Uncorrected Evidence 84

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Oral Evidence

Taken before the Transport Committee

on Wednesday 14 November 2007

Members present

Mrs Gwyneth Dunwoody, in the Chair

Mr David Clelland

Clive Efford

Mrs Louise Ellman

Mr Philip Hollobone

Mr John Leech

Mr Eric Martlew

Mr Lee Scott

David Simpson

Graham Stringer

________________

Examination of Witnesses

Witnesses: Mr Chris Austin, Director, Public Policy, and Mr David Mapp, Commercial Director, Association of Train Operating Companies; and Mr Richard Malins, Managing Director, Transport Investigations Ltd, gave evidence.

Chairman: Good afternoon, gentlemen. Firstly, we do have a little bit of housekeeping of our own; Members with an interest to declare?

Clive Efford: Member of Unite.

Mr Martlew: Member of Unite and GMB.

Mr Clelland: Member of Unite.

Graham Stringer: Member of Unite.

Chairman: There is a slight lack of imagination here! Gwyneth Dunwoody, Aslef.

Mrs Ellman: Member of Unite.

Q1 Chairman: Can I ask you gentlemen firstly to identify yourselves for the record, beginning on my left.

Mr Mapp: I am David Mapp, the Commercial Director for the Association of Train Operating Companies.

Mr Austin: Chris Austin, Director of Public Policy for the Association of Train Operating Companies.

Mr Malins: Richard Malins, I am a director of my own business, Transport Investigations Ltd.

Q2 Chairman: Did Mr Malins or Mr Austin want to say anything specific before we begin?

Mr Austin: No, Chairman.

Q3 Chairman: In which case you know how concerned this Committee has been in the past about ticketing. Can you tell us what you understand as the Government's present strategy on integrated ticketing?

Mr Austin: Yes, the strategy was set out in the Government's White Paper published in July and covers around a seven-year period making provision for smartcard and ITSO smartcard ticketing and other forms of electronic ticketing.

Q4 Chairman: Mr Austin, can we spell out ITSO, I do not think many people listening will have much of an idea what it is.

Mr Austin: It is a bit of a mouthful. It is Integrated Transport Smartcard Organisation.

Q5 Chairman: We will allow you ITSO from now on since we have it on the record.

Mr Austin: It covers that and it covers other forms of electronic ticketing, and other forms of ticketing which are convenient to passengers, and proposes a way of continuing to develop those over a seven-year period.

Q6 Chairman: Do you think the Government is doing enough to encourage rail operators to develop integrated ticketing arrangements, particularly in relation to buses and coaches?

Mr Austin: I think it is. I think the important thing is to set the framework and to allow the operators then to work within that to develop policies to produce the results that are required. In some cases there may be help needed, and indeed there has been Government funding for ITSO in the development of proposals and some research work as well, but the rest other less complex systems like PlusBus for example have been introduced entirely by the operators on their own initiative without the need for Government support.

Q7 Chairman: The difficulty about that is when the National Passenger Survey asked about ticketing sales facilities at stations and by phone, one in five passengers thought they were either "poor" or "very poor". Do you think that is an acceptable level of customer satisfaction?

Mr Mapp: The National Passenger Survey does indeed ask a question about ticket buying at stations. The overall score from the last wave in the spring of this year was that 67% of customers interviewed were either "fairly" or "very" satisfied with the ticket buying at the station which they had used.

Q8 Chairman: How was the question phrased, in the same way? Are we comparing like with like?

Mr Mapp: I cannot remember the exact wording but effectively it asks customers in the context of the station which they have just bought their ticket from to rate how satisfied they were with ticket buying at that station.

Q9 Chairman: What are rail companies doing to improve this?

Mr Mapp: There is a whole range ---

Q10 Chairman: Even 67% is not what you would call a raging success, is it really?

Mr Mapp: 67% is the average. There are some elements of the market which are significantly more satisfied. Longer distance travellers for instance were 80% satisfied with ticket buying at stations. I should also emphasise that the National Passenger Survey question is specifically related to stations, and stations now account for less than 60% of all sales. Over 40% are through the Internet, through call centres, through travel agents and other channels, so the question itself only relates to a proportion of overall ticket sales. We are not complacent about the 60%, or indeed the 80%, and there is a whole range of initiatives that we are pursuing to improve our customers' experience of retailing across the network. In particular we have invested significantly in the Internet to the extent that Internet sales represent 14% of all sales in total and nearer 30% for longer distance train operators. There has been significant investment in the ticketing on departure network which now covers 500 stations and through which about Ł500 million worth of sales pass. There have been round about 900 new self-service ticket machines installed at stations in the past three years. We are participating fully in the development of smartcode smartcards, in particular ITSO smartcards but also the Oyster scheme in London as well. Looking further ahead there is active development work underway looking at printed home tickets and also barcode tickets on mobile phones. We certainly are not complacent. There are many things that we are doing which we hope will improve retailing for customers in the future.

Q11 Clive Efford: The industry appears to be reluctant to make a major investment in smartcards. What do you think the Government can do to encourage you to invest and make the business more attractive?

Mr Austin: The investment required is quite high and quite clear. There is a lot of ticketing equipment, back office systems and software support required, and so far the benefits coming from it have been less tangible. There is some revenue generation but some of the other advantages or some of the other potential cost savings are more difficult for us to achieve than for example for Transport for London. The increase in sales through smartcards and the reduction in sales through ticket offices will in the long run allow savings to be made in the cost of operating ticket offices. Transport for London have realised that at some of their ticket offices. We are precluded from doing that by regulation which controls the hours of opening of ticket offices, so that is one area where the benefits are much more difficult for us to realise.

Q12 Clive Efford: The information we have is that some organisations have been critical of ITSO. There are new technologies coming in such as contactless credit cards; Barclaycard do one for Oyster for instance. Is that the way forward then rather than investing in huge kit like ITSO?

Mr Mapp: I do not think the issue is ITSO - and I should declare an interest here as a board director of ITSO Ltd - which has developed a world standard in smartcard technology. Whilst that has perhaps taken longer than some people expected, in comparative terms it has actually been developed quite quickly. By comparison the magnetic stripe bank cards took 25 years to develop. I do not think ITSO is the issue; the central issue has been the lack of a business case for commercial operators to invest in the fairly expensive infrastructure you need to support smartcard schemes. As far as the rail sector is concerned, the current Government strategy of specifying ITSO enablement in every new franchise is a very effective method of leveraging in private sector investment to fill that gap, and I think that strategy is likely to be fully effective over time.

Q13 Clive Efford: How does the rollout of ITSO compare with for instance Oyster across London? What is the difference?

Mr Mapp: Oyster of course had a head start over ITSO in the sense that the Mayor and Transport for London decided to introduce the Oyster scheme some years ago now. ITSO has taken longer to develop partly for the reasons that I have already articulated. It is now a franchise requirement in several of the recently let franchises, most notably South West Trains but also East Midlands, West Midlands, Cross Country and East Coast as well. In each of those franchise agreements there are commitments to roll out ITSO over the next two to three years, so I think whilst it had a slower start than Oyster ITSO is likely to catch up progressively over the near future.

Q14 Clive Efford: You have suggested that ATOC could provide "the client" for a national integrated ticketing system. What would this achieve?

Mr Mapp: I am not sure I understand the question.

Mr Austin: I think I can help there. In our written evidence we said that our subsidiary organisation Rail Settlement Plan has the technology to provide the back office support for these smartcard systems, and so whether it was rail only or rail and bus we have the ability to do that for a national system.

Q15 Clive Efford: And how would that benefit either you or the travelling public?

Mr Austin: The advantage is it would end up being a little quicker because it is a ready-made system capable of adaptation, but of course there is a cost attached to it.

Q16 Clive Efford: Why are only 70 of the 330 stations in Greater London capable of taking Oyster cards?

Mr Austin: That number has increased this week with the introduction of the London overground concession and a further almost 50 stations have been added to the network, and there are a further 14 or 15 stations to be added in January, so it is expanding. The main rollout for the entire network within London comes in in 2009. That is the timescale we are planning to.

Q17 Clive Efford: The situation for people in London is not satisfactory, is it? We have two systems that are not compatible and are never going to be compatible. How are we going to resolve this situation because it appears that in these 330 stations across London we are going to have two separate pieces of kit sitting side-by-side. How is that going to be resolved in a way that is easy for the travelling public?

Mr Mapp: I think strategically there is little doubt it would have been better to have one national smartcard standard, and indeed it was always the intention that ITSO would be that national smartcard standard. Nevertheless Oyster was introduced earlier in London and it has been a success and it is well-established. I think at the moment the proposed approach by the Department for Transport and the Government is the sensible, pragmatic way of addressing that, which is that that they are in discussion with DNT and they are in discussion with Transport for London with a view to ensuring that all Oyster equipment is retrofitted to allow it to accept ITSO smartcards by 2010.

Q18 Clive Efford: That will mean that the travelling public when they are confronted with a gate will have one single pad, and whether it is an Oyster card or an ITSO card, they will strike that same pad? They will not have to have a pad that is half ITSO and half Oyster where you are creating a huge amount of confusion? There will be one simple system for the public to understand?

Mr Mapp: My understanding is that there will be one yellow blob, yes.

Q19 Mrs Ellman: How could a passenger feel confident that they are getting the best advice on cheap fares?

Mr Mapp: The obligation to sell both impartially and accurately is a regulatory obligation on train companies through their franchise agreements and specifically through the ticketing settlement agreement, which is the main regulatory framework in this area. That is an obligation which the train companies take very seriously indeed. As part of the regulatory framework we are obliged to undertake an annual mystery shopping survey. The survey currently includes just over 10,500 mystery shops which include stations, Internet sites and call centres. Across a range of representative retailing scenarios through that survey, which is conducted by an independent market research company, they have found that in around 99% of transactions the customer has been sold accurately the most appropriate ticket for their journey, so for the vast majority of customers we believe that they are sold the correct ticket for their journey. We accept that some are not. We accept that we make mistakes and 1% of one billion passenger journeys is a large number; and we fully accept that.

Q20 Mrs Ellman: Could I ask you a little more about this survey. You say 99% satisfaction - that sounds extraordinary.

Mr Mapp: It is very high.

Q21 Chairman: Where did you undertake your survey, Mr Mapp? You are stretching the Committee's credulous response.

Mr Mapp: I think what lies behind it is the fact that the vast majority of ticket sales are actually fairly straightforward repeat purchases. It is for the next station down the line, it is a cheap day return or it is a saver return to London and so on, and booking clerks become very expert in issuing those tickets. Where we tend to make mistakes are with products which are much less frequently issued where the booking clerk in some cases will not be aware of some of the finer detail associated with the product. It is those types of mistakes that tend to get publicised quite widely in the media, but the evidence suggests that for the vast majority of customers they are sold the right ticket for their journey.

Q22 Mrs Ellman: I find it very hard to believe this 99% figure. It just flies in the face of what I know to be the case from numerous people who discuss this. There have been numerous reports of people not getting the correct information and having great difficulty in trying to access information. Are you being complacent when you talk about 99%?

Mr Mapp: Are we complacent? No, not in the least. As I said, we fully accept we make mistakes and 1% of one billion passenger journeys is still a large number of customers that get sold the wrong ticket; we fully accept that.

Q23 Chairman: We do not disagree, 1% is a lot of journeys; we sort of suspect it might be a bigger percentage than one.

Mr Mapp: As I say, the mystery shopping survey is conducted independently by a market research company. We share the results with the Department for Transport.

Q24 Mr Leech: You use the phrase the "most appropriate" ticket rather than "best value" ticket. How do you make a distinction between what is the most appropriate ticket, because some tickets are open tickets and that might be considered to be the most appropriate ticket when they are trying to sell the ticket to somebody? How do you make the distinction between that and ensuring that someone gets offered the cheapest ticket by telling them they could go on a fixed time and pay less?

Mr Mapp: In simple terms it is the cheapest ticket for that point in time at which the customer wishes to travel. If the customer can obtain a cheaper ticket by varying their travel time they will be made aware of that, but in effect it is the cheapest ticket for the time at which the customer wishes to travel.

Q25 Mr Martlew: I can believe your figures because if you are travelling daily in from Eltham you get the standard ticket but I think the reality, if you are looking at the amount of money people lose, it is probably much greater than 1% of the total because it will be on the long distance journeys that people will get the wrong priced ticket. This is partly because of the fact that the staff have a very complicated system to work at and it is also partly because some of the rail companies make it so confusing, and deliberately confusing, that people just do not know what is the correct price. You say 1% but what was the percentage lost to the customer from this survey?

Mr Mapp: We do not measure it in revenue terms but I think it would be a reasonable assumption to assume that that 1% is spread reasonably equally across all customers, in which case it would certainly intimate a 1% revenue loss as well.

Q26 Mr Martlew: How can you say that because the cost of a ticket from Carlisle would be Ł100-odd and if you get it wrong by Ł25 that would be Ł25 but the one from Eltham would be about Ł4 so if you get that wrong it is going to be a lot less, is it not?

Mr Mapp: I think the simple answer to your point is I do not know what the revenue effect is.

Q27 Mr Martlew: Thank you.

Mr Mapp: However, I think it is a reasonable assumption that it should be very similar to the overall effect in terms of the number of passengers affected by it. Perhaps I could just come back to the point about complacency because I would really like to emphasise the fact that we are not complacent about this. We understand that customers do get sold the wrong ticket and we are doing a number of things to improve our performance in that regard. There are a number of things that we are doing over the next 12 months which we hope will improve matters for customers.

Q28 Chairman: Such as?

Mr Mapp: Most importantly, our proposals for fare simplification, which were set out in the White Paper, which we plan to introduce during the course of 2008. That will introduce a simpler national fare structure based on four ticket types and we hope by doing that, in conjunction with the way in which fares are presented on the Internet and other forms of communication, customers will be able more easily to make sure they understand the fares on offer and obtain the most appropriate fare for the journey which they are making. There are other work streams that we also have, including having a look at the way in which ticket fare choices are presented on self-service ticket machines with a view to improving those presentations. We are also developing what we call the price promise, something that was asked for by the Government in its White Paper, where we will set out in clear and simple terms the things that we will do and commit to doing to make sure that customers obtain the best priced fare for their journey.

Q29 Mrs Ellman: Are you planning to run down rail ticket offices?

Mr Austin: I touched on the point earlier. Run down is not the right word.

Q30 Mrs Ellman: Reduce the availability of them?

Mr Austin: Clearly, as more people buy away from the station, the need for ticket office staffing levels to be maintained at their present level will reduce and so the expectation is, yes, there would be in the long run as people shift away to other forms of ticketing a reduction in the cost of operating ticket offices through the reduction in staffing levels.

Q31 Mrs Ellman: You make it sound as if that is driven by cost and not the needs of the public. Do you not think that there are many members of the public who wish to go to a ticket office rather than use the other means, which might be very simple for a lot of people but not for some people?

Mr Austin: Absolutely, and I am not suggesting in any way that we will get to the point where there is no facility at main stations to provide the service that customers are looking. The fact is however that more and more people, as Mr Mapp has indicated, are choosing to book off-line from the comfort of their own homes, either via the Internet or via telephone link or to use smartcard products like Oyster which they can top up without ever going near a station.

Q32 Mrs Ellman: Do the current regulations specify a particular level of ticket office availability?

Mr Austin: Yes they do and that was my point. That is set in aspic whereas the reality is that customer demand is changing. We cannot respond to that because of the regulation.

Q33 Mr Scott: Do you think it is acceptable, if you take for example London, you are penalised financially if you use the old-fashioned commodity called cash?

Mr Austin: Sorry to pause on that, I am not sure that that is actually right. In what way did you have in mind? I know there is differential pricing on the Underground for Oyster but at the moment that does not apply to national rail; the tickets are the same price whatever method.

Q34 Mr Scott: I was referring more to where you would be adopting something such as that for rail?

Mr Austin: Inevitably as a joint product we will be moving to the same sort of offer that London Transport has in areas where Oyster is accepted, yes.

Q35 Mr Scott: So people would pay a higher price if they use cash?

Mr Mapp: At the moment we are not allowed to do that within the regulatory framework.

Q36 Mr Scott: You say, understandably, that the Government's concessionary fares policy only looks at one mode of transport and does not consider rail services, but that extending it to rail services would need careful thought. Can you see a sensible national extension of free concessionary fare schemes that would include some rail journeys without incurring high costs or overloading already busy trains?

Mr Austin: I think that is a very difficult thing to do because it is quite difficult to distinguish between short distance and long distance travel. They tend to share the same trains, for example between Coventry and Birmingham and Macclesfield and Manchester, and you have shorter distance passengers using longer distance trains. The worry would be for us that whilst we would welcome the extra business, providing it was properly paid for, the experience with the bus industry is that it has led to considerable overcrowding. We already have a lot of overcrowding that we are tackling on the rail system at the moment so if that were to be the case, and to encourage a lot of additional off-peak traffic, we would need support to enable us to expand the capacity of the rail network to cope with it.

Q37 Mr Hollobone: To follow on from Mr Scott's point about the Oyster card and the differential charging for cash and Oyster, in your answer, Mr Mapp, you said under the current regulatory framework you are not allowed to differentiate the price. Will that be the case then when the ATOC companies introduce the Oyster card in London?

Mr Mapp: At the moment I am not aware that the DfT plans to make any specific change to the regulatory framework to allow for that. I think it is true to say that we have argued the case with the DfT for there to be greater freedom with regard to pricing and indeed for us to be given the ability to differentially price, by which means we will be able to do that. Whether in the context of Oyster introduction we would choose to then introduce a similar pricing regime to that introduced by Transport for London, I think is a question that we have not fully addressed.

Q38 Mr Hollobone: As it stands at the moment there would be a substantial difference between a passenger in London on an overground train on one of your companies where there would not be a financial penalty incurred, as on the London Underground at the moment, in buying a ticket for cash?

Mr Mapp: That is correct.

Q39 Mr Hollobone: With regard to fare dodging, is it right that you think that nationally the loss of revenue from fare dodging amounts to some Ł400 million or about 8% of revenue?

Mr Austin: That is the figure that we put in our paper. I would say that it is an informed guess, an informed estimate. There is no consistent across-the-board survey of this although individual train companies do research it on a regular basis. It is our best estimate of what it is likely to be.

Q40 Mr Hollobone: Is that not an excessive amount that could go into improving the public transport system? Given that you are having to make a guess of what that amount is, should data not be collected far more comprehensively given the scale of the problem?

Mr Austin: I think the answer is yes to both of those questions. It is a lot and train operators are doing a lot to address that, both through gating additional stations and through providing higher levels of ticket checks on-train, which overcomes the shortcomings of the gates. In the process of doing this, they are also building up a much better store of information and time series data to demonstrate much more accurately the level of losses being incurred, so the two really go together.

Q41 Mr Hollobone: I think that Mr Malins is of the view that there is an over-reliance in the rail industry on introducing barriers to prevent fare dodging and more sophisticated strategies are needed. Mr Malins, would you elaborate on that?

Mr Malins: My point here that I put in the paper, and I repeat for you now, is that, first of all, as Chris has admitted, there is no sound or consistent method of measurement by most TOCs on the extent to which they have fare evasion or simply ticketless travel, what I would describe as people who may not pay their fares for the very reason the Committee was alluding to earlier on, that it is actually quite difficult to buy a ticket in the first place. So we need to distinguish between people who are deliberately trying to avoid paying and those who find it difficult to pay because the facilities are not there. The sort of numbers that Chris has been talking about would embrace absolutely everything if the number were correct - and I suspect it might be on the high side.

Q42 Mr Hollobone: Whilst you are on the subject of whether people are genuinely dodging fares or accidentally dodging fares, do you have any estimate of the number of people who are willfully doing this?

Mr Malins: All I can say is that one can draw a little pie chart which says if you look at the world at large there are people out there who always want to pay their fares and are committed to doing it. That could be 80% of the population but it will vary and I would not like to say that is an absolutely correct figure. Then there are people who if it is made difficult to pay they will not bother. Then there are people who are determined fare evaders. Quite what number they represent is something that is very difficult to get at. I would say that the number Chris quoted is probably an outside number for fares not paid for all sort of reasons, some of them in fact not the customers' fault. I do not think there is any consistent measurement within that to know precisely what the number is and therefore what the reasons are and how best to tackle them. The point I was making to the Committee is I think it is a knee-jerk reaction by train operating companies to revert to closing stations, which is the system we had years ago, which meant people were standing around getting bored so that we can check people at the beginning of the journey. The sort of gates that are used are those designed for the Underground. I think they are effective where you have got high volumes of short-distance business where it is difficult to check by other means and also when people are not encumbered by bags and are familiar with the system. What alarms me - and I would like the Committee to think about this - the spreading of this to inter-city business where I think it is a) unnecessary and b) wholly inappropriate in terms of customer service. I do not think it is necessary because once people are on your system for longer, the on-train check is far the most effective, and that is what people should concentrate on. Ticket gates where you have got a serious short-distance problem, yes, but on long-distance business the train is much the best place to do it.

Q43 Mr Hollobone: I understand the legal framework for ticket inspection on railways is different to that which operates on buses. Would there be support for making that legal framework the same? And then to Mr Mapp: I believe in your evidence you say that guidelines could be given on both prosecution and on sentencing which better reflect the serious nature of fare dodging.

Mr Malins: I said in my note that because in my business we do this as an agency activity for a number of rail operators - not all of them TOCs I might say, one of them is Docklands Light Railway - we find that the legislation is fit for purpose. It goes back a very long way to the 19th Century and the Regulation of Railways Act. That is the one we normally use and we do not want any change in that, it is fine for railways. I really could not speak for buses but clearly they could not use that Act because it only applies to railways and is authorised by Acts of Parliament or other similar means.

Mr Austin: Maybe I could answer that one. The other piece of legislation is the Penalty Fares Act and the Penalty Fares Rules which apply to certain areas of certain train operating companies, principally in the London area but not entirely; it operates in Leeds and Birmingham for example. Again the rules there are written around the requirements of the railway rather than a bus where the driver is inspecting every ticket as you get on the bus. We put the bit in our evidence about sentencing because there was (admittedly anecdotal) evidence from train operating companies around the country that sentencing of offenders who have deliberately set out to travel without a ticket is pretty patchy, and some seem to consider it a more serious offence than others and sometimes that sends the wrong messages generally to people who are thinking about trying it on.

Q44 David Simpson: Given the links between fare dodging and anti-social behaviour, do you think that enough is being done by the train operators to protect the honest passengers that are travelling and using their facilities?

Mr Austin: I think you are right to raise that. It is a very serious issue and it is one of the reasons that makes on-train ticket inspection in urban areas at certain times of day more expensive because you cannot do that with a single person or even two people, it has to be a team of people, very often supported by a rail enforcement officer or the British Transport Police. That is part of a wider societal problem, it is not just limited to the railways, and that is a problem. We do try, I think assiduously, to protect passengers who do try to pay their fares. I know there are a number of anecdotal experiences where, as we discussed earlier this afternoon, people have found it difficult to buy tickets, and I think smartcard ticketing and Oyster will help that because of the amount of prepay that will be going on. We try to do that with an increased number of ticket machines around the system. Mr Mapp has already mentioned over the last three years 900 additional machines have gone in across the network. Then there is an appeals procedure for people who feel they have not been treated fairly.

Q45 Clive Efford: Can I just follow up that point about safety. Is it not a fact though that you can eradicate the problem by stopping people who are obviously intent on causing problems from getting on trains in the first place, and then does it not become a problem because you do not have stations manned particularly in off-peak periods?

Mr Austin: Up to a point in the sense that there is evidence that gating of stations has helped in keeping the railway for people who are passengers not who are just using it as an area to congregate, but it is not always the complete answer.

Q46 Clive Efford: In this age where people have got a heightened sense of security on our public transport system, is having any stations unmanned on the network a sensible way forward?

Mr Austin: I think it is inevitable. There is a large number of quite small stations with relatively light usage all around the country, principally in rural areas but also in some suburban areas as well, where the costs and the benefits of having staff on the station are just miles apart.

Mr Malins: Could I add to that Chairman, I mentioned earlier on that I do some work for the Docklands Light Railway and I think many of the Committee will know that is basically an unstaffed railway as far as stations are concerned. We would say that in fact they do not have the problem that you are describing to any great extent, although they do to a small extent but it is kept under control. Partly of course that was a system designed to be like that from the outset, so you can design out some of the problems by building the thing correctly in the first place and that is more difficult on an the established rail network. I would say, yes, you can have an unstaffed railway that is safe and the Docklands Light Railway proves it.

Q47 Chairman: Is not a lot of that because it was specifically built and tailored in a particular way? Does it not have automatic coverage by security cameras, it is a very restricted railway anyway and it tends, if I may say so without sounding pejorative, to be in places where there is going to be quite a big movement all the time on the stations, these are not isolated stations.

Mr Malins: No, but they will be similar to suburban stations elsewhere.

Q48 Chairman: Is that actually true? The DLR tends to cover areas where almost by definition they will have larger numbers moving around than, say, some of the smaller urban areas even in London?

Mr Malins: To some extent you are right, but I think it does demonstrate that you can have an unstaffed model that works; that is all I am saying.

Q49 Clive Efford: Can I pick up something Mr Malins said earlier on about checking tickets on trains. He said if you have people on a train for a length of time it is sensible to have checks on the train. What is a long period of time? Are you talking about commuters?

Mr Malins: Exactly where you draw the boundary perhaps is something we can debate, but let us say notionally that on journeys of an hour or longer it should be quite practicable. For what I would call the intercity network you should be able to do it all properly on-train.

Q50 Clive Efford: Presumably you are not talking about packed commuter trains because that would not be possible?

Mr Malins: No.

Q51 Mr Martlew: Mr Malins, you talked about mainline stations but can I ask Mr Austin, are you thinking of gating stations like Euston for example where people are going through with lots of luggage and will be travelling perhaps three, four or five hours? Is that what you are thinking about? It seems to me that you may be.

Mr Austin: Yes there are proposals to gate. I am not quite sure of the timescale, I do not have that in my head, but Waterloo, which is one of the larger stations that is not gated at the moment, and King's Cross, and Richard's example, Paddington is already gated partially. I think the important thing there is to make sure that the level of customer service surrounding that is high enough to assist people who have tickets that will not go through the gates or who have luggage. I know as a regular user of Paddington that the staffing levels at the barriers are quite high for that purpose.

Q52 Chairman: If you use Victoria, Mr Austin, which I am sure you do in coming back from the airport, you will discover that you are enormously dependent on whoever happens to be at the gate at the time. I think they do make an effort but if they empty one train at the same time, which is the pattern coming from the airport particularly, there are frequently occasions when it is extraordinarily difficult to get through if you have an awkward-sized piece of luggage or a child in a pram.

Mr Austin: Yes, I understand that.

Q53 Chairman: Which does not auger well for the sort of numbers that you are talking about at Waterloo.

Mr Austin: No but I mean they will have the advantage of the experience at the other stations to build on in the design for that, but you are quite right ---

Q54 Chairman: You mean having done it wrong once we can always pray we will not do it wrong again?

Mr Austin: More than pray, I hope - actually get it better.

Q55 Chairman: So you are assuring us that all will be well?

Mr Austin: I think it is certainly in our members' interests to make it well because we do not want to be deterring passengers by having a difficult struggle through the gates to get on the train in the first place.

Q56 Mrs Ellman: Have you got any evidence of passengers with free concessionary passes transferring from rail to bus?

Mr Austin: Yes, we have a little. There has been a little bit of work done on local services which indicates no big swing as a result of the introduction of concessionary fares in England but a slight dropping off in the rate of growth, because local services have been growing quite strongly over the last ten years and there is some evidence over the last year that that may have started to tail off. In Wales there is definitely evidence on the Conwy Valley line of quite a significant reduction in patronage once the bus concession was introduced and then the opposite when the concession was extended to rail and indeed, on the Heart of Wales line they have had to double the length of the trains from one car to two cars to carry the extra people who are travelling.

Q57 Mrs Ellman: Would you welcome the extension of the concessionary schemes in England to rail?

Mr Austin: As I mentioned earlier, I think that would be quite difficult unless it were accompanied by the funding to increase the capacity of the service as well because it would, as we have seen in a small way on the Heart of Wales line, increase the demand on a railway that has already got strong growing demand and some overcrowding problems ---

Q58 Chairman: And nothing frightens rail companies like the thought of having too many passengers does it, Mr Austin?

Mr Austin: We welcome that but what we do not want to do is to have it in an unplanned way that we cannot provide for with additional trains and longer trains, and in some cases additional platforms.

Mr Mapp: I think it is also worth mentioning that we do already offer a range of railcards targeted at parts of the market which are likely to be affected by the sort of concessionary scheme that you are highlighting. We offer a railcard aimed at the senior retired market, the young person market and the family market, and those railcards have been remarkably successful, and they continue to be remarkably successful to the extent that there are now 2.2 million people in the country who have railcards that can take advantage of the discounts which they offer.

Q59 Mrs Ellman: Would you be opposed to a proposal to extend the concessionary bus schemes to rail?

Mr Mapp: It is a matter for government. It is really a matter of public policy. If the Government believes that that is a policy objective which they wish to pursue then, as Mr Austin has made clear, providing the necessary financial arrangements are put in place then of course in principle we would not oppose that, but there are practical issues in terms of overcrowding that would need to be addressed and I think the implications of those issues should not be under-estimated.

Q60 Mr Hollobone: A number of your members allow police officers off duty to travel free of charge on rail services on the understanding that if there is trouble on the train they can assist the ticket inspector or the other rail staff to deal with that. To what extent do your members offer that service?

Mr Mapp: Are you referring to the agreement that we have with the Metropolitan and City of London Police Forces in the London area?

Mr Hollobone: I represent a constituency in Northamptonshire and I understand that the rail operator there allows off-duty police officers to travel free of charge.

Q61 Chairman: I think Mr Hollobone is referring to a custom and practice which has always been in most transport systems. Nobody specifies it but I think it is accepted, it is one of those nod-and-a-wink jobs.

Mr Mapp: Right, okay. Well, in the schemes that I am aware of there is certainly an agreement with police forces in Greater London and there are also some schemes around the country that I am aware of where police officers receive free travel. In the case of London there is a financial arrangement in place. In other areas it is on the basis that the police officers provide support and assistance.

Chairman: We are getting a bit tight for time now so Mr Simpson.

Q62 David Simpson: I think, Mr Austin, you mentioned earlier on that customers had the right of appeal and I understand also that train operators appoint their own appeals panels. How can customers be sure that they are getting a fair deal?

Mr Austin: There are two companies that offer an appeals service, one of which is owned by one of our members and the other of which is independent. Independence is guaranteed by the fact that they do not exercise a personal discretion in that they are administering a code of practice set by the Department for Transport, which audit them, so that is the guarantee of independence. The other is perhaps the financial point, that the funding is on the basis that it is paid for by the train operators who participate in the scheme but on the basis of a flat payment for each appeal, regardless of whether it is accepted or not, so there is no financial incentive one way or the other; it is a straight payment.

Q63 Chairman: Can I ask you very briefly now, gentlemen, is it true that revenue protection staff have got too much power and occasionally are a bit heavy-handed?

Mr Austin: I do not think they have too much power. I think they have the powers they need to implement their responsibilities and duties. In the event of any of them being, or appearing to be, heavy-handed there is an appeals procedure.

Q64 Chairman: This appeals procedure Mr Simpson mentioned, you are quite convinced it is sufficiently transparent and people will be quite reassured because they will know that it is separate from the people who have appointed those to run the system?

Mr Austin: I think so, Chairman, and they are set up to be independent.

Q65 Chairman: Yes I understand that but does the passenger understand that they are totally separate?

Mr Austin: They are audited by the Department for Transport and Passenger Focus is also involved, and I think if there were any concerns over the way the code was being applied there is a right of appeal to Passenger Focus as well.

Q66 Chairman: So you think the passenger can be assured that this is a satisfactory appeals procedure?

Mr Austin: Yes I do.

Q67 Chairman: You have not talked about PlusBus in relation to buses.

Mr Mapp: PlusBus is a scheme that eight train operating companies have supported since its inception. It is a scheme that has been developed entirely by private sector bus and train operators without any central government funding. Over the course of the past three or four years it has grown to the extent that there are now 227 PlusBus schemes across the country with more planned, including Crewe to be added during the course of 2008. Whilst initially numbers were small they have grown significantly, over the last year in particular, in response to the first national promotional campaign for PlusBus, and this year we are expecting there to be over 100,000 issues of PlusBus tickets. I think it demonstrates the ability of the private sector to work co-operatively together. There is, we believe, further potential and further opportunity in PlusBus and the PlusBus product lends itself very well to delivery through smartcard.

Q68 Chairman: You have spoken quite a lot about Internet sales and how the trend is upwards, but it is not possible if you have a cycle, to book the right of passage, is it, on the Internet? PlusBus is not available on the Internet, cycle carriage bookings are not available over the Internet. The point you were being asked very specifically earlier, on which I think is enormously relevant, is if you are moving towards more and more technology do you understand how some of this can exclude whole groups of passengers? I must tell you unless it is a three-wheeled cycle I cannot see myself fighting my way on to a train with a bicycle, but supposing I went mad and decided to put a bicycle on at Euston to get to Crewe, how could I book that if I cannot use the Internet (although you tell me that Internet booking is the way to do it)?

Mr Mapp: The vast majority of rail products are available on the Internet.

Q69 Chairman: But this particular one is not and it is not alone, is it? All I am saying to you is why is it that you have a system that you are telling us you are going to use more and more, that you are telling us is very helpful, that you are telling us provides the passenger with the right sort of information, and then you are not able to say why certain groups of passengers are excluded from using the system?

Mr Mapp: I think the development of the Internet has focused on the major products that the vast majority of customers wish to buy. I would accept that there are omissions from the product range at the moment that need to be addressed and PlusBus is one and cycling is a second, and I think that is something as an industry we do need to address.

Q70 Chairman: What about frequent and unco-ordinated bus timetable changes; is that going to undermine PlusBus?

Mr Austin: That was something we referred to in our paper and I guess that is a concern. The suggestion was that, if possible, there should be a move with connecting rail/bus links to make the changes at around the same time as the train time tables twice a year, which are themselves governed by European requirements, so that there would be some co-ordination.

Q71 Chairman: Integration is going to be enormous and we have been talking about concessionary fares, we have been talking about special simplified systems, are you quite confident that if as an industry you are required to move forward the companies will not only be responsive to the complications that will come with the new technology but they are in talks with government about the implications of the difference between the Oyster system and the ITSO system?

Mr Austin: Yes, I think it is very interesting to look at the historical perspective of this because the card ticket lasted for 150 years, the magnetic stripe ticket for 30 years and now we are already talking about changes to the Oyster system. It is going to change more frequently and more dramatically over the next few years then we have ever seen before so we are going to have to be pretty light on our feet, and we want to be doing that.

Chairman: I am sure we associate your Association with lightness of approach and the ability to dance round all the problems! Thank you very much, gentlemen, I am very grateful to you.

Witnesses: Mrs Elaine Holt, Managing Director, First Capital Connect, and Mr Martin Dean, Business Development Director First Group, First Group plc; and Mr Les Warneford, Managing Director, Stagecoach UK Bus, and Mr Ian Dobbs, Chief Executive, Stagecoach Group Rail Division, Stagecoach Group plc, gave evidence.

Q72 Chairman: Good afternoon to you, gentlemen and madam, you are most warmly welcome. Could I ask you to identify yourselves for the record please.

Mr Warneford: I am Les Warneford, I am the Managing Director of Stagecoach UK Bus.

Mr Dobbs: I am Ian Dobbs, I am Chief Executive of Stagecoach Rail Division.

Mr Dean: I am Martin Dean, Business Development Director, UK Bus Division for First Group.

Mrs Holt: I am Elaine Holt, I am Managing Director of First Capital Connect.

Q73 Chairman: Thank you. Did any of you have anything you wanted to say before we begin? Nothing at all. You know about the Government's strategy on integrated ticketing. What do you think they ought to do to encourage rail and bus operators to develop integrated ticketing arrangements?

Mr Warneford: I think they could probably help a lot by putting some money with us into promoting the schemes that we are already developing.

Q74 Chairman: Such as?

Mr Warneford: PlusBus in particular which I think for its simplicity has a lot of potential to grow enormously.

Q75 Chairman: Do you agree with that?

Mr Dean: I think that is right and that is a good point, but one of the things to say in terms of what the Government has done is the block exemption on ticketing to the Competition Act which has been very, very useful in terms of allowing us to have ticketing agreements between operators and not fall foul of the Competition Act, and that is very, very important and that has led to the development of a lot of schemes, and PlusBus is a very positive one.

Q76 Chairman: Since both of you have got major bus and rail operations - Stagecoach for example have got nearly half of the shareholding in Virgin Rail Group - why is it that there are not more integrated ticketing schemes across all these different modes? Mr Warneford, why can I not go from one to another on a Stagecoach?

Mr Warneford: As far as I know, Chairman, where we know that there is some demand we are very happy to provide that.

Q77 Chairman: Where you know ---?

Mr Warneford: --- There is a demand for it then we are happy to provide through ticketing. I am not conscious that there is a huge gap there.

Q78 Chairman: You are not conscious, so we are not looking for customers, we are going wait for them to come to us, are we?

Mr Warneford: No, we have already promoted schemes, we have joint ticketing.

Q79 Chairman: Mr Dean, are you happy with everything you are doing?

Mr Dean: Yes, Chairman, if you look at a lot of locations throughout the United Kingdom where we operate in an area and another operator runs in that area as well, then there are examples of joint ticketing schemes and we have implemented quite a few, as Mr Warneford said, where there is the demand to do that.

Mrs Holt: I think when you are looking at customer requirements and particularly the environment focus going forward, there is an increasing demand for integrated transport, whether it be cycling or bus integration, and I think as train operators we are doing quite a lot of work in this area to see how we can better respond to customer needs. I think customer focus is changing particularly around the environment and access to rail stations is becoming more important to them, so I think that there is more that we can do, and certainly First Group rail operators are working very closely with the local bus companies and indeed cycle groups and other bodies to make sure that we do respond to customer demand.

Q80 Chairman: Can you give me off-the-cuff - and I am not going to hold you to it - two or three things you think your company does.

Mrs Holt: If we take First Capital Connect we are doing a lot with cycling. It is a particular issue for us because we serve Cambridge and Brighton and places like that, so we have invested quite a lot in cycle facilities, parking, security, and that kind of thing to promote different travel to stations because car parking is an issue at stations.

Q81 Chairman: I understand that but before we get on to that, how do I get my bicycle on a train in Cambridge or to Cambridge? Do I have to book specifically by going to the station; can I use the Internet; how do I get my cycle on?

Mrs Holt: If you are travelling from Cambridge you can leave your bike at the station. There are plenty of facilities there. Peak trains are very, very crowded so we do not allow bikes on the train in the peak but off peak you can travel with your bike. You are not required on our services to book in advance, but the point was made earlier about booking with bicycles not being available on the Internet, and that is something we should all look at.

Q82 Mrs Ellman: What is the industry doing to make sure that passengers get accurate information on the best deals at all times?

Mr Dobbs: I did not quite catch the question.

Q83 Mrs Ellman: What are you all doing to improve the situation for passengers to make sure they get the cheapest prices and best deals at all times?

Mr Dobbs: I think the previous witnesses actually summarised very well some of the general schemes that are going on and the actual scale of the problem as well. One of the areas where I think we are making some major strides is in making better the customer-friendly nature of the ticket vending machines that we have got. That is one area where I think the first generation were not particularly friendly in that regard.

Q84 Chairman: Vending machines?

Mr Dobbs: Yes, the ticket vending machines, and really with experience and feedback from our customers we are now looking at ways with software where we can make those far more interactive and simpler to use as well. We are actually seeing quite a distinct movement to ticket vending machines. They are becoming increasingly popular and I think that is something we see in other industries as well. In some of our stations for instance we are getting up to 70% of ticket sales through the ticket vending machines. Waterloo is nearly 50% now, which is quite remarkable.

Q85 Mrs Ellman: Does anyone else have anything to add to that?

Mr Warneford: I think the question, Chairman, probably does not much apply to the buses where we have got very simple fare structures and scales that are posted on the vehicle. I am not conscious that there is a problem of awareness or information about them.

Mr Dobbs: Could I possibly comment on your earlier question about the appropriateness of the Government's approach on integrated ticketing. I think one of the things that we would very much applaud is the leadership the Government has taken with regard to defining itself as the common platform across all operators. It is an area where it is very difficult to develop smartcard technology but it is certainly one that has enormous potential. I know between the rail and the bus divisions in our company we are looking very much at smartcards as the future. We have had PlusBus and other schemes in the past but I think we have been scratching the surface. We have to produce a product that customers, the people out there in the street, are very comfortable with, something that is very easy to use. I think a common smartcard platform is the way to go.

Q86 Mrs Ellman: Is the PlusBus scheme undermined by frequent changes to bus timetables?

Mr Dobbs: My personal experience is that is not necessarily the case. I think first of all although it is promoted it is not widely known about. That is number one. I think secondly in a lot of the stations we serve, certainly in the south east of England, that the preferred mode of travel to the station is the car anyway. People have already got a car at home and what we have been trying to do is encourage them to leave it at the station and go forward from there, so we have been increasing car parking spaces. Maybe bus has been a little bit further down the priority in the Home Counties, but I think it is an area we have to look at in the future, and again we have to make it visible.

Q87 Mrs Ellman: Are there any plans to improve the PlusBus scheme?

Mrs Holt: Yes there are. More stations are being added all the time and I think there is a lot of work going on to make sure that bus timetables and train timetables are linked.

Q88 Chairman: There is an original idea!

Mrs Holt: Yes, startling, is it not! So I think we are seeing that. We have been running the franchise for 18 months and we have seen a 58% growth year-on-year on PlusBus sales because we are working a lot more closely with other bus companies, so I think where there is a will there is a way, and I think it is important that train companies do build relationships. It does work when it is there and advertised in the station. I think advertising and better liaison on timetables is something that is taking place and something that will improve.

Q89 Mrs Ellman: Is fare dodging a problem?

Mrs Holt: The previous witnesses talked a lot about the level of ticketless travel. I think we should remember that 95% of our customers do pay for their tickets. In First Capital Connect's case it is about 5% of people that are fraudulent so, yes, it is a problem and we are making big investments into gate lines, additional staff, and a variety of other measures. The majority of people are honest and they pay their fare and it is the small percentage that we have to deal with.

Q90 Mrs Ellman: Do you need any new powers to make fare dodging more difficult?

Mrs Holt: No, we do not believe we do on the rail side.

Mr Dean: On the bus side outside London there is not the ability to levy a penalty fare. I think that is something that we would welcome the enabling power to do.

Mr Dobbs: I think from our side I would agree with Mrs Holt that the issue is being far more professionally managed now than it was a few years ago. I think there has been a major tightening up on revenue protection. It is still a problem, of course it is a problem, and while there are people there not paying and can be seen by others not to pay, it is a major problem. It is, in the context of the overall picture, a very small minority of people and the actual number of people within that 5% that was quoted there, whatever the number is, the hard core of people who are deliberately dodging is very, very small.

Q91 Mr Scott: The industry has been reluctant to make major investment in smartcards. Is the government putting the long term structure and incentives in place to make the business case more attractive?

Mr Dean: The principle of ITSO is a good one because obviously if you create a common platform what it does mean is that you have the same standards and you can buy products en masse which has to be a good thing.

Mr Dobbs: Within the rail industry, the government - I think as has already been mentioned - is going through a process of specifying smartcard technology to be implemented on all new rail franchises to either a large or to a small extent, depending on which franchises they are. We were certainly with South West Trains the first company to go through the process where we had to introduce a smartcard scheme across the entire train operating company. That is a huge challenge but I think it is moving in the right direction. We think there is a positive business case for it in our part of the home counties, probably because of the sheer volumes of people involved and it will allow us far more flexible ticketing in the future as well, particularly with the commuting market. In other parts of the country the business case is far weaker. Clearly in rural areas, where the volumes of people are much lower and the numbers of footfalls through each of the stations are very light in some cases, the business case is very, very difficult to prove.

Q92 Mr Scott: Oyster is to be extended to all rail stations in London by 2008. Do you think that is sensible, investing further in Oyster when it is not going to be compatible with ITSO? What is your view on this?

Mr Dobbs: We are very happy to embrace Oyster technology on mainland rail as long as we obviously get the commercial arrangements around it robust. I think it is sensible because extending Oyster across the mainland rail system gives the consumer more choice.

Q93 Chairman: I think we have to be clear about this because what Mr Scott was asking is, since there is a gap between the two systems, are you assuming that you will be able to move or are you saying no, you drop the ITSO standards and you go for the Oyster standards? I think there is a specific gap and a specific disagreement, is there not?

Mr Dobbs: No, I do not believe there is a gap. We are cooperating with Transport for London to put Oyster pay as you go onto all of our stations. We have had some very fruitful discussions with them which we hope will lead to a resolution of that in the next few weeks. In the meantime, we are both within London and outside of London implementing the ITSO smartcard as well so we are putting two systems in. I do not believe that is a problem.

Q94 Chairman: Why?

Mr Dobbs: As has already been mentioned, they are going to be interoperable. As far as the customer is concerned, they will be able to use ITSO smartcard products in London that have Transport for London fares on them and of course they will be able to use Oyster cards on mainland rail stations with the Greater London area as well.

Q95 Mr Scott: You do not think it would be better just to go with one system and, as Oyster obviously is around at the moment, to use that and not ITSO?

Mr Dobbs: The Mayor has decided that Oyster is the right thing for London, bearing in mind that it came along earlier than ITSO as well, so it would have been silly waiting for ITSO. As the system evolves in the future and the technology evolves, I think the systems will technically probably come close together. As far as the passenger is concerned, it will not make a lot of difference. You will have a card that you touch on a reader which is either valid or not valid, just the same as a normal ticket.

Q96 Mr Hollobone: Stagecoach basically runs the public transport system in Kettering because you are in charge of most of the buses and now the trains. What plans do you have for somebody for example in Burton Latimer in the Kettering constituency to buy an integrated ticket to take him from Burton Latimer to the station and then to London?

Mr Warneford: Kettering is one of the Plusbus stations so you can buy a rail ticket which has the bus add-on. If you are asking will you be able to buy the rail ticket on the bus, that technically is a much huger problem and that will be the same problem anywhere in the country, to put the whole rail ticketing system onto the bus driver's machine.

Mr Dobbs: Our contracted obligation is to install an ITSO smartcard system at Kettering Station along with the other mainline stations on that line and also at selected stations in the East Midlands commuter area, let us call it, around Derby and Nottingham. Our key priority is to get that technology in place first. Once we get things rolling, we will then be looking at how we can spread out greater integration but at the moment, as I think Mr Warneford has said, we have the Plusbus product and we will look to develop that further and see whether it can be integrated with smartcard but I think that is some years away. Our first priority is to get the rail product working properly. When we have done that, then we will look at developing it.

Q97 Mr Hollobone: We will come back to the rail product, with your permission Madam Chairman, in a minute. Pensioners in Kettering are looking forward to their free concessionary bus travel from next April. The local borough council is looking to extend that free concession into the peak period which the borough council will subsidise. Will your smartcard technology be able to cope with that?

Mr Warneford: Do you mean purely on the bus?

Q98 Mr Hollobone: Yes.

Mr Warneford: The situation with the national business concession scheme next April has a problem and you have crystallised it in your own question. Although there will be one national smartcard scheme from the government, from the Department for Transport for all the elderly and the disabled, with a standard, core time of day at which it can be used, each district can then apply different times of day to it. I just cannot understand how the bus drivers are going to know what is going to be valid from one area to another. Purely within your own area, within Kettering, our drivers will recognise a Kettering pass will be available in the morning peak period. That will not be a problem but they might not know what the rules are for Northampton or for Corby or for South Northamptonshire. I can see a real problem there.

Q99 Mr Hollobone: With regard to the rail service in Kettering, I am very glad that you are here, Mr Dobbs, because there is huge concern in Kettering at the moment that ticket prices are going to be going up quite sharply under your new franchise arrangement. You are proposing to cut the number of trains from London to Kettering by a fifth, the number of evening peak trains from London to Kettering by a third and halve the number of trains from Kettering going northwards throughout the day, effectively downgrading Kettering from an intercity station to an outer suburban station. Could I invite you, Mr Dobbs, to visit with me Kettering railway station in this, its 150^th year, so that you can talk with local passengers about the link between ticketing and the extra prices that local people are going to have to pay with a severely downgraded service?

Mr Dobbs: Yes.

Q100 Mr Martlew: Surely a lot of the problems are with Victorian stations and integrated ticketing because you cannot physically get the bus near the station. Plusbus or whatever will not work if the forecourts of the stations are full of cars so local government perhaps needs to clear the forecourts of the stations to get the buses there. Is that correct? Would that be helpful?

Mr Warneford: By and large I would say that where the bus can get to the station sensibly as part of its route, we probably can arrange with whatever the train company is to make sure that there is space for the bus. In your own area, Penrith for example, there is a bus/rail link and we have a place where we can stop at Penrith. The bigger problem - and I do not have an answer to it - is the first part of your question. A lot of stations are nowhere near convenient bus routes. You have to run dedicated services and they are expensive to provide.

Q101 Mr Martlew: That is the problem you cannot see the solution to?

Mr Warneford: Not without some extra funds to whoever provides that service.

Q102 Mr Martlew: There are two problems. One, you are saying there is no bus route that goes by.

Mr Warneford: In some places.

Q103 Mr Martlew: The other one is, even if there is, you cannot get near the stations anyway because the forecourts are full of cars parked.

Mr Warneford: Where we can easily access the station, we can probably overcome the parking problem because we can get space for a bus stop or two.

Mr Dobbs: It is down to us. We have to get those issues sorted out. They are not rocket science issues. Sometimes we have not been good at doing those things in the past. Traffic management at the fronts of stations is one of those things. We get a lot of illegal parking around the fronts of stations as well and we sometimes do not do a lot about it. We need to work with local authorities as well. It is fair to say that there are many places around the country where local authorities have been very generous in the help they have given us in solving some of those traffic management problems. Some counties, some cities, are more generous than others of course, but it is up to us to go and seek funds and sort things out and make sure that I can get the buses in the front, whether they belong to Stagecoach or First Group. We do not discriminate in that sense because we know it is good for both our companies.

Chairman: We would all like buses and trains to have some kind of coordination and we would like you to think of trying to get your passengers to the railway stations. That would be very revolutionary.

Q104 Mr Martlew: Mr Dean, do you see major problems when the national concessionary fare scheme starts?

Mr Dean: When the national scheme starts, I think a lot of the issues are already out in the open from the when the scheme became a free scheme in 2006/7. The biggest issue with the national scheme is going to be whether there might be some tourist hotspots which might become overwhelmed with older people using their ability to use their pass. For example, a London pensioner could go to Weymouth and use his pass on a bus service in Weymouth and, if they all decide to do that at the same time, then clearly there could be some capacity issues. That is something we will have to monitor very carefully.

Q105 Chairman: Is Weymouth Council aware of this impending invasion of London pensioners?

Mr Dean: I am sure they would welcome it.

Q106 Clive Efford: Extending concessionary fares to rail needs some careful thought. Have you any thoughts on how we can extend the concessionary fare scheme to include some rail journeys without incurring high costs or overloading already busy trains?

Mr Dobbs: It is difficult for me to add much to what has already been said. As railway companies, we want to encourage passenger growth. Of course we do. We do need to have robust financial arrangements in place to make sure that it does not in any way work against us of course. Those are the kinds of arrangements that government decides as policy, as to whether it is prepared to support that kind of travel. Capacity is an issue, as has already been mentioned. It is a critical issue in some areas. It is less critical in others. Applying national standards to the system in this regard is very difficult. There is clearly more capacity available offpeak than there is in peak, but I think as has already been alluded to on the buses, the difficulty is once you start to apply different rules in different places it becomes very complicated.

Q107 Clive Efford: That is the second time that has been referred to. I take it what you would be advocating is a single standard for concessionary fares so that it can operate nationally.

Mr Dobbs: I am not advocating that. I am just pointing out that I think there are many complications, both practical and financial. If government wishes to move ahead with it as policy, I think fine. We will address that and we will see if we can work something out. At the moment I do not believe that it is being put forward as a suggestion by government.

Q108 Clive Efford: When you say that there are problems, practical and financial, do you mean in administering it because it can be complex if it applies in different ways in different paths that people use?

Mr Dobbs: It is more about the volumes of people.

Mrs Holt: I do not think the rail industry has thought enough about it and that is what we need to do.

Q109 Clive Efford: Is there any experience of these schemes in Scotland and Wales that you could bring to light that may assist people in trying to organise for extending concessionary fares to rail?

Mrs Holt: There is going to be some learning from the Scottish scheme which is just getting up and running. Once that has been up and running, there will be lessons we can learn from that. That is a significant network and there are very different services across the patch, so I think there will be some learning points from that.

Q110 Clive Efford: Given that there could be different schemes operating in different areas, different cards coming from different areas, do you see the problems that we have seen in terms of the disputes between operators and concessionary travel authorities getting worse, continuing or being resolved by the use of a national scheme?

Mr Warneford: They are not getting any better. They are a big problem.

Q111 Clive Efford: Would you like to elaborate on that?

Mr Warneford: Yes. In Scotland and Wales we have a uniform payment scheme funded through the Scottish Executive and the Welsh Assembly. The operators know where they stand. The authorities know where they stand and there are no disputes. I think the result in both countries has been passenger growth and investment. In England, the government or the DfT - I know not which - chose to distribute the payments to the operators through all the district unitary councils without any standard payment mechanism for the operators. Some local authorities were not given enough. Some were given the right amount. Some were given too much. Some of those who were given the right amount chose not to pay that amount to the operators. The operators have an appeal mechanism to go through which is very time consuming and convoluted. The end result from the operators' point of view is we now have a postcode lottery on what we receive for carrying the elderly and the disabled according to which district it might be in and it can be variable between over 70% of the average adult fare to around about 40% of the average adult fare. Where it is exceptionally low, we are now virtually at breaking point. We cannot run a bus full of elderly at 40% of the adult fare without losing money. Unless we can resolve this, we will end up reducing services. It is not where we want to be and we have persevered for 18 months now trying to get a solution.

Q112 Clive Efford: How does that work? If you have a cost that you will incur in running a bus, regardless of whether there is one passenger on it or whether it is full of passengers, and those buses are already running, presumably they have a turnover because you are running them. The buses are now full of passengers with concessionary fares. Does that mean that they are pushing off fare paying passengers and costing you money or you are just running a full bus?

Mr Warneford: Anecdotally, we believe that in some cases adult passengers are now being deterred from trying to board the bus. They are finding other means to travel. I do not think that is an enormous amount, but some.

Q113 Clive Efford: Why is that? Is it because these pensioners are a bit rowdy, like schoolchildren?

Mr Warneford: They are not at all rowdy. They are very well behaved and it is a great scheme for them, but they fill the bus. At 9.30 in the morning every bus stop has a queue of pensioners. The bigger problem is where the numbers of pensioners have grown so much that we have to provide even more buses. I have some extreme examples, particularly on the south coast, where we are not receiving any payment at all and we have to pay the drivers, the engineers, the fuel and all the rest of it. In one particular authority it is costing us about 1.5 million a year for the extra capacity.

Clive Efford: You are running buses and you are not running them on a franchise, so you are running them commercially.

Chairman: I think this is a very interesting aspect of philanthropy I have never connected with Stagecoach. I am absolutely thrilled. I think you should get more publicity for this.

Q114 Clive Efford: They are full of non-paying fare passengers who are all on the concessionary fare scheme and the other passengers have all disappeared?

Mr Warneford: No, the others have not all disappeared. I am not suggesting that.

Q115 Chairman: Why do you not name this wicked authority? If they are costing you all this money I think the least we can do is to give them some publicity.

Mr Warneford: There is more than one.

Q116 Chairman: Tell us which ones.

Mr Warneford: The most extreme examples are in Hampshire, Sussex and Gloucestershire.

Q117 Chairman: Are they local district councils?

Mr Warneford: Ultimately it is the district councils who have to pay, even though some combine into bigger schemes.

Q118 Chairman: When you say it has taken you 18 months, who are you negotiating with that has taken 18 months?

Mr Warneford: The particular authorities I referred to use a third party agent who are not helping matters.

Q119 Chairman: Let us give them some publicity. Who is this third party agent?

Mr Warneford: MCL.

Q120 Chairman: Which stands for what?

Mr Warneford: I have no idea.

Q121 Clive Efford: Is it not the case that bus companies have increased the price of single fares disproportionately because the concessionary fares reimbursements are largely based on single fares?

Mr Warneford: No, we have not increased fares disproportionately, but the whole bus industry is still subject to average annual cost increases which are well above the RPI index. Our annual industry cost increases are around 6 to 7% per annum and we have to cover them.

Q122 Clive Efford: What is driving that?

Mr Warneford: Labour, fuel, insurance, most recently fuel again. We thought it had stabilised a year ago and now it has rocketed again.

Q123 Clive Efford: Is that the same for First Group?

Mr Dean: To support Mr Warneford, we would also support the move towards a national concessionary fare scheme as there is in Scotland and Wales and, yes, we have the same sorts of cost pressures.

Q124 Clive Efford: London has a more extensive concessionary fare scheme than elsewhere in England. Does this give rise to any particular issues for operators or the public?

Mr Dean: Obviously in London it is slightly different in that the revenue risk is taken by Transport for London. It is a well established scheme and I am not aware of it causing any particular problems. One of the things that will be interesting, to use my example of a few questions ago, will be that London pensioners from April 2008 will now be able to flash their London freedom pass in Scarborough, Whitby and all over the place.

Chairman: We are going to have long day trips. I am getting very concerned about these. Are you also providing resuscitation?

Q125 Mr Clelland: If there were no concessionary fares, is it not the case that bus operators would need to - and indeed would - themselves introduce concessionary fares in order to attract passengers onto their buses at offpeak times?

Mr Warneford: I have heard that suggestion over a lot of years but I go back a lot of years in the industry and there never were commercial concessionary fares offered. I think the answer would probably be in some cases there would be and in others there would not and it would have to be a commercial decision as to the viability, the level of service, the type of demography. You could not say a plain yes or no answer to it.

Q126 Mr Clelland: Certainly on the railways that is something which has been introduced over many years. Given the fact that we now have commercial bus companies as opposed to public bus companies that we used to have, I am quite sure that some sort of concession would have been introduced in order to attract more people onto the buses. Otherwise it would not have been viable to run buses in offpeak periods if there was nobody riding on them. In that case, why is it that the bus companies insist on the concessionary fares being based on the prices of single fares - I think there is some evidence that they have been increased disproportionately - and make no contribution whatsoever to the increased ridership they are getting as a result of the concessionary fare system?

Mr Warneford: To go back to the first part of what you were saying, all the conventional price elasticity formulae suggest that we would be better off if we charged the full fare for the elderly and carried fewer of them - i.e., discounting never generates more money; it generates more passengers.

Q127 Mr Clelland: You have evidence for that?

Mr Warneford: That is all the conventional wisdom from the academics.

Q128 Mr Clelland: Do you have some evidence for that?

Mr Warneford: The Department for Transport rely upon it in the concessionary fares.

Q129 Mr Clelland: On the conventional wisdom or the evidence?

Mr Warneford: On the evidence.

Q130 Mr Clelland: Can you produce this evidence for us?

Mr Warneford: It is produced by academics. There are published papers. Would we provide commercial concessions? Possibly. You asked about the single fares. We do not insist that the calculation is based on the adult single fare. We are happy for it to be on the adult single fare, the return fare where there is one and the data key. Where we do have some disagreement is about how much the elderly would otherwise use season tickets because they are casual travellers, so we do have a disagreement about that going into the melting pot. The debate is not really about the level of fare at all. I know it has devolved into that because of the way the DfT has chosen to produce what is called its toolkit, but the issue is really about what it costs to run the bus. If you cannot afford to run the bus, then the elderly cannot travel.

Chairman: Do you understand this commercial argument, Mr Clelland?

Mr Clelland: No.

Q131 Mr Martlew: You have both said that you would prefer a national scheme as in Wales and Scotland. Is that because you think you would make more money out of it or it would be easier to administer and you would not have the bureaucracy and the difficulties that some councils get too much and some get too little? Can we exclude London?

Mr Dean: Yes. We think from the point of view of the operators and the local authorities it would be much better if we could focus our minds on customer service and running the buses rather than negotiating on a number of schemes. Just to back up Mr Warneford's view, if you look at some companies, if they straddle a lot of administrative areas, they have to negotiate with about seven or eight concessionary fare authorities. This is very, very time consuming for the local authority and the bus company.

Q132 Chairman: They are not exactly expecting to come out of it with no benefit, are they?

Mr Dean: No.

Q133 Chairman: You are not negotiating in an abstract; you are negotiating for hard cash which belongs to rate payers.

Mr Dean: I understand that, but it would be better for everybody if we could get on with the more positive aspects of managing the business. If there was a nationally administered concessionary scheme, it means the amount of time that the local authorities and bus operators were spending on negotiating the correct level of reimbursement would be considerably reduced.

Q134 Mr Clelland: I agree with what you are saying on the national scheme. I wish we did have a nationally administered scheme rather than the one we have. You have suggested certain regional and county concessionary travel authority groupings. Is that happening or is it still as fragmented as ever?

Mr Dean: At the moment there are some county wide schemes so the money flows from the district council but, for example, in the Essex area there is a number of district councils but there is a lead travel concession authority which is the county council. That does make things a little easier, but it is not always the case. It depends upon the area and whether they decide to have a county administered scheme or not. If there was a move towards some sort of a regional administered scheme, that would be better than the situation that there is at the moment.

Q135 Mr Leech: I want to come back very briefly to through ticketing. When I took a ticket from Manchester to London I can get a train ticket with the tube added on but I cannot have the Metrolink before the train journey. Why is that? Given that Stagecoach now runs Metrolink in Manchester, is it going to change?

Mr Dobbs: That is back to me because Metrolink comes under the rail division. I hope in the future it will change. Ticketing in Manchester is entirely the responsibility of the Greater Manchester Passenger Transport Executive. It is not ours. We effectively run the managing contract on Metrolink in Manchester. I am already talking to the PTE about ways that we can improve integrated ticketing with the light rail system in Manchester and the heavy rail system, partly due to the fact that we are obviously doing a lot of the development work on smartcards in the UK at the moment because we will be the first company that has them on the ground. I think we have the expertise to help the likes of our colleagues in Manchester towards that end. We will look for similar developments in other parts of the country as well. As was mentioned earlier by Mr Hollobone, we have just taken over the East Midlands rail franchise in the last four days and we have the Sheffield Super Tram at the north end of that so we have exactly the same issue. We want to work with those PTEs. The good thing is of course that the common platform is going to be an ITSO platform. The PTEs are developing smartcard systems that are compatible with ours. It is the same platform and again the travelcard add-on in London will be possible on our smartcards, so if you get a smartcard ticket from Sheffield and you want to travel to Victoria ----

Q136 Chairman: Mr Dobbs, I should tell you that this is not the view of Oyster. This Committee was told very specifically that that would not be the case.

Mr Dobbs: With respect, the Department for Transport is in the process of developing with Transport for London what is called IOP, ITSO On Prestige, which has the dual reading ability for ITSO smartcards and Oyster to work on the same readers. You will be able to buy a travelcard ----

Chairman: I will take your word for it.

Q137 Mr Leech: We do not need smartcards to be able to add on the Metrolink before a train journey and we also do not need smartcards to add on a Stagecoach bus journey into Manchester and then a train journey. When are we likely to get some change and some movement so that these can be added, because clearly that has a significant impact on the number of car journeys into railway stations and persuading people to use public transport?

Mr Dobbs: I, like you, would like to see it happen sooner rather than later. I am not responsible for either ticketing or fares on Metrolink. That is a GMPTE responsibility. I am working with them to develop that but at the moment the technology on the tickets that are sold there by the PTE is not compatible with London for instance or the mainland rail system. It is a different kind of black stripe ticket.

Mr Leech: If you buy a ticket in advance you could add something that does not need to go through any smartcard system or Oyster system or anything like that; it just needs to be shown. Surely it just needs someone to knock a few heads together between the companies and the PTE to make sure that it happens.

Q138 Chairman: Mr Dobbs, go out and knock a few heads together.

Mr Dobbs: I am sure my customers would be delighted to hear that they were going to have their heads knocked together. We will certainly work with the PTEs, all of them, to see what we can do in practical terms. I think smartcards will beat all of the rest of the systems in practical terms because we are not far away.

Chairman: Gentlemen and Madam, you have quite encouraged us. I have completely revised my view of at least one major company and I am so delighted to hear of these pacific, philanthropic and tolerant companies that I did not know existed. Thank you very much for coming this afternoon.

Witnesses: Mr Keith Halstead, Chief Executive, and Mr Ewan Jones, Director of Operations and Deputy Chief Executive, Community Transport Association UK, gave evidence.

Q139 Chairman: Good afternoon, gentlemen. Would you be kind enough to tell us who you are?

Mr Halstead: Keith Halstead, chief executive of the Community Transport Association.

Mr Jones: My name is Ewan Jones. I am deputy chief executive of the Community Transport Association.

Q140 Chairman: Thank you both for coming. It is extremely helpful for us to have you here. Mr Halstead, did you want to say something before we begin?

Mr Halstead: Yes. I wonder whether we could make a brief opening statement. The CTA very much welcomes the government's concessionary fare scheme as it provides increased opportunities for elderly and disabled people to travel and will obviously bring many people improved independence, mobility and choice. However, when you look across England, a much more mixed picture emerges and many older and disabled people will not be able to make use of their concessionary bus travel pass to which they are entitled because either they cannot physically access a local bus service or the may be geographically remote from such services as to render them redundant. In these cases, such passengers will have to pay for their transport. Therefore, it is the CTA's view that the current concessionary fares strategy is not equitable.

Q141 Chairman: That is helpful. I do not know whether you heard some of the evidence that was given beforehand?

Mr Halstead: Just the last few moments.

Q142 Mrs Ellman: If the concessionary fare scheme was extended as you ask, could community transport handle the demand?

Mr Halstead: Yes, we believe it could. By its very nature, community transport is demand responsive and services are by and large resource restrained, limited by capital and revenue grant and other funding constraints. Therefore, I think we feel that if it was extended to embrace community transport our members could better respond to the demand from community transport users. Also currently a number of older people and people with disabilities are using community transport to get to other transport provision to use their pass, so it is not as though it would be a completely new raft of users.

Q143 Mrs Ellman: Have you done any feasibility studies to establish just what the demand would be?

Mr Halstead: We did undertake some research last year where we found that of the 295 travel concession authorities, which embraced obviously rural district councils, unitaries and PTEs, the majority did not reimburse community transport and even where they did the rate of reimbursement was less than 50%.

Q144 Mrs Ellman: What would the extra number of passengers be likely to be? Have you done any work on that?

Mr Halstead: We have not done any specific work on what the extra number of passengers would be.

Mr Jones: Not specifically. Our information is largely anecdotal on that but we are aware that a lot of our members and community transport providers round the country are responding to demands and needs. They are delivering transport to passengers who are not able to travel on existing bus services because they are inaccessible or because there are no such services available where those people live. By its very nature community transport does have a high proportion of passengers who are older people or disabled people. A lot of them are using community transport already and they are paying for that. The point is, when they come under the national concession, they will have an entitlement to travel on registered bus services but they will not be able to use that because they do not have access. Therefore, they are paying to go on community transport and we feel that, if they cannot access their concession, the travel concession authorities should deliver the concession using a different tool, be it community transport or something else.

Q145 Mrs Ellman: What would the cost be of adding community transport to the concession?

Mr Halstead: The government has stated a figure of Ł25 million to extend it to cover all community transport operations and we would very much like to know how the department has arrived at that figure. That is not something that has been shared with us. Even if it was that amount, that is less than 5% of the current total spend on concessionary bus travel, 550 million, and less than a mile of motorway at 30 million. If the government is committed to social justice - and the Department for Transport's own over-arching objective was recently extended to embrace access to jobs, services and social networks, including for the most disadvantaged - then the current policy seems to go against the grain rather than with it in terms of social justice.

Q146 Mrs Ellman: Have you made any assessment of the costs?

Mr Halstead: No. We have not been able to do that. Currently, we are undertaking a mapping exercise to map more effectively community transport provision across England, but one of our difficulties is that often there are small, voluntary car schemes and a whole variety of different types of community transport that we would need to capture. That is why we have embarked on this mapping programme.

Q147 Mr Martlew: Can I congratulate you for the work that you do? Would a national scheme be better for you because you say that some authorities do not give you any money; some of them give you a bit? As long as you are included in a national scheme, do you think it would be a better system?

Mr Halstead: It would be a better system, yes. At the moment at best it is a postcode lottery, just depending on which travel concession authority you live in. You either get some return or not as a community transport operator for running eligible services. If all community transport organisations were able to be included in the scheme, that would be a much better position.

Q148 Mr Martlew: The situation is that even community transport will not be able to help some of these people because they do not have the facilities in that particular area. Surely in that case the best solution would be for some payment to be made to taxis or private hire companies? There is a network out there. That would seem a very simple solution.

Mr Halstead: Yes. We want to look at the public transport network in the round to meet those gaps. If there is no community transport scheme there, by all means. Taxis are part of the local link to the transport networks too.

Q149 Mr Martlew: The way that that could possibly be done because of the cost factor would be that an individual would be given a credit, so much a year, Ł200 or Ł300 a year credit on a system which they could use on taxis or community transport.

Mr Halstead: We can certainly go down that route, yes.

Q150 Chairman: Disabled people who cannot use mainstream transport are entitled at the moment to concessions from the DWP, are they not, in terms of benefit?

Mr Halstead: Yes.

Q151 Chairman: Are these adequate? Do you think this is the way round it? Is that what you are telling Mr Martlew?

Mr Jones: Our key point here is that if there is a concession which is available to certain people in certain categories and the national policy is that disabled people over 60 are entitled to free transport on registered buses, then there will be a group of people who cannot access that concession due to the nature of the services and/or the vehicles. In those cases in order for a national policy to be delivered across the board locally, different tools need to be used. Yes, the registered bus service obviously is the first choice but we are arguing that community transport, taxis and other mechanisms should all be there in the toolbox because this is an issue of discrimination potentially otherwise because certain people cannot travel. It is not about community transport wanting funding. Community transport should be reimbursed for providing free travel and understands and accepts that it should be no better or no worse off as a result of doing that because this is about the concessionary travel for the individual, not about the Community Transport Group looking for a funding stream.

Q152 Mr Martlew: I accept what the Chairman says. It is called a mobility allowance, is it not? Would you accept that it would have to be a cash sum? It would not be paid in cash. You could not give an open ended commitment to some lady who lives at the top of a mountain to be able to travel in to do her shopping every day, could you? It would have to be cash limited to some extent. Would you accept that or not?

Mr Jones: Practically any scheme would have to be cash limited. The current scheme is cash limited.

Q153 Mr Martlew: The pensioner can travel every day where there is a bus. It does not matter how many times he travels; he or she does it free. If you were using taxis for example that would not be possible, would it? There would have to be a financial cap so that you could spend more over the year, I suspect in rural community transport as well.

Mr Jones: Yes. It is a question of agreeing where the balance point is, is it not? There is certainly an argument that for instance the problem with living in an area where there are not services is partly because there are not services, but it is partly a lifestyle choice as well for a lot of people. The point is we need to try and find the balance.

Q154 Chairman: While we are talking about lifestyle choices, what about smartcards? Have you done any work on whether your members find smartcards acceptable?

Mr Jones: Not specific work but I think it is our general view that a lot of concessionary travel pass schemes exist already. If you use a pass, if that pass is replaced in some way or used in conjunction with a smartcard, I feel that is likely to be relatively easy for a lot of people to use. Particularly, given some of what was being said towards the end of the last contributor, it would improve the whole through ticketing issue and access to different services. Oyster cards are great when you come to London for people like me, who do not live here. It would be even better if I could use that everywhere else on any form of transport. Disabled people and older people are using community transport or any other form of transport and the same benefits could potentially apply.

Q155 Chairman: Have you experiences from the other countries of the United Kingdom that would help you in assessing the effects of the changes towards, say, smartcards within England?

Mr Jones: Yes. In particular we administered a programme of grants, the Community Transport Concessionary Travel Initiative, Ł3 million over a three year period in Wales, where that money went to 15 projects in Wales to deliver free transport to people who are entitled to concessions. The Welsh Assembly Government are just in the process, I believe, of appointing external evaluators for that project which will be very interesting to see. Those again were projects across Wales, north, south, east and west, operating in different ways, different types of projects, some using dedicated vehicles, others linking in with existing taxi and community transport networks, to provide the free transport that concessionary passengers were entitled to. We have yet to see the evaluation of that because we administer the grant payment scheme on behalf of WAG and we service the independent panel that made recommendations to the Minister in Wales as to who should receive the funding. Obviously we are not involved in evaluating that ourselves.

Q156 Chairman: That independent assessment meant that you did not lay down a specific template to the various organisations dealing with it; you simply said, "This is what you should be doing overall". Is that right?

Mr Jones: Yes. What we said to groups was not that they had to use this kind of model or this kind of service, but, "You have come to the assessment panel. Tell us about your area, about the passengers who are entitled." The Welsh Assembly Government was quite specific. It was not across the board disabled people. The term they used was "severely disabled people" so it was only a certain subset. It was not even the whole entitled market, if you like. "Come and tell us about your area, of your definition of severe disability and why those people do not have access and how you propose to ...".

Q157 Chairman: Each individual project was tailored to the needs of that particular area?

Mr Jones: Yes.

Q158 Chairman: It would be very flexible. There would be some common denominators but not a series of templates that could be used across the whole?

Mr Jones: Exactly, yes. One project in Powys brings together 20 plus different organisations using different community transport and car schemes to provide the delivery. Others link up with local taxi firms and provide a token service in Pembrokeshire so there are different models for different areas. The word "pilot" is in there as well and that is another reason. It is action research as well, if you like.

Chairman: Gentlemen, you have been very helpful and we are very grateful to you for being such good witnesses. Thank you.