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Train companies confirm fare changes for 2011

23/11/2010

TRAIN COMPANIES CONFIRM FARE CHANGES FOR 2011

Train fares will rise by an average of 6.2% in January 2011, the Association of Train Operating Companies (ATOC) announces today.

According to the Office of Rail Regulation the average price paid for a single journey is currently £4.89; applying the 6.2% increase to this would see the average single fare rise to £5.19 in January.

ATOC says that above inflation fare rises are the result of a change in government policy in recent years which has sought to sustain investment in the railways by reducing the amount that taxpayers contribute and requiring passengers to pay more.

Michael Roberts, Chief Executive of ATOC said: “We know times are tough for many people but next year’s fare increases will ensure that Britain can continue investing in its railways.

“Even with these fare increases, the money passengers spend on fares covers only half the cost of running the railways – taxpayers make up the difference. The government is sticking with the previous administration’s policy to cut the taxpayers’ contribution to the overall cost of running the railways.

“More and more people are travelling by train and demand is expected to double in the coming decades so it is more important than ever that money is spent on providing better stations, more trains and faster services. Money invested through fares has helped to bring about the record levels of customer satisfaction and punctuality on the railways today.

“But, in the longer term we need reform which drives down the cost of the railways by relying more heavily on the innovation and resources of the private sector to give passengers a better service and taxpayers better value for money.”

ENDS

Q&A

Why do fares go up every year?
Above inflation fare rises are the result of Government policy since 2004, which has sought to sustain investment in the railways by reducing the amount that taxpayers contribute and requiring passengers to pay more.

Even with the increases announced today, the money passengers spend on fares covers around only half the cost of running the railways – taxpayers make up the difference. Money from fares raises around £6bn a year, paying for around half of the industry’s £12bn annual costs.

The previous Government wanted to move to a position where every £1 paid by the taxpayer is matched by £3 from the passenger.

Because of the squeeze on public finances, the current Government has also made it clear that taxpayers should contribute less and passengers more to the overall cost of running the railways to ensure that investment can continue.

Who decides the level at which fares should rise?
Fares are determined largely as a result of Government policy. About half of fares are directly regulated according to a formula linked to the rate of inflation. The rest are set by train companies so that they can honour financial commitments set out in their franchise agreements with the Government.

For several years these agreements have been signed against the background of the Government’s policy to shift the funding of the railways from the taxpayer to the passenger.

Where does the money go?
For every pound spent on the railways, on average:

48p goes to Network Rail (which charges operators to access the tracks) and other infrastructure costs
17p on staff costs
17p on miscellaneous costs (including train maintenance, administration, contractors)
11p on leasing trains
4p on fuel / energy
3p to train company profit

Next year’s fare increases will help to ensure that Britain can continue investing in its railways. The money raised from fares makes up a significant amount of the money due to be invested in the railways over the next few years.

How do the fare rises affect different journeys?
Figures from the Office of Rail Regulation show that the average price paid for a single ticket is £4.89. Applying January’s 6.2% rise would see this figure rise to £5.19. Broken down by sector, this means the average price paid for a single journey will rise to:

- £3.79 in London and the South East
- £20.92 on long distance
- £3.37 on regional routes

Why does ATOC publish an average figure?
There are tens of millions of fares in the system to get millions of passengers around the country every day.

We understand that people will want to plan their budgets for next year – in particular during tough times for many people. We are trying to give the public a general steer of how much, on average, fares will go up by in January by giving one overall figure.

If people want to find out how much their fares are going up by, they will be able to go the National Rail Enquiries website or call their train company from the start of December.

How do I find cheap tickets?
To get a good deal, wherever they can, people should:

- Book early
- Avoid busy times of the day
- Use a Railcard - young people, the over 60s and families can get a third off most tickets
- Go to the National Rail Enquiries website, run by and paid for by train companies, which has up to date information on all the best deals and a Cheapest Fare Finder

What has happened to fares since privatisation?
Fares have risen at a significantly slower rate since privatisation than during the last 20 years of British Rail. The average annual real terms increase since 1996 is 1.3% (including the 2011 rise); this compares to a 2.7% increase during the last 20 years of British Rail.

The average price paid per mile is 19p – in real terms, the lowest level in five years. Season tickets, as measured by pence per mile, are now lower in real terms than at privatisation.

Sales of cheap Advance tickets have risen 80% in the last four years and the number of journeys made on Railcards has risen by 70% in the last decade. Four out of five people travel on discounted tickets.

The perception that rail fares are too high is partly driven by the most expensive, fully flexible Anytime fares on long distance routes. However, only around 2% of journeys are made using these fares.