Rail fares in England are due to increase by an average of 8% next January. Is this a reasonable price to pay for improving the network, or are commuters being unfairly clobbered?
The reason for the huge increase is that the Government has changed policy. Since 2004, regulated rail fares (which include season tickets) have risen each year by the Retail Price Index (RPI) + 1%. The Government has decided that for the next few years the formula should be RPI + 3%. In Scotland, increases will still be calculated by the old formula.
On Tuesday, the Office for National Statistics announced that the RPI in July, the month which is relevant for calculating fare increases, was 5%. So that’s why English regulated rail fares will go up by an average of 8% in January. But this is only an average. Some fares may go up by less; but some may increase by as much as 13%.
Philip Hammond, the Transport Secretary, justified the increase. He said: ‘We are now embarked on one of the biggest programmes of rail investment for 100 years, delivering more than 2,700 new carriages, a £900m programme to electrify more lines and the vital Crossrail and Thameslink projects in London. Due to the scale of the deficit, these investments would simply not have been possible without the difficult decision we have made to increase rail fares. I know this decision has not been popular, but I hope passengers will appreciate the improvements it allows us to make.’
The key issue in the financing of railways is what proportion of the cost should be met by passengers and what proportion by taxpayers. Up to now, taxpayers have been paying up to half the operating costs. The Government’s aim is not only to reduce the proportion the taxpayer has to contribute but also to reduce the overall cost of the railways. If it succeeds in doing so, these planned above-inflation fare increases will only be temporary, it claims.
An independent review of the finances of the railways conducted by Sir Roy McNulty and published earlier this year, found that operating costs of the railways in Britain were running at about 40% more than those in France, the Netherlands, Sweden and Switzerland. McNulty reckoned that £1bn could be cut from the annual bill.
But McNulty also reported that fares in Britain were about 30% higher than in those countries and so to commuters already paying these higher fares, the new planned increase seems like adding insult to injury. A demonstration against the new price hike was organised at London’s Waterloo station to coincide with its announcement on Tuesday. Many of those demonstrating think the root cause of the problem was the privatisation of the railways carried out by the last Conservative government which, they say, is what led to the increased costs of running the network. Some want the railways renationalised, though no major party is advocating it.
Labour, however, is siding with the commuters, arguing that the strain should be taken by extra government subsidy, paid for by slowing the rate at which the government wishes to reduce its deficit. Maria Eagle, the shadow transport secretary, said: ‘These fare rises squeezing commuters are the direct consequence of the Tory-led Government’s decision to cut too far and too fast, and travellers are having to pay more to plug the gap in the transport budget. The cost of getting to work is, for many people, the biggest single item in the monthly budget – bigger than mortgage payments and bigger than rent. With train fares set to rise four times faster than wages in the next year, ministers should think again and give commuters a break.’
There is no doubt that many commuters are already feeling the pinch as wage increases fall well short of the rate of inflation. Some opponents of the planned fare rises say that this additional pinch will make the railways unaffordable to poorer commuters. Trains will become a subsidised service available only to the better off, they claim, so making a nonsense of the case for taxpayer subsidy in the first place.
Stephen Joseph, chief executive of the Campaign for Better Transport, said: ‘It’s really a self-fulfilling prophecy that only people in well-paid jobs are commuters. As fares continue to go up, only the people who have those jobs will be able to use the trains.’
Campaigners argue that driving poorer workers off the trains is bad for the overall health of cities, which require a cohort of low-paid workers to keep them going. But if such workers are first driven out of the city because both house prices and rents are too high, and then find it is too expensive to commute back in to take up the jobs they need to fill, then cities themselves will suffer.
The fare increases are attacked too on environmental grounds. Domestic air fares are about half long-distance rail fares and yet planes produce far greater carbon emissions than trains. Putting up rail fares in this way will only make things worse, it’s argued.
The Government would say that the only way to square this particular circle would be to pare back the investment in the railways that the higher fares are paying for. But is that, they would ask, in anyone’s long-term interest?
What’s your view?
- Will the planned fare increases affect you and, if so, how badly?
- Is the Government right to be embarking on ‘one of the biggest programmes of rail investment for 100 years’ or not?
- Do you think you will see an improvement in the service you use as a result of these investments?
- Do you think Labour is right to say that the Government should be borrowing more to pay for them?
- Do you think it is possible to reduce the costs of the railways by £1bn a year?
- Do you think the new formula for calculating regulated rail fares will prove temporary or permanent?
- Do you think poorer commuters will be driven off the trains or not?
- And what do you make of the call for the railways to be renationalised?
