London business groups have called on the government to ensure rail fares do not surge next year on the back of above expected inflation, warning this would cripple the capital’s recovering economy.
London First and the Centre for London said today that a 5 per cent rise in rail fares next year, which is the current projection, would be a major drain on the economy and would put off people from returning to the capital.
Rail fares increase every year in line with annual Retail Prices Index (RPI) inflation, which in August hit an annual rate of 4.8 per cent.
Veteran political commentator Steve Hawkes wrote in City A.M. today that the Treasury and Department for Transport (DfT) are looking closely at changing the formula to stop a 5 per cent rail fares hike next year.
“Even Rishi knows 5 per cent would be toxic,” one insider said.
A DfT source said that “any fare adjustments will be considered in context of a wider rail recovery package” to be unveiled later this year.
Adam Tyndall, programme director for Transport at London First, said “increasing rail fares by nearly 5% would be a big mistake, when people are wanting to get back into London to both work and play”.
“Putting travellers off our railways in the coming months would be counter-productive and probably cost the Treasury more in the long-run,” he said.
“Those sectors that rely on commuter and visitor traffic – such as hospitality, retail, arts and culture – need confidence that policymakers are pulling out all the stops to accelerate their recovery.”
Nick Bowes, chief executive at the Centre for London, said: “We still don’t know for sure how working patterns will settle down after long periods of home working during the pandemic but one thing is for sure – big hikes in rail fares will deter rather than encourage more people back into the office.
“And it will make the headache over what do with the gaping hole in Transport for London’s budget even worse.”
A DfT spokesperson said: “No decision has been made on national rail fares. The Government is considering a variety of options and we will announce our decision in due course.”