Coalition agreement

Quote

Commuters face threat of big fare rises

Commuters face the threat of big fare rises at the end of the year as the new Government refused adopt to a Liberal Democrat election pledge to cut the cost of rail travel.

Speaking at King's Cross Station, Philip Hammond, the new Transport Secretary, said adopting the plans, which would entail changing the formula used to calculate controlled commuter fares, would be "difficult".

This meant that at the very least commuters will see the cost of season tickets go up by one per cent above the retail price index, currently running at 5.3 per cent.

Significantly a Department for Transport spokesman was also unable to guarantee that the current formula would remain unchanged, leaving the possibility that regulated fares could be allowed to increase by more than one per cent above RPI^▸ .

While the new Government was committed to having a "fair fares" policy, it had to be "realistic" about the economic situation, Mr Hammond said.
Even if the Coalition leaves the formula it inherited from the previous Government unchanged, commuters would face significant rises, unlike this year when negative inflation meant they fell.

Fares are due to go up in January, but are calculated on RPI in July.

On current figures the cost of an annual season ticket from Brighton would go up from ^3,556 to ^3,780 ^ an increase ^224.

Commuters on Southeastern, which runs from Kent and Sussex into London, would be hit even harder because fares on the line are pegged at three per cent above RPI, to pay for additional investment in rolling stock and the introduction of the 142mph Javelin train.

An annual season ticket from Canterbury would on existing figures go up from ^3,840 to ^4158.72, an increase of ^318.72.

The Department for Transport is expected to be hit hard by proposed cuts in Government spending.

Allowing fares to rise would help the DfT^» pick up some of the cash it will need to find under the complex funding system used to fund the privately operated rail industry.

Known as "cap and collar" the DfT shares the burden if train operators revenue is lower than that predicted when the original franchise was negotiated.

Were fares to rise, the amount of cash needed in subsidies would be lower and the money the Government raised from operators who pay a premium for running services on more profitable routes would be greater.

"There is at least a possibility that the Treasury and DfT are looking at fare rises as a way of meeting the spending gap," said Stephen Joseph, executive director of the Campaign for Better Transport. "We think this would be electoral suicide would be key marginal seats. We support what the Liberal Democrats say and that fares should be reduced.

The prospect of fare rises alarmed Anthony Smith, chief executive of the consumer watchdog, Passenger Focus. ^For many passengers the recession is yet to end. Passenger Focus research shows that only 45% of passengers think their ticket represents value for money," he said. "If rail is going to remain the transport choice for many we want to see government continue to limit fare rises in January 2011.^