The government is to restrict rail companies from imposing excessive fare increases following the row over a 10 per cent rise announced by Virgin last week.

The deputy prime minister, John Prescott, has asked the Strategic Rail Authority to look into the extension of an existing price cap on 40 per cent of journeys to cover most of them.

Prescott expressed his shock at finding that fares had increased by £40 on Virgin's London to Manchester route since privatisation.