I think Greening's argument seems to be a bigger fare increase will see people trying to use the train less which won't generate as much extra revenue as the government were hoping for.
If it's approved at the expense of Eric Pickles' plan for weekly bin collections to be reinstated then it'll probably be seen as a good move. If, however, it's approved at the expense of slowing down the Lib Dem's plan of the first £10,000 of earnings to be non-taxable then it wouldn't be seen as a good move.
It should be noted that improved public transport links could help put unemployed people in to work and it can also attract businesses to areas they wouldn't have previously considered.
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Im surprised that a 2% rise in fares only nets the Dft £26m, thought it would be much higher when you consider the scale of the national network.
Of course it's a 2% on average increase. An operator is free to put up a £5 fare by a lot more than 2% and to freeze a £10 fare to balance it out.