Government should freeze rail fares
17 August 2021
Ahead of the announcement of July’s Retail Price Index (RPI) figure tomorrow (18 August), which will be used to set the rail fare rise for January 2022, Paul Tuohy, Chief Executive of Campaign for Better Transport, said:
“In the face of a climate emergency the Government should be doing everything it can to encourage people to choose low-carbon public transport by making it the cheapest option, not hiking rail fares. If the Government can freeze fuel duty for ten years, it can freeze rail fares next year to help encourage more people to use the trains and get commuters back spending in our towns and cities.”
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The current situation
On Wednesday 18 August, the RPI figure which is used to set the January 2022 rail fare rise will be announced.
Campaign for Better Transport’s view
- The Government should cancel the January 2022 fare rise and freeze fares at the current level
- Raising rail fares is counter-productive to getting the economy back on track and encouraging passengers back to the railways
- Raising rail fares is counter-productive to tackling climate change and reducing carbon emissions from transport
- Reforms to the fares system should be prioritised to provide passengers with value for money and encourage people back to the railways as part of a green transport-led recovery.
Regulated rail fares, including season tickets and standard returns, make up almost half (45 per cent) of all fares and increases are set by the Government. Since 2014, fare increases have been capped at the previous July’s Retail Price Index (RPI) figure. Regulated fares rose by 2.6 per cent this year because this was the RPI level in July 2020.
The remaining tickets, including advance and peak long-distance tickets, can be increased at train companies’ discretion.
RPI vs CPI
The Government continues to use the Retail Price Index (RPI) to calculate annual fare increases, rather than the accepted and more accurate measure of inflation, the Consumer Price Index (CPI). RPI over-estimates real inflation so consistently that the Office of National Statistics ceased using it as an official measure in 2013 and the Government has already switched to CPI for most other sectors. In July 2018, the then Transport Secretary, Chris Grayling, indicated that future fare rises would be pegged to CPI, but gave no date for the switch. Had CPI been used to calculate last year’s increase, fares would have gone up by one per cent instead of 2.6 per cent. This table shows the CPI figure in comparison to the annual rail fare increases from 2014.
|Regulated fare rise %||Average fare rise % (regulated and unregulated)||CPI at that time %|
The ’covid effect’
The effect of Covid-19 on transport has been seismic. But as the UK begins the process of recovery, the need for sustainable transport has only strengthened. By supporting public transport, walking and cycling, the Government can not only improve our environment and our health, but also create jobs, tackle social exclusion and help the economy to recover. Reduced passenger numbers have had profound financial implications for public transport operators and will impact on fare revenue for the foreseeable future. In our 2019 report, Covid-19 Recovery: Renewing the transport system, we called for a new approach to fare setting on public transport to address future fare rises (or reductions) and how these are calculated. We also called for a rapid move to simplified fare structures and account-based ticketing, more devolved and better integrated transport with multi-modal tickets and zonal fares for cities beyond London, and ‘flexible’ season tickets that offer an equivalent discount to full time ones.
The Government recently published its Decarbonising Transport Plan which recognises the need for modal shift from cars to public transport to help reduce emissions from transport. It reiterates the Government’s ambition for public transport, cycling and walking to be “the natural first choice”. Rail is the greenest major form of transport (releasing up to 85 per cent less carbon per passenger kilometre than other forms of transport), so enabling more people to travel by rail will be crucial to helping transport reduce its carbon footprint.
Congestion cost the UK economy £6.9 billion in 2019. Ensuring rail travel is affordable will help increase modal shift away from cars, helping to reduce congestion. Alongside the health impact on individuals, poor air quality also has a significant economic impact. Three million working days are lost every year due to air pollution and according to CBI Economics, cleaning up the air in our towns and cities could boost the UK economy by £1.6bn a year as well as preventing 17,000 premature deaths each year.
Notes to Editors
- Campaign for Better Transport operates in England and Wales. Campaign for Better Transport’s vision is for all communities to have access to high quality, sustainable transport that meets their needs, improves quality of life and protects the environment. Campaign for Better Transport Charitable Trust is a registered charity (1101929).