Rail fare prices - the basis of increases (merged ongoing discussion)

[whole diary]

[Chris from Nailsea]

Well, that particular line seems to have originated in a press release from the RMT^▸ (National Union of Rail, Maritime & Transport Workers) on 4 June 2010:

RMT General Secretary Bob Crow said today:

^Just a few weeks into this ConDem administration we can now see their transport policy taking shape ^ ring-fencing the profits, subsidies and fare increases of the private train operators while passengers are forced to travel in slow-moving, over-crowded cattle trucks on dangerously under-maintained tracks."

[JayMac]

Perhaps instead of that 12% pay rise, Commie Bob should be charging news outlets for re-using his quotes.

And it's a bit poor of the BBC^» (British Broadcasting Corporation - home page) to re-hash a quote (if that's what they've done) from a two month old press release rather than asking Bob to comment on this latest piece. Unless of course the RMT^▸ (National Union of Rail, Maritime & Transport Workers) media relations department were using a similar response like that given by MPs^▸ (Member of Parliament) in parliament referring the questioner to a answer given previously.

Maybe Bob's on holiday.

[inspector_blakey]

I think he might be - the RMT^▸ (National Union of Rail, Maritime & Transport Workers) froth about last week's little, erm, contretemps on LUL^▸ (London Underground Ltd) has Pat Sikorski's name attached to it. He's the Asst Gen Sec, so I'm guessing Bob's on his hols.

Maybe I'm being a little harsh on this occasion calling it froth though. The incident was certainly serious enough, although the RMT press release does smack rather of immediately placing blame where they'd like it to be and pre-judging the inevitable investigations into the incident.

[JayMac]

From the West Briton:

Westcountry rail passengers could be the most badly hit by a double price hike in train fares, an industry commentator has warned.

From January, the cost of tickets will go up by one per cent more than the level of inflation for July, which is to be announced today and expected to be about five per cent.

Transport Secretary Philip Hammond has also refused to rule out changing the "inflation plus one per cent" formula used to set regulated fares, which includes season tickets and most off-peak long-distance journeys.

Some commentators are predicting increases of ten per cent from January, which could be particularly punishing for passengers making frequent long-distance journeys from Devon and Cornwall.

Chris Irwin, chairman of the TravelWatch South West pressure group, added that any across-the-board price rise would be felt more keenly in low wage areas such as the Westcountry.

A ten-per-cent rise on an open return ticket from Plymouth to London would see the fare go up by about ^23 to almost ^252.

Mr Irwin said: "The Great Western line has already got the most expensive mainline fares in Europe, and we rely much more on long-distance rail travel than other regions. We are also a part of the world where wages are much lower than other parts of the country, so we will really feel an increase in fares of eight or nine per cent. Even in the South West, the incomes of those in Cornwall are half those in Swindon."

He said the hike would discriminate against those on low wages, undermine the Government's green agenda by driving rail passengers on to the road and put economic growth at risk.

He said: "Will it overcome over-crowding? Almost certainly not. Rather than buy more carriages, British Rail would push up fares."

Commentators fear the fares formula will be changed as part of the spending review in the autumn.

Transport Secretary Philip Hammond has said: "It would normally be the case that next year's regulated train fares are calculated using July's inflation figure, plus one per cent. But this is not a normal year. The scale of the financial crisis that we have inherited means that we will have to make some tough decisions. I am therefore not yet in a position to determine next year's fare increase. It would be irresponsible, at a time when investment in the railway is under pressure, to rule anything out until the spending review is concluded."

A spokesman for the Association of Train Operating Companies said predictions of rail fare rises were "just speculation".

He said: "The average price paid for a single journey comes in at under five pounds and we will have to wait and see how this changes."

[old original]

What seems to have been forgotten by most people (including the media) today is the fact that these regulated fares hardly moved last january (in fact some went down) due to the RPI^▸ (Revenue Protection Inspector (or Retail Price Index, depending on the context)) being in negative territory last July, so in effect next January's increases will balance this out.

[JayMac]

I'd say it's only balanced out for those whose income will have increased by 5.4% since last January. That takes into account the expected rise of 5.8% in Jan 2011 minus 0.4% from Jan 2010.

And remember nothing is yet set in stone. We are waiting on the Government's comprehensive spending review report which will be published in October. Something that will no doubt be giving ATOC^» (Association of Train Operating Companies See - here) a logistical headache. Not knowing what the fares increases will be until then will be making life complicated for the fares bods as well as the TOCs^▸ (Train Operating Company) financial officers.

Then there is the LibDems to throw into the mix. They had a manifesto pledge to change the regulated fares increase formula to RPI^▸ (Revenue Protection Inspector (or Retail Price Index, depending on the context)) minus 1%. If this is one of their redline coalition agreements then it will prove very difficult for Phillip Hammond to do anything else to appease the sandalistas.

To paraphrase the ancient chinese proverb: We are living in interesting times!

[JayMac]

From the guardian:

Commuters face fare rises of nearly 11% on some routes next year under government changes to the rail ticketing regime.

Transport secretary Philip Hammond is reinstating a provision that allows rail companies to average out fare hikes across a basket of tickets instead of applying uniform price increases. The result is that some regulated fares on commuter routes are likely to rise by as much as 10.8% in January.

Anthony Smith, chief executive of Passenger Focus, the rail user watchdog, said some commuters would be "shocked" by the cost of renewing their season ticket in January. "It is very disappointing. We could be back to double-digit fare rises on particular routes. Some passengers will be in for a real shock in January."

The basket system means that a further 5% can be added to the planned rise on certain fares, provided the net increase across the batch of tickets is in line with the official limit. As a consequence, next year's scheduled increase of the rate of inflation plus one percentage point, which comes in at 5.8%, will in fact be 10.8% on some tickets. The government announced a wave of fare increases in last week's comprehensive spending review, including the headline increase of 5.8% for 2011, as part of plans to reduce the state's ^5bn annual rail budget.

The fares basket was scrapped last year by the previous transport secretary, Lord Adonis, who ordered rail operators to apply the pricing regime to each fare individually. The move angered some train operators at the time, particularly those exposed to the London commuter market who feared they would lose tens of millions of pounds in revenues. Fare hikes are capped for regulated tickets, which include commuter season tickets and off-peak long-distance fares.

A DfT^» (Department for Transport - about) spokesperson said the government could not afford to limit the fares cap to each individual ticket: "The decision to remove the 5% flexibility for 2010 was made by the previous government. It was only removed for the fares year starting January 2010 to address the particular circumstances at the time. This loss of flexibility is unsustainable in both operational and affordability terms."

A government source said the decision by the previous transport secretary, Lord Adonis, to apply the cap to individual fares was a "one-off" change in an election year. "That was only ever a temporary measure and this is one of those tough decisions that we are having to make. It is not affordable to continue with a one-off move instigated by the previous government." Some passengers will benefit from the changes as the corollary of higher increases on some fares will be decreases of a similar proportion on others.

A spokesperson for the Association of Train Operating Companies said: "It means that some fares will go up by less than 1%. Importantly, the average is weighted so that operators cannot increase fares on routes with lots of passengers, and likewise reduce them on routes with fewer passengers."

However, the effect of reintroducing the basket system is likely to be more marked from 2012 onwards, when the fare caps rises from inflation plus one percentage point to inflation plus three percentage points until 2015. If that increase was introduced in January, including the basket regime, it would mean fares on some routes rising by nearly 13%. Farepayers already put ^6bn per year into the railways and they will account for three-quarters of the industry's funding by 2014.

[ChrisB]

A spokesperson for the Association of Train Operating Companies said: "It means that some fares will go up by less than 1%. Importantly, the average is weighted so that operators cannot increase fares on routes with lots of passengers, and likewise reduce them on routes with fewer passengers."

Hmmm - Interesting. The Fares committee from the Customer Panel has always understood that the fares basket IS NOT weighted, and thus TOCs^▸ (Train Operating Company) load the popular fares and decrease the not-so-popular fares as a way of increasing income.

Enquiries will be made!

[Rhydgaled]

Exactly how much additional farebox revenue per year are these planned rises (including the 3% above inflation coming up) expected to generate? When I heard of this plan I was devestated that the goverment's new policy is to encourage modal shift away from public transport (I've heard they also cut funding for rual bus services), a move which can only cause rises in greenhouse gas emmisions.

[John R]

There's an obvious contradiction. The government says it is unaffordable to continue with the restriction, so by definition they expect it to raise more money. Therefore, if you believe that statement, (and why else would they be lifting the rule) then  ATOC^» (Association of Train Operating Companies See - here)'s statement must be false, as if it were weighted the net effect would be nil.

[Zoe]

When I heard of this plan I was devestated that the goverment's new policy is to encourage modal shift away from public transport (I've heard they also cut funding for rual bus services), a move which can only cause rises in greenhouse gas emmisions.

I'm not sure that will be the case.  Many people can't afford a car and so will have no option but to not travel at all.

[JayMac]

And then we've got muppets like Iain Duncan-Smith telling jobseekers to utilise public transport to go to other areas to look for work. Bit difficult if the public transport ain't there. Then, even if it is there, a larger proportion of the jobseekers' already meagre income will be needed to utilise it.

Joined up government? I think not.

[ChrisB]

Exactly how much additional farebox revenue per year are these planned rises (including the 3% above inflation coming up) expected to generate?

Errrr......an extra 2%. (RPI^▸ (Revenue Protection Inspector (or Retail Price Index, depending on the context))+1% -> RPI+3%)

When I heard of this plan I was devestated that the goverment's new policy is to encourage modal shift away from public transport (I've heard they also cut funding for rual bus services)

That's a by-product unfortunately. Franchise agreements state that the rise will be in baskets at an average of RPI+1%. To restrict each fare to that rise,. rather than aberages within baskets is detrimental to the TOCs^▸ (Train Operating Company), and therefore they have to be compensated (i.e. paid wonga) toi agree to the change. It is that extra money that the current Government wishes to save.

As you rightly say, that will encourage modal shift and an increase in CO2 emissions. Unfortunately, the GFovernment needs to save hard cash at the moment, rather than worry about modal shift & CO2. That can wait a few years....

There's an obvious contradiction. The government says it is unaffordable to continue with the restriction, so by definition they expect it to raise more money. Therefore, if you believe that statement, (and why else would they be lifting the rule) then  ATOC^» (Association of Train Operating Companies See - here)'s statement must be false, as if it were weighted the net effect would be nil.

You misunderstand. It is unaffordable as they have to pay TOCs additional money to stick to the fixed increases in each fare. They wish to save that, so back to baskets they want to go.

Another stated aim (of BOTH Governments) is to shift the cost of the railways more onto the users. This will also save taxpayer money in funding the railway. It's another 'cut' if you like, but introduced by Labour in the last Government. That extra 2% will go directly into funding the extra rolling stock & Crossrail, as trhe Minister said in his Statement last week..

[John R]

There's an obvious contradiction. The government says it is unaffordable to continue with the restriction, so by definition they expect it to raise more money. Therefore, if you believe that statement, (and why else would they be lifting the rule) then  ATOC^» (Association of Train Operating Companies See - here)'s statement must be false, as if it were weighted the net effect would be nil.

You misunderstand. It is unaffordable as they have to pay TOCs^▸ (Train Operating Company) additional money to stick to the fixed increases in each fare. They wish to save that, so back to baskets they want to go.

Exactly. Abolishing the restriction raises more money from the farebox, which it wouldn't do if the ATOC statement was true. So for franchises currently on a cap and collar arrangement, the government will need to give less support.

[Rhydgaled]

Errrr......an extra 2%. (RPI^▸ (Revenue Protection Inspector (or Retail Price Index, depending on the context))+1% -> RPI+3%)

Maybe you misunderstood, I'm wondering how much extra revenue (ie. ^s) would be generated, not the percentage. My own calculations were rather un-informed and I came up with either ^43,200,000 or ^115,200,000, BIG difference there! I ask this because I'm wondering if there's a way that amount can be saved without pricing passengers off Britain's railway, I have an idea but I expect the goverment won't listen unless it generates at least as much as the fare hike would. We can NOT afford to wait a few years to get modal shift to rail, according to what I've read global greenhouse emmisions MUST START TO FALL BY 2015.