The Harrogate MP insisted growth in passenger numbers would support increased investment in services as part of the new Northern and TransPennine rail franchises.
Transport firm Arriva will take over the the Northern rail franchise, which includes the bulk of local services in Yorkshire, while FirstGroup will operate the TransPennine Express franchise connecting Yorkshire to the North-West and North-East. Both franchises will begin in April.
The phasing out of Pacer trains - dubbed buses on rails by commuters - 125 mph trains on some transpennine routes, new and more frequent services, increased rush-hour capacity, on board wi-fi, more staff and upgrades to station facilities are among the improvements promised.
Mr Jones said: “Where is the money coming from? The money is actually coming from increased bums on seats, it is passenger growth and the growth is really significant.
“If you just take the rail network as a whole, the number of people on it has reached 1.65 billion passengers journeys a year, that has more than doubled in 20 years.
“That is causing some of the capacity issues but also generating the revenue for much of this fantastic investment.”
Taxpayers will pay Arriva £1.79 billion in subsidies over the nine years of the franchise although that will be £149 million less than the last franchise agreement.
TransPennine Express will be subsidised initially but over the seven year franchise it will generate £400 million for the Government - the first time the franchise has generated premiums.
The Government is already committed to limiting annual rises in regulated fares, which includes most season tickets, to match inflation.
Rail operators in the past have handed back franchises to the Government after being unable to deliver on their promises and make a profit but Mr Jones insisted the improvements set out in the new franchises will be delivered.
“I think this is about companies seeing opportunity and going out and grasping it.
“There has been competition for this franchise, vigorous competition for both franchises, and that’s a good sign, a sign of robust transport health.
Labour criticised the awarding of the Northern franchise to Arriva, a subsidiary of Deutsche Bahn, the German state railway.
Shadow Transport Secretary Lilian Greenwood said: “It’s absurd that taxpayers and commuters in the North will be effectively subsidising rail networks in Germany when those profits could be reinvested in better local services.
“Once again the Government is happy for any public sector operator to run our railways as long as it isn’t British.
“It’s welcome that the Government was forced to backtrack on its initial plans for across the board service cuts and commuters will be glad to see the end of the Pacer trains.
“However, after last year’s stealth fare rises and delays to vital electrification schemes, passengers need to see real improvements and not just more empty rhetoric.”
The franchise deals include a raft of new routes including and direct links from Bradford to Wakefield, Sheffield, Nottingham, Liverpool and Manchester Airport.
Passengers using Northern franchise services will be able to use tickets on their mobile phone or printed at home.
The deals include the promise of cheaper fares for people out of work.