“The last Labour government saw that the train companies were taking advantage of consumers…we took away that power from them.”
Ed Miliband, 11 January 2012
The first proper Parliamentary ding-dong of the New Year was all about the issue of rising train ticket prices, following reports that some commuters have seen their fares rise by as much as 11 per cent this year.
Labour leader Ed Miliband opened the batting at Prime Minister’s Questions by asking: “The Chancellor said in the autumn statement that train fares would only rise by 1 per cent above inflation. Can he (Cameron) therefore explain why rail companies this month on some of the busiest commuter routes have increased their fares by up to 11 per cent?”
Mr Cameron replied: “The power was given to them to do that by the last Labour government.”
Both men then accused each other of getting their facts wrong in heated exchanges. Time for FactCheck to intervene.
The government puts a cap on the annual rail fare hikes that can be imposed by operators on many key commuter routes. The cap is currently inflation (RPI) plus 1 per cent.
Fares are adjusted in January, but it’s the RPI rate six months earlier that is used to calculate the price rise. In July 2011 RPI was 5 per cent, so the average price hike this year is 6 per cent.
But – and it’s a big but – regulated fares are sorted into “baskets”, and while each basket of fares must not rise by more than RPI plus 1 per cent, individual fares within these baskets can “flex” by up to 5 per cent more.
That’s why some rail operators have increased the price of a small number of tickets by as much as 11 per cent, as reflected in countless angry headlines. (The Association of Train Operating Companies points out that the companies do have to balance things out, so if they increase fares above average on a busy route, they have to impose a below-average rise or a reduction on an equally busy one.)
Fair or not, this system was one that Labour inherited from the legacy of the privatisation of British Rail under John Major’s Conservative government in the mid-1990s.
But New Labour left the rules about “baskets” and “flexing” unchanged until 2010, when the then Transport Secretary Lord Adonis froze the practice.
Mr Cameron appeared to finally concede this point today, but cast doubt over whether the change was intended to last forever, saying: “They changed it for one year only – for an election year – with no intention of making it permanent.”
A document released by the Department for Transport appears to back that up. It shows that Lord Adonis signed off a pricing agreement with Stagecoach South Western trains in January 2010 including a change in the rules on “flexing” which would run out after just one year.
That doesn’t itself prove that there was no intention to continue the policy the following year: the relevant paragraph (5b) suggests the “no flexing” rule could have been repeated “in a future notice”.
But sources in the rail industry have told FactCheck there was nothing to stop Labour from specifying a longer period of time in this document if they had really wanted the change to last longer than one year.
Not surprisingly, Lord Adonis has insisted today that: “It was my firm intention to continue the policy for subsequent years.” What did he say at the time?
In 2009 he told MPs: “In a time of economic stringency, I do not think it acceptable for individual commuters to face significant above-average fare increase. The government’s intention is, therefore, that in future the cap should apply to invidual regulated fares, not just to the average of each fares basket.”
In the same year he also said: “We stand by that policy change too and that will also be carried into effect next year, so there will not be the flexibility for fares to change within the basket as has been the case up to now.”
The Commons transport committee appeared to understand that the change was intended to be permanent, saying: “We welcome the removal of regulated fares basket flexibility. No longer will train operators be able to continue the unacceptable practice of increasing selected regulated fares by six or seven times the inflation rate.”
Of course, Labour lost in 2010 and we will never know whether the policy would really have continued.
What’s not in dispute is that the new Transport Secretary, Philip Hammond, announced five months after the Coalition came to power that a decision had been made to reverse Lord Adonis’ move, saying: “We have gone back to the basket system because it provides the freedom to respond.”
Mr Cameron isn’t exactly lying when he says that Labour gave the train companies the power to impose massive hikes on certain fares through the “flexing” approach. And Mr Miliband is technically right to say that Labour changed things – eventually. But neither side is being entirely straight.
Labour may not have invented the practice but they allowed the operators to get away with it for 12 of their 13 years in government, until changing tack just before the last general election. It’s not clear whether the new policy would have been permanent.
But it’s indisputable that the Coalition abandoned it when they came to power, putting commuters in the situation in which they now find themselves.
For that reason, we can’t give either the Prime Minister or Ed Miliband a Fact or Fiction rating.
So which party has the better record on protecting commuters from big fare hikes? Hard to say for sure.
The cap was RPI minus 1 per cent until 2004, when Labour increased it to RPI plus 1 per cent. George Osborne wanted to raise it to RPI plus 3 per cent from this year before finding savings elsewhere that enabled him to maintain the cap at its current level.
Rail users’ groups query whether either party has anything to be proud of on this issue.
Stephen Joseph from the Campaign for Better Transport told FactCheck: “Fares in the UK are well above European averages. Both parties have bought the argument that the cost should be borne by fare-payers.
“We would argue that other countries have taken a different view – that a good transport network benefits everyone and it should not just be paid for by fare-payers but through other means.”
By Patrick Worrall