Rail fare rises scaled back

Government limits hikes for second year running.

The Chancellor George Osborne has announced train fares in England will be frozen in real terms for another year.

This means increases to regulated rail fares, which includes season and off-peak tickets, will be capped at 2.5% from January 2015. This figure is taken from the Retail Price Index (RPI) measure of inflation for July 2014.

Normally the cap on prices is determined using the formula RPI plus 1%, which would have meant an average 3.5% above inflation rise for commuters.

But for the second year running the Government has altered its preferred calculation to a cap pinned only to inflation.

The Chancellor also said the Government would scrap the rule which allows train companies to vary price increases on individual journeys.

Train operators are permitted to raise fares 2% above the average increase as long as the overall average of RPI+1% is maintained, which would mean fares on some journeys would  have gone up by as much as 5.5%.

But this flexibility to vary prices will no longer be allowed.

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Making savings

With the general election looming, it has been widely anticipated that the Government would cap rail fares again to keep voters happy.

But Osborne said: "Support for hardworking taxpayers is at the heart of our long-term economic plan. It’s only because we’ve taken difficult decisions on the public finances that we can afford to help families further.”

The Government says the move will cost £100 million by 2015/16 but over a quarter of a million annual season ticket holders will have saved a combined total of £75 thanks to the freezes in 2014 and 2015.

Elsewhere

In Wales, rail fare increases usually mirror what happens in England, though the Welsh Government has not yet confirmed if it will stick to the 2.5% cap.

In Scotland, there will be no rise in off-peak fares in 2015, but peak fares will rise by 2.5%, the same as the July inflation rate.

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