Five year rail fares deal will save commuter costs

19 August 2015

The government is putting an end to above inflation fare increases with a five year hold on regulated rail fares.

The move extends the cap put in place in 2014 and 2015 and will keep regulated rail fare increases at Retail Prices Index (RPI) inflation and no more for the life of this Parliament.

Figures just released by the Office of National Statistics (ONS) show that the RPI figure for July, which is used by the government to calculate regulated fares for the following year, was 1%. This means that no regulated rail fares will rise by more than that figure in 2016, making it the lowest fare increase since 2010.

It also means that for the first time since 2003, people’s earnings are on average rising more quickly than fares. Latest ONS figures show that earnings are increasing by 2.4%.

Rail Minister Claire Perry said:

“As part of our long-term economic plan, we are investing record amounts in transforming the UK’s rail network in order to provide better journeys for everyone, and fares have an important role to play in delivering this investment.

But I know that many families are concerned about the cost of rail travel, which is why we are putting an end to above inflation fare increases. This will make a real difference to household budgets, saving season ticket holders around £425 each over the next five years.”

In September 2014 the government also announced that train operating companies are no longer able to use a “flex” rule to raise some individual fares by up to 2% more than the permitted average increase.

The fares passengers pay will continue to support the biggest rail modernisation programme for over a century, with £38 billion in spending to improve the network in the 5 years to 2019. The investment is set to deliver crucial benefits for passengers, including relief from crowding on some of the nation’s busiest routes.

CIPP comment

The CIPP welcome this move as it will clearly aid many employees and in turn the many employers who provide beneficial loans to assist with season tickets.

After yet more significant rail fare increases in 2012,the CIPP Policy Team lobbied HM Treasury (with overwhelming support from members) to increase the £5k threshold for employer provided beneficial loans. We were very encouraged when the government doubled the threshold to £10k in April 2014 and it is heartening to see even further support in the area of travel costs