2015 fare increases

[infobleep]

There were local and European elections this year. Also the BBC state they are ending the rule which allows increases of up to 2‰ so long as the average is 1% above inflation.

Does this mean that in future years companies will be able to make rises of whatever rate they like so long as the average is just 1% above RPI?

I assume they didn't use the 2% rule last year, given it they stated fares would not increased by RPI+1% and that is what the rule was designed for, if I understand the BBC news report correctly. Was that rule ever used?

 

[thealexweb]

Didn't they do the same last year? Don't recall there being an election this year.

There were some elections. European elections UK wide and local elections in England and Northern Ireland.

Edit: infobleep got there first. ^

 

[IanD]

There are usually elections somewhere in the UK every year given the way local council elections are run.

 

[LNW-GW Joint]

I assume they didn't use the 2% rule last year, given it they stated fares would not increased by RPI+1% and that is what the rule was designed for, if I understand the BBC news report correctly. Was that rule ever used?

From this parliamentary briefing paper: www.parliament.uk/briefing-papers/SN01904.pdf

Between 1995 and 1998 the cap on increases to regulated fares was equal to that of the
Retail Price Index (RPI); from 1999 to 2003 it was one per cent less than RPI (RPI-1); and
since 2004 it has been one per cent above RPI (RPI+1). In October 2010 it was announced
that this would increase to RPI+3 for three years from January 2012; meaning that fares
would increase in real terms by ten per cent over the four years from January 2011.
However, in November 2011 the Government announced that the cap would remain at
RPI+1 for 2012. In October 2012 the Government announced a reversion back to RPI+1 for
2013 and 2014, negating the RPI+3 increase announced in October 2010. In December
2013 the Government announced that regulated fares would be limited to RPI for 2014.

So in fact RPI+3% was never implemented in any of the 3 years intended.
Scotland and Wales generally stick to RPI+1% (although Scotland will apply different increases to peak (RPI) and off-peak (frozen) fares next year).
http://www.bbc.co.uk/news/business-29098340

Whatever you think about fare rises, the money coming in to DfT will be less than planned, so that will increase the pressure on franchise subsidies.

 

[swt_passenger]

There were local and European elections this year. Also the BBC state they are ending the rule which allows increases of up to 2‰ so long as the average is 1% above inflation.

Does this mean that in future years companies will be able to make rises of whatever rate they like so long as the average is just 1% above RPI?

I assume they didn't use the 2% rule last year, given it they stated fares would not increased by RPI+1% and that is what the rule was designed for, if I understand the BBC news report correctly. Was that rule ever used?

Two separate things here. The point was that the headline RPI + 1% was an average of all the different fares a TOC was responsible for. (Their fares basket.) So within that average any particular individual fare could go up by up to RPI + 3%, as long as it was financially balanced out by a corresponding fare (or fares) going up by only RPI - 1%.

Headline writers always seemed to avoid mentioning the possibility of any fares being less than RPI though. If they now say they've removed the '2% flex rule' that means they cannot do any averaging, the RPI + X% will therefore be a cap - and no doubt the whole fares basket will rise by the maximum amount.

 

[306024]

Which I guess shows what a basket case the fares structure is

Didn't they do the same last year? Don't recall there being an election this year.

There are usually elections somewhere in the UK every year given the way local council elections are run.

So that's clear then

 

[infobleep]

Two separate things here. The point was that the headline RPI + 1% was an average of all the different fares a TOC was responsible for. (Their fares basket.) So within that average any particular individual fare could go up by up to RPI + 3%, as long as it was financially balanced out by a corresponding fare (or fares) going up by only RPI - 1%.

Headline writers always seemed to avoid mentioning the possibility of any fares being less than RPI though. If they now say they've removed the '2% flex rule' that means they cannot do any averaging, the RPI + X% will therefore be a cap - and no doubt the whole fares basket will rise by the maximum amount.

I any have misunderstood this but surely if the +2% is removed they can increase fares by any amount in future years so long as the overall average is The RPI+1%. I don't include 2015 in this of course.

Given the less money that is coming in, will unregulated fares rise much higher than they over wise would? How will this impact on investment and improvements in our railways? Will it delay improvement projects?

 

[swt_passenger]

I any have misunderstood this but surely if the +2% is removed they can increase fares by any amount in future years so long as the overall average is The RPI+1%. I don't include 2015 in this of course.

The way it is explained they have completely removed the ability to flex fares. You're interpreting it as removing the limit on the amount of flex. Completely the opposite.

 

[IanD]

Which I guess shows what a basket case the fares structure is





So that's clear then

Well, the original quote was obviously about this being a bribe for next year's general election, of which there were none in the UK last year.

Then it turned out that last year's was a bribe for the local elections - which happen every year. So every political decision made every year is a bribe for the upcoming elections BUT in reality some are made for different reasons. It's just depends which party you support as to how you perceive this.

 

[Tetchytyke]

The ability to flex fares- i.e. increase popular routes by more than the limit so long as the average remains within the limit- has been removed. And rightly so, it made a mockery of having regulated fares when TOCs could rip off passengers on the most popular routes at will.

Last year's decision change was because Labour were making big wins on the "cost of living crisis" campaign in advance of the European elections, and general election campaigning starts at least a year in advance anyway. This year the decision is because the fare rises will kick in only a few months before a general election.

 

[Baxenden Bank]

Tickets sold in advance or tickets sold are advance? Big difference. I wonder if she knew that difference, or that advance tickets don't exist for all trains.

All depends on what spin you want.

Season tickets are bought in advance and account for a vast chunk of travel - look at the station usage figures - over 200 entries and exits in the morning, the same on the return in the evening for every season ticket sold.

I think that actual 'advance' sales, as in fixed train at knock down prices, were about 2% of the total, perhaps a bit more now (5%?). So the minister is talking from what she should be sitting on and the person who did her brief is attempting very clever manipulation of statistics. Pity the news reporters don't have the background knowledge to be able to put the real numbers to her and expose her 'spin' for what it is.

PS the breakdown of ticket types sold is publicly available somewhere, just don't have it to hand.

Oh, and fares are still going up by more than most peoples wages / pensions / benefits, so not a 'freeze' at all. A proper freeze would be no increase compared to today's prices. Again a pity that reporters don't pick up on such.

 

[Deerfold]

Well, the original quote was obviously about this being a bribe for next year's general election, of which there were none in the UK last year.

Then it turned out that last year's was a bribe for the local elections - which happen every year. So every political decision made every year is a bribe for the upcoming elections BUT in reality some are made for different reasons. It's just depends which party you support as to how you perceive this.

Or the European elections which the Tories were justifiably worried about (and which don't happen every year).

Chancellor announces this morning regulated fares will only rise by inflation, i.e. 2.5%. Anyone smell an election?

Presumably they're not looking for votes from people who travel in the evening "peak" but not the morning peak in Northernland.

 

[jon0844]

If this was going to be a bribe ahead of the general election, surely you would wait until the last possible minute to step in and 'save the day'?

From a PR point of view the announcement today is a bit of a fail. However it's presumably to give the rail industry time to work things out.

If fares were truly frozen then they'd actually be a cut in real terms and where would the shortfall come from?

Sent from my XT1068 using Tapatalk

 

[ess]

Of course politically it looks great to not implement a fare hike so an easy way of achieving that is to say you intend to hike fares by a lot and then just hike fares a bit. So RPI+3% was never implemented but RPI+1% was.

 

[infobleep]

The way it is explained they have completely removed the ability to flex fares. You're interpreting it as removing the limit on the amount of flex. Completely the opposite.

Thanks. I understand now.

 

[infobleep]

Well the train companies support it according to the BBC. If they support it I'd like to think they wouldn't have increased their fares by RPI+1%, were that allowed.

Of course if they get less money, something has to give. According to a graph in the BBC report, 11% is spent on leasing trains. Does that include the cost of ordering and building new trains? Is there anything that could be done to reduce that percentage, without impacting on building and ordering new trains?

 

[Class 170101]

The offical statement from the Treasury
https://www.gov.uk/government/news/government-extends-freeze-on-rail-fares-to-2015

 

[Tetchytyke]

Well the train companies support it according to the BBC.

Of course they do. To say anything else would be political suicide, and would again focus attention on the fact most of the electorate want to see the fat cats given the boot.

 

[Panda]

When they increase fares by more than inflation then there is massive uproar about cost of living and the government being out of touch. When they don't increase it by more than inflation then it's cheap politicking. Damned if they do, damned if they don't.

 

[bnm]

Well the train companies support it according to the BBC. If they support it I'd like to think they wouldn't have increased their fares by RPI+1%, were that allowed.

Of course if they get less money, something has to give. According to a graph in the BBC report, 11% is spent on leasing trains. Does that include the cost of ordering and building new trains? Is there anything that could be done to reduce that percentage, without impacting on building and ordering new trains?

Equally is there anything that can be done to reduce the wage bill? Rail staff wages across all grades in managerial, frontline and clerical positions (excepting some gateline, revenue and catering roles contracted out) have increased far beyond inflation since privatisation. In 1993 the wage bill was around 19% of the cost of running the railway. Today it is 25%. In 1996 a driver's salary was around £22,000 basic. Today it is around £47,000 basic. If a driver's salary had matched inflation over that period it would today be £37,000. Also over that time the working week has reduced, so the real increase is even higher. I'm highlighting an example here with figures I can find. I've no doubt it's the same for a lot of qualified positions in the rail industry, although my research did bring up the fact that signallers have not been so fortunate. They've only just beaten the compounded inflation in the period since privatisation.

This is not a dig at drivers. You and your unions have done well to get these salaries and a shorter working week.

Another hidden cost to the industry and ultimately the passenger is competition between TOC/FOCs for staff. This has contributed to the rise in wages with TOC/FOCs fighting each other either to poach or retain staff. From the dispatcher right up to the MD.

Not the sort of competition John Major and the architects of the Railways Act 1993 envisaged I suspect.

 

[jon0844]

Of course they do. To say anything else would be political suicide, and would again focus attention on the fact most of the electorate want to see the fat cats given the boot.

I am sure that they'll be protected. If the Government is doing this as a pre-election bribe then they'll have to cover the train operators for any losses if a TOC is expecting a certain level of revenue.

For the newer franchises, the ticket revenue went to the Government anyway. Surely the TOC still gets the money it was going to get, and any bonuses for improved performance so won't care one bit.

 

[Stats]

All depends on what spin you want.

Season tickets are bought in advance and account for a vast chunk of travel - look at the station usage figures - over 200 entries and exits in the morning, the same on the return in the evening for every season ticket sold.

I think that actual 'advance' sales, as in fixed train at knock down prices, were about 2% of the total, perhaps a bit more now (5%?). So the minister is talking from what she should be sitting on and the person who did her brief is attempting very clever manipulation of statistics. Pity the news reporters don't have the background knowledge to be able to put the real numbers to her and expose her 'spin' for what it is.

PS the breakdown of ticket types sold is publicly available somewhere, just don't have it to hand.

Figures available on the ORR data portal. 'Advance' tickets accounted for 3.3% of franchised rail journeys in 2013-14; season tickets accounted for 43.6% of franchised rail journeys

 

[infobleep]

Yet I'm sure I read somewhere advanced purchase tickets accounted for more than half the ticket types available. If I did, it just shows what stats can do.

I mean 1 in 14 now use a railcard to save money [http://www.railfares2014.com/finding-best-fare]. This just means over 92‰ don't. Doesn't sound so great now.

 

[Deerfold]

Yet I'm sure I read somewhere advanced purchase tickets accounted for more than half the ticket types available. If I did, it just shows what stats can do.

I mean 1 in 14 now use a railcard to save money [http://www.railfares2014.com/finding-best-fare]. This just means over 92‰ don't. Doesn't sound so great now.

Assuming you mean advance (advanced would presumably refer to smartcards ) then as stated above I suspect more than 50% of tickets are bought in advance, but many fewer are of the ticket type Advance.