Ending inflation-busting rail fare rises (Department for Transport) 12th March 2012

Press Release: 8th March 2012

RAIL fare increases will be capped at the rate of inflation under plans to help hard-pressed passengers by ensuring the rail industry brings down the cost of Britain’s railways.
A value-for-money study by Sir Roy McNulty concluded last year that inefficiency across the railway industry is costing farepayers and taxpayers £3.5 billion-a-year.
In her Reforming Our Railways: Putting the Customer First Command Paper, Transport Secretary Justine Greening today outlines how the industry will work collaboratively to reduce this £3.5 billion efficiency gap by 2019 with the savings going towards curbing fare increases while also investing in rolling stock and better infrastructure, and lessening the industry’s reliance on public subsidy.
Network Rail, with the help of the Office of Rail Regulation, is already on track to deliver a significant tranche of these savings: at least £1.2 billion-a-year savings by 2014 and at least £1.8 billion-a-year by 2019.
The Command Paper commits the government and industry to:

• Reducing and then ending above-inflation rises in average regulated fares as soon as possible;
• Expanding smart ticketing technology so that passengers across England and Wales can enjoy Oyster-style smartcard payment options and more flexible season tickets;
• Reforming rail franchises so that operators have to deliver more value and better levels of service for passengers while ensuring taxpayer subsidies are concentrated on safeguarding less profitable routes that remain crucial to communities;
• Investing in Britain’s capacity to grow jobs and prosperity by funding thousands more carriages, extending electrification of the rail network and redeveloping railway stations;
• Strengthening the rail regulator’s capacity to improve the passenger experience and oversee the crucial efficiency challenge;
• Involving rail workers in our plans to get the industry on a more sustainable footing, to grow jobs and to develop skills;
• Empowering passengers by providing better punctuality and real-time travel information.

Greening said:

"Inefficiency and waste in the railways is costing hard-pressed farepayers and taxpayers £3.5bn-a-year and I will no longer allow them to be lumbered with this unnecessary burden.
"We are setting out a roadmap for action alongside the industry to root out inefficiency so we can deliver real value-for-money that ends inflation-busting fare rises once and for all.
"Our Command Paper also safeguards community services, commits to continued investment in rail infrastructure and rolling stock, and empowers passengers through better ticketing systems and real-time information.
"It is about building a more efficient and affordable rail network that serves its passengers better, encourages the rail industry to thrive and grow, and ultimately reinvigorates and sustains Britain’s economy."

Greening has also welcomed Network Rail’s decision to unveil a raft of commitments on improving transparency and accountability – including appointing a public interest director to the Network Rail board to represent the interests of taxpayers.
Network Rail is also granting company members a greater say in board and remuneration decisions, and giving further decision-making powers to its regional directors to make it more responsive and operations-focused.
On Network Rail’s reforms, Greening said:

"Network Rail is really grasping the nettle in responding to the challenges facing the rail industry. I welcome warmly Network Rail’s decision to voluntarily appoint a public interest director to its board and remuneration panel, other governance-strengthening measures, and the steps it has announced to improve performance and efficiency."

Notes:
1. Proposals in the Command Paper on fares and ticketing, and on devolving rail decisions to sub-national bodies, are both being put out to consultation today and are published as separate documents alongside the Command Paper.
2. The Government is today publishing three documents:

• Reforming Our Railways: Putting the Customer First (Command Paper);
• Rail Fares and Ticketing Review: Initial Consultation;
• Rail Decentralisation: Devolving Decision-Making on Passenger Rail Services in England.

All three are available to download at: www.dft.gov.uk/rail-reform