Millions of commuters are set for a boost after the government said it will freeze rail fares for the first time in 30 years.
There were fears that rail fares could rise by 5.8% next year as they are usually calculated using Retail Prices Index data plus one percentage point. RPI came in at 4.8% in July.
MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
The Treasury said commuters on more expensive routes will save more than £300 per year.
Reeves said the decision to announce the freeze would ease the pressure on household finances and make travelling to work, school or to visit friends and family ‘that bit easier’.
How much will rail fares cost?
Transport costs make up 12% of household spending, the Treasury said, so any reduction will be welcomed by commuters.
The freeze will apply to all regulated fares, including season tickets, peak returns for commuters and off-peak returns between major cities, benefitting more than a billion passenger journeys across England.
According to Treasury calculations, a typical commuter travelling to work three days a week using flexi-season tickets will save £315 per year travelling from Milton Keynes to London, £173 per year from Woking to London and £57 per year for routes from Bradford to Leeds.
The Railways Bill being introduced in Parliament will also create Great British Railways (GBR), a new publicly owned company, that will run and manage the tracks and trains.
There are also plans to invest in tap in tap out and digital ticketing, alongside investing in superfast WiFi on the railway.
Transport Secretary Heidi Alexander said: “We all want to see cheaper rail travel, so we’re freezing fares to help millions of passengers save money.
“Commuters on more expensive routes will save more than £300 per year, meaning they keep more of their hard-earned cash.
“This is part of our wider plans to rebuild Great British Railways the public can be proud of and rely on.”
Will the rail fare freeze benefit consumers?
Ben Plowden, chief executive of the Campaign for Better Transport, welcomed the freeze.
He said: “We know that cost is the number one concern for people wanting to travel by train, so it is very welcome that fares will be frozen next year as we have been calling for.
“As well as helping households with the cost of living, this will enable more people to choose rail, reducing traffic on our roads, benefitting the economy, helping the environment, and connecting communities across the country.”
But the benefits of the freeze really depend on where you live and how much you use the railways.
Not all types of tickets are regulated either. For example, advance purchase tickets, first-class fares and some flexible tickets are set by the operating companies.
The freeze also isn’t much use if you commute on the London Underground. Transport for London fares are set by the Mayor of London so commuters in the capital may not feel the full benefits, especially as prices already rose by 4.6% in March.
London tube fares to rise
Though train fares are frozen, London Tube fares are set to rise by an inflation-busting 5.8% in March 2026. London mayor Sadiq Khan said the national rail fare freeze would not be mirrored in Transport for London fares.
The increase in spring will see a typical £4 tube fare rise to £4.25. Exact details of the new fares are likely to be published before Christmas.
A spokesperson for the Mayor of London said: “TfL and the Mayor are in close conversation with (the) government on fares and will confirm plans for future fares in due course.”
-
Autumn Budget tax changes: how is your generation affected?The chancellor expects everyone to do their bit to boost the nation's finances but the tax burden is by no means shared equally
-
Revealed: pension savers ditch investment trusts and favour passive fundsDemand for investment trusts is cooling among self-invested personal pension (Sipp) customers, who are increasingly choosing money market funds, passive funds and individual shares
-
The consequences of the Autumn Budget – and what it means for the UK economyOpinion A directionless and floundering government has ducked the hard choices at the Autumn Budget, says Simon Wilson
-
Why UK stocks are set to boomOpinion Despite Labour, there is scope for UK stocks to make more gains in the years ahead, says Max King
-
Electric vehicle drivers to be charged new per mile tax from 2028Electric vehicle drivers will be forced to pay a 3p per mile tax, as taxation will be brought closer in line with petrol and diesel cars
-
Salary sacrifice cap of £2,000 to be introduced in 2029The government says 74% of basic rate taxpayers currently using salary sacrifice will be unaffected by the change
-
Savers will have to wait as long as 48 years to build a £1m cash ISA pot if allowance is cutChancellor Rachel Reeves is rumoured to be planning a cut to the cash ISA allowance in the Autumn Budget, making it harder for savers to build wealth. Will you still be able to build a £1 million cash ISA pot?
-
Autumn Budget live: Rachel Reeves cuts cash ISA limit, introduces mansion tax and moreLive updates Chancellor Rachel Reeves unveiled a slew of tax hikes and ISA reforms in her second Autumn Budget. We take a look at the latest updates and analysis
-
Should ISA investors be forced to hold UK shares?The UK government would like ISA investors to hold more UK stocks – but many of us are already overexposed
-
Hundreds of thousands more taxpayers to be pulled into £100k ‘tax trap’ by 2029Frozen thresholds are pushing more workers into paying income tax at an effective 60% rate. We look at why, as well as how you can avoid being caught in the trap.
