Labour says fare cap will save passengers £1,000

Business & Economy 02 Jun 2017
Labour says fare cap will save passengers £1,000

Labour: Rail passengers would be £1k better off under renationalisation

The party is likely to face criticism that its calculation is based on a system for increasing fares that has been scrapped.

Image: Labour says renationalisation will benefit passengers

By Adam Parsons, Business Correspondent

Labour has returned its focus to the railways after claiming that passengers would be £1,000 better off" if they were to win the General Election.

The party has already said that it would renationalise the network were it to be in Government, bringing franchises back into public ownership as they run out.

It has also said that it would bring in new caps on how much fares could rise, using a different measure of inflation that, says Labour, would result in lower increases.

"Under the Conservatives, rail fares have sky-rocketed and tickets are some of the most expensive in Europe," said leader Jeremy Corbyn.

"Labour will take Britain's railways back into public control and put more money into people's pockets by capping fares. This will save commuters £1,014 on their rail season tickets over the next Parliament."

However, the party is likely to face claims that it has distorted the figures, after quoting a "potential cost" to commuters if a Conservative Government raised fares by more than inflation – a system that was actually scrapped four years ago.

Under existing rules, certain train fares – known as "regulated" fares – can only rise by a measure of inflation known as the retail price index (RPI).

This figure includes housing costs and is calculated in a slightly different, and much more complicated, way.

It normally produces a significantly higher figure than the consumer price index (CPI) statistic, which is the one normally used to measure the price of living.

For example, at the moment RPI is running at 3.5% while inflation measured by CPI is 2.7%.

The Flying Scotsman and Virgin Trains' new Azuma travel in the same direction alongside two of the rail operator's present day fleet - to depict the past, present and future of UK rail travel, in a world first
Video: What nationalising the railways means

Labour says it will change the system so fares can only go up by the lower CPI figure, protecting passengers from painful increases.

According to its figures, that would mean a cumulative saving of £551 over the five years of the next Parliament, compared to increases based on RPI.

But Labour has gone a step further, assuming that a Tory Government would go back to the previous system of allowing increases of 1% more than RPI.

That is how the party has reached the figure of £1,000, but there's no mention of such a change in the Conservative manifesto.

Labour's shadow transport secretary, Andy McDonald, said: "Theresa May's failure to commit to freezing rail fares shows just how out of touch they are.

"Privatised rail has failed and it will take more than tinkering around at the edges to deliver much needed improvements for passengers."

A Conservative spokesman said: "Renationalising the railways will either add billions of pounds to our national debt or hit ordinary working people in the pocket with higher taxes.

"It's yet more economic shambles from Labour."

There is little doubt that the train network does need huge investment, but there is also disagreement about how that can be delivered.

For one thing, critics of Labour's policy are likely to claim that curtailing increases in rail fares will less money being available for investment. That, in turn, is likely to mean the Treasury being asked to make up the shortfall.

Some will portray this as a subsidy for train users. Popular, perhaps, with commuters, but not so attractive for voters who never use the network.

Also, the great bulk of Britain's daily train journeys happen around London and the South-East – the idea of capping train fares would be welcomed in London's commuter belt, but that is also one of the most fiercely Conservative regions of the whole country.

Posted in:

  • Labour
  • Rail
  • General Election 2017

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