England rail fares to rise by over 4% in January

Across the country campaigners are protesting at railway stations against the announcement today that rail fares will increase on average by 4.1%, 1% above the latest inflation figures, from January 2014.

The rise is due to government policy aimed at train commuters to shoulder a larger share of the railway operating costs than taxpayers.  Under an agreement between the government and rail operators, operators are allowed to peg fare increases to the July inflation figure, plus 1%.

The July inflation figure used by the government, the Retail Price Index (RPI), which is calculated from an index of various prices and incomes including tax allowances, state benefits, pensions and index-linked gilts, was announced as being 2.1%.

However, under the terms agreed with the government, rail operators are able to increase prices by 5%, as long as the average fare increase is within the RPI plus 1% target.  Some fare will go up by 9.1%, adding a potential £200 to yearly travel tickets.

Action for Rail, a group committed to restoring the publicly funded British Rail, have commented that today’s announcement has continued a trend where fares have increased three times faster than average earnings.

The rail fare price rise has also attracted attention over the government’s use of RPI.  The calculation method had been called flawed by the previous Bank of England chairman, Mervin King, in November 2012. The Office of National Statistics have, since January 2013, calculated inflation through the improved RPIJ system (“J” standing for Jevon), which recorded July’s inflation figures at 2.6%.

The Department for Transport defended their use of RPI, as a change in calculation would mean renegotiation with all train franchises “at significant cost to the taxpayer”.

A planned government review of train and ticketing costs has been delayed until the autumn of this year.

Peter Winnicki