Biz Bulletin: Inflation-Busting Train Fares

It has been confirmed that train fares are to rise by an average 5.9% in January, more than the rate of inflation.

The Association of Train Operating Companies (Atoc) made the announcement after the Chancellor intervened to limit the increase, ruling that a rise of RPI (Retail Prices Index) inflation plus 3% was "too much".

George Osborne agreed to RPI plus 1%.

The average fare rise is nevertheless higher than RPI, which stood at 5.2% in November (Stuttgart: A0Z24E - news) , and the latest inflation-busting increase comes at a time when travellers can least afford it as wage growth fails to keep pace with the cost of living.

Michael Roberts, chief executive of Atoc, said: "Money raised through fares helps pay for new trains, faster services and better stations.

"The long-standing Government approach to sustaining rail investment is to cut the contribution from taxpayers and increase the share paid for by passengers.

"The industry is working together to continue cutting costs as a way to help limit future fare rises and offer better value for money for taxpayers over the longer term."

In September the then transport secretary Philip Hammond said rail fares were so expensive the system had become a "rich man's toy".

Maria Eagle MP, Labour's Shadow Transport Secretary, accused ministers of presiding over a 'fares fiddle.'

"Ministers have shown how completely out of touch they are with the rising costs of commuting, by failing to stick to the tough rules Labour established in Government, she said.

"It's clear that many commuters are facing a fares fiddle thanks to the Government's decision to allow train companies to average out the revised fare cap across a range of tickets, meaning many tickets will rise by a shocking nine per cent in the New Year."

Bob Crow, general secretary of the RMT transport union, said: "These inflation-busting increases show that the great rail fares privatisation swindle is still rocking along with the train operating companies laughing all the way to the bank.

"Independent analysis by Government departments has proven that the fare increases are trousered by the shareholders of the private companies while passengers pay through the nose to travel in rammed and creaking carriages.

"The corporate welfare scroungers from the train companies have bled hundreds
of millions out of our railways and they should be told that the game's up."

:: Rising unemployment and the high cost of living left consumer confidence close to an all-time low in November, according to Nationwide's latest measure.

Its Consumer Confidence Index crept up slightly from its record low in October but the findings suggest that households remain under severe pressure and were concerned
about future prospects for themselves and the wider economy.

There was only a marginal improvement in its spending index, which indicated that shoppers remain reluctant to make major purchases in the run up to Christmas.

Small improvements in expectations for employment prospects and household income helped the index rise.

But Nationwide chief economist Robert Gardner said this could "hardly be described as festive cheer".

He said: "Signs that inflation has passed its peak may have provided some comfort, but at 4.8% in November (the CPI (Berlin: CEJ.BE - news) measure), the cost of living was still rising at more
than twice the pace of underlying wage growth."

Meanwhile, the CBI is warning that retail takings so far this month have been "poor for this time of year".

Its (Euronext: ALITS.NX - news) latest retail survey, carried out in the first two weeks of December, found that sales volumes grew for the first time in seven months thanks to heavy discounting.

According to the CBI, we are buying food and Christmas gifts but we are not buying "big ticket" items like cars, washing machines and fridges.