Ken Livingstone's rail fare cut 'impossible' to deliver

 
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The 5% fare cut proposed by Ken Livingstone isn't as straightforward as it at first looks.

There are other sticking points apart from the Conservatives' assertion that the money is already assigned to upgrade projects.

The bottom line is the mayor does not control rail fares, even though we do have a joined-up transport system between rail and Transport for London (TfL) services.

But from within the rail industry I'm being told the cut would be extremely "problematic" - in particular with trains and Travelcards.

At the moment, when it comes to London Travelcards the rail companies and TfL agree together on how much they will go up. They recently agreed to put them up next year by 8%.

Travelcards are a regulated fare and so train operating companies (TOCs) are bound by the government's formula: inflation (RPI) + 3%. That is higher than TfL's/Boris Johnson's current fare formula of RPI +2%.

Start Quote

It's extremely unlikely Train Operating Companies would agree to a 5% cut in fares, including Travelcards, and reduce their revenues ”

End Quote Tom Edwards

So, what would happen if in October 2012 after being elected Ken Livingstone tried to drop fares including Travelcards by 5% as promised?

It's extremely unlikely TOCs would agree to a 5% cut in fares, including Travelcards, and reduce their revenues.

They pay an agreed amount to the Department for Transport for the franchise and there is no way the government would allow them to pay less.

Also, even if they had a 5% cut on fares on Travelcards on London routes they would have to put up a similar number of fares by 5%.

This is again part of the franchise and called "flex".

Given that London has the most rail passengers in the country I'm told this balancing act would be "virtually impossible".

Political row

If TfL and TOCs don't agree on the fares, then what?

The default position when there is no agreement on Travelcards is the price goes up by inflation RPI+0%.

I'm told it's unlikely rail companies would cut rail Oyster fares and also the combination fares which apply when you take a train and then a bus or Tube.

So, if Ken Livingstone is elected and he cuts fares by 5%, Oyster rail fares and Travelcards won't be cut.

For the TOCs, the Department of Transport matters more than the Mayor.

Of course this would also open up one hell of a political row between central government and the Mayor. Sound familiar?

 
Tom Edwards Article written by Tom Edwards Tom Edwards Transport correspondent, London

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  • rate this
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    Comment number 4.

    There is already an example of flex being used in Southeastern last year when they had the dubious honour of incvreasing their 'basket of fares' by inflation + 3% - TfL set a lower increase within their area and the extra was paid for by flex increases above rpi +3% - as an example my fare increased by 12.8%. SOme As Tfl has set RPI+2% on a number of fares, other will follow in January 2012.

  • rate this
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    Comment number 3.

    AMENDEDI'm not an economist, but if a necessary and regular output as travel goes up yearly (RPI +3% or even up to 8%) then how does it not ultimately push inflation up 'perpetually'. Is there a government fiddle that ironically keeps this off any RPI figures and are they are blended in elsewhere? Please advise anyone. Tom... do you know..? or can you ask Robert or Stephanie if you bump into them

  • rate this
    0

    Comment number 2.

    I'm not an economist, but if a necessary and regular output as travel goes up yearly (RPI +3% or even up to 8%) then how does it not ultimately push inflation up perceptually. Is there a government fiddle that ironically keeps this off any RPI figures and are they are blended in elsewhere? Please advise anyone. Tom... do you know...? or can you ask Robert or Stephanie if you bump into them

  • rate this
    -1

    Comment number 1.

    When Ken previous cut fares as Mayor, Travelcards did still have to go up. That's why someone like me who found it cheaper to commute using a Travelcard back in 2001 no longer uses one and instead uses an Oyster Pay as You Go card.

    As long as oyster fares go down without compromising service/investment people will be happy.

    Boris refuses to address the problems, at least Ken is trying to.

 
 

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