Rail fare rises '21 - up by 2.6% but not until March

[whole diary]

[grahame]

From the BBC^» (British Broadcasting Corporation - home page) and other outlets - looks like it was a press embargo until midnight

Rail fares will rise more than expected next year - although the new inflation-busting 2.6% increase is being delayed until 1 March.

Regulated fares were expected to increase by 1.6% in January, as successive governments linked annual rises to July's RPI^▸ (Revenue Protection Inspector (or Retail Price Index, depending on the context)) inflation rate.

Rail minister Chris Heaton-Harris said the rise reflected "unprecedented taxpayer support" for rail this year.

But unions said the rise was "plain daft" and would deter travellers.

An average increase of 2.6% across all fares will still be the lowest since 2017.

Until 28 February season tickets holders can renew at existing prices and the cost of daily fares will stay the same.

Rail travel has been badly hit during the coronavirus crisis, and Mr Heaton-Harris said delaying the price rise from January "ensures passengers who need to travel have a better deal this year".

Regulated fares make up about half of fares and include season tickets on most commuter routes. But operators are expected to match their rises for unregulated fares.

[grahame]

As an FAQ^▸ (Frequently Asked Questions) from LBC

- How big is the fare rise?
- What normally determines the figure?
- What's changed?
- Why?
- What about unregulated fares?
- What else is different to normal?
- How much more expensive has train travel become in recent years?
- Where does the money go?
- Is there any way of avoiding the fare rise?
- Any other tips on limiting the cost of train travel?

[grahame]

From the Department for Transport at https://www.gov.uk/government/news/rail-fare-rise-to-be-delayed

Management summary box says:

* rail tickets will remain at 2020 prices until March 1 2021, giving commuters the chance to renew season tickets at old prices

* passengers still advised to reduce number of journeys as much as possible for the time being

* regulated fares to increase by 2.6% in March, the lowest amount in 4 years, ensuring taxpayers are not unfairly overburdened by anticipated investments of around ?10 billion to keep vital services running during pandemic

Follow link for rest of announcement.

[grahame]

Press Release from Railfuture

Rail campaigners have condemned the announcement of inflation-busting rail fare increases in March.

"This really isn't going to help bring passengers back to trains" said Chris Page, chairman of the campaign group Railfuture. "This increase will come at a time when people are deciding whether to go back to work 5 days a week.  Indeed there?s even a risk that it will result in even lower revenue for the government, by pricing people off the railways.

"The delay in implementing flexi-seasons will also reduce rail revenue.  They are needed in March when people will be deciding how many days per week to go to the office.  Passengers will vote with their feet and revenue will be less as they travel say 3 days per week with ordinary tickets instead of 4 with a flexi-season.

"The government continues to impose fare rises using RPI^▸ (Revenue Protection Inspector (or Retail Price Index, depending on the context)) instead of CPI, meaning that rail fares have become less and less affordable over the years.  To use RPI+1% is outrageous and completely unjustified. Things aren?t going to get back to near normal until about June at the earliest, so a 2.6% increase won?t generate much cash when there are so few  passengers travelling. It will just annoy the very people the industry needs to be cultivating.

"Meanwhile fuel duty for motorists remains frozen, as it has been for ten years now.

"Rail staff may bear the brunt of this as they are already seen to be Government supported when ordinary passengers are losing their jobs.

and

Notes to editors:

Government claims it is the "lowest actual increase for four years", which is true in purely numeric terms, but at 1.6 percentage points above CPI (the accepted measure of inflation) you have to go back to January 2013 (last use of RPI+1%) to equal it (4.2% fare increase with preceding July's CPI of 2.6%)

Given that the TOCs^▸ (Train Operating Company) have ceased to be businesses and are now merely contractual-interface companies (to avoid the government becoming the employer, client of suppliers etc.) with the government receiving all revenue and paying all costs (apart from the open access operators who only set their own operator-specific fares) we expect that in England the same increase (2.6%) will apply to all fares, not just regulated fares

These increases are often presented as something the government 'caps' whereas fact that the government is actually imposing the rise.

The government has reintroduced the policy from 2003 of RPI+1%, rather do anything to control costs. News articles have referred to CPI as the government's 'preferred' measure. RPI has not been an official government statistic for many years and the government has announced its intention to abolish RPI in 2030 and replace it with CPIH (CP plus housing costs).

The 1 March increase is being presented as being kind to season ticket holders. Whilst welcome, it is likely that this is simply because the government couldn't decide in time for the implementation window for fare changes needed for advance sales.

[Surrey 455]

From the Department for Transport at https://www.gov.uk/government/news/rail-fare-rise-to-be-delayed

Management summary box says:

* rail tickets will remain at 2020 prices until March 1 2021, giving commuters the chance to renew season tickets at old prices

* passengers still advised to reduce number of journeys as much as possible for the time being

* regulated fares to increase by 2.6% in March, the lowest amount in 4 years, ensuring taxpayers are not unfairly overburdened by anticipated investments of around ?10 billion to keep vital services running during pandemic

Follow link for rest of announcement.

This only seems to benefit commuters whose annual season ticket expires in January or February.

[Sixty3Closure]

I suspect many commuters won't be coming back anyway.

My company is planning on continuing to remote work where possible till April at the earliest and I don't think we're the exception so March is probably of limited use.

I think the railfuture quote summed up my thoughts quite nicely and yet again a rail fares increase by much more than my pay rise even if this year was a bit different.

[grahame]

They say a problem shared is a problem solved! If this is the wrong place to post apologies!

[snip]

The spanner in the works now is I don?t think I?m under the pressure I thought I was to purchase my ticket to Ryde again. However, because of the engineering works in Q1 2021 on the island, is it possible unless I renew now I will not be able to obtain the ticket I desire?!

A good board to post in (we don't really have "right" and "wrong".  However, I'm splitting the thread - so this will have its own thread in a few minutes (edit to add link ... http://www.passenger.chat/24380 ).   That way it will come better to the attention of a couple of members here may know the answer for you.   Personally, I would be no better that offering "educated guess" level answers ... better wait for others.

[ChrisB]

Press Release from Railfuture

Rail campaigners have condemned the announcement of inflation-busting rail fare increases in March.

"This increase will come at a time when people are deciding whether to go back to work 5 days a week."

Hmmm - fancy thinking if they think the commuter will be the one making that choice - it will be the employer undoubtedly, if the commuter wants to retain their job.

"Passengers will vote with their feet and revenue will be less as they travel say 3 days per week with ordinary tickets instead of 4 with a flexi-season.

I very much doubt that a flexi-season will be worth using for 4 days/week - a normal season will present better value as it will give a better discount for 4 or 5 days. A flexi-season will only be worthwhile at 3 days or less if current offerings (carnets & ticket packs) are a guide.

"Things aren?t going to get back to near normal until about June at the earliest, so a 2.6% increase won?t generate much cash when there are so few  passengers travelling."

Agreed - they'd raise far more implementing this the following year, in 2021....they may still do so.

and

Notes to editors:

...we expect that in England the same increase (2.6%) will apply to all fares, not just regulated fares

Those wishing for full nationalisation - this is likely to be a consequence. You get what you wish for.

The government has reintroduced the policy from 2003 of RPI^▸ (Revenue Protection Inspector (or Retail Price Index, depending on the context))+1%,

Hmm - a 'policy' runs for more than a single implementation - I don't think they have a crystal ball? {yes, semantics, but....)

rather do anything to control costs.

They need to make a suggestion here....

the government has announced its intention to abolish RPI in 2030 and replace it with CPIH (CP plus housing costs).

No - the *independent* Office for National Statistics has stated that they are dropping the RPI calculation - there's b*gger all the Government can do to retain it after that date.

[didcotdean]

From what I can see it is pretty much accepted by economists that the calculation of RPI^▸ (Revenue Protection Inspector (or Retail Price Index, depending on the context)) is broken and has been since around 2010 although there are differences about exactly as to how various technical changes have contributed to this and how this could be fixed if at all (it is typically biased high by up to 1%). The ONS^» (Office for National Statistics - website) is required to compile this although not as a 'national statistic' primarily as it is hard-wired into index-linked gilts with long maturity dates. Changing the mechanism has been delayed once already as it was thought it would disturb confidence in already sold gilts, although this had been priced in for some time by the market.

The official measure of inflation that gets all the headlines from 2013 is CPI and maybe ought to be the measure used for all ongoing valorisation by now unless there is a contractual reason otherwise. The RMT^▸ (National Union of Rail, Maritime & Transport Workers) for one though have opposed its potential use in determining pay rises for its members.

In the end though it wouldn't matter as the increase can be anything the government determines it wants, without reference to any index.

[ChrisB]

Changing the mechanism has been delayed once already as it was thought it would disturb confidence in already sold gilts, although this had been priced in for some time by the market.

The official measure of inflation that gets all the headlines from 2013 is CPI and maybe ought to be the measure used for all ongoing valorisation by now unless there is a contractual reason otherwise. The RMT^▸ (National Union of Rail, Maritime & Transport Workers) for one though have opposed its potential use in determining pay rises for its members.

That is the reason that the ONS^» (Office for National Statistics - website) can't ditch calculating RPI^▸ (Revenue Protection Inspector (or Retail Price Index, depending on the context)), yes. But it has given notice to the Government & unions that it won't be calculated after that date in 2030 (the end date on the longest gilt under RPI), so they'll both have to move to CPIH after that date.

[grahame]

This thread has gone very quiet - no post for 49 days. And yet the fare "revision" with a rise of 2.6% come in in less than 4 weeks.  Tickets may be purchased prior to 1st March for travel on or after that date and will be honoured. I do find myself wondering if the delay by two month and quietness may signal some significant changes to the system, or are simply because of the low passenger numbers at present.

[ChrisB]

Very low passenger numbers - minute numbers booking flexible tickets ahead as date of travel likely unknown currently. Of course any Advance fares that may be available don't generally rise in January - but May & September.

[grahame]

Press release from RailFuture

The usual annual punishment for rail passengers - rail campaigners condemn inflation-busting fare hikes

Monday March 1st sees fare rises of 2.6% kick in across England and Wales. "This is the usual annual punishment for rail passengers, just slightly delayed" said Bruce Williamson from the campaign group Railfuture. "In fact it's worse than that as the government is screwing the public with an extra 1% over and above inflation. As part of the government's announcement of a gradual easing of lockdown, they should be encouraging the public to start using trains again, but instead they're gradually pricing the railways out of existence. It just doesn't make sense to kick the rail industry when it's down.

"Even without the extra 1%, it would still be an inflation-busting increase, because the government continues to base fare rises on RPI^▸ (Revenue Protection Inspector (or Retail Price Index, depending on the context)), which is a higher measure of inflation than CPI, yet CPI is widely regarded as a more realistic figure.

"We really need to get the economy moving again and get people travelling back to work, but pricing passengers off the railways really isn't going to achieve this. Why are they charging us extra to do the right thing? There are many other jobs which are indirectly supported by rail users in city centres too. The potential knock-on effects are huge if we don't get this right.

"This latest price increase won't generate much cash for the government in itself, but it may have the effect of deterring passengers so much that it actually ends up costing the taxpayer more in the long term."

Notes to editors:

Railfuture is the UK^▸ (United Kingdom)'s leading independent organisation campaigning for better rail services for both passengers and freight.

* Government claims it is the "lowest actual increase for four years", which is true in purely numeric terms, but at 1.6 percentage points above CPI (the accepted measure of inflation) you have to go back to January 2013 (last use of RPI+1%) to equal it (4.2% fare increase with preceding July's CPI of 2.6%)

* Given that the TOCs^▸ (Train Operating Company) have ceased to be businesses and are now merely contractual-interface companies (to avoid the government becoming the employer, client of suppliers etc.) with the government receiving all revenue and paying all costs (apart from the open access operators who only set their own operator-specific fares) we expect that in England the same increase (2.6%) will apply to all fares, not just regulated fares

* These increases are often presented as something the government 'caps' whereas in reality the government is actually imposing the rise

* The government has reintroduced the policy from 2003 of RPI+1%, rather than do anything to control costs.

* News articles have referred to CPI as the government's 'preferred' measure. RPI has not been an official government statistic for many years and the government has announced its intention to abolish RPI in 2030 and replace it with CPIH (CP plus housing costs)

* The 1 March increase is being presented as being kind to season ticket holders. Whilst the delay from the normal start of January is welcome, it is likely that this is simply because the government couldn't decide in time for the implementation window for fare changes needed for advance sales

* The International Energy Authority comments "Rail is one of the most energy-efficient transport modes, responsible for 9% of global motorised passenger movement and 7% of freight but only 3% of transport energy use." (https://www.iea.org/reports/rail)PIH (CP plus housing costs)

[ChrisB]

1% above RPI^▸ (Revenue Protection Inspector (or Retail Price Index, depending on the context)) *will* produce a fair whack for the Treasury. even when the rise is limited to the usual fares that are contained within this 'basket'.

They missed the likely (yet again - it's been a decade since the last rise!) freeze in road fuel duty, which to me is far more effective than banging on about RPI v CPI, when it's well known now that many costs on the railway are affected by RPI% (like staff costs) and one needs to bang on about sorting that whole problem out....they won't of course, because the unions won't like it.

[IndustryInsider]

They missed the likely (yet again - it's been a decade since the last rise!) freeze in road fuel duty, which to me is far more effective than banging on about RPI^▸ (Revenue Protection Inspector (or Retail Price Index, depending on the context)) v CPI, when it's well known now that many costs on the railway are affected by RPI% (like staff costs) and one needs to bang on about sorting that whole problem out....they won't of course, because the unions won't like it.

Though with the DfT holding all the cards at the moment, there's arguably never been, and never going to be, a better chance to sort that whole problem out.