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Rail fares to increase in real terms in January, despite Government spin

18 August 2009
Today the inflation figures have come out that train companies use to set 2010 fares -- creating fares at least 1 percentage point above inflation. Campaign for Better Transport has warned that train fares will go up in real terms this January, and has criticised the Government for implying that they will fall.

The Government has said ‘the majority of regulated rail fares, including most commuter fares, will fall in January.’ (1) RPI is now at -1.4%, which means that regulated fares will fall in absolute terms by 0.4%. But these fares will still be 1% higher in real terms. (2)

Cat Hobbs, the group’s public transport campaigner, said:
“The Government is pretending it’s being tough on train companies by sticking to the RPI+1 formula for regulated fares. In fact, this formula means that passengers will still pay more in real terms. It’s Government policy to make passengers pay more. The Government is trying to take the credit for a negative inflation rate, whilst still raising fares above inflation. With people's pay packets already restricted, now is the time to stop this crazy policy.”

The organisation also warned that a fare ‘cut’ of 0.4% is unlikely to be the reality for many passengers. Government policy is to reduce its own investment in the railways and make passengers pay more. Train companies will try to raise the money they need for premium payments to the Government by changing the time restrictions on tickets to effectively force passengers to pay higher fares. First Great Western recently announced changes to time restrictions on its Off Peak fares and the introduction of a new Super Off Peak fare. The changes mean that many passengers will see their fares go up by 20%. Regulated fares for Southeastern and some fares in the Northern franchise are capped at RPI+3% so fares can rise by 1.6% in these areas.

Notes to editors
1) Press release issued today by the Department for Transport, "Most commuter fares set to drop next year".   

2) Press release issued today by the Office of National Statistics, "CPI inflation unchanged while RPI rises to -1.4"      
 
The Retail Prices Index (RPI) is the most familiar general purpose domestic measure of inflation in the United Kingdom. It is available continuously from June 1947. The Government uses it for uprating of pensions, benefits and index-linked gilts. It is commonly used in private contracts for uprating of maintenance payments and housing rents. It is also used for wage bargaining. According to the CIPD, at least 8 in 10 employers use RPI as the cost of living benchmark when deciding on staff pay awards.

The Retail Prices Index (RPI) annual inflation figure for July was released today. It will be used to calculate January’s regulated train fare rises using the Government’s formula of RPI+1%.