Train fares 2011

Yesterday saw the Bank of England release the rate of inflation and its effect on the Consumer Prices Index and the Retail Price Index (RPI). Inflation is much higher than the Bank's preferred level of 2%. More worrying is that the RPI, on which train fares for the following year are based, is even higher - 4.8%. The calculation for the affected fares is RPI+1%, so the likelihood is that regulated train fares will increase by 5.8% from 1 January 2011.

Or is it?

The government was very careful in its response to this. The official line is that this is NOT assured by any means and that 'all options' are being considered. By all options, they're assuming (nay, hoping) travellers will refer to the LibDem 'angle' which, in the run-up to the general election, was that the formula should be RPI *minus* 1%.

Cue reports of in-fighting within the Coalition, with the LibDems eager to see their policy introduced and the Tories mindful that, if so, this will generate a lot less money for the DfT's coffers.

Less reported is the view that the Tories are willing to amend the current RPI+1% formula in an upwards direction. RPI+3% perhaps? They could argue that rather than all tax payers contributing to the rise, only those who use the railway network are paying more.

This time last year the RPI was greater than -1%, which, when the formula was applied, saw these regulated fares actually fall slightly. This was something train operators did not want - reduced revenue when they needed it most - so increased non-regulated tickets significantly in some cases. The exact opposite scenario will play itself out from January; can you see the non-reg ticket prices being frozen wholesale this time?

In an interview with The Guardian, National Express' chief executive Dean Finch, said of raising train fares: "It is absolutely legitimate for anybody to look at, in terms of raising revenues. Everyone complains at rail (surely 'train' - Ed.) fares being awful, but we have more than one billion journeys on the railways every year. That tells you in the overall scheme of things the railway is an effective form of travel and is an integral part of people's lives".

As gutsy as Finch's statement is, could he be right? Put the fares up by whatever you like and people will keep on coming? At what point will a London commuter, resident in Brighton, look for work on the South Coast where a 10-mile journey by car will be cheaper and the saving offsetting the reduction in salary? NX's top man seems to think we're nowhere near that point yet.

If others in the government share this opinion, train passengers will continue to be hit very hard for the foreseeable future.