Rail commuters face steeper fare rises

Rail commuters will face increased annual hikes in fares from 2012, Chancellor George Osborne announced today.

At present the annual increases in regulated fares, which include season tickets, are capped at 1% above the retail price index (RPI) inflation level.

Today Mr Osborne said that from 2012 the cap will be RPI plus 3% which - if introduced for next January - would have meant season tickets going up almost 8%.

Mr Osborne said the rise was needed to pay for new trains and improve passenger conditions.

Bob Crow, general secretary of the RMT transport union said: "The massive increase in rail fares will drive people off the trains and onto the roads and it looks like the profits of the private rail companies will be ring fenced while upgrades are kicked into the long grass, forcing passengers to pay through the nose to travel on creaking, overcrowded services."

Mr Osborne said the amount of money for transport projects over the next four years would be greater than for the previous four years.

He confirmed that the 16 billion pounds cross-London Crossrail scheme would go ahead and listed a number of other key projects that would escape the axe.

These included Manchester to Liverpool rail electrification, widening schemes on the M25, improvements to the M1, M4, M5 and an upgrading of the A11 in East Anglia.

Campaign for Better Transport chief executive Stephen Joseph said:

"The Chancellor's statement focuses on large-scale transport projects but the reality is cuts in funding for everyday transport. These projects should not be used as a smokescreen to cover up service cuts and rocketing fares on our buses and trains. Understandably, this will enrage people across the country who rely on these essential services

"We are appalled at the Government's plan to allow rail fares to rise so far above the inflation rate. Hard-working commuters who depend on the train face paying over £1,000 more for their annual season ticket by the time of the next election. These eye-watering rises are unacceptable at a time when we should be growing the railways in order to tackle congestion on our roads and reduce carbon emissions in line with Government targets."

The new RPI plus 3% rail fare formula will be in place for three years. The Department for Transport will reduce resource spending by 21% in real terms over the next four years and capital spending will be reduced by 11% in real terms.

The department's administration budget will be cut by 33%.

Transport Secretary Philip Hammond said: "This Government inherited a financial crisis because we were spending more money than the country could afford. That has meant that we have had to look again at every pound that we spend to ensure we get value for money.

"Whilst we have had to make some difficult choices, I am confident that our focus on the long term will ensure that we can continue to build a transport system that supports economic growth and reduces carbon. We have secured investment to allow us to go ahead with important projects such as high speed rail, support for ultra-low carbon cars and major road building and public transport programmes.

"We have taken big steps forward in improving efficiency - making genuine savings of over 21% from our resource budget. We have also radically reformed the way decisions are made, ensuring that local people have more control over their priorities."

Among decisions taken today are:

* A 20% reduction in bus subsidies paid directly to operators that will save more than £300 million by 2014/15;

* Concessionary fare "bus passes" to remain for older travellers;

* Higher charges for cars using the Dartford River Crossing, with the price going up from £1.50 to £2 in 2011 and to £2.50 in 2012;

* A reduction of 28% in resource grants to local authorities;

* Spending on upgrading the London Underground network will be protected;

* More than £10 billion funding for the national and local road networks, and public transport schemes in Britain's major cities. This will include widening the remaining section of the A11 to provide a continuous dual carriageway link between Norwich and the M11; improving the junction between the M4 and M5 in the West Country; easing congestion on the M1 between junctions 28 and 31;

* There will also be route extension and capacity increases on the Midland Metro; investing in the Mersey Gateway Bridge; improving the A23 Handcross to Warninglid in Sussex; upgrading the Tyne and Wear Metro; improving the Tees Valley bus network for passengers; introducing a managed motorway scheme between junctions 25 to 30 of the M62; and improving accessibility to Leeds rail station;.

* Crossrail will proceed in its entirety, providing an additional 10% capacity to London's rail network, while Government will continue to seek efficiency savings to maximise value for money;

* Better management of contracts across the Highways Agency will save £240 million by 2014-15;

RAC Foundation director Professor Stephen Glaister said: "It is a relief to hear that the Chancellor recognises transport infrastructure investment is good for growth and good for society. What we now need is the detail to show that the £30 billion promised is being spent on the projects that deliver the best value for money - and more often than not that means roads.

"The 150,000 drivers using the Dartford Crossing each day will be very nervous about the planned hike in the toll, though moves to improve traffic flow might soften the blow slightly."

James Hookham, the Freight Transport Association's policy and communications managing director, said: "We are encouraged with Osborne's declaration of support for transport projects and it is good news that many of the trade routes we identified to transport ministers as priority projects demanding further investment have been protected.

"While we have yet to learn the full details of other road and rail projects it looks like the message has got through: for future growth to happen, infrastructure is not an optional extra but an absolute essential."

The AA said capital expenditure on transport would be cut by 11% and that "important schemes" on the A47, A19, A21, A14 had been axed.

AA president Edmund King said: "The hike in tolls (at Dartford) is an act of highway robbery as these tolls should have been dropped not doubled in two years.

"There is some relief that road improvements will go ahead, although most widening schemes proceeding will use the hard shoulder. We are relieved that transport spending has not been more savagely cut but we need to see the detail. More than 90% of passenger journeys are by road and hence roads are essential.

"Whilst welcoming improvements to the A11 to Norwich, the M62, the Mersey bridge and improvements to the M1, A46, M4, M5 and A3, other essential schemes have been cut."

He went on: "It is also worth remembering that road users more than pay for these investments in the £46.8 billion in tax that was collected from drivers in duty, VAT and company car tax last year.

"The prospect of drivers paying more in tolls and taxes yet still sitting in jams for years to come is not great at a time when it is important that the economy recovers."

Dr Ashley Steel, global transport chairman for financial services body KPMG, said: "The Government has clearly recognised the huge impact transport and infrastructure has on creating the foundations for economic growth. The announcement of £30 billion plus of capital spend over the next four years is good news for transport schemes across the whole UK, such as the Merseyside bridge, the rail electrification in the North West and the upgrade to Birmingham New Street.

"Londoners will be particularly pleased with the confirmation that Crossrail will progress and £6 billion is to be spent on Tube upgrades - rightly, given the economic contribution and importance London has on the overall economy."

"Bus operators will be relieved that pensioners will keep their free bus passes but we will have to wait and see if the fuel duty will be cut, given the intention to reduce bus subsidy by 20%. Expect fare increases.

" With only 3% increase above inflation in rail fares, the state subsidy remains substantial. This may seem good news for rail users, however this represents around a 20% increase in fares over the next four years."

Around 40% of rail fares are regulated.

Anthony Smith, chief executive of rail customer watchdog Passenger Focus, said: "Although we know the average amount (by which) fares will go up, some passengers could find they will be asked to pay a further 5% if the Government doesn't continue to restrict the flexibility train companies have to put up prices on individual routes.

"This level of price rises puts the spotlight on industry performance. For such prices passengers will rightfully expect punctual, clean trains with a reasonable chance of getting a seat. We will be pressing to ensure that the rail industry is as efficient as possible. Savings identified by the Government's value for money review should be passed on to passengers."

Passenger Focus welcomed the commitment to transport projects including Crossrail, electrification and a pledge on new trains.

Mr Smith said: "The good news is the Government's acknowledgement that transport spending is good for Britain's economy and will improve rail services. But rail passenger numbers are on the way up so we need these new trains and projects to arrive as soon as possible. For those plans postponed, we hope these projects will be picked up during better economic times."

Luke Pollard, head of public affairs at travel organisation Abta, said: "The cuts announced today will undoubtedly land a blow to consumer confidence which will have a knock-on effect on how consumers want to spend their money when it comes to holidays. But the travel industry need not be too pessimistic."

Michael Roberts, chief executive of the Association of Train Operating Companies, said: "The Government's change to regulated fares from January 2012 is part of a wider policy to shift the funding of the railways more towards the passenger, so that the taxpayer pays less. All extra income raised by the Government's decision will go back to Government, not to train companies.

"Regulated fares account for roughly half of all rail journeys. Train companies will continue to offer a range of good value fares to suit all pockets."

He went on: "The Department for Transport seems to have come out with a smaller cut to its budget than many other departments, and train companies and passengers will welcome the Chancellor's support for a number of rail schemes across the country, including Crossrail.

"However, we will need to see the full details of the plans before we can understand what they mean for passengers and the industry as a whole. Sustained and targeted investment in Britain's railway is vital to keep pace with demand, which is expected to double in the coming decades."