UK train fares set to rise after year of commuter misery

Passengers waiting for news during travel disruption on the East Coast mainline at Peterborough Station, Peterborough, England, on Aug 9, 2019.
Passengers waiting for news during travel disruption on the East Coast mainline at Peterborough Station, Peterborough, England, on Aug 9, 2019.PHOTO: AP

LONDON (BLOOMBERG) - After cancellations, delays and strikes, British train commuters are bracing for another kick in the teeth: fare hikes.

Rail users could be looking at an increase of almost 3 per cent in the cost of travel, based on inflation data set to be announced on Wednesday (Aug 14). Last month, a number of services were cancelled because of record temperatures, with many train operating companies concerned that tracks could buckle in the heat.

Regulated fares, which cover around 40 per cent of rail fares, are capped based on the July Retail Prices Index (RPI) measure of inflation, with increases coming into effect in January. Economists forecast that the latest data will show a 2.8 per cent increase in the RPI.

That would add more than 100 pounds (S$166) to an annual standard-class season ticket from Sevenoaks in Kent, southeast England, into central London.

UK train services were fully privatised in 1997, and there's long been public resentment at high ticket prices, often directed at the train operating companies which manage the routes.

"After a year of more stable - but still patchy - rail performance, many passengers are mystified that rail fares should be going up at all," said Mr David Sidebottom, director at watchdog Transport Focus.

The RPI is already a much-maligned measure of inflation and was stripped of its quality mark in 2013. While it's down from 3.2 per cent a year ago, it's usually much higher than other measures, such as the Consumer Prices Index.

 
 

As a result, it rewards some bondholders and pensioners, whose returns are based on the index, and penalises rail users and student loan borrowers, whose interest payments are linked to the measure.

In a report last month, UK lawmakers called on the Office for National Statistics to make immediate changes to its calculation, saying that a "simple mistake in price collection" had gone "unresolved for a decade."