Ouch – yesterday’s news about rail fare increases is painful for commuters like me. So what are the facts and how might it all pan out? I’m putting my questions to our rail expert, James Tallack, to find out.
Until yesterday’s spending review, rail companies were limited to price rises of RPI plus 1% for season tickets. Now this protection for commuters has been weakened and rail companies are free to raise prices by 3% above RPI for three years from 2012.
Matt Stevens: If RPI stays at around 5% this could add up to 24% over three years? Increasing prices by 8% a year in the next three years could push the price of my annual season ticket from £2,388 to £3,007!
Which? rail expert James Tallack: Yes, it’s potentially a big increase, although it’s a common misconception to equate an 8% year-on-year increase to a 24% increase overall. The figure is actually cumulative, so at 8% a year for three years the fare goes up by £619, which is a 26% increase on the current price.
And remember that it’s purely speculative that companies will put their prices up this much – they may not choose to increase by the full 3%. Plus, the actual increase from 2012 depends on what RPI will be by then.
Matt: Is it fair to ask for more from those of us who already pay thousands every year just to get to work? As a commuter I feel like a sitting duck – I travel from where I live to where I work and I don’t have any other travel options.
James: The fare increases will reflect what passengers can tolerate before they switch to alternative modes of transport. As prices go up, it’s possible that more affordable modes will emerge. For example, we may find express coach companies moving in to cater for passengers who can’t afford price rises (this already happens between London and Oxford).
Matt: But it’s not just the fares that commuters have the right to get angry about – plans for an extra 2,000 new carriages are now on hold. I doubt I’ll see a 26% increase in the quality or frequency of the service, so are these price rises reasonable?
James: This is a really fair point – if people could see an improvement in the quality of the services they’re getting then raising prices might be more acceptable to them.
Companies must look at improving the train frequency, ensure they’re on time and make sure there’s enough seats at busy times. There also needs to be more clarity about peak travel times so passengers know how the cost is affected at different times of the day.
But these improvements will depend on the individual train companies and so will vary throughout the UK.
Matt: Rail companies get millions in subsidies from the government and have done since privatisation in the mid-nineties. If more could be raised from the passengers’ (rather than the public) purse, these subsidies could be cut.
James: It’s true that the railways receive a large public subsidy. However, we still invest much less in our railways than other European countries. This is a political decision that reflects a view that service users (rather than taxpayers) should pay for public services.
Nonetheless, the government does require the private train companies to fulfil a certain level of service – the frequency and number of trains per day etc. If left to their own devices, companies would only run trains when passenger demand is high, so you’d see far fewer trains during the daytime on weekdays.
If the government continues to demand that train companies provide a public service while also reducing the public subsidy, the money will have to come from regular users, like commuters.
Matt: I’ve heard that this could be a short, sharp shock with price-rise restrictions likely to be re-introduced in a few years. What do you think about this theory?
James: We can only go on what’s in the government’s spending review and there’s no provision to revert back to the RPI+1% formula at the moment.
However, without serious competition between train companies, it’s an important question to ask whether such a simplistic RPI-based mechanism is the best way to regulate fares.
Has this eased your worries about the rising costs of train travel, or have you still got unanswered questions?