Coalition counters energy price-freeze with rail fare cap: Train operators banned from adding 5% to annual ticket price rise

Train operators told to lower maximum price rise as part of drive to cut transport costs

Train operators will be banned from adding an additional 5 per cent to the annual rise in rail fares under a new drive to reduce the cost of living to be launched by the Government.

The move will bring some relief to hard-pressed commuters, who have been angered that some rail companies have topped up the government-approved increase each January on the busiest routes. Operators must keep the average rise to RPI inflation plus one per cent, but under a system called “flex” can vary the increase for individual fares.

In January, fares in England will rise overall by 4.1 per cent. But the five per cent “flex” margin will be cut to two per cent, ending the double-digit rises for some commuters in recent years. Ministers say some will save more than £20 a month. If the new ceiling had been introduced January this year, a monthly season ticket from Colchester to London would currently cost £535.80 rather than £547.20, while the same ticket from Bicester would cost £485.30 rather than £489.90 and from Warwick £746.30 rather than £767.30.

Unveiling a government review, the Transport Secretary Patrick McLoughlin will also announce plans for “flexible” season tickets which could cut costs for part-time workers and people who sometimes work from home. A pilot scheme will trial “touch in, touch out” tickets like the Oyster card system on the London Underground. Part-timers could get a discount for travelling three days a week, or for making their journeys earlier or later.

Mr McLoughlin will begin a counter-attack against Labour’s move to make the “cost of living crisis” the central issue at the 2015 election. The Conservatives have dismissed Ed Miliband’s energy price-freeze as a gimmick, and argue that the best way to help hard-pressed families is to ensure economic stability.

However, the rail fares cap is the first in a series of targeted measures to help cut household bills. Ministers are also looking at bank fees, water charges and the cost of gas and electricity, which could be reduced by cutting “green” obligations.

The action on rail fares highlights the Coalition’s ability to “steal Labour’s clothes” before 2015, since Labour had planned to scrap the “flex” system and may make lower fares a key pledge.

In his speech, Mr McLoughlin will say: “Over the next few weeks, we will be announcing a number of new initiatives to put money back into people’s pockets. The people of Britain have endured an incredibly difficult few years. Most have had to make sacrifices. Now, while we remain committed to the careful economic policies which have got us this far, we will also share the rewards of recovery.”

The review could open the door to the eventual ending of paper tickets and a code of conduct for train companies to give customers confidence they get the best deal. A proposal for operators to charge premium fares at peak times has been blocked.

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