Government caps rail fare increase in England at 4.9% as inflation falls

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Ministers have capped next year’s rail fare increase in England at 4.9 per cent, well below July’s retail price index figure of 9 per cent on which annual fare rises have historically been based.

The move comes as the government tries to bear down on inflation and alleviate cost of living pressures ahead of a general election, expected by the end of 2024.

The rail industry is already heavily reliant on subsidies as the switch to hybrid working has left passenger numbers well below pre-pandemic levels.

The government similarly intervened to cap this year’s annual fare increase at 5.9 per cent after RPI in July 2022 hit 12.3 per cent. As with this year, the rail fare increase will take effect in early March rather than January.

Mark Harper, transport secretary, said: “Having met our target of halving inflation across the economy, this is a significant intervention by the government to cap the increase in rail fares below last year’s rise.  

“Changed working patterns after the pandemic means that our railways are still losing money and require significant subsidies, so this rise strikes a balance to keep our railways running, while not overburdening passengers.”

The latest official figures, which use the consumer price index, showed inflation had slowed in November to 3.9 per cent, its lowest level for over two years.

Sir Ed Davey, Liberal Democrat leader, said a rise in fares in March would still be unwelcome. “This is yet another hit on commuters’ pockets who have put up with so much chaos and disruption on our railways this past year.

“People are paying more for less on our rail network. Nowadays it is a miracle if the trains are actually running, let alone on time.”

But Alex Robertson of Transport Focus, the independent passenger watchdog, was more positive. “After recent disruption and the pressure on household budgets anything that limits fare increases has got to be welcome,” he said.

The government said that this year’s intervention by the taxpayer built on last year’s decision to cap the increase for 2023.

The industry remains in a difficult financial situation and heavily dependent on subsidies; from July to September 2023 rail revenues were 78 per cent of pre-pandemic levels once inflation is taken into account.

Taxpayer support for the railways in the financial year 2022-23 was £11.9bn, equivalent to more than £420 per household, according to the government.

Mick Lynch, general secretary of the RMT, the largest rail union, said passengers had been “slapped in the face with massive fare increases” while privatised train operators paid out “huge shareholder dividends”.

Transport policy is devolved in the UK so the Scottish and Welsh governments set their own fare caps.