Rail users are to be hit with soaring ticket prices after the Government announced measures that will see fares rise at more than twice the rate of inflation for three years in a row.
The Department for Transport (DfT) calculated that rail fares would rise by 10 per cent in real terms over the next four years. However, campaigners said season tickets could increase by as much as 30 per cent by 2014.
The subsidy handed to local bus operators will also be reduced, paving the way for services to be slashed.
Under changes revealed in the Comprehensive Spending Review, regulated rail fares – which include season tickets – will be allowed to rise by three per cent above inflation from 2012. Government rules currently limit fare increases on regulated fares (which make up two-fifths of all journeys) to one per cent above inflation.
It will come as miserable news for commuters, who already face a six per cent rise in their ticket prices in January. With the Treasury predicting inflation of around two to three per cent from next year, fare hikes are likely to come to around six per cent in total each year.
The Chancellor, George Osborne, said higher fares were needed to safeguard improved services for passengers. Spending on major transport projects will be £30bn over the next four years, greater than the figure spent on Britain's transport network in the four previous years, he said.
It means large infrastructure projects, such as the £16bn Crossrail scheme in London and the South-east, have been spared from the huge cuts programme. London will also benefit from a £6bn programme of investment that will see faster services and more frequent trains introduced to the Tube network. Other spending to be rescued included the Mersey Gateway bridge and the widening of the M1 motorway.
Train station upgrades totalling £2.1bn were also approved. Refurbishments at Birmingham New Street, London King's Cross, Reading and Gatwick Airport station will all take place.
Campaigners said that Mr Osborne had used the large figure set aside for major transport projects to mask cuts to services and spiralling fare prices. "The Chancellor's statement focuses on large-scale transport projects but the reality is cuts in funding for everyday transport," said Stephen Joseph, chief executive of the Campaign for Better Transport.
"Hard-working commuters who depend on the train face paying over £1,000 more for their annual season ticket by the time of the next election. These eye-watering rises are unacceptable."
The fares watchdog, Passenger Focus, warned that commuters would not tolerate the prospect of seeing season tickets rise dramatically as they were already being charged some of the highest rail fares in Europe.
"This level of price rises puts the spotlight on industry performance," said Anthony Smith, its chief executive. "For such prices, passengers will rightfully expect punctual, clean trains with a reasonable chance of getting a seat. Passenger Focus will be pressing to ensure that the rail industry is as efficient as possible. Savings identified by the Government's value-for-money review should be passed on to passengers."
Allowing fares to rise by three per cent above the retail price index (RPI) from 2012 means the Government will be able to reduce the £5bn it gives towards the cost of running Britain's trains each year.
The impact on fares
If inflation is around 5 per cent (the Retail Price Index is currently 4.6 per cent as of September figures) then RPI+3 equals an 8 per cent rise. This would lead to yearly rises of:
* £80 extra on a typical annual season ticket costing £1,000 (eg Redditch to Birmingham – cheapest current fare £1,056)
* £120 on an annual season ticket costing £1,500 (eg Macclesfield to Manchester – cheapest current fare £1,496)
* £160 on an annual season ticket costing around £2,000 (eg Slough to London – cheapest current fare £2,004)
* £200 a year on an annual season ticket costing around £2,500 (eg Sevenoaks to London – cheapest current fare £2,520)
* £240 a year on an annual season ticket costing around £3,000 (eg Farnborough to London – cheapest current fare £2,940).