Rail fares in England and Wales are set to increase at their fastest pace in a decade, unless ministers decide to prevent steep price increases to encourage commuters to get back on the train.
Annual rail fare increases are generally governed by the July Retail Price Index (RPI) plus another 1%. The Office for National Statistics (ONS) said on Wednesday that the RPI for July was 3.8%, which means prices could rise 4.8% in January. This would be the biggest increase since 2012.
However, the government has yet to reveal its plans for the January price hikes as it considers the effect of the coronavirus pandemic on UK transport and transfers control of rail services to a new independent body, Great British Railways. .
A sharp increase in tariffs could also prove politically controversial in the run-up to the UN climate summit, Cop26, to be held in Glasgow in November. The UK has already been criticized for its implicit subsidies on polluting petrol and diesel cars with a ten-year freeze on fuel taxes. Campaigners say fares should be frozen to encourage passengers to return to the railways and help cut emissions.
Ministers face a dilemma over whether to try to lure commuters to the railways with lower prices, or allow rail companies to increase fares – potentially allowing them to recoup some of the cost. their losses during the pandemic.
The government stepped in to bail out rail companies at the start of the pandemic after the first nationwide lockdowns, and the number of people using public transport is still well below pre-pandemic averages in some cities.
Regulated rail fares in England and Wales have already risen 2.6% in March this year, a delayed increase from January in part due to pandemic travel restrictions earlier this year. About 40% of fares are regulated, according to the Rail Delivery Group, which represents the rail companies.
It is understood that the fares will be seen as part of a “rail take-back” program as the government tries to bring back people who used to work from home on public transport. However, the government has yet to give details on when this will be announced other than saying it is expected later this year.
A spokesperson for the Ministry of Transport said: “No decision has been taken on national rail tariffs. The government is considering various options and we will announce our decision in due course. “
Labor said its analysis showed that an annual subscription between Birmingham and London would have increased by 50% since 2010 under coalition and Tory governments to more than £ 12,000 if the latest planned increases materialize. Meanwhile, a subscription from Coventry in London and Swindon in London will have increased by £ 3,600 and £ 3,300 respectively, he said.
Jim McMahon, the shadow secretary of transportation, said it would be “yet another enticing hike” for commuters.
Paul Tuohy, chief executive of the Campaign for Better Transport, said the government should freeze fares to increase the number of passengers, while helping to reduce climate emissions by reducing the number of trips made by car.
“In the face of a climate emergency, the government should do everything in its power to encourage people to choose low-carbon public transport by making it the cheapest option, not by increasing rail fares.” , did he declare. “If the government can freeze fuel taxes for 10 years, it can freeze rail fares next year. “
Anthony Smith, chief executive of Transport Focus, an independent watchdog, said: “After an extraordinary year, it is good to hear that the government is considering a range of options. It is important to think about what would help even more people to travel by train.
The use of the RPI measure is particularly controversial because flaws in its calculation mean that it is higher than other measures of inflation, such as the Consumer Price Index (CPI). The ONS said on Wednesday that CPI inflation was only 2% in July.
Unlike the CPI, which is the primary measure of inflation used by the Bank of England and the Treasury, the RPI includes some housing costs. It also uses a mathematical formula that has been abandoned by other countries in recent years because it can skew readings of inflation.
The House of Lords Economic Affairs Committee has previously warned the government against choosing RPI or IPC when it best fits the chessboard, a tactic known as “index shopping”.
Economists and statisticians are very critical of the RPI, which lost its status as a national statistic in 2013.