11 August 2020
Ahead of the announcement of July’s Retail Price Index (RPI) figure next week (19 August), which will be used to set the rail fare rises for January 2021, Darren Shirley, Chief Executive of Campaign for Better Transport, said:
"Millions of people around the country are starting to plan their return to work and a rail fare rise in January is the last thing they need. Raising rail fares when people are already staying away from the railway will further damage the economy and the environment at a time when we need to be investing in a green sustainable transport-led recovery. The Government should hold fares at the current level and prioritise the introduction of flexible season tickets for the millions of people who will be working and commuting part time in January.”
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The current situation
On Wednesday 19 August, the RPI figure which is used to set January 2021 rail fare rises will be announced.
Campaign for Better Transport’s view
- The Government should cancel the January 2021 fare rise and hold fares at the current level
- Raising rail fares at this time is counter productive to encouraging passengers back to the railways and to limiting the cost of people’s commutes
- Reforms to fares, including the introduction of flexible season tickets, should be prioritised to provide passengers with value for money and encourage people back to the railways as part of a green transport-led recovery.
Regulated rail fares, including season tickets and standard returns, make up almost half (45 per cent) of all fares and increases are set by the Government. Since 2014, fare increases have been capped at the previous July’s Retail Price Index (RPI) figure. Regulated fares rose by 2.8 per cent this January because this was the RPI level in July 2019.
The remaining tickets, including advance and peak long-distance tickets, can be increased at train companies' discretion, so looking at fares as a whole, the average rise was 2.7 per cent this year.
RPI vs CPI
The Government continues to use the Retail Price Index (RPI) to calculate annual fare increases, rather than the accepted and more accurate measure of inflation, the Consumer Price Index (CPI). RPI over-estimates real inflation so consistently that the Office of National Statistics ceased using it as an official measure in 2013 and the Government has already switched to CPI for most other sectors. In July 2018, the then Transport Secretary, Chris Grayling, indicated that future fare rises would be pegged to CPI, but gave no date for the switch. Had CPI been used to calculate last year’s increase, fares would have gone up by 2.1 per cent instead of 2.8 per cent. This table shows the CPI figure in comparison to the annual rail fare increases from 2014.
|Regulated fare rise %||Average fare rise % (regulated and unregulated)||CPI at that time %|
The ’covid effect’
The effect of Covid-19 on transport has been seismic. But as the UK begins the process of recovery, the need for sustainable transport has only strengthened. By supporting public transport, walking and cycling, the Government can not only improve our environment and our health, but also create jobs, tackle social exclusion and help the economy to recover. Reduced passenger numbers have had profound financial implications for public transport operators, and the continued need for social distancing will impact on fare revenue for the foreseeable future. In the longer term, passenger demand could be affected by increased home-working, public mistrust in the safety of public transport and the expected economic downturn. In our recent report, Covid-19 Recovery: Renewing the transport system, we called for a new approach to fare setting on public transport, which should address future fare rises (or reductions) and how these are calculated. There should be a rapid move to simplified fare structures and account-based ticketing. Multi-modal tickets and zonal fares should be expedited for the cities beyond London as part of more devolved and better integrated transport and part-time season tickets should be introduced nationwide.
Part-time season tickets
Campaign for Better Transport has called for flexible season tickets for part-time commuters for many years. The number of people working part time and flexibly has been trending upwards for years, even before the pandemic: in 2019, 40% of women in employment were working part time. With millions of people set to continue working from home for at least part of the week for the foreseeable future, if not permanently, the need for a more flexible approach to commuter tickets has only increased. The Government recently announced that rail companies are to submit proposals for part-time season tickets. This welcome move could give people who work and commute flexibly or part time a fairer deal on train tickets for the first time. The Government should insist that all operators offer such tickets, and that they give an equivalent discount to full-time season tickets, part-time commuters do not need a repeat of carnet tickets that offer little to no savings.
The Government is currently consulting on the next stage of its Transport Decarbonisation Plan. Rail is the greenest major form of transport (releasing up to 85 per cent less carbon per passenger kilometre than other forms of transport), so enabling more people to travel by rail will be crucial to helping transport reduce its carbon footprint. Ensuring rail travel is affordable will help increase modal shift away from cars and reduce congestion, which cost the UK economy £6.9 billion in 2019.
Notes to Editors
- Campaign for Better Transport operates in England and Wales. We campaign to bring sustainable transport to all and ensure solutions are delivered that improve the wellbeing of communities, quality of life and the environment. Campaign for Better Transport Charitable Trust is a registered charity (1101929).