Rail fares Q&A: Why are they going up again?
Rail tickets are about to go up again.
Train companies have now set and published all 2013 ticket prices. If you buy a rail season ticket for your commute, it will go up by 4.2% from 2 January.
But this is still just an average. Some increases are much more.
It all prompts a few questions, doesn't it?
If the regulated fare rise is set at 4.2%, why do some fares go up by more?
Rail companies are allowed a little wiggle room, called "flex", which currently lets them put some fares up by as much as RPI plus 6%, as long as it's balanced out with smaller rises, or even cuts elsewhere. So you may be facing an even bigger hike, as much as 9.2%.
Oh, and the government has promised a similar RPI plus 1% rise in 2014 and 2015. We've actually had inflation-busting fare rises every year since 2004.
Why are fares going up regardless of the service you're getting?
In a nutshell, the government wants passengers to pick up more of the bill for running the railways.
It all started in 2007, when a White Paper called Delivering a Sustainable Railway effectively set a target to get about three-quarters of the money through fares with a quarter through tax by 2014. At the time the bill was split about 50-50; it's now about 60-40, possibly a little more. So that is why fares keep going up.
The government also says it is helping to pay for huge, multi-billion pound improvements across the network, from electrifying lines to brand new stations and trains.
So is all this investment making a difference to the standard of service?
Much of the expected improvement is still to come. In July 2012, the government announced a £9.4bn package of investment in the railways in England and Wales - £5.2bn to complete current schemes such as Crossrail and Thameslink, plus £4.2bn for new projects, including electrification and upgrading of several key lines.
However, this latest tranche of money will take time to filter through, with work not due to be completed until 2019. And the government is expecting part of the funding to come from what it calls "substantial efficiency savings".
The TUC points out that the government has asked the rail industry to come up with £3.5bn worth of savings by 2019, as a result of the McNulty review of the railways published last year.
It reckons that the industry will have to close large numbers of ticket offices and employ fewer staff on trains in order to meet that target. So services could get better in some ways and worse in others.
If our fares are so high, why are record numbers of people using the trains?
Our regulated fares are some of the highest in Europe. But there are still lots of cheap deals out there if you can book well in advance and travel off-peak. Couple that with the cost of running a car, the pricey insurance and petrol, and the train becomes a very attractive proposition. They are also rather nice when you get on them, and very safe.
Here is a very interesting thing that I was told by a senior rail executive whom I trust. If you analyse it per person per mile, season tickets are by far the cheapest deal they offer. In fact, he said, they make a loss on them. All the fare rise cash goes to the government.
Why do they use RPI and not CPI as a measure of inflation?
The Office for National Statistics has two inflation indexes - the Retail Prices Index (RPI) and Consumer Prices Index (CPI) - that measure the rising costs of goods and services in different ways.
One of the key differences between the two main indexes is that RPI includes housing costs such as mortgage interest payments and council tax, whereas CPI does not.
RPI is normally bigger than CPI, which obviously means fare rises are higher. Yet the government uses CPI for setting pension and benefit rises for example, so the accusation is that they use CPI it when it's useful to have a smaller number, RPI when they want a bigger number.
Here is what they sent me: "The use of RPI is consistent with the general indexation approach adopted across the rail industry. The Office of Rail Regulation uses RPI as the index for Network Rail's revenues, eg Track Access Charges."
You can make up your own mind.
Is it the same across the UK?
The Scottish and Welsh governments have both approved similar fare rises, (Scotland's is actually a fraction lower, at 3.9%), but fares aren't going up at all in Northern Ireland.
In fact, the Scottish government has also vowed to limit the peak fare increase to the rate of inflation in 2014 and 2015, if it can.
What would Labour do?
Pretty much the same. They started the above-inflation fare hikes. This is what they told me: "There is no conceivable way we will go into the next election backing a higher cap than 1% above inflation and will decide whether we can make a more generous pledge nearer the election."
They would however, abolish the "flex" I mentioned earlier, which would stop 9-10% hikes.
Will it ever end?
In its recent command paper, the government promised to address "the concerns about rail fares and the impact they have on hard-pressed families - by ending inflation-busting increases in average regulated fares at the earliest opportunity".
That is the promise, although they can't put a timescale on it. So your guess is as good as mine.
For the record, I have just bought my first yearly season ticket. For the princely sum of £4,240. I could buy a 2003 reg Ducati Monster for that.