Rail passengers could see big fare rises, Hammond warns
Train passengers could see a big rise in ticket costs in the new year if investment in the railways is to be protected, Philip Hammond has warned.
The transport secretary said the current formula used to set fares at 1% above the Retail Prices Index (RPI) inflation rate was not "set in stone".
He said it would be "irresponsible" to not consider charging passengers more.
The Transport Salaried Staffs' Association union warned people may no longer be able to afford train travel.
Speaking to the National Rail Conference in Liverpool Mr Hammond said the government faced "stark choices".
"To my mind, the current fares formula is a reasonable and sensible approach. But it cannot be set in stone when all the other variables are vulnerable to change and to challenges," he said.
"We will face some very stark choices and it would be irresponsible at this point to rule out even considering an increased contribution from the fare payer as part of the solution to protecting investment in the railways."
The RPI inflation is currently at 5.1% and, if it remained at that level, increases to regulated fares would be capped at 6.1% in January next year.
Mr Hammond again took the opportunity to criticise high bonuses paid to those in the railway industry.
Last month he said he was "very disappointed" that Network Rail had paid senior management a total of £2.4m in bonuses last year, despite a warning from the rail regulator.
On Thursday, he told the conference: "To be frank, I think a lot of people will be asking why this same pay discipline can't also be applied to the railways - an industry that, in effect, straddles the private and the public sectors because of its dependence on billions of pounds worth of taxpayers' money.
"And, if we are going to ask people to endure personal sacrifices to get ourselves out of the hole we are in, then those at the top have a duty to act fairly and set the right example, especially on pay and bonuses."
But Gerry Doherty, general secretary of the Transport Salaried Staffs' Association union, warned any rises could put people off.
He said: "We already have the highest rail fares in Europe with a walk-on anytime return fare between London and Manchester costing £262, a figure way beyond the means of millions of ordinary families.
"If Mr Hammond goes down the route of scrapping price controls on fares, we are going to end up pricing those families off the railways altogether."
He urged the coalition government to introduce the Liberal Democrats manifesto pledge of changing annual increases to RPI minus 1%.