Train fares to soar after ‘stealth deal’
The Times: July 11, 2007
Ben Webster, Transport Correspondent

Rail passengers face fare rises of at least 30 per cent above inflation under a series of deals between the Government and train companies.
Ministers were accused yesterday of orchestrating the increases but leaving the operators to take the blame.
Three companies signing contracts in the past fortnight have announced almost identical fare increases.
Stagecoach and Arriva are planning fare rises in the East Midlands and Cross Country franchises of 3.4 per cent a year in real terms. Go-Ahead intends to raise fares by 3 per cent a year on the London to Northampton route By the end of the eight-year franchises, fares will have risen by 30 per cent. However, the companies can impose the full increase much sooner if they choose.
A standard open return from London to Nottingham costs £109 now and is expected to rise to at least £164 by 2015, given the Treasury’s modest inflation target of 2 per cent per year over the period.
The increases affect “unregulated fares”, which account for 60 per cent of total fare revenue. The Government regulates the price of season tickets and saver tickets and all other fares are supposedly set by the train companies.
But the Department for Transport made clear to all the companies bidding for the latest franchises that they could only win if they planned sharp rises in unregulated fares. Arriva, which was awarded the Cross Country franchise yesterday and will replace Virgin, has had to agree to a huge reduction in subsidies. It will receive £239 million from the Government next year but just £5 million by 2015.
Rail companies are angry that the Government is blaming them for fare rises but only Stagecoach has spoken out so far because the others are worried about losing existing or future franchises.
Unregulated fares have risen by 18 per cent above inflation since privatisation a decade ago. On long-distance services, they have risen by 31 per cent. The total amount paid in fares by rail passengers has doubled since privatisation to more than £5 billion a year. But the total subsidy has risen even faster, reaching £6.3 billion last year, four times what British Rail received in a typical year.
The rail network is carrying 50 per cent more passengers than in BR’s last year but the cost of running it is three times as high.
Theresa Villiers, the Shadow Transport Secretary, said: “The Government should come clean and admit that it responsible for these endless fare hikes, which are looking more and more like yet another form of stealth tax.
“If the Government wants people to make greener transport choices, they are going to have to seriously up their game when it comes to efficiency in running the railways or their fare increases will price more and more people off public transport and back into their cars.”
Passenger Focus, the rail passenger watchdog, said there was no evidence yet that higher fares were deterring people from travelling by train. The average fare increased 6.8 per cent last year but the total distance travelled also increased by 6.8 per cent.
Anthony Smith, the watchdog’s chief executive, said: “These increases, which are already happening with a 20 per cent rise at South West Trains, are taking advantage of a captive market. People don’t have an alternative because roads are so congested.”
A DfT spokesman said the similarity in the increases announced by different companies was “just a coincidence”. He added: “We have no role in setting unregulated fares. We are trying to find the right balance between the farepayer and the taxpayer in covering the cost of the railways.”