Rail fare rises of 13% ‘may break government’, campaigners warn

Passenger groups, environmental lobbyists and unions predict average fares will rise four times faster than wages in 2012 Hitting rail commuters with a swath of double digit rail fare increases will carry “economic and political consequences” for the government, campaigners have warned on the eve of inflation figures that will mean some tickets rise by 13%. Millions of rail passengers will get an indication of the fare increases due in January when the inflation rate that sets annual price rises is published on Tuesday. Under the government’s austerity drive, from next year season tickets will rise by the rate of retail price index inflation plus 3% until 2014, with room for a further 5% increase on some services. With the RPI due to hit 5% next week, commuters face a 13% increase on certain routes – to the dismay of passenger groups, environmental lobbyists and trade unions. “It will be a straw that breaks the camel’s back,” said Stephen Joseph, chief executive of the Campaign for Better Transport (CBT), which has warned that average fares will rise four times faster than wages in January. “There are both economic and political consequences for this. For some people in the London labour market and some cities outside of London, this will be a big chunk of money. “If you look at places where there is a large number of rail commuters, there is a significant number of marginal seats. Those are precisely the places that will be affected by eye-watering rail fare rises.” The Department for Transport has confirmed that it will retain the so-called flex system, which allows rail companies to average out fare increases across a basket of tickets instead of applying uniform price increases. Under this framework, a further 5% can be added to the RPI + 3% hike on certain fares, provided that the total increase within that batch of fares is in line with the official limit. This means that an annual season ticket from Bournemouth to London, currently £5,424, could rise by £705 to £6,129. Increases could be even higher on fares that are not capped, such as advanced purchase fares. Train operators, who levy the fare increases and are often a lightning rod for passenger ire over ticket prices, will pass on the increased revenue to the government and are keen to emphasise that they are only following DfT policy. “Increasing the money raised from fares will mean that taxpayers contribute less to the running of the railways, whilst ensuring that vital investment can continue,” said David Mapp, commercial director at the Association of Train Operating Companies. The government spends around £4.6bn a year on the railways with the farepayer contributing £6.2bn, a gap the DfT wants to widen after setting a target to reduce industry costs by a further £1bn by the end of the decade. Theresa Villiers, the rail minister, ruled out scrapping the flex system, which had been dropped in the final year of the Labour government. “The scale of the deficit means that the government has had to take some very difficult decisions on future rail fares but the long term solution is to get the cost of running the railways down. That way we can get a better deal for passengers and taxpayers. We are determined to do this and if we succeed, we hope to see the end of above inflation rises in regulated fares,” she said. Nonetheless, a concerted campaign against the rises has already begun. The environmental group Climate Rush will join CBT, unions and the shadow spokeswoman for transport, Maria Eagle, at Waterloo station, in London, tomorrow to protest against the increases. According to CBT, fares will rise by an average of 8% – four times more than the average wage rise. Eagle said: “For many, the cost of getting to work is now the biggest single item in the monthly budget, bigger even than rent or mortgage payments. These fare rises are the direct consequence of the decision to cut too far and too fast, meaning commuters are having to pay more to plug the hole in the transport budget.” Despite warnings that inflation-busting hikes will dent demand for rail travel, journeys on the network rose by 6.9% last year to 1.32bn. Inflation fell modestly in June, to 5% on the RPI measure, as hard-pressed retailers slashed the price of electronics goods such as televisions. City analysts expect a similar reading for July, with average earnings growing at less than half that pace, many households are already enduring a painful squeeze on their living standards. High oil prices, January’s increase in VAT and the weakness of the pound, which pushes up the cost of imports, have all boosted prices. CPI inflation, the measure targeted by the Bank of England, is expected to be above 4%, for most of this year. Sir Mervyn King will be forced to write to George Osborne this week to explain why inflation remains more than half a percentage point above the government’s 2% target. Rail transport Transport Transport policy George Osborne Inflation Mervyn King Bank of England Dan Milmo Heather Stewart guardian.co.uk

Posted by on August 14, 2011. Filed under News, Politics, World News. You can follow any responses to this entry through the RSS 2.0. You can skip to the end and leave a response. Pinging is currently not allowed.