Asked by Baroness Randerson To ask Her Majesty’s Government
what assessment they have made of the impact of increases in train
fares due to be introduced in January 2018. The Parliamentary
Under-Secretary of State, Department for Transport (Baroness Sugg)
(Con) The Government understand the concern about the
increase in the cost of rail fares and...Request free trial
Asked by
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To ask Her Majesty’s Government what assessment they have
made of the impact of increases in train fares due to be
introduced in January 2018.
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The Parliamentary Under-Secretary of State, Department for
Transport (Baroness Sugg) (Con)
The Government understand the concern about the increase in
the cost of rail fares and the impact this can have on
people’s budgets. Our railways need substantial investment
to ensure they are fit for purpose for the 21st century.
Despite record levels of investment, the Government have
ensured that, since 2014, regulated rail fares have risen
no faster than retail prices. We of course continue to
monitor our rail fares policies closely and keep them under
review.
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(LD)
My Lords, in January rail fares will go up by 3.4%, at a
time when wages are already failing to keep pace with
rising inflation because of the impact of the falling pound
following the Brexit vote. For instance, an annual season
ticket from Swindon to London will increase by £304. For
many years now, the Government have frozen fuel duty to
help motorists, so will the Minister agree that the
Government should now freeze rail fares for the coming year
to help rail passengers?
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The noble Baroness mentions the freezing of fuel duty,
which is obviously widely welcomed by motorists, following
the Budget. I am afraid that we cannot freeze rail fares
because by doing so, we would have to decrease investment
in our railways, which is sorely needed.
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(Con)
Can the Minister explain why, exceptionally, rail fare
increases are tied to RPI, when every other cost of living
increase is tied to CPI?
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My Lords, the retail price index is widely used across
government and is the consistent general indexation approach
adopted across the rail industry. Franchise payments, network
grants and franchise financial models are all indexed at RPI.
Of course, we are all very aware of the pressures on people’s
incomes and we carefully monitor how rail fares and earnings
change and keep reviewing how fares are increased.
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(Lab)
My Lords, can the Minister confirm that the extraordinary
decision to bail out the Stagecoach/Virgin Trains East Coast
franchise could cost the taxpayer more than £1 billion? Could
she estimate for the House what impact that might have on
rail fares after 2020?
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My Lords, VTEC has paid all its premiums in full to date, and
we expect it to continue to do so as long as the contract
continues. As with all recent franchise contracts, when
entering into the east coast contract Stagecoach committed to
inject additional funds into the business at its own expense,
and we will hold it to that commitment in full. From 2020,
there will be a new east coast partnership, one of the first
of a new generation of integrated regional rail operations.
That will include appropriate contributions from the private
partner under a long-term competitively priced procured
contract. I do not recognise the figures that the noble Lord
uses.
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(Con)
My Lords, can my noble friend explain to me why, in economic
terms, the cost of travel appears to be inelastic, and we
have seen many trains overcrowded in recent years?
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My Lords, passenger use of the rail network has doubled since
privatisation, which is to be welcomed. As I said, the
Government’s use of the RPI is consistent with general
indexation on rail industry costs. We are trying to keep
fares as low as practically possible, while maintaining the
level of investment that our railways need to deal with the
overcrowding my noble friend mentions.
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(LD)
Is the Minister aware of the fares that are charged to
commuters in France, Germany and the Netherlands, and the
proportion of those met by public funds as opposed to making
the customer pay more?
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My Lords, I have indeed been looking at the comparison
between the UK and Europe. I understand that it very much
depends on which rail fare you are looking at; many fares are
similar or even cheaper in the UK. Britain has seen the
biggest shift to rail from other transport of any railway in
Europe since 2009. We have comparable punctuality and higher
than average customer satisfaction, and we are investing more
in rail than any country in Europe. We are currently
delivering the biggest upgrades to our network since the
Victorian era.
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(Lab)
Could the Minister confirm that the Government have locked
themselves and rail passengers into the yearly increase in
regulated fares being related to the normally higher retail
price index figure for at least the number of years that each
existing franchise is due to continue, since that is part of
the franchise agreements with train operating companies? What
amount of compensation in total would have to have been paid
to train operating companies for lower than expected fare
revenue if the Government had decided to agree to this coming
January’s increase in regulated fares being related to the
increase in the widely used—not least by government—consumer
price index, rather than the higher retail price index?
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My Lords, the noble Lord is right to point out that our
current franchise agreements are negotiated on the RPI
increase. I say again that we recognise the effect that has
on people’s incomes and keep it under review. We welcome the
fact that we were able to reduce this from RPI plus 1 in
2014. I am afraid I do not have the figures to hand, and I am
not sure they would be available, on the compensation that
would need to be given if we used CPI rather than RPI.
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(Con)
My Lords, not only is the whole area of train fares very
complicated, it is actually discriminatory. Many people in
this country do not have access to the internet or computers
and they find trying to get deals on train fares almost
impossible. They also find—as do I—that the stations are not
always accessible. Staff are training, or sick, and we stand
there in the rain waiting for the train. It is not a good
picture.
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My Lords, I recognise that the fare system can sometimes be
complicated and illogical. Many tickets are now bought
online, but for those who do not use the internet the Rail
Minister is working with the industry on a fares and
ticketing action plan. Among other things, they are working
on reducing jargon and improving the vending machines at
stations. They have extended the availability of advance
purchase fares, which you can now buy at the station on the
day of travel. For those who do use the internet, we are
working with online retailers to ensure that they provide the
best information online. We are also introducing smart
ticketing to make it easier and more convenient to purchase
cheaper tickets.
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