David Cameron: “The power was given to [train operating companies] to [raise fares] by the last Government.”

Ed Miliband: “The last Government reversed that policy.”

David Cameron: “I know that he’s had a bad start to the year, he’s only making it worse by getting it wrong… what was the case in 2009 is the case today.”

Ed Miliband: “I’m afraid the Prime Minister is just wrong about the facts. The last Labour Government saw that the train companies were taking advantage of consumers, were ripping them off by charging more for the busiest routes. We stopped it, we took away the power when we came to office and he’s bringing it back.”

Prime Minister’s Questions, 11 January 2012

The first session of Prime Minister’s Questions of the year proved a testy affair, with both party leaders accusing the other of getting his facts wrong.

The issue that dominated the early exchanges between David Cameron and his Labour opposite number Ed Miliband was the increases to rail fares that came into force over the New Year.

According to the Labour leader, these rises had seen passengers on some routes charged 11 per cent more for their travel (although as Full Fact found when we looked into the same claim, these increases weren’t solely due to last week’s change).

However neither leader could agree on who was to blame for the jumps in rail fares.

While Mr Cameron told the House that the previous Government had put in place the fare increase structures that had led to this year’s rises, Mr Miliband claimed that this was “just wrong”.

According to the Opposition leader, the previous administration had actually introduced measures to prevent train operating companies from targeting certain routes for particularly large hikes.

So who is correct?

Analysis

Mr Cameron is correct to point out that the last Government were responsible for introducing the system under which the New year fare increases were calculated.

The ‘RPI+1’ formula – under which fares increase on average by the RPI rate of inflation at the time of the previous July plus 1 per cent – has been in force since 2003.

While the present administration had signalled that it intended to change this formula to ‘RPI+3’ in order to reduce the amounts by which rail tickets are subsidised from the public purse, the Government announced at the end of last year that RPI+1 would remain in place this year on account of high inflation.

However that is not to say that each rail route saw the same increase of 5.9 per cent. That is because train operating companies are allowed to vary individual rises by 5 percentage points above or below RPI+1, so long as the average increase is not above RPI+1 across the whole network.

It was this ‘flex’ policy that was the source of much of the controversy between Mr Cameron and Mr Miliband.

While the flex policy has been in place in one form or another since the privatisation of the railways in 1993, it was subject to a revision in 2009 when Labour was still in office.

(It is worth noting here that when calculating the average rise, routes are weighted by how busy they tend to be, meaning that Mr Miliband’s claim that the train operating companies were ‘ripping off’ customers by targeting the busiest routes isn’t strictly accurate.)

In August 2009 the Department for Transport announced that it was “removing train operators' ability to increase individual fares next year by up to 5% above the national fare change.”

This meant that in January 2010, the last fare revision overseen by Labour, all fares decreased by 0.4 per cent, as in July 2009 RPI stood at -1.4 per cent.

In October 2010 the Coalition Government confirmed that the flex policy would again be used when calculating fare increases from 2011 onwards. It is on this basis that Mr Miliband claims that the present administration was “bringing back” increases of ‘up to 11 per cent’.

However doubt has been cast on just how far-reaching the implications of the 2009 decision to remove flex from fare increases were.

Then Transport Secretary Lord Adonis does state in the 2009 press release that the move specifically applies to “January” and “next year”.

And a document unearthed by the Guido Fawkes blog between the DfT and one of its rail franchisees seems to confirm that the move was only temporary.

This states that: “From 00.00 on 1 January 2011 the amendments to the Franchise Agreement [removing the flex policy]… shall be reversed, so that, except as may be contained in a further notice, Schedule 5.5 of the Franchise Agreement shall be read as if this Notice of Amendment had not been served.”

This would suggest that the 2009 move was understood by train operating companies as more of a temporary ‘holiday’ than a permanent change in policy, and the onus would have been on the Government to repeat the move or make it permanent.

Of course we cannot be sure whether or not a Labour Government would have done this, although it is interesting to note that Lord Adonis did tell a Transport Committee hearing in 2009 that it was his Government’s policy to remove flex “in future”:

“The Government’s intention is, therefore, that in future the cap should apply to individual regulated fares, not just to the average of each fares basket.”

Conclusion

While it is true that the Labour Government did make changes to the way in which train fare rises are calculated, particularly with regard to the flex policy, it does seem that Ed Miliband is labouring the point by claiming that his government had “reversed” it, as there is little to suggest that the move was permanent.