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Protests may herald U-turn on coalition's rail fare rises

Government hints it may back down over planned increases in the face of mounting opposition

Gwyn Topham, transport correspondent
The Guardian, Tuesday 14 August 2012

Passenger groups and unions are stepping up pressure over train fares with a day of action, as the government hinted it may back down over planned rises that would result in some season tickets costing £1,000 more in 2015 than in 2011.

Fares will rise in January by three percentage points above the July RPI figure, which will be announced on Tuesday. That is expected to leave fares between 5% and 6% higher. Passenger groups said train fares were going up three times faster than salaries. With train operators allowed to raise some fares by an additional 5%, some commuters could see double-digit price rises on their tickets next year.

The transport secretary, Justine Greening, said she would ask for government money to keep fares down.

The Campaign for Better Transport's chief executive, Stephen Joseph, said: "The government knows they can't continue to hit [car] commuters – that's why they've postponed the fuel duty increase. Now they need to give the same help to rail users."

He said commuters in the south-east routinely spent up to 15% of their salary getting to work in London, and warned that the price of an annual season ticket from many towns – including Brighton, Oxford, Luton and Reading – would rise by more than £1,000 between 2011 and 2015.

Demonstrations are expected on Tuesday at London's Waterloo and dozens of other stations around the country, organised by the TUC-backed Action for Rail campaign. Elsewhere, a season ticket for rail travel between Liverpool and Manchester would see an annual increase of over £160, and between Leicester and Derby would go up nearly £120, at current rates.

Frances O'Grady, the TUC's deputy general secretary, said: "These fare rises will add even more pressure to passengers feeling a massive squeeze on their incomes. At the same time the government is asking the train operators to make cuts to staff on trains and stations and in ticket offices. Passengers are being asked to pay more to get less. We want cuts to rail fares, not rail staff."

A similar rise planned for January 2012 was modified to one percentage point above inflation in George Osborne's autumn statement, but at the time he restated increases scheduled for 2013.

But Greening said there could be a similar U-turn by the Treasury this autumn if there was "spare money". She added: "I am keen to see what we can do to keep fares down to something affordable."

While reducing the deficit by cutting subsidy was important, the government needed to "strike a balance" with continued investment in the network and affordable fares.

She said she was hopeful money would be made available. "If you don't ask, you don't get, so I'll make sure I'll ask."

Greening pledged in March to "end the era of inflation-busting fare rises". However, the government has also called for the taxpayer subsidy to be cut, which means more funding has to come from ticket revenue. The McNulty report on value for money in the rail industry concluded that substantial efficiency savings could be made, and Greening has demanded spending cuts of £3.5bn a year by 2019. The current subsidy is around £4bn a year.

Train operating companies maintain that they do not benefit directly from the additional rise in regulated fares, as payments they make or receive under the terms of their franchises are adjusted. Michael Roberts, the chief executive of the Association of Train Operating Companies, said: "The government decides the average increase of commuter ticket prices and other regulated fares which train companies will be required to introduce. Any flexibility train companies have within the rules is to maximise revenue for the government."

Unions say the proposals in the McNulty report mean train operators are likely to shed thousands of station staff, guards, catering staff and ticket offices to cut costs – putting up to 20,000 jobs at risk.

The Department for Transport is expected to announce on Tuesday morning which firm will run services on the West Coast mainline between London and Glasgow for the next 15 years, which could see the end of Richard Branson's Virgin Trains. First Group, which runs Thameslink and the Great Western route, is tipped to take the franchise, as first reported in the Guardian. Both Branson and the RMT union claim that First Group's bid for the service can only be profitable if staff and onboard services are drastically cut.

First Group did not take up the option to run its Great Western franchise to term, saving an estimated £800m in payments to the government, although it is now bidding to win the contract again.

The shadow transport secretary, Maria Eagle, said: "Passengers are set to lose out no matter which companies win these new longer franchises because ministers have promised successful bidders they can hike fares, cut services and close ticket offices. Instead of the strict 1%- above inflation cap proposed by Labour, the government has told train companies they can levy fare rises of 8% above inflation in 2013 and 2014 and 6% above inflation for the rest of the franchise."

Eagle said ministers should consider how bidders have "treated the spirit of previous contracts, for example not gaming the system to evade payments to the taxpayer", before awarding new franchises.

The RMT said it was considering a ballot for industrial actionadding that First Group's bid was "based on the same kind of over-geared financial projections that led to the collapse of the GNER and National Express contracts on the East Coast – forcing the government to renationalise the service". The union said the winning West Coast bidder was likely to remove onboard shops and catering with a potential loss of 800 train crew jobs.


Rail fares rises set to be revealed

14 August 2012 Last updated at 01:39 GMT BBC

Rail fare increases from next January are set to be revealed, with some commuters braced for rises of more than double the rate of inflation.

The latest Retail Price Index inflation figure - expected to remain at 2.8% - will be used to calculate the increase.

In England fares will rise by inflation plus 3%, while in Scotland they will go up by inflation plus 1%. Wales has yet to set a figure for its increase.

The extra money is helping to fund huge investment across the network.

BBC transport correspondent Richard Westcott says passengers and taxpayers used to split the cost of running the railways, with both sides paying about half each, but successive ministers have cut the amount of government funding and that has resulted in regular fare rises.

The latest rise will mean fares in England will have gone up by more than inflation for 10 successive years, resulting in some of the most expensive train journeys in Europe, our correspondent added.

The planned rise for fares in England is only an average. Train companies are allowed to raise some fares by as much as 11%, as long as they cut ticket prices elsewhere.

Stephen Joseph from passengers' group the Campaign for Better Transport said rail fares could rise three times faster than salaries if the government sticks to its policy.

"With the economy flatlining, this is untenable. The government knows they can't continue to hit commuters - that's why they've postponed the fuel duty increase," he said.

"Now they need to give the same help to rail users."

The group said commuters across the country routinely spend between 5% and 10% of their salary getting to work. In some towns in the South East, it said they spent up to 15%.

Olympics bounce?

Forecasts for July's Retail Price Index (RPI) inflation measure suggest it will remain unchanged from 2.8%, or dip slightly.

The rate of inflation has fallen sharply from September last year, when the RPI stood at 5.6%.

This is partly due to falling petrol prices, but also a slowdown in the increase in the price of clothes and food.

The slowing of inflation means it is heading back towards the Bank of England's target rate of 2%. This means the Bank has more leeway when considering further stimulus measures to boost economic growth.

Last month, the Bank said it would pump a further £50bn into the economy over the next four months through quantitative easing (QE), taking the total size of the programme to £375bn.

But earlier this month, the Bank decided not to pump more money into the economy, despite figures released at the end of July showing that the UK economy contracted by 0.7% between April and June.

Some economists expect the economy to bounce back in the current quarter, helped in part by a short-term boost from the Olympic games.

This, they say, could come from a small uplift in consumer spending and from ticket sales, which will be recorded in the third quarter.

Rail fares set to rise by 6.2% in January

Passenger groups protest over planned rises that will result in some season tickets costing £1,000 more in 2015 than in 2011

Gwyn Topham, transport correspondent
guardian.co.uk, Tuesday 14 August 2012 12.45 BST

The cost of train travel will be even higher than expected next year with fares set to rise by 6.2% in January.

Passenger groups and unions have stepped up pressure over train fares by staging a day of action, as the government hinted it may back down over planned rises that would result in some season tickets costing £1,000 more in 2015 than in 2011.

Fares will rise on 1 January 2013 by three percentage points above the July RPI figure announced on Tuesday. A surprise rise in inflation to 3.2% means train fares will increase by 6.2% on average. Passenger groups said fares were going up far faster than salaries and risked pricing ordinary people off the railways. With train operators allowed to raise some fares by an additional 5%, some commuters could be paying 11.2% more for their tickets next year.

The transport secretary, Justine Greening, said on Monday she would ask for government money to keep fares down.

There is also pressure within the coalition to limit price rises. Julian Huppert MP and Lord Bradshaw, co-chairs of the Liberal Democrat transport committee, have warned Greening that Lib Dems would not support these fare rises on what was already the most expensive railway in Europe.

Huppert said: "People are struggling to make ends meet against a backdrop of wage freezes and rising utility bills. George Osborne has to realise that people cannot be expected to pay huge rises in rail fares on top."

Maria Eagle, the shadow transport secretary, said: "David Cameron's decision to side with the powerful private train operators against commuters and passengers shows he is desperately out of touch with the cost-of-living crisis facing many hard-working families."

She said Labour would enforce a strict cap of 1% above inflation across all routes.

Demonstrations were taking place on Tuesday at Waterloo in London and dozens of other stations around the country, organised by the TUC-backed Action for Rail campaign.

Protesters at Waterloo leafleted passengers and carried a huge banner reading: "Cut rail fares, not rail staff."

Stephen Joseph of the Campaign for Better Transport said: "This higher-than-expected inflation figure means that rail fares will rise by more than 6% if the government proceeds with its policy. There will be even more pressure on the government to reverse its policy, and bring fares down."

He said that postponing the fuel duty increase on cars showed the government knew they could not continue to hit commuters. But he pointed out that many in the south-east of England routinely spent up to 15% of their salary getting to work in London, and warned that the price of an annual season ticket from many towns – including Brighton, Oxford, Luton and Reading – would rise by more than £1,000 between 2011 and 2015.

Elsewhere, a season ticket for rail travel between Liverpool and Manchester would see an annual increase of over £160, and between Leicester and Derby would go up by £120.

The TSSA union has highlighted several commuter towns where season tickets to the capital will cost more than £5,000 a year.

Malcolm Shepherd, chief executive of cycling group Sustrans, said: "With rail fares rising so much faster than inflation and salaries, more of us are going to feel forced into using a car to get around, adding to congestion and pollution in our cities. The government saved drivers over £500m by postponing the fuel duty increase set for August. That money could make a huge difference in keeping fares down."

The RMT general secretary, Bob Crow, said: "This is the ConDem government handing out a massive kicking to commuters and is pure electoral suicide. The fare increase tied to these figures represents a massive blow to the travelling public as they see fares rocket by over 6% in January at a time when household budgets are hit by the government's austerity programmes."

He warned the money would not be invested back in services but "trousered by the greedy train operators as another windfall profit".

Simon Weller, national officer of the train drivers' union Aslef, said: "Enough is enough. Rail fares are constantly going up. We should stop subsidising private shareholders."

However, train operating companies maintained they would not benefit from the additional rise in regulated fares, as payments they make or receive under the terms of their franchises are adjusted.

Michael Roberts, the chief executive of the Association of Train Operating Companies, said: "The government decides the average increase of commuter ticket prices and other regulated fares which train companies will be required to introduce. Any flexibility train companies have within the rules is to maximise revenue for the government."

In Scotland, fares will rise by RPI plus 1%, while Wales has yet to set a figure. The RPI figure was significantly higher than expected, with most in the City predicting a 2.8% increase. The soaring cost of air travel will ultimately be a small factor in increased rail fares, as the ONS said plane tickets pushed the inflation index higher.

A similar rise planned for January 2012 was modified to one percentage point above inflation in George Osborne's autumn statement, but at the time he restated increases scheduled for 2013.

But Greening said there could be another U-turn by the Treasury this autumn if there was "spare money". She added: "I am keen to see what we can do to keep fares down to something affordable."

She said she was hopeful money would be made available. "If you don't ask, you don't get, so I'll make sure I'll ask."

While Greening pledged in March to "end the era of inflation-busting fare rises", the government also wants to see the taxpayer subsidy cut and passengers pay a higher proportion of rail costs.

Last year, the DfT-commissioned McNulty report on value for money in the rail industry said substantial efficiency savings could be made, and Greening has set a target of spending cuts of £3.5bn a year by 2019.

However, unions say McNulty's proposals will mean train operators shedding thousands of station staff, guards, catering staff and closing ticket offices.

The rail minister, Theresa Villiers, defended the rises, saying: "We are determined to drive down the cost of running the railways so we can put an end to above-inflation fare increases in the future. Our reforms aim to deliver £3.5bn in efficiency savings while continuing to expand services. That is the most effective way to respond to passenger concerns about fare levels."

Rail fare hike sparks Tory and Lib Dem revolt

George Osborne urged to make policy U-turn as parties fear 'tax on commuting' will destroy support in marginal seats
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Toby Helm and Jamie Doward
guardian.co.uk, Saturday 18 August 2012 21.50 BST

George Osborne is facing a mass revolt by Tory and Liberal Democrat MPs over soaring rail fares, amid warnings that above-inflation increases will destroy remaining support for the coalition among commuters in marginal seats.

The chancellor will come under intense pressure to perform yet another policy U-turn when MPs return to parliament next month, after it was announced last week that many fares would rise in January by up to 6.2% – 3% above inflation – with some rising by up to 11%.

Conservative and Lib Dem MPs said they would lobby the chancellor and the transport secretary, Justine Greening, to cap increases at 1% above inflation at most. Rises at that level are written in to franchise agreements, but all of the extra 2% above that flows directly to the Treasury – prompting MPs and commuters to complain of a tax on commuting.

Government sources say Greening is sympathetic to MPs' calls, but Osborne – under heavy pressure to keep to his deficit reduction targets and to pay for new investment in the railways – is said to be less so.

Several MPs in commuter seats said they had to act after they returned from holiday to find their postbags and inboxes inundated with complaints from furious constituents.

One Kent MP – Sir John Stanley, the member for Tonbridge and Malling – accused ministers of "exploiting commuters" and using rail fares as "a disguised form of taxation".

The Conservative MP for Harlow in Essex, Robert Halfon, said: "I have already written to Justine Greening. It is a simple cost-of-living issue. Many people in my constituency are on below-average earnings and commute into London, and they cannot afford these rises."

Tracey Crouch, the Tory MP for Chatham and Aylesford in Kent, said: "A lot of Tory MPs will be seeking meetings with ministers as soon as we return. Household living standards are already squeezed and people who have to commute are feeling very aggrieved."

The Tory party deputy chairman, Michael Fallon, has also registered his concern, telling his local paper that rail operating companies must show restraint, while Philip Davies, the Tory MP for Shipley in Yorkshire, said big rises would choke off economic revival.

"It is absolutely essential that this decision is changed. Government should be on the side of the people – not hitting them where it hurts most. It is very difficult to see how we can get out of a recession when these kinds of increases leave people with even less money to spend."

With Lib Dems also calling for Osborne and Greening to back down, the issue is a further headache for the chancellor, who has already performed several U-turns since the budget in March.

Stephen Joseph, executive director of the Campaign for Better Transport, said: "With so many Conservative MPs in marginal 'commuter' seats, it is pretty clear that if ministers do not back down, they will be hit hard in the ballot box."

While ministers are standing firm so far, the rebel MPs remain optimistic, having succeeded in getting Osborne to cap fares at inflation plus 1% in last year's autumn statement.

Meanwhile – apparently sensitive to suggestions that rail chiefs might walk away with big bonuses irrespective of performance while commuters are stung for higher fares – the Office of Rail Regulation (ORR) is seeking assurances from Network Rail that it will limit payouts in the event of missed targets.

In an extraordinary development, Richard Price, chief executive of the ORR, has felt it necessary to write to Graham Eccles, chairman of Network Rail's remuneration committee, seeking assurances that "in the event of a catastrophic accident for which Network Rail was culpable, no bonuses would be paid".

Unions and MPs have expressed concerns that it has been left to the regulator to push for such assurances as Network Rail, which receives almost £4bn a year from the taxpayer, seeks to introduce a possible £12m bonus scheme for its six top directors. As chief executive of Network Rail, Sir David Higgins already earns over £560,000 a year.

Shadow transport secretary Maria Eagle said: "It beggars belief that the rail regulator has had to explain that bonuses would be inappropriate in the event of a catastrophic accident or, as is currently the case, a failure to meet performance targets."

In June, the regulator announced that Network Rail missed many of its punctuality targets last year, especially for long-distance services.

"Passengers facing 11% annual fare rises will be staggered that Network Rail bosses have the front to haggle over yet another round of bonuses," Eagle added.

"There is something morally repugnant about executives of what is in effect a publicly funded company having to be told by a regulator to forgo their huge annual bonuses in the event of a fatal crash they bear responsibility for," said Manuel Cortes of the TSSA rail union.