Why are train companies likely to raise fares again?

Train fares are expected to rise again from January Photo: Gareth Fuller/PA Wire

Rail passengers are likely to be hit with another price increase, by as much as 11% on some tickets, from early next year.

The exact prices will not be decided until later, but we will get an indication when the inflation figures for July are released today. July's inflation rate is used to help set price increases for rail tickets.

Rail prices have been rising above the rate of inflation for the last decade, with some eye-watering hikes.

We should expect protests today, even if inflation stays where it is. It is currently much lower than it was at this time last year, so why the complaint? Even an increase of 2.4% can result in fare increases of more than 11% on certain tickets. How on earth can that happen?

Protesters hold a banner outside Waterloo Station this morning Credit: Climate Rush

The Government allows train companies to increase their prices at the rate of inflation plus 3% in England (the figure is 1% in Scotland). They can also increase some fares by up to 11% if they agree to cut other fares.

Last year, after fierce lobbying from the transport secretary Justine Greening, the Chancellor cut the increases at the last minute. Perhaps campaigners hope that if they get an early start in this year they may force him to repeat that.

Passengers queuing to buy train tickets at Victoria Station in London Credit: Katie Collins/PA Wire

But remember this only affects so-called regulated tickets, which account for about half of all train tickets. Season tickets and off peak intercity routes will be most affected.

Unregulated ticket prices are set by the train companies themselves. In the main, they are tickets where passengers are considered to have a choice to take the train or other modes of transport.

The other factor that has been driving up prices for passengers is the need to spend hefty amounts of cash updating the train network. Since 2004, the Government has been trying to shift the burden of cost from the taxpayer to the passenger.

Essentially it is trying to wean the industry of public subsidy, but that will take a very long time.

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