Rail passengers face a substantial increase in overcrowding from 2014 because the government is not buying enough carriages, a report by MPs warns today.

The Department for Transport's train procurement programme will miss original targets for preventing increased overcrowding, according to the Public Accounts Committee (PAC). Under current plans there will be 15% fewer extra places on London-bound trains during rush hour, compared with earlier targets, representing a drop from 117,000 new seats to 99,000.

The MPs added that commuters will have to endure packed carriages unless the rail industry tackles a cost base that makes it one of the most expensive in Europe. "Rising demand for rail travel combined with serious cuts in public expenditure make it imperative that the rail industry becomes more efficient, otherwise the passenger will suffer," the MPs said. The Association of Train Operating Companies (ATOC), which represents 19 franchises, estimates that the London commuter market will grow by 35% over the next 25 years.

The transport secretary, Philip Hammond, echoed the committee's criticism of the high costs in the rail industry, which increase the burden on farepayers and taxpayers who, between them, put around £11bn per year into the railways.

"As the committee rightly says, this situation is not sustainable," said Hammond. He claimed that a recently announced increase in rail fares, which will now rise by three percentage points above inflation between 2012 and 2015, would help pay for further increases in rail capacity. "That decision means we will be able to unveil details of our plans to reduce overcrowding in the coming weeks," he said.

The PAC report warns that money garnered from fare increases on some franchises is not being spent equally on commuters. MPs cited the example of the Southeastern route, where above-inflation fare hikes are helping pay for a high-speed service that does not stop at some passengers' stations.

"It is not clear to passengers where the money from increased fares has been spent," the MPs said.

The DfT has ordered 650 carriages so far as part of a five-year spending plan for the railways between 2009 and 2014. However, the remaining capacity increases, including a further 300 carriages, have been put on hold due to the comprehensive spending review. The government is expected to issue a statement on further carriage deals this month, when it is also expected to address the fate of a £7.5bn programme to replace the UK's intercity train fleet.

ATOC said the government should give operators greater control over ordering carriages rather than using civil servants. "The delay in tackling capacity has coincided with the growing involvement of civil servants in buying new trains," said ATOC.

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