FOR passengers boarding a ScotRail train from January 1 next year, the price of most tickets is likely to increase by 4.1%.

If you're getting on a train south of the Border, barring another U-turn by the Coalition, fares will go up by 6.2%, nearly twice the rate of inflation. Why the disparity?

The answer is not that the Scottish Government, which sets fares for ScotRail, has simply chosen to throw more money at the railway – though its policy will prove expensive. But there is a rift emerging between Westminster and Holyrood over what rail subsidies should be spent on.

When the Coalition was formed, one of the early decisions was that passengers should pay more to ensure that investment could be injected into the rail network. A formula governing regulated rail fares – roughly around half the number of tickets sold, including season tickets – that had been set in place by Labour at 1% above the Retail Price Index measure of inflation, was accelerated to RPI+3% for three consecutive years. Though in line with the austerity ethos of the Coalition, this was not about generating more funds for the Treasury but protecting major infrastructure projects such as London's £16 billion Crossrail scheme and the £33 billion needed to fund high-speed rail over the next 20 years.

While the stance was welcomed by many transport academics and policy wonks, including former Labour politician and Transport Times editor David Begg, it produced howls of protest from opposition politicians and rail unions who complained that, as passengers already pay some of Europe's highest rail fares, they just couldn't afford the eye-watering fare hikes this would entail. The policy was postponed this January, when an RPI+1% increase was introduced, but the higher rate is still slated for next January.

Scotland has not been immune to pressure for a similar hike in fares. A consultation published last November by Government agency Transport Scotland reasoned that moving to an RPI+3% formula would only have a marginal effect on passenger numbers. In other words, people would not be priced off the railways, but would suffer the higher fares.

There were other hints in the consultation document, designed to inform the future of the Scottish rail network beyond 2014, as to what the revenue from this fare increase could be spent on.

One plan was for passengers to pay higher prices on routes that had been subjected to significant levels of investment. Though not explicit, the assumption was that this would apply to Edinburgh-Glasgow trains following the investment of £1bn through the Edinburgh Glasgow Improvement Programme (EGIP).

Ministers thought differently, however and in June ruled out any move upwards from the RPI+1% formula. Around the same time, a cut of £350 million was announced for EGIP, one of the biggest cuts in transport investments overseen by the SNP.

Though rail campaigners tend to call for higher investment and lower fares, the political reality is a compromise needs to be struck between the two – and that compromise is starting to look very different on either side of the Border.