Page last updated at 17:04 GMT, Wednesday, 25 February 2009

Cost of train travel could fall

Trains at Clapham Junction
British train fares are the highest in Europe

The cost of train travel could fall next year after ministers confirmed they have rejected a request from operators to ensure fares keep rising.

Half the UK's fares are currently allowed to rise by 1% above inflation.

In the event of a general 1% drop in prices, these fares would have to fall and such deflation now seems likely.

Transport Minister Lord Adonis told MPs that the existing fares formula would remain in place and therefore prices could potentially come down next year.

Heading down?

MPs on the transport select committee, who were questioning Lord Adonis, welcomed the possibility of cheaper fares, saying ticket prices were the most expensive in Europe.

But they asked him to apologise for the fact that the government's intentions were widely speculated upon in the media on Tuesday, one MP saying it was "out of order" for the media to be briefed before Parliament.

In a time of economic stringency I do not think it is acceptable for individual commuters to face significantly above average fare increases
Lord Adonis, transport minister

The cost of standard regulated fares are linked to the Retail Prices Index (RPI) and are allowed to rise by 1% above RPI every year.

Fares rose by 6% this year but the RPI rose by just 0.1% last month and is soon expected to fall into negative territory.

Given the imminent threat of deflation, worried train companies have been asking the government to freeze fares at current levels for two years, but Lord Adonis confirmed he had rejected this.

He told MPs this stance could result in fares falling next year.

"We stand by the [RPI + 1%] formula as it applies to most train operating companies and if the formula would lead to a fall in fares we will carry through a reduction in fares next January."

Ministerial apology

Rail companies would also no longer be able to increase certain fares by well above the industry average, he added.

"In a time of economic stringency I do not think it is acceptable for individual commuters to face significantly above average fare increases," he said.

There have been warnings that commuter train companies reliant on regulated fares could be heading for financial difficulties should ticket prices fall and that some might cut services in response.

Lord Adonis said operators would be expected to honour their existing commitments on services "in full".

MPs expressed dismay that news of the government's intentions were widely reported, including by the BBC, on Tuesday.

"It is not in order for witnesses, including ministers, to make statements to the media about what they are going to say to select committees before they have actually arrived," said committee chairman, Labour MP Louise Ellman.

"We are extremely concerned about that and we would like to hear an apology for what happened."

Lord Adonis apologised for any "disrespect" felt by the committee.

He said "commercially sensitive" reports in the media had suggested policy on calculating fares would change and the government needed to make it clear that this would not happen.



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