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Government should confirm CPI rail fare switch for January

12 August 2019

Media briefing from Campaign for Better Transport

Ahead of the announcement of July’s Retail Price Index (RPI) figure on 14 August, which will be used to set the rail fare rises for January 2020, Darren Shirley, Chief Executive of Campaign for Better Transport, said:

"Last year, passengers were told by the Transport Secretary that fare rises pegged to RPI were difficult to justify and should be a thing of the past, but there is still no end in sight to these exorbitant increases that will cost commuters dearly from January.

“The Government should commit now to January’s fares rise being linked to CPI and a comprehensive package of reforms to rail fares should follow after the Rail Review completes.”

ENDS

Campaign for Better Transport spokespeople will be available for interview. For further information and example fare rises, please contact the press office on 020 3746 2235 or communications@bettertransport.org.uk

The current situation

On Wednesday 14 August, the RPI figure which is used to set January 2020 rail fare rises will be announced.

Campaign for Better Transport’s view

  • This rise will come as a real blow to passengers already paying thousands of pounds to endure overcrowding, delays and cancellations
  • The Government must commit to setting fare rises at CPI for January and future years
  • The Government's Rail Review needs to set out a comprehensive package of fares reforms.

Background

Regulated fares

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 3.2 per cent this January because this was the RPI level in July 2018.

Unregulated fares

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 3.1 per cent this year.

RPI vs CPI

The Government continues to use 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 and did not commit to introducing the lower level of fare rises for this January. Had CPI been used to calculate this year’s increase, fares would have gone up by 2.5 per cent instead of 3.1 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 %
2014 3.1 2.8 2.6
2015 2.5 2.2 1.5
2016 1.3 0.7 0
2017 1.9 1.2 0.7
2018 3.6 3.4 2.6
2019 3.2 3.1 2.5

The Williams’ Rail Review

The Williams’ Rail Review aims to transform how the railways are managed and operate and that must include fundamental reform of fares.