Latest Rail News

04.08.14

Miliband calls for lower cap on fare rises – but no freeze

Labour leader Ed Miliband has pledged to cap annual fare rises on each route if his party comes to power next year, ending operators’ flexibility to hike some fares by more as long as the average is no more than inflation plus 1%.

Speaking on a visit to Hastings in East Sussex, Miliband warned that commuters could face fare rises of up to 5.6% next year – on top of ‘inflation busting’ fare rises of nearly 20% since the coalition came to power.

Allowing regulated fares to rise by more than inflation was introduced by Labour in 2004, as part of a wider policy to put more of the cost of the railways onto passengers and less onto taxpayers.

As part of his party’s rail manifesto, Miliband has stated that there would be a “simplifying of fare structures and the creation of a new legal right to the cheapest ticket”.

However, Patrick McLoughlin, the transport secretary, said Miliband’s comments looked like “yet another unfunded spending promise which shows that Labour has failed to learn the lessons from their great recession”.

At the Q&A in St Mary in the Castle in Hastings, Miliband said: “David Cameron has failed hard-pressed commuters – who are already struggling due to the cost-of-living crisis – by allowing fares to rise by 20% since he came to power.

“Commuters here in Hastings travelling into London could see their fares rise by up to £265 to almost £5,000 next year.”

In 2004, Labour, under the leadership of Tony Blair, changed how fare prices (around half of which are regulated by the government) were regulated. Before 2004, government policy was to set regulated fares at July retail price index (RPI) minus 1%, resulting in below inflation rises. Since 2004, the annual change in these fares has been set by the government at July RPI plus 1%, leading to average fare rises higher than the rate of inflation every year since then.

Coalition policy to accelerate rises to RPI plus 3% were twice modified by the chancellor George Osborne ahead of January rises as inflation crept up, but fares rose by over 6% annually in 2011 and 2012.

In defence of the government, McLoughlin said: “It [fare capping] would cost £1.8bn over the lifetime of the next parliament and be paid for by more borrowing and higher taxes.

“It is because we've taken difficult decisions as part of our long-term economic plan that we've been able to cap rail fares increases at the rate of inflation for the first time in a decade, the majority of which was spent under Labour rule. People will look at what Labour did in government, not what it says now.”

(Image:  c. Stefan Rousseau)

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