The Department for Transport have intervened to cap rail fares this year, delaying a review of rail fares until March 2024.
Government's Announcement
The Government has announced a significant intervention to cap next year’s rail fare increase at 4.9%, considerably below the 9% July’s RPI figure on which they are historically based.
This comes as the Government delivers its commitment to halve inflation by the end of the year with the latest statistics showing inflation is at its lowest level for over two years at 3.9% – helping to keep fare rises lower in the long-term.
Historical Context
Since 1996, under both Labour and Conservative governments, regulated rail fares have increased closely in line with RPI inflation – never being more than 1% above or below RPI before last year’s significant Government intervention.
Today’s announcement means fare increases are lower than last year’s rise and will not increase until the 3rd March 2024. This means passengers will not see any changes in their fares until then, giving them more time to purchase season tickets at the current rate and keeping fares as low as possible for longer. Fare changes will now take place in March every year moving forwards.
Regional Comparison
The regulated fare cap for National Rail operators in England is also significantly lower than in Scotland where rail fares are set to increase by 8.7% from April next year.
Transport Secretary's Statement
Transport Secretary Mark Harper said:
“Having met our target of halving inflation across the economy, this is a significant intervention by the Government to cap the increase in rail fares below last year’s rise.
“Changed working patterns after the pandemic means that our railways are still losing money and require significant subsidies, so this rise strikes a balance to keep our railways running, while not overburdening passengers.”
“We remain committed to supporting the rail sector reform outdated working practices to help put it on a sustainable financial footing.”
Government's Previous Intervention
Today’s announcement builds on last year’s unprecedented intervention, which saw Government cap the increase for 2023 at 6.4 percentage points lower than the 2022 July RPI figure. This means the government will have helped keep ticket prices more than 9% lower than what passengers would have paid if rises matched the RPI benchmark in the last two years.
Challenges Facing Railways
With changes to working and travel patterns, there are significant challenges facing the railways. In July to September 2023, rail revenues were 78% of pre-pandemic levels once inflation is taken into account. Over the past year (2022/23) the taxpayer has provided £12 billion in support for the railways, which is over £420 per household, as it continues to deal with a persistent revenue shortfall after Covid.
Financial Sustainability and Cost-saving Reforms
Some fare increases are therefore necessary to ensure the financial sustainability of our rail network, as are cost-saving reforms, with which ministers have urged rail unions to agree.
The 4.9% increase strikes the right balance to keep our railways running and financially sustainable, while not overburdening passengers with excessive fare rises as we bear down on inflation.
Keeping Travel Cost Affordable
This comes on top of further government interventions to keep the cost of travel more affordable. Since January, single bus fares in England have been capped at £2 thanks to government funding. The bus fare cap had been due to rise to £2.50 in November but we are keeping the fares down at £2 until the end of next year to help millions of people make significant savings on their travel costs.
The bus fare cap has helped cut fares in England outside London by 7.4% between June 2022 and June 2023, with even bigger savings in rural areas where fares have dropped by almost 11%. This extension is only possible due to the redirected HS2 funding as part of the Network North plan and takes the total government investment to keep bus fares down to nearly £600 million – with over 140 operators signing up to continue offering the cap across more than 5,000 routes.
Response from London TravelWatch
A spokesperson from London TravelWatch, the transport watchdog, issued this statement in response to the Government’s announcement.
“These new rail fares will see already hard-pressed passengers hit with another unwelcome price hike.
Reform to rail fares and ticketing could not be more urgent now. Government needs to set out an alternative vision that makes public transport appealing – this includes affordable fares, rolling out contactless payment options, and improving train service punctuality so passengers are getting real value-for-money.”
Summary
The recent intervention by the Department for Transport to cap rail fare increases and delay a review until March 2024 reflects a strategic approach to balancing the financial sustainability of the railways while considering the impact on passengers. As changes in working and travel patterns continue to present challenges, ongoing government support and reform efforts are crucial in ensuring a robust and efficient rail network for the future.
(This article is sourced from globalrailwayreview.com and curated by Thetransporteronline24)
