The Last Word

The flaws in fare policy

Despite the concession by the Chancellor that saw regulated fare rises capped at 6% rather than 8%, few passengers are aware that the inflation plus 3% formula may still apply in 2013 and 2014, say Guy Dangerfield and Anthony Smith of Passenger Focus.

Shifting the cost of the running the railways from the taxpayer onto the farepayer is longstanding Department for Transport policy – and it has a direct impact on fares.

Prices rose only by an average of 6% at the beginning of January, rather than the planned 8%, following the Chancellor’s Autumn Statement. The reported ‘cost’ to the Government of making the change – just under £30m in lower fares over the year – was seen as worth it, especially if fewer people were put off taking the train in the first place, and it provided a rare economic ‘good news’ headline for the Government.

When the planned 8% rise was first announced in July 2011, there was “understandable angst”, according to Guy Dangerfield, passenger issues manager at independent watchdog Passenger Focus.

He said: “That was partly because passengers cannot always see what more they are getting for their money, and partly because few people expect their salary to rise by that much this year.”

When the rise was limited to 6%, Passenger Focus chief executive Anthony Smith said: “2011 saw the industry’s inefficiencies highlighted in a number of reports. The current policy of moving costs from the taxpayer onto the fare payer will go totally sour if the whole industry and Government does not wring better value for money out of its spending – why should passengers go on paying for a fractured inefficient industry?

“Unregulated fares have not been hit in the same way as in previous years. Whether this is because train companies felt the limits have finally been reached, or that passengers who have a choice might baulk at paying these fares during grim economic times does not matter – let’s hope this policy continues in the following months.

“Train companies also appear to have not used the flexibility to price up fares on particular routes to the same extent as seen in previous years.

“Those forward looking train companies that offer direct debit schemes for season tickets are to be congratulated – spreading the cost of an annual ticket makes rail more affordable for some passengers. However, rising car park charges are also increasing the cost of using Britain’s railways.”

Importantly, the switch back to the RPI plus 1% formula seems only to apply for 2012 – will the Government push ahead with RPI plus 3% in 2013 and 2014?

Unless inflation collapses, Dangerfield said, that could mean fares are nearly 25% higher in three years’ time – and virtually nobody expects their salary to increase by that much.

“Passenger Focus will be calling for tighter limits to the amount train companies are allowed to put up particular prices by more than the regulatory cap if they reduce other fares – that is deeply unfair on those who could have a much larger fare increase.

“But there are also risks from a passenger perspective. The Government’s fare review may reopen the debate on whether certain ticket prices should be regulated at all.

“Expect the rail industry to argue that in some markets there is plenty of competition from private cars, coaches and, in some cases, air, so regulation is unnecessary. Government may not carry out another fares review for some time, so it’s crucial that this one gets to the heart of passengers’ concerns about the current system.”

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