THE Chancellor has announced that rail fares are to be allowed to rise more quickly, but not for another two years. The 'cap' on regulated fares is to remain, but becomes RPI + 3 per cent for three years from 2012.

George Osborne said transport would receive capital investment of £30 billion for roads as well as railways over the next four years.

The Association of Rail Operating Companies said the government would receive the additional revenue from higher fares, rather than operators, but a spokesman could not explain how this would be achieved.

More recent franchises typically enter the protection of 'cap and collar' clauses from their fourth year, in which the DfT gains from higher-than-predicted revenue, but older contracts, such as c2c, are unlikely to be included in this.

The ATOC spokesman agreed that existing franchise contracts could not be changed without the consent of both parties.

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