Conservative party’s new pledge could win over Londoners
The cost of train tickets for commuters will be frozen for the next five years under a Conservative government, the party has announced.
The policy was put forward in the party’s manifesto, with David Cameron saying: “Because of the difficult decisions that we have taken to repair the economy, we have been able to hold down commuter fares for the past two years. If elected in May, we would freeze them in real terms for the next five.”
Fares have risen 20% under the coalition government, with many commuters spending thousands of pounds on season tickets for overcrowded trains.
What’s good about this?
A whole parliamentary term is a long time, making this an important pledge for the Tories. London commuters are sick and tired of paying extortionate prices just to get to work – an issue that has so far gone largely unaddressed by any party.
Politicians, who have their travel paid for by the taxpayer, have thus far failed to understand the impact of these excessive costs on workers in London and the rest of the UK.
There is no doubt it will be a huge vote-winner, especially for those who work in the capital, but live in the home counties. After five years of rising fares, it’s a sign the Tory party is finally listening to voters.
What’s wrong with this?
The problem is, while a freeze sounds promising, it’s only in “real terms”, which means fares will be able to rise at the rate of inflation. There are three problems with this. Firstly, rail fares are set against the Retail Prices Index, a separate and usually much higher rate than the Consumer Prices Index, the measure we usually call “inflation”. Currently, CPI is at 0%, while RPI is at 1.0%.
This means rail fares can go up by 1% year on year at the moment.
The second issue is, while RPI inflation is currently at the lowest it has been for more than five years, it is likely to rise as the economy improves. In the past 10 years it has tended to hover between 3% and 5%, and it’s not unreasonable to expect it to return to that level (or higher) during the next five years. That means even “frozen” fares could still be rising significantly.
The third issue is that the Conservatives haven’t made clear what would happen if inflation is negative, an issue that could happen in the next few months. We’re assuming ticket prices would drop – but this needs to be clarified.