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Fare rises will continue until 2019 to fund £37bn rail investment

National Rail also announce 4,000 jobs will go in the same time frame

The spectre of annual above-inflation fare rises until the end of the decade hung over £37.5 billion plans unveiled today to run and expand the railways.

Network Rail (NR) said its plans assumed the annual RPI inflation plus 1 per cent formula would be in place throughout 2014 to 2019.

There was further discouraging news for passengers when NR announced its trains-on-time target for 2014-19 would not be an improvement on the 2009-14 target of 92.5 per cent which it is failing to meet.

Gloom also deepened when NR said it planned to axe nearly 4,000 jobs by 2019, although it hoped that compulsory redundancies could be kept to a minimum.

And NR chief executive Sir David Higgins sounded a further ominous note when he said the rail industry had entered an "era of trade-offs" and had to balance the need to build more infrastructure, run trains on time and cut costs.

To be approved by the Office of Rail Regulation (ORR), the NR plan comes just days after regulated fares, which include season tickets, went up by an average of 4.2 per cent - to a widespread chorus of disapproval.

The NR plan provides for 170,000 extra morning commuter seats at peak times by 2019 including 115,000 - a 20 per cent increase - on services into central London.

NR also envisages 225 million more passengers per year travelling by 2019 and 355,000 more trains in service.

Projects include various electrification schemes, such as the Great Western and Midland Main Lines, station improvements at Birmingham New Street and Reading in Berkshire, and reopening 31 miles of railways in Scotland closed under the Beeching cuts 50 years ago.

NR group strategy director Paul Plummer said they were making an assumption that annual fare rises would stay at RPI plus 1 per cent.

He said altering the annual fare formula was a matter for government and that if a government wanted to make changes it would need to increase the public subsidy to the railways.

The subsidy is set to fall during the five-year period, from £4.5 billion in 2009 to between £2.6 billion and £2.9 billion in 2019.

So receiving less money from the farebox would mean this subsidy rate of decline would slow.

With the Government committed to laying more of the burden of rail costs on farepayers rather than taxpayers, there seems little likelihood of ministers embracing any plan to limit fare rises if that means subsidies for the railways continue at high levels.

On the question of the unchanged 92.5 per cent trains-on-time target for 2014-19, NR said: "We want to do better than that, but we are facing up to some problems that come with success - that is, more trains and more passengers on an increasingly congested network.

"Even the smallest delay at busy times can cause a ripple effect which disrupts passengers several hours later, hundreds of miles away."

NR's trains-on-time total for 2009/10 was 91.5 per cent, with 90.8 per cent being achieved in 2010/11 and 91.6% in 2011/12.

This compares with a figure of only 79.2 per cent in 2002/03.

A total of 174,636 trains were cancelled or more than 30 minutes late in 2011/12 compared with 256,328 in 2002/03.

NR is set to have 34,583 employees by April 2014 and the company said this figure was expected to go down by 3,974 to 30,609 by 2019.

The company said as it had a staff turnover of around 8 per cent, or 2,700 per year, it expected to be able to lose the vast majority of these posts through natural wastage and voluntary redundancy.

Sir David said: "As our railway gets busier the challenges get bigger and more complex. We have entered an era of trade-offs.

"Increasingly we have to balance the need to build more infrastructure, run trains on time and cut costs, and in many areas choices will need to be made."

Michael Roberts, chief executive of the Association of Train Operating Companies, said: "We aim to build on today's near record levels of customer satisfaction by combining the best of the public and private sectors to provide newer trains, quicker journeys and more seats."

Anthony Smith, chief executive of rail customer watchdog Passenger Focus, said: "Passengers will welcome the fact that Network Rail and train companies are working together on a plan to deliver passenger and Government priorities - more trains on time, and more seats.

ORR chief executive Richard Price said: "Ministers have shown huge faith in what the railways can add to Britain's society and economy, committing to around £20 billion-worth of public money at a time when there is little money to go around.

"Key to maintaining rail's success will be openly justifying this significant commitment of public money.

"Taxpayers significantly fund the railways, and have every right to see where this money is being spent."

Bob Crow, general secretary of the Rail Maritime and Transport union, said: "While we support any plans to expand and invest in Britain's railways, you cannot seriously expect to safely increase capacity while at the same time the Government is looking to axe key frontline staff on trains, track and stations."

Manuel Cortes, leader of the TSSA rail union, said: "We obviously back rail investment to improve the service but passengers have already suffered enough pain with a decade of annual inflation-plus fare increases.

"They should not now be expected to face another six years of even higher fares."