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Rail commuters face 20% rise in ticket prices as cap is axed

Dick Murray, Transport Correspondent 18.10.10

London rail commuters face a "double whammy" of fares increases of up
to 20 per cent over the next two years.

The Government is set to remove the price cap which restricts
peak-time fares for at least the next two years. This will send prices
soaring with annual season tickets costing hundreds of pounds more.
Union sources at the Department for Transport revealed the plans in
advance of an announcement on Wednesday.

Fare increases of up to 10 per cent are expected in January and the
same again the following year. A 20 per cent increase would mean an
annual season from Brighton to London would cost £4,226 - an extra
£710 - from 2012.

From Guildford it would mean an extra £554 (£3,272) and from Sevenoaks
an additional £504 (£3,024.)

From Reading a 20 per cent increase would take the cost of an annual
season ticket to £3,992 (and extra £664) from 2012 and from Southend
Central it would cost £3,056 (up £508.)

Ministers won't scrap the cap altogether - so they can reintroduce the
restriction to win votes in the run-up to the general election in
2015.

The DfT is also expected to confirm on Wednesday that subsidies to the
train companies, currently running at more than £800 million a year,
will be cut by a third over the next four years - putting more
pressure on the operators to increase fares. Gerry Doherty, general
secretary of the TSSA transport union, said: "Philip Hammond (the
Transport Secretary) is taking a big gamble by allowing the private
train companies to increase fares by up to 10 per cent in January.

"But he will be committing political suicide if he scraps the fares
price cap altogether and allows the companies freedom to charge what
they like when they like." Only the overall fares policy will be
announced on Wednesday.

"Bruce" wrote in message
...
Posted without comment:
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Rail commuters face 20% rise in ticket prices as cap is axed

Dick Murray, Transport Correspondent 18.10.10

London rail commuters face a "double whammy" of fares increases of up
to 20 per cent over the next two years.

The Government is set to remove the price cap which restricts
peak-time fares for at least the next two years. This will send prices
soaring with annual season tickets costing hundreds of pounds more.
Union sources at the Department for Transport revealed the plans in
advance of an announcement on Wednesday.

Fare increases of up to 10 per cent are expected in January and the
same again the following year. A 20 per cent increase would mean an
annual season from Brighton to London would cost £4,226 - an extra
£710 - from 2012.

From Guildford it would mean an extra £554 (£3,272) and from Sevenoaks
an additional £504 (£3,024.)

From Reading a 20 per cent increase would take the cost of an annual
season ticket to £3,992 (and extra £664) from 2012 and from Southend
Central it would cost £3,056 (up £508.)

Ministers won't scrap the cap altogether - so they can reintroduce the
restriction to win votes in the run-up to the general election in
2015.

The must think that commuters have short memories

I think they are in for a shock

tim

In message , Bruce
wrote:
The DfT is also expected to confirm on Wednesday that subsidies to the
train companies, currently running at more than £800 million a year,
will be cut by a third over the next four years

Um, won't that breach the present franchise agreements?

--
Clive D.W. Feather | Home:
Mobile: +44 7973 377646 | Web: http://www.davros.org
Please reply to the Reply-To address, which is:

In article ,
Clive D. W. Feather wrote:
Um, won't that breach the present franchise agreements?

Presumably the gov't will negotiate (or legislate) a variation in the
franchise agreements that will balance lower subsidies/higher premiums
with an increase in the fares basket cap, such that the overall
package is revenue-neutral on the TOCs.

-roy

"But he will be committing political suicide if he scraps the fares
price cap altogether and allows the companies freedom to charge what
they like when they like." Only the overall fares policy will be
announced on Wednesday.

You should take all these press releases, in advance of Wednesday,
with a pinch of salt as it’s standard practice for governments to,
shall we say, encourage a bit of scare mongering in the hope we will
all breath a sigh of relief come the day.

However, any fare rises will be perceived by South East commuters for
what they are, tax increases, and tax increase on top of Brown’s
thirteen years of non-stop tax increases.

For sure, there’s been very little mood, for a long time now (even
before the credit crunch) for anymore 'blood out of a stone' tax
increases.

The election result showed that what the electorate wants and demands
is that the government gets a grip on the public sector, stops them
wasting all our money, indeed wasting all our money for the next
twenty years.

Not putting evermore burden on taxpayers, which is what nearly all
commuters are, it’s really quite simple.

But, before all that, some of us would like to see Gordon Brown shot
for the misery that he has inflicted on our nation.

And, after the cuts, most of us will want to see Gordon Brown shot.

In article , (Roy
Badami) wrote:

In article ,
Clive D. W. Feather wrote:
Um, won't that breach the present franchise agreements?

Presumably the gov't will negotiate (or legislate) a variation in the
franchise agreements that will balance lower subsidies/higher premiums
with an increase in the fares basket cap, such that the overall
package is revenue-neutral on the TOCs.

That could be more expensive than it seems if cap and collar applies to
most of the franchises

--
Colin Rosenstiel

In article ,
wrote:
In article , (Roy
Badami) wrote:

In article ,
Clive D. W. Feather wrote:
Um, won't that breach the present franchise agreements?

Presumably the gov't will negotiate (or legislate) a variation in the
franchise agreements that will balance lower subsidies/higher premiums
with an increase in the fares basket cap, such that the overall
package is revenue-neutral on the TOCs.

That could be more expensive than it seems if cap and collar applies to
most of the franchises

I'm not sure why. By definition it would be calculated to be revenue
neutral, so any increase in fares collected will effectively go to the
exchequer.

-roy

In article , (Roy
Badami) wrote:

In article ,
wrote:
In article , (Roy
Badami) wrote:

In article ,
Clive D. W. Feather wrote:
Um, won't that breach the present franchise agreements?

Presumably the gov't will negotiate (or legislate) a variation in the
franchise agreements that will balance lower subsidies/higher
premiums with an increase in the fares basket cap, such that the
overall package is revenue-neutral on the TOCs.

That could be more expensive than it seems if cap and collar
applies to most of the franchises

I'm not sure why. By definition it would be calculated to be revenue
neutral, so any increase in fares collected will effectively go to the
exchequer.

Er, it's not quite that simple. Cap and collar isn't cost-free to TOCs and
higher fares could drive passengers away, worsening their results.
Therefore they might not accept the change without some compensation.

--
Colin Rosenstiel

"Roy Badami" wrote in message

In article ,
Clive D. W. Feather wrote:
Um, won't that breach the present franchise agreements?

Presumably the gov't will negotiate (or legislate) a variation in the
franchise agreements that will balance lower subsidies/higher premiums
with an increase in the fares basket cap, such that the overall
package is revenue-neutral on the TOCs.

Why would this be necessary? By allowing higher fare increases, the
government would have to provide less subsidy under cap and collar
arrangements. As many TOCs are currently getting collar support, this
would automatically fall if TOC revenues rise by more than the rate of
inflation.

In article ,
wrote:
In article , (Roy
Badami) wrote:

In article ,
wrote:
In article , (Roy
Badami) wrote:
Er, it's not quite that simple. Cap and collar isn't cost-free to TOCs and
higher fares could drive passengers away, worsening their results.
Therefore they might not accept the change without some compensation.

Oh, I see. Yes, presumably there would have to be an agreed estimate
of demand elasticity to allow calculation of how many passengers would
be lost. You could then scale the revenue levels that cap and collar
are based on appropriately, and also calculate the change in subsidy
or premium.

Presumably the process won't be entirely cost free, but I'm not sure
I'd expect it to be hugely expensive either.

-roy