as others are reduced to maintain an average of 6.2 per cent in a 'basket' of ticket prices.

The flex was suspended by Lord Andrew Adonis when he was Labour transport secretary, and restored with effect from January 2012 after the coalition came to power last year.

There is still speculation about the prospects for 2013 and 2014, when fares in England are also due to rise by RPI+3 per cent again, and it may be that no change in that longer-term policy will be announced for the time being.

For the moment, though, operators are just waiting for today's statement to confirm the predictions, after which they will start work on re-adjusting thousands of fares so as to be ready for the changeover on the first Sunday in January.

A spokesman for the Association of Train Operating Companies commented: "The change in policy now expected from the government is a positive move for passengers, as it will mean lower than expected fare rises.

"Train companies are ready to work hard to ensure that a government decision on fares is able to be implemented in time for the New Year."

Mr Osborne's rethink will have other effects behind the scenes as well. The amounts due to the government from train operators, or paid to them in subsidies, will also need reviewing again to take into account the likely fall in their revenues during the coming year.

Reader Comments:

Views expressed in submitted comments are that of the author, and not necessarily shared by Railnews.

  • Lutz, London

    This is only a postponement; the fares will need to rise by three percent over inflation for three years, to re-balance the revenue stream, and to bring about break even.

  • Paul, London, England

    Nigel, are you including health, environmental and NHS costs from the road network in your calculation ? I think not.

  • Nigel McBride, Stafford, England

    Fuel duty and VAT more than cover the cost of the road network in this country but rail fares only cover 60% of the costs of the rail network.

    So logically, fuel duty should come down and rail fares increase by around 80%, rather than just 8% or 6%.

    But that would be politically 'difficult' - I, for one would man the barricades !

  • Melvyn Windebank, Canvey Island, Essex, England

    Why should fares rise if fuel duty is to be frozen?

    Surely fuel duty should be tied to rail fares and have the same increase!!