Yet another year of inflation-busting rail fare rises will add to the cost of living crisis

David Cameron’s cost of living crisis is leaving families struggling and yet another year of inflation-busting fare rises will just add to the pressure on household budgets. Instead of standing up for hard-pressed commuters, this government is siding with the private train companies and helping them to increase their profits at the expense of passengers.

At last year’s Conservative Party conference the Prime Minister promised that rail fares would in future only increase by one per cent above inflation. That should have meant no fare increasing by more than 4.1 per cent in the new year, as a result of today’s inflation figures on which next year’s fare rises are calculated. In reality, commuters returning to work in the new year will find that their fares have gone up by as much as 9.1 per cent. This is a direct result of David Cameron’s decision to give back to the train companies a power, taken away by Labour, to hike some fares by as much as five per cent above the so-called cap. This ability to bust through the cap on fare rises doesn’t bring in more money to the tax-payer, it just helps the private train companies walk away with more than £300 million a year from passengers. By allowing the train companies to fiddle the fare cap in this way, David Cameron has broken his promise to commuters and added to the pressure on household budgets.

There is an even bigger rail scandal that has been uncovered by Labour. It turns out that the Government could have afforded to end above inflation fare rises altogether if they hadn’t cut how much some private train companies have to pay back to tax-payers from next year. As a result of the Ministerial incompetence that led to the rail franchising fiasco, almost every private train company contract is being extended without a competition.

New figures, obtained by Labour from parliamentary answers, reveal that the deals signed by Ministers to extend just two of these contracts will see train companies pay back £78.5 million less in franchise payments next year than in 2011/12. Virgin Trains paid £156 million last year, but have negotiated to pay only £92m next year. Meanwhile, National Express will receive a subsidy of £2.4 million for running c2c services, instead of the £12.1million they paid last year. This loss of this £78.5 million of income, as a result of these botched negotiations, could have funded an inflation-only fare rise in 2014 at a cost of £67.5 million according to the Government’s own figures. And all this is on top of the £48 million of tax-payers money that has already been wasted as a result of the failed letting of the InterCity West Coast contract. To add insult to injury, the Prime Minister has now decided to prioritise a costly and unnecessary privatisation of InterCity East Coast rail services. Yet this is the only rail service to be run on a not for private profit basis. It will have returned £800 million to tax-payers by the end of this financial year and reinvests all its further profit in the service, over £40 million so far. Ministers should now abandon this privatisation and focus their efforts on securing better deals from negotiating extensions to existing franchises. It is an outrage that this incompetence has blown a perfect opportunity to end above inflation fare rises.

A One Nation Labour approach to our railways would see train companies once again banned from hiking fares beyond a strictly enforced cap, a legal right to the cheapest ticket introduced and a crack down on rising car parking charges at stations by bringing them within regulation. We would stand up for passengers and be willing to take on the vested interests in the private train companies, tackling the contribution that rising rail fares are making to the cost of living.

Maria Eagle is Shadow Transport Secretary