Rail passengers face above-inflation increases

Transport Secretary Philip Hammond today gave another broad hint that rail passengers could face big fare rises in the new year.

Mr Hammond has already indicated that the existing annual-rise fares formula whereby season tickets go up each January by 1 per cent above RPI inflation, may have to be changed.

Today he said it would be "irresponsible" to rule out considering "an increased contribution from the farepayer".

With RPI inflation currently running at around 5 per cent, regulated fares - which include season tickets - could rise by 6 per cent in January 2011 and by even more should the Government change the formula.

Addressing a rail conference in Liverpool, Mr Hammond said: "To my mind, the current fares formula is a reasonable and sensible approach. But it cannot be set in stone when all the other variables are vulnerable to change and to challenges.

"We will face some very stark choices and it would be irresponsible at this point to rule out even considering an increased contribution from the farepayer as part of the solution to protecting investment in the railways."

Last month Mr Hammond was critical of six-figure bonuses paid to Network Rail top directors, particularly as he had earlier called on the company to show restraint.

Today, he said: "To be frank, I think a lot of people will be asking why this same pay discipline can't also be applied to the railways - an industry that, in effect, straddles the private and the public sectors because of its dependence on billions of pounds' worth of taxpayers' money.

"And, if we are going to ask people to endure personal sacrifices to get ourselves out of the hole we are in then those at the top have a duty to act fairly and set the right example, especially on pay and bonuses."

Gerry Doherty, leader of the TSSA rail union, said: "We already have the highest rail fares in Europe with a walk-on anytime return fare between London and Manchester costing £262, a figure way beyond the means of millions of ordinary families.

"If Mr Hammond goes down the route of scrapping price controls on fares, we are going to end up pricing those families off the railways altogether."

Mr Doherty called on ministers to encourage rail travel by introducing the Liberal Democrat manifesto pledge of annual increases being kept to RPI minus 1 per cent rather than the existing formula of RPI plus 1 per cent.