Fare rises 'to benefit train firms'

Man on phone on a train station platformTrain companies rather than taxpayers could end up benefiting from revenue raised from increased train fares, a report from a Government spending watchdog has said.

Some of the Government budget reductions in road maintenance and rail may not be financially sustainable, the report from the National Audit Office (NAO) said. Road maintenance reductions could lead to a deterioration in the quality of roads, it added.
In a sample of 73% of the Department for Transport's (DfT) budget, more than half of the reductions, compared with planned spending, were "the result of cuts, delays to new investment or higher fares, rather than new approaches to delivering the same service for less".

The NAO said the DfT believed the majority of savings it was directly responsible for implementing were on track so far. But the NAO added: "We have not validated this assessment, as most of the critical milestones lie ahead."

Next month, rail passengers face season ticket fare rises of 1% above RPI inflation, with RPI plus 3% rises due in January 2013 and January 2014.

In its report, the NAO said: "A portion of the £759 million budget reductions in passenger rail services is dependent on commercial negotiations with train operating companies over the amount of additional revenue raised by increasing the cap on passenger rail fares to 3% above inflation.

"There is a risk that the benefit of the resulting increase in passenger revenues will not be passed on to taxpayers fully, but will also result in increased train operating company profits."

The report continued: "There are risks to value for money in decisions taken by the DfT to reduce costs following the 2010 spending review. There is a risk now that a proportion of the budget reductions in road maintenance and rail budgets may not be financially sustainable."

A DfT spokesman said: "As a result of the tough decisions taken by the coalition government to get the public finances under control, we have since been able to announce £2 billion of investment in our transport infrastructure. This is in addition to the £3 billion the Government is providing to councils for road maintenance over the spending review period until 2014-15.

"We have now announced that regulated rail fares will rise by inflation plus 1% in 2012, not inflation plus 3% as set out at the time of the Spending Review. However, we remain confident that any possible future fares change would yield its full anticipated value to the tax payer and not to train company profits."
© 2011 Press Association
Read Full Story