Train fares will rise by several times the rate of inflation under a series of deals between the Government and rail companies designed to take advantage of record growth in demand for rail travel.

Stagecoach gave notice yesterday that it planned to follow its 20 per cent increase on its South West Trains franchise last month with a substantial increase on the new East Midlands franchise after it takes over in November.

The company plans to raise fares by at least 30 per cent above inflation during the seven-year franchise and indicated that it preferred one big increase early in the contract rather than spreading it over several years.

Go-Ahead plans to raise fares on the London-Northampton route by 25 per cent in real terms during its eight-year franchise.

Passengers on the East Coast Main Line and Cross Country franchises also face large increases under deals due to be announced in the next few months.

The Department for Transport has publicly distanced itself from the increases, claiming that they are a matter for the private train companies. The DfT says that it is only responsible for setting regulated fares, such as season tickets, which it expects to raise by 1 per cent a year above inflation.

The Times has learnt, however, that the DfT made clear to the companies, when they were bidding for the franchises, that they would have to raise unregulated fares to have any chance of winning.

The department now expects to make a profit from franchises that it had previously subsidised. Under the East Midlands deal Stagecoach must pay the DfT £374 million in the final four years of the franchise.

Chris Grayling, the Shadow Transport Secretary, said: “The Government is trying to pass the blame for these fare increases on to the train companies. But they seem to be another form of stealth tax.

“We need a guarantee that all the extra money raised from passengers will be spent on improving services.”

Passenger Focus, the official rail passenger watchdog, said that the increases were making rail travel unaffordable for people on low incomes.

A spokeswoman said that the watchdog was worried that the Government planned to abolish the price cap on saver fares, which are the only cheaper tickets available on the day of travel on many routes.

Brian Souter, chief executive of Stagecoach, said that it was unfair to place all the blame for the fare increases on the train companies.

“There have been some very high fare increases across the industry and that’s because of the way the [franchising] model is shaped. If you don’t bid on that basis you don’t win a franchise.”

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