Page last updated at 10:46 GMT, Thursday, 28 October 2010 11:46 UK

Train fare hikes likened to 'stealth tax'

Planned changes to train fares amount to a "stealth tax on commuters", shadow transport secretary Maria Eagle has told MPs.

At question time on 28 October 2010, Transport Secretary Philip Hammond told MPs the decision announced in the Spending Review to cap future price rises at 3% above the retail price index (RPI) rather than the current 1% was necessary to fund investment.

Mr Hammond said: "But in the short term the decision that had to be taken was very simple: do we go ahead with investment in additional rail vehicles to ease overcrowding and improve the passenger experience or don't we?

"We have taken the decision that investing for the long term is the right answer for the UK economy."

But Ms Eagle also attacked the decision to change the way the cap was applied, from limiting the rise in individual prices to an average increase across a "basket" of regulated tickets.

She said Mr Hammond had told The Times that fares would rise 10% over the spending review period, but she claimed the total rise including inflation would be "30% plus".

"So for the sake of hard-pressed rail users, who are already struggling thanks to other measures the government are taking, will you now abandon this stealth tax on commuters?"

Mr Hammond replied: "You talk as if, in the past, rail companies were restricted on individual fares. That is not the case.

"There was always a basket approach until this year, strangely enough a general election year.

"And for this year only the previous government announced that system would be abolished and companies would be limited on individual fares."

Mr Hammond added that the change back to the old system was "not a stealth tax because companies are only allowed to increase regulated fares by a weighted average of 1% above RPI in the coming year across all the regulated fare pool".

Following transport questions, MPs put questions to Women and Equality Minister Theresa May and her team in the Commons.

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