Spending Review: steeper train fare hikes from 2012

At present, the annual increases in regulated fares, which include season tickets, are capped at 1% above the retail prices index (RPI) inflation level (see the Cheap Train Tickets guide).

Osborne says that from 2012 the cap will be RPI plus 3% which – if introduced for next January – would have meant season tickets going up almost 8%.

He says the rise is needed to pay for new trains and improve passenger conditions.

Bob Crow, general secretary of the RMT transport union, says: "The massive increase in rail fares will drive people off the trains and onto the roads.

"It looks like the profits of the private rail companies will be ring fenced while upgrades are kicked into the long grass, forcing passengers to pay through the nose to travel on creaking, overcrowded services."

Campaign for Better Transport chief executive Stephen Joseph says: "We are appalled at the Government's plan to allow rail fares to rise so far above the inflation rate.

"Hard-working commuters who depend on the train face paying over £1,000 more for their annual season ticket by the time of the next election.

"These eye-watering rises are unacceptable at a time when we should be growing the railways in order to tackle congestion on our roads and reduce carbon emissions in line with government targets."

Further reading/Key links

Slash costs: Cheap Train fares, Cheap UK travel