Rail passengers face the biggest rise in ticket prices since the industry was privatised in the mid 1990s
Daily Mail: 16th August 2010 By Paul Bentley
Rail passengers face the biggest rise in ticket prices since the industry was privatised in the mid 1990s after the Government refused to rule out higher-than-usual fare increases.
Long distance season tickets are predicted to go up by more than £200 and, at the very least, commuters will see tickets rise by one per cent more than July's retail price index.
Under the current pricing system, train companies raise fares each New Year by one per cent above the level of the RPI of the previous July.
Last month's RPI, which will be announced on Tuesday, is expected to be around 5.1 per cent, meaning a 6.1 per cent rise to some ticket prices.
With a 6.1 per cent increase – the highest since the current formula was set in 2004 - a commuter travelling from Brighton to London, for instance, will have to pay £216 more than the £3,556 they are currently charged each year.
Season ticket holders going from Canterbury to London would see their £3,840 bill increase by £311, pushing the cost of the ticket above £4,000.
But the rises could even end up even higher if the government decides to scrap the funding formula - and give rail companies the freedom to raise fares by as much as they wish.
The current fares system was part of Labour's plan to make rail users increasingly pay a higher proportion of the cost of running the taxpayer-subsidised railways.
And last night Conservative Transport Secretary Phillip Hammond refused to rule out that this formula may have to change.
If his Department is forced to bear the brunt of budget cuts in the government's October review of finances, then fares could rise by even more than 6.1 per cent.
Mr Hammond told the Telegraph: 'It would normally be the case that next year's regulated train fares are calculated using July's inflation figure, plus one per cent.
'These figures are due to be published shortly. '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 in the spending review which concludes this autumn.
'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.'
At the time of the last ticket price hikes in January, Liberal Democrat transport spokesman Norman Baker MP, now a Transport Minister, demanded a fares freeze.
He campaigned for lower fares during the election and is understood to have warned the Treasury of the dangers of demanding fare rises of more than ten per cent.
The Association of Train Operating Companies said any predictions that rail fares would increase were 'just speculation'.
A spokesman said: 'The Government is currently reviewing its approach to rail fares and a final decision is unlikely to be made until the spending review in the autumn.
'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.'