Uncorrected Evidence 84

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Oral Evidence

Taken before the Transport Committee

on Wednesday 12 December 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

Graham Stringer

________________

Memoranda submitted by Passenger Focus, London TravelWatch and

TravelWatch SouthWest

Examination of Witnesses

Witnesses: Mr Stephen Joseph, Executive Director, Campaign for Better Transport, Mr Anthony Smith, Chief Executive, Passenger Focus, Mr Rufus Barnes, Chief Executive, London TravelWatch and Mr Gordon Edwards, Company Secretary, TravelWatch SouthWest, gave evidence.

Chairman: Good afternoon to you, the Committee is now in session. Members with an interest to declare, Mr Clelland?

Mr Clelland: Member of United.

Clive Efford: Member of Unite.

Graham Stringer: Member of Unite.

Chairman: ASLEF.

Mrs Ellman: Member of Unite.

Q208 Chairman: Thank you very much. Gentlemen, you are most warmly welcome. I am sure several of you already know the House rules, if you agree with one another please do not repeat what somebody else has said. If you want to catch the Chairman's eye it should not be too difficult because the clerk will dig me in the ribs. If there is anything else you want to say we will ask you whether you want to say it. Would you like to identify yourselves for the record, please?

Mr Edwards: Gordon Edwards, Company Secretary, TravelWatch SouthWest.

Mr Barnes: Rufus Barnes, Chief Executive, London TravelWatch.

Mr Smith: Anthony Smith, Chief Executive, Customer Focus.

Mr Joseph: Stephen Joseph, Executive Director, Campaign for Better Transport.

Q209 Chairman: Do any of you have anything you want to say briefly?

Mr Barnes: I would just like to say that the paper was written nine months ago and certain things have moved forward since then. I think it is important to make sure that your members are aware of the changes that we wish you to take into account. We made reference towards the beginning of our report to ticket queues on the underground. We believe London Underground has made progress but things have got worse recently at King's Cross St Pancras following the transfer of the Eurostar service and the opening of the First Capital Connect station there. We have noticed, rather worryingly, that there are queues for the ticket office and the ticket machines that are actually causing movement problems within the station. Secondly, we believe that there has been some very useful progress in relation to mobile phones and telephones. We referred to this in our report but we believe that Transport for London has recently announced that they will be experimenting with the use of mobile phones and Oyster acceptance. That, we believe, is good and welcome news.

Q210 Chairman: Mr Barnes, I am going to stop you there. Do you think possibly as the questions come up you can answer the particular points and point out to us if there is a gap between what you said originally and what is happening now and why. If there is a difficulty and at the end of the time you feel we have missed something by all means raise it. Mr Smith?

Mr Smith: I think the Committee's investigation is extremely timely as the number of passengers going through Britain's railway network increases day by day and in recent research we have done - which unfortunately was done prior to our report being submitted - reducing ticket queue time, something as simple as that, actually came out as the sixth priority among Britain's rail passengers on a national survey. Subsequently we have also done some research on the passengers' attitudes to the future of ticketing and future ticketing technology which I will refer to in the course of questions.

Q211 Chairman: Mr Edwards?

Mr Edwards: Our evidence was obviously submitted nine months ago and most of it remains relevant today. However, there has been one change, and we welcome the Government's decision to pay the additional Ł212 million towards the cost of free concessionary travel from the first of April next year by specific grant using option four.

Q212 Chairman: Thank you. Mr Joseph?

Mr Joseph: I wanted to say that we would like to take this opportunity, if the Committee wishes, to update the Committee on something that it expressed interest in in its report on the draft Local Transport Bill in relation to the Competition Act and ticketing and bus services. If the Committee wants to explore that I am happy to update them on where we have got to on that.

Q213 Chairman: That would be helpful. Let us see how we go and if you think we have missed bits out it is not above you to attract the Chairman's attention. Do you all think that the Government has got a strategy on integrated ticketing?

Mr Smith: In terms of the national railways the integrated ticketing works quite well inside the railway network; it works less well when you try to use rail and bus or a combination of some other form of public transport. There are schemes which are now being promoted, the PlusBus scheme whereby you can buy a bus ticket relatively easily on top of your rail ticket but we simply do not think that the promotion is high profile enough at present.

Q214 Chairman: What about smartcards?

Mr Barnes: I think the smartcard is good in principle and we are delighted that the Government has pressed national rail to accept Oyster in the London area. We are worried about the implementation arrangements for that.

Q215 Chairman: In what sense?

Mr Barnes: We are very aware that the Government's concern is that the ITSO product should not be undermined by Oyster. We are pleased that the Government has said that Oyster has to be accepted on all national rail stations in its pay as you go concept but we are aware that there are going to be differences across London that are going to be really problematic and confusing for passengers.

Q216 Chairman: You have presumably drawn that to the attention of the Government; what response have you received?

Mr Barnes: The Government appears to be saying that if some companies offer one thing and another company offers another thing, then that is the commercial world.

Q217 Chairman: That is what I am asking you: is there a strategy behind this. Mr Joseph?

Mr Joseph: In answer to that precise question we have not identified a strategy. In particular what we have not identified is a strategy which would fit with the current transport secretary's express wish to focus on door to door transport. There is, as my colleague to my right said, a strategy for integration within the railway; there is no strategy for integration between rail and bus or between creating a smartcard that will allow door to door transport such as you find in many other European countries.

Q218 Chairman: Is that your view, Mr Edwards?

Mr Edwards: Yes, there is no strategy whatsoever and we have made representations to the Department for Transport when they have been letting new rail franchises, that we wanted to see some commitments in there around integrated, multi-model ticketing. Nothing has happened whatsoever.

Q219 Mrs Ellman: Are smartcards important or do you think improvements could be made by existing payment systems?

Mr Smith: The research we have done with passengers shows that the smartcard is instantly recognisable, people can see the benefits, they want it, they would like it to be more available especially in the London area with the pay as you go concept on the national rail network. The difficulty with smartcards on the national railway network is that where you get longer distance journeys, where the price is high and variable, there is a great reluctance to store large amounts of money onto a smartcard. It works very well for urban areas and, as my colleagues have said, it would be great if those urban areas and smartcards could talk to each other so you could use them in Manchester, London or Sheffield, but for longer distance journeys it is much harder to see quite what the benefit is.

Q220 Mrs Ellman: What about outside the London area?

Mr Smith: There are plenty of examples outside of London - the Travelmaster card in South Yorkshire, the Trio in Merseyside, System One in Manchester - where smartcards work. People like them; they are understandable. As long as you have a clear pricing structure, a zonal fair structure, and people know what they are going to pay.

Q221 Mrs Ellman: Do you think that enough attention is given to the views of travellers outside London and there is not too much focus on travelling within London?

Mr Smith: I think the existence of these other smartcards indicates that it is a popular product in all types of area and could be extended outside urban areas. The fact is that the Oyster card is a very prolific product in London; people have seen it and a lot of people use it. In many ways it is leading perceptions.

Mr Barnes: I think the issue about London is that Oyster works and Oyster has been seen to work and Oyster has been popular with users. It is first generation. It is obviously the case that people need to be able to have a product that is useable elsewhere and I understand your question, but we do not want to lose the benefit we have seen of Oyster in London because people want to have the ITSO product that has a national benefit.

Mr Edwards: To go back to your original question, there has been more done now, yes. In the south west of England there are 102 destinations without railway stations where you can buy a through ticket to. You can only book on the internet to 20 of those 102. For the other 82 you actually have to go to the station and buy it. You cannot buy the add-on fare with any advantage purchase ticket. Why cannot the railway industry, with the technology that is available today, just deliver that?

Q222 Mrs Ellman: Mr Smith, can I ask you from Passenger Focus, do you think enough work is done on looking at the needs of people who want simply to be able to go to a station and buy a ticket on the day? Is there not a drive to everything being through Smartcards and other technologies to the exclusion of passengers - I do not know how many - who want to be able to buy tickets and travel?

Mr Smith: I think it is a fact that the move on the railways is very much towards pre-purchase for all types of travel whether it is through Smartcard or through booking ahead. As we have seen in the current fare rises the relentless pressure on walk up and go fares continues and we are moving towards a very different type of railway which, in some ways, on longer distance travel, is becoming more of an EasyJet type booking system. This is happening without any public debate and really at the behest of the operators largely to suit their convenience.

Q223 Mrs Ellman: Passenger Focus is there looking at the needs of passengers, have you done any research on the views of passengers and particularly those who do not want to have to go down this route?

Mr Smith: It is quite clear that many passengers value the ability to be able to turn up at the railway station and purchase a ticket on the day of travel either because they want to be sufficiently flexible about their plans or they want to talk to a member of staff which is very important. I do not think the rail industry is ever going to be able to get rid of ticket windows because people want to talk to staff. Some of the products are complicated; they need to have a discussion with a human being about them. People like the railway because it has that turn up and go ability. I think it is one of the railway's great attractions and selling points that you can do that, you can turn up and go.

Q224 Mrs Ellman: Has Passenger Focus made representations to the operators and to government to pursue the views of those people?

Mr Smith: Yes, we have. We have made strong representation both to government and to the operators and to the Association of Train Operating Companies but I think some of the realities of the pressure on space on the railways is pushing the operators towards trying to get people to book in advance. A lot of people are very comfortable doing that and we should not decry it because you can travel very, very cheaply if you book in advance. The great benefit of the railway is that you can turn up to go. It is a social service, it is a public service and it should be available when you want to use it within reason.

Mr Joseph: We have recently been focussing on the closure of travel centres at various railway stations. South West Trains are leading the way on this and we think other operators will follow it. We are concerned about this for a number of reasons, firstly because, as Mr Smith said, some of the railway products are complicated and people like to be able to have the leisure to explore the options for them in relation to travel which travel centres provide. Secondly, we are concerned - from the aspect of one of the other things the Committee is interested in - with penalty fares. If you have no travel centre and relatively few staff at ticket offices people will simply be caught by penalty fares regimes because they have not had time to actually buy the ticket in advance. We have certainly raised these issues with South West Trains; we have, as usual I am afraid, come across a split between whether this is required by the franchise or a decision made by the operator. Responsibility, as often with the railway, seems to be divided or passed between the two.

Q225 Mr Scott: How effective do you think Transport Direct is?

Mr Barnes: Transport Direct is an organisation that is providing information rather than ticketing. It is one of the organisations that fulfils this role, but it is just one of those organisations, the National Rail Enquiry Line is another. It is one organisation.

Q226 Chairman: Is it effective?

Mr Barnes: I cannot really comment on whether it is better or worse than any of the others?

Mr Joseph: In principle what Transport Direct is trying to do is admirable and certainly some of the new features that it has added to allow, for example, carbon calculations of journeys and so on are admirable too. Nobody else is providing car and public transport comparisons. The problem seems to be when you get down to the very local level of journeys in that it seems to fail to notice the opportunities for walking any distance or for cycling and therefore does not include those as options and some of the first and last legs of the journey are still very odd. It is also reliant on the local public transport information, for example the location of bus stops, provided by Traveline and from that the local authorities. We have evidence from some of our local groups that some of that basis is not very well done. We have some concerns about the detail although we think in principle the case for Transport Direct is very strong but needs to be developed.

Mr Edwards: The key barrier to the use of public transport is the availability of information. At the moment we have both Transport Direct which gives live travel news but also provides a journey planning system which people find quite difficult to use initially but once you get used to it it is fine. Then we have all these regional travel line organisations which do not have a standard format and do not cross regional boundaries. Really we want to see the Government take some lead in joined-up thinking to ensure that there is just one source of accurate public transport information which is easily accessible. Rail fares are available on the National Rail Enquiry site, they are also available on the Transport Direct site, but on Transport Direct you cannot get bus fares. On Traveline South West from 2 January you will be able to get the bus fares but no train fares. All these bodies are publicly funded so can we please have some joined-up thinking.

Mr Smith: I think Transport Direct is a big step in the right direction. Information is key prior to ticketing and I think what they are trying to do is interesting because in a sense they are competing with the satellite navigation technology you are seeing in use in cars increasingly, that sort of pinpoint accuracy of journey information. Public transport has to keep up so it is a step in the right direction, but clearly there is more work to do.

Q227 Clive Efford: Has the ticket fares on trains coming into line with the zones improved the understanding of the prices and the link between the different modes of transport in London?

Mr Barnes: I think when you start from the position that prior to the introduction of zonalisation you had vastly more fares options, anything that brings about a simplification of that helps people's understanding of the fares they are likely to have to pay for the journey they make. That must be a good thing. Zonalisation is also a vital prerequisite to the acceptance of Oyster on the national railways in the London area - Oyster pay as you go - otherwise you would not have been able to introduce Oyster pay as you go on the national railways because the system could not cope with such a large number of individual fares. Yes, it was a good thing; yes, it goes towards simplification and it is a prerequisite before we see Oyster pay as you go extended to the national railways.

Mr Smith: I agree with my colleague's comments that overall it is a good thing but it has been painful in its implementation because some of the fare rises which have been implemented following the introduction of the zones have been quite significant. Individual passengers I think got quite a nasty shock in terms of what might happen. We saw I think rises in the order of 30% which were relatively small monetary amounts but still quite a big jump and what we have yet to see is what the overall impact will be of turning London into a complete zoned area on travel from outside of London. There are many forces at play here, including the government regulation of certain types of rail fare which apply to the whole of a train company's activities. Now you get a sort of ring in London which sets certain things happening in terms of price which we thing has a potential consequence of reducing the train company's room for manoeuvre with prices outside of that area so what could be good news for London might not be quite such good news for Kent.

Q228 Clive Efford: It is not good news for south east London. How satisfactory is the Oyster card from the passengers' perspective.

Mr Barnes: Oyster has been a massively beneficial product for London but there are some uncertainties about the future. I think everybody needs to be very clear about those uncertainties. One of the reasons that Oyster has been so beneficial with the pay as you element of Oyster has been the fact that on Transport for London services you get a discount in the fare that you would pay compared with the fare that you pay if you pay by cash. I think that there has been an expectation that when Oyster pay as you go is extended to the national railways that discount will automatically be applied to national rail fares where pay as you go is accepted. There is no guarantee of that at all. In fact, some train operating companies have said that they do not intend to give that discount. Whereas we have seen some companies in the recent pass actually accepting them, others have said they positively will not. This will cause confusion and cause massive disappointment I suspect potentially to your constituents if South Eastern were to decide not to give the discount that currently applies to travel on TfL services.

Q229 Clive Efford: How will that work? If you have a smartcard and you are travelling around the system, you could go from one section of the network that offers the discount and one that does not. How will you know?

Mr Barnes: Because you have to click in and click out of each section.

Q230 Clive Efford: Does it tell you? Until you have clicked in or out, supposing there is a display screen there to tell you what has just been taken off your smartcard, how do you know?

Mr Barnes: The current situation with Oyster on Transport for London services is that there is a daily cap; it cannot take more than the daily cap off the service. The detail of how it is going to work on the national railways has not yet been worked out, but I can foresee some very real problems. Southern recently decided to accept Oyster pay as you go on their service from Clapham Junction up to Watford Junction; that parallels the service operated by the London Overground. That is good news for passengers. However, as I say, South West trains have made it clear to us that they believe in their franchise bid there was no provision at all in the financial bid that they put together for them to give a discount.

Q231 Clive Efford: This is disastrous, is it not? If, for instance, South Eastern were to say that they are not going to offer the discount on pay as you go Oyster cards that means that the Oyster is irrelevant for commuters in a quarter of London, is it not?

Mr Barnes: It is not necessarily irrelevant because it does speed up the passage, for example, through the ticket gates and it does enable people to travel more easily if not more cheaply. However, I would agree with you that the confusion that could result from different train operating companies in the London area applying a different policy could be very unacceptable, confusing and in many respects it could result in passengers believing that Oyster pay as you go is going to deliver one thing and it delivers something else.

Mr Smith: From our research the Oyster card has been a tremendous success. The only downside that we can pick up from our research is the inability of passengers to be able to see what they have got on it or what they have got left. It is a relatively dumb piece of plastic in that respect unless you actually have some sort of contact with the system. I think Oyster's success has been built on the fact that we have had one organisation specifying the introduction of it - Transport for London - and one contractor delivering it and they meet exactly together. Once you get 23 train companies or however many trying to do this there has got to be a common agreement otherwise the chaos that you are predicting will come about.

Mr Joseph: Going back to Mrs Ellman's earlier question about whether there is a strategy, there is no strategy. The Department for Transport needs to specify and be an intelligent client that creates an Oyster style product across the country.

Q232 Clive Efford: What is your understanding of the conflict between the technology involved behind ITSO and Oyster?

Mr Barnes: Oyster has been developed by a company, as Mr Smith has said, and is basically a monopoly product, monopoly supply, monopoly cost, et cetera. The interface of the ITSO product I am told is extremely difficult in respect of the pay as you go element of the stored value ticket. As you Oyster is a double product, on the one hand it can be a period ticket, on the other hand it can be a stored value ticket. It is the stored value element where there is a problem on the interface and I believe, although I am not a technical expert, that the problem is having the information stored on the ITSO product that can be read by the Oyster machinery in respect of pay as you go. I believe that is where the problem lies.

Q233 Clive Efford: Are you aware of an internet ticket sales line that claims it can provide an ITSO type smartcard that will work on the current Oyster systems without requiring any new gates or readers?

Mr Barnes: I am not personally aware of the detail of that; I have heard of the company that is making that claim but I do not know the details.

Q234 Clive Efford: Are you aware of the current rail legislation that allows train operators to stop sales of certain promotional tickets and that this is likely to increase under smartcards?

Mr Barnes: Certainly the rail companies can sell promotional tickets as much as they wish to. They have to sell a particular core range of tickets but above that they can sell any tickets that they believe are in their commercial interests.

Q235 Clive Efford: This question is about something more than that, it is actually blocking the sale of other sorts of tickets that might be in a passenger's interest but not in the train operator's commercial interest.

Mr Smith: I am aware of this because I would have thought it would still have been in the train operator's interest to sell products which are specific to perhaps just that train company, whether it is Virgin or South West Trains or whatever. You are quite correct in your analysis that that benefits consumers because you have a degree of choice.

Mr Barnes: What I suspect it may not be feasible to do is to sell it through the Oyster product or through the ITSO product because the benefit that the companies have from their promotional tickets is that they are usually only sold by that company and they get all the money for it. When you go down the route of an Oyster product or an ITSO product it is a shared value and they have to share the money that they get in. I suspect what you are alluding to is that if a company wished to sell a promotional product it would still have to be outside the ITSO/Oyster product.

Q236 Clive Efford: What is the future for the travelling public? At the moment if you start your journey on a bus you cannot buy your train ticket, what would solve this through-ticketing problem for the public? What do you envisage?

Mr Barnes: We would definitely advocate wider sales opportunities for multi-model tickets and perhaps this is the right point to draw your attention to a further potential problem with the ITSO/Oyster product because it has to do with ticket sales. Again South West Trains, under its agreement with the Department for Transport, will, we understand, be accepting the Oyster pay as you go product but it does not intend to sell the Oyster pay as you go product; it only intends to sell the ITSO product. Other train operating companies in the London area have said that they will both sell and accept it so in the South West Trains area - and maybe elsewhere, I do not know - passengers who wish to top up their Oyster pay as you go product will not be able to do it at their local South West Trains station, they will have to go to another ticket sales outlet. We think this confusion is absolutely awful and perhaps a further indication of lack of integration and ticketing policy.

Q237 Clive Efford: Can I just clarify that they are actually saying they will not allow TfL to put their machines on their station forecourts so that Oyster card users can top up their cards?

Mr Barnes: I think the problem is that South West Trains would have to invest in the cost of that product.

Q238 Clive Efford: What if TfL suggested that they put the machines there themselves?

Mr Barnes: They would be very happy to accept anything free.

Mr Edwards: Could I just make the point that from the first of April next year all concessionary pass holders in England are going to be issued with an ITSO smartcard for their concessionary fare travel. This is a major investment by the Government but they will be of no use getting on a bus in London because they will not be able to operate the Oyster machines there so they will be taken as paper tickets. There really needs to be something joined-up here.

Mr Smith: I think trying to guess the future is always a bit dangerous but we did ask passengers what they thought the future as being and funnily enough it does not look that different from where we are now, which is quite reassuring. People see the smartcard as being the key where you can use a smartcard in different parts of the country, in different urban areas, a smartcard which has this element of both stored value and pay as you go, but that is not a replacement for that ability to have staff to talk to, to have other methods of buying a ticket. I think the future is smartcards.

Q239 Graham Stringer: Will you tell us what progress you think there is being made on the conflict between composition and cooperation on ticketing?

Mr Joseph: The short answer is some, but not enough. The opinion that we commissioned said that the way in which the Office of Fair Trading had interpreted the competition law with respect to bus services was too narrow and in fact not in the passengers' interest. It proposed in summary that the Office of Fair Trading would be able to allow agreements between operators subject to the public interest test that is being proposed to apply to quality partnerships. In other words, that all agreements between operators that met the public interest test should be allowed. The result has been some progress in the sense that the bill now removes some of the rather extreme penalties that were threatened through the Competition Act against the bus operators who happen to catch each other's eye in the street and obviously deemed to be a cartel arrangement. The first group, Stage Coach, are at least not now threatened with dawn raids of 15% fines on their entire turnover. Some of the penalties have been removed but we are a long way from seeing an approach by the competition authorities that actually facilitates the integrated ticketing that this Committee is seeking in this inquiry. We understand that draft guidance has recently been produced as part of the Local Transport Bill proceedings. The lawyers who have been commissioned on this have said they will scrutinise that for us and we are due to go back to the Office of Fair Trading and the Department of Transport and suggest ways in which that guidance can be changed. We have also said to the Department that subject to what the lawyers say we will suggest amendments to the bill either in the other place or when it comes to this House in order to give effect to what passengers actually want, which is the ability to be able to get a ticket which is valid on all the services on a particular route. The discussion we have had has been about London where there is at least some product that allows people to get on different buses run by different companies because they are part of the network. Outside London we are a very, very long way from that. We did actually get examples from passengers, not just in rural areas but in places like Sheffield, where there are strong examples of where, if you want to use the tram, you have to buy a Stage Coach Dayrider but if the Stage Coach buses do not run you also have to buy a day ticket for First Buses. We are a very, very long way from the vision that we were discussing about London a few minutes ago, in which you can get a single product that will take you door to door.

Q240 Graham Stringer: That is very interesting. I have to say, I am rather in favour of dawn raids on First Group and Stage Coach, there have not been enough. What I would like your views and advice on, Mr Joseph, we all want, with a guiding public mind, sensible integrated ticketing. Is that going to open the door for more anti-competitive monopoly behaviour that is not in the interests of the passengers between the big five bus companies, of which there has been some evidence in the past, there have been some prosecutions but not nearly enough when you look at the overall evidence.

Mr Joseph: The lawyers we commissioned, who do know the competition law very well, were clear about the public interest test that needs to be applied to such agreements. Where it is in the public interest for operators to agree to accept each other's tickets or indeed where an area-wide ticketing system can be set up, then there is not a problem that is against the public interest. That does not give a blank cheque to operators to shut out other operators to agree deals that are against the public interest, but overwhelmingly, in situations outside the areas envisaged by the Local Transport Bill where you have quality contracts, where you have multiple operators, the evidence is that people want to be able to get a single ticket that is valid on each other's services. The operators want to provide that and the interpretation of the competition law by the Office of Fair Trading is impeding that.

Q241 Graham Stringer: Just staying with our friends from Stage Coach and First Group and the other members of the big five, they survive by and large by tendering their services through public subsidy. Have you analysed that there may be, or have been where concessionary fares have been, unintended consequences for people who are not concessionary fare payers in the passenger services provided? I hope that question is clear. When you bring in the concessionary fare scheme it changes the level of demand, the kind of demand. It enables the bus companies to target their services more on public subsidy. Are you aware that that has changed the services in any sense?

Mr Joseph: We are starting to get anecdotal evidence of that happening. We have not done a full survey and it is probably premature to do so until after the first of April. We have, for example, seen in Sussex a situation where there have been serious cutbacks in services around Worthing, for instance. We have had press coverage turn up other evidence on that. We have started to get ordinary people writing to us saying - it looks as if the concessionary fares have an adequate compensation for operators in this - that this is resulting in worse services in certain areas and it also has an impact on the other fares charged, particularly off-peak fares charged by operators as well. I think the previous evidence the Committee has had does not, in this case, lead to a debate between the local authorities and the bus operators. I think all the evidence we have had has tended to put the blame for this at the door of the Government in terms of the formula they have used to compensate operators and in particular routing it through district councils rather than the passenger transport executives or county councils and the level of payments that the Government has given. As my colleague from TravelWatch South West said, we will have to see how the extra Ł212 million that the Government has made available for the scheme after the first of April works out, but I think there are still concerns that particularly in tourist areas and in places of high demand there will be problems if there is not full compensation given through the local authorities to operators. I think, to put it brutally, there is a danger that pensioners will get free travel concessions and not have any buses that they can use them on.

Mr Edwards: Since the first of April 2006 there have been a large number of commercial services in south west England withdrawn and on many occasions the bus company - a subsidiary of the major groups - stated that the revenue from the routes has fallen due to inadequate concessionary fare reimbursement. We obviously do not have access to any financial information to state whether that is true or not true. What we do see, therefore, is that the local authority then has to go out and put out a contract for a service which usually, because of financial constraints, is less good than the service that was previously provided at substantial cost to public funds.

Mr Smith: Again some anecdotal evidence, but the introduction of concessionary fares on the buses of course has had an impact on the railways in some parts of the country. Previously there was the bizarre situation where the bus fare was more than the rail fare in many rural areas. The introduction of free bus travel has, to a degree, diverted quite a few passengers onto the buses and away from the trains where similar concessions are not available at the present time.

Q242 Chairman: I think what worries the Committee is how accurate is the information about this because - I am not saying this in any sense in a pejorative way - a lot of the information is after all anecdotal. How would we obtain accurate research that says what is happening and how widespread it is in the event?

Mr Edwards: If I could draw your attention to a report which was 179 from the Scottish Executive Development Department after they introduced free concessionary fares, they looked at the Lothian and Strathclyde areas and said a significant switch from rail to bus was measured by on-train surveys before and after the introduction of free fares. The abstraction was between 19% and 66% and it averaged 46% for those two regions. I could give you examples where we have seen abstraction on certain railway lines in south west England from rail to bus. We now have a line like the Exeter to Exmouth line which is basically becoming a commuter railway, well used in the morning peak by commuters who come back, of course, in the evening. During the day the over-60s who used to use that service now go by bus because it is town centre to city centre every 12 minutes, low floor, free.

Q243 Mr Martlew: Is that a problem?

Mr Edwards: In the south west we are worried about the financial liability of our railway lines because many of our railway lines are community railway lines, have been designated by the DfT and they are supposed to grow custom. However, you have somewhere like Looe to Liskeard, Penzance to St Ives where, in the winter, people, because of the high percentage of concessionary fare holders in those area, are now using competing bus services and not using trains.

Mr Smith: I think that is a good question, does it matter? From the passengers' point of view of course it is potentially of great benefit in the short term, but in the longer term the railways in these areas are subsidised by the Government for a purpose and if that purpose is not being fulfilled you would hope there would be a bit of joined up thinking about which mode of transport is going to be favoured by the public subsidy, but it appears to be approached in separate parts.

Q244 Graham Stringer: Is there anything to be learned from the experience in Wales or Scotland or Northern Ireland in relation to the introduction of the national concessionary fares scheme? We have had some very interesting examples, but are there other lessons that can be learned which the Government should be applying to England?

Mr Joseph: Specifically on the point that has just been raised about rail, in Wales there has been a new approach and now has three community railway lines added to the National Concessionary Fare Scheme and these are ones that are regarded by the Welsh Assembly Government and all parties in Wales as being important as lifelines for parts of rural Wales. It seems important to keep going so they have been added to the National Concessionary Fare Scheme. In the written evidence of TravelWatch South West to the Committee suggests - and we certainly support this - that initially the lines designated as community railways in England should be added to the National Concessionary Fare Scheme. Scotland actually went through a process where they did try the kind of local reimbursement that is being used in England and found that it was much, much simpler to organise it nationally. We think that it would be appropriate to learn from that experience from Wales and Scotland and move towards a genuinely national scheme.

Mr Barnes: Can I add that it is worth considering the London situation as well which of course is entirely different in its funding regime. For many years now senior citizens have had the opportunity to travel on the bus, the underground and national rail, trams in Croydon and Docklands Light Railway, and because they are able to travel on the mode that is appropriate for the journey they wish to make people do not have to think, "This is the free option; this is the option I am going to use" and it has not had the worrying impact that quite clearly my colleague in the south west is concerned about. If you have the concession only on one mode it has an impact on other modes.

Q245 Mr Clelland: Our colleagues here will be aware of the fact that the introduction of the scheme impacted particularly badly on Tyne and Wear Transport Authority who found themselves with a Ł7 million shortfall and in order to make up for that some smaller services had to be cut and in particular the Team Travel Scheme (which was a scheme to help young people travel on a concession) had to be cut back as well. Are you aware of any other unintended consequences of the concessionary travel scheme? Have other concessions been cut back in order for authorities to be able to implement it?

Mr Joseph: One example where this unintended consequence came to South Yorkshire was as a result of the shortfall the Passenger Transport Executive started to charge buses a departure tax at bus stations. Stage Coach, for one operator, charged an extra fare if you were going to those bus stations.

Q246 Chairman: That is a unique idea, charging at a bus station to get on a bus.

Mr Joseph: Exactly. This does not make any sense to passengers at all. In answer to an earlier question about where we can get evidence from on this, what we can get evidence on is the percentage of the average adult fare passed over to operators in each local authority area. That evidence is available. In the Sussex example I gave 41.9%, for instance, of the average adult fare is being passed over compared with 73.6% in Wales, which does give you some indication of the level of shortfall. I think the particular argument in Sheffield or the result in Tyne and Wear are not defensible but to go back to the point I made, the root of this is the level and formula for reimbursement.

Q247 Mr Clelland: Do we think that the new specific grant is likely to go anywhere at all towards resolving any of these problems?

Mr Joseph: I think the jury is out on that. Actually when I have heard presentations from the relevant Department for Transport officials they have admitted that it is fingers in the air stuff. They really do not know where the travel is going to be; they have made a best guess. We area concerned that particularly in things like tourist honey pot areas or, for that matter, in London and some other big cities, that there will be a significant shortfall which will appear in places like Blackpool, for instance, and there will be problems with that.

Mr Edwards: Another unintended consequence, because the money goes down to district councils there are of course a lot of district councils that have received far more money for concessionary fares through the Rate Support Grant than they actually need to pay out. They are therefore able, because it comes as part of the EPCS element, to use that money on other services. If we had it all done by specific grant - which we support - a lot of district councils in the south west of England would have a major problem in how they fund certain services which are currently being funded by concessionary fares money which is not being used for that purpose. We would fully support this Committee taking district councils out as travel concession authorities.

Q248 Chairman: Are you saying that they are not good value for money anyway?

Mr Edwards: No, we are saying they are excellent value for money, the concessionary fares, but as Mr Clelland has said, he has a shortfall in Tyne and Wear and we have a short fall in greater Bristol, but we have West Devon which spends less than 50% of its current money for concessionary fares actually on concessionary fares.

Q249 Mr Clelland: Mr Joseph mentioned this rather novel idea of the bus companies charging passengers to use certain bus stations. Are there any other consequences for the fare paying passengers by the introduction of concessionary fares?

Mr Joseph: As I said in my earlier answer to Mr Stringer, I think it is very much about cuts in the commercial services, increases in off-peak fares and other things and Mr Edwards has also mentioned this too. It is much less high profile than the charges at bus stations or the loss of a particular scheme; it is incremental eating away of the bus network and incremental increases in fares.

Q250 Mr Leech: Mr Joseph, the implication from what you said was that you were advocating direct payment from government to bus operators for journeys that are taken with concessionary fares, is that right?

Mr Joseph: That is correct, as in Wales and Scotland.

Q251 Mr Leech: Why do you think it is that the Government will not support that? Is it anything to do with the fact that it is going to cost an awful lot more than they say it is?

Mr Joseph: We are not experts on this but I think actually the evidence from Scotland and Wales was that by the time you took in the transaction costs of actually routing it through local authorities it was actually cheaper for those respective devolved governments to do it directly and that is why they ended up with a direct system. It actually ought to be cheaper. The problem we have at the moment is that we have the imbalances that Mr Edwards referred to, money going to places that do not spend it so there is actually wasted money in parts of the system and shortfalls elsewhere and a national scheme would put that right.

Q252 Mr Leech: Why do you think the Government is so against the idea?

Mr Joseph: I think that is very hard to say and you are going to have to ask the Minister after this session that question. As far as we can see it is simple inertia and in-fighting between different government departments in terms of routing through local authorities.

Q253 Chairman: Inertia is very seldom simple. Mr Edwards?

Mr Edwards: It is nonsense to have 293 travel concession authorities in England all able to do their own arrangements for issuing cards, all with their own rules, all with their own local arrangements, all with their own back office, all being encouraged by the Government to sign separate contracts for 2008 ITSO cards. Mr Joseph is quite right, we need, like Scotland and Wales, a national scheme with national reimbursement; we need to stop all these arguments which are destroying relationships between local authorities and bus companies arguing about concessionary fares reimbursement.

Q254 Mr Martlew: Various local authorities have different schemes that go beyond. In my area there is no time restriction. How would you deal with that if you decided on a national scheme? Would you destroy that?

Mr Edwards: I think that to get a national scheme, whether with the advent of smartcards you would then be able to say a local authority would be able to top it up -----

Q255 Mr Martlew: Smartcards are not working at the moment.

Mr Edwards: No, but with ITSO smartcards and with bus operators being able to accept them and read them, it would be possible to load cards issued in a certain district with special features. I think the current system is just so complex; 293 different travel concessionary authorities is a nonsense.

Q256 Mr Hollobone: How bad is fare evasion? Is enough being done to tackle it and is enough being done to differentiate between deliberate fare evasion and passengers who make an honest mistake?

Mr Smith: Industry estimates say that something in the range of 5% to 8% of the revenue is lost as it is not collected. At the moment passengers put in about Ł5.5 billion into the revenue stream each year and that is soon going to creep up to Ł6 billion. That equates to about Ł400 million, that would pay for 400 new carriages tomorrow. It is a lot of money; it is a tremendous loss. Passengers who have paid deeply resent the fact that other people have not because they are subsidising them and the industry should collect what it is owed before it puts the fares up.

Mr Edwards: The only comment I would make on this is that obviously we support all passengers paying the correct fare for their journey, but the railway companies have to make available ticket offices with sufficient windows and ticket machines that work and issue the full range of tickets.

Q257 Chairman: I think the odd person looking at those tickets would help too.

Mr Joseph: That is correct. We are concerned that the emphasis on revenue protection happens on intercity lines and that some of the local lines that actually need that revenue most do not get the revenue protection that they need. Lines like the Beach Line in Bristol or some other lines in that market, as we have discussed in relation to concessionary fares, need that revenue to support them and do not seem to have the priority that should be given to making sure that people on those lines actually all pay up. In particular, where you have severe crowding on parts of the network and a pay as you travel on-train ticketing system, you often find that the conductor or guard physically cannot make his way down the train to collect the fares which is another loss of revenue. We are concerned that it is the local services where the revenue protection ought to happen most is not happening.

Mr Smith: We support the concept of penalty fares as long as they are consistently applied and also passengers have the ability to buy the correct ticket before boarding. The great concern here is ticket queues.

Q258 Chairman: Yes, we have had that point. Mr Barnes?

Mr Barnes: I think it is very important to recognise that some of the new train operating companies have installed a number of new gates at the stations and it is very interesting, when talking to the managing directors of the companies, that some of them are saying that they are raising far more money then they ever realised they would as a result of the gates they have put in.

Q259 Chairman: I want to ask finally about the English National Concessionary Fare Scheme which is estimated to cost around a billion pounds per annum. Is that good value or not?

Mr Edwards: It certainly is, yes. It has been a tremendous success. You only have to go out on buses and talk to elderly people to see how it has revolutionised there lives, their ability to access hospitals, health centres, to go to the shops regularly and get fresh food, to go out and see their friends. It is a great success story and it is only a pity that it has been so overshadowed by these arguments between operators and local authorities about reimbursement. For the customer it is a great, great success story and it has led to phenomenal growth in bus patronage.

Q260 Chairman: It does rather cut out young people or anybody on a low income who might actually benefit from a different scheme.

Mr Barnes: Yes, I think that we have in London seen the number of concessions for young people introduced by the Mayor of London. They have raised separate issues which I am sure you have not time to look at at the moment, but there are other options for concessions which over time need to be looked at.

Chairman: You have been very tolerant, gentlemen; thank you very much indeed.

Memorandum submitted by the Department for Transport

Examination of Witnesses

Witnesses: Mr Tom Harris MP, Parliamentary Under Secretary of State for Transport and Mr Bob Linnard, Director, Rail Strategy and Stakeholder Relations, Department of Transport, gave evidence.

Q261 Chairman: Good afternoon, gentlemen. Could you introduce yourselves for the record, please?

Mr Harris: I am Tom Harris, the Parliamentary Under Secretary of State for Transport and on my left is Bob Linnard, Director of Rail Strategy for the Department of Transport.

Q262 Chairman: Minister, is there something you want to tell us before we start?

Mr Harris: Yes, please, I have a very short statement. At the risk of being accused of trying to curry favour with you, can I begin by wishing you a happy birthday?

Q263 Chairman: Do you realise I am seven today?

Mr Harris: I was not going to mention the age! Can I first of all thank you for the opportunity of appearing here on my first official appearance in front of the Transport Committee. I think the subject of your inquiry is very welcome to us. The Government sees ticketing choices as being absolutely crucial to the travelling public because we believe they should be fair, they should be transparent and importantly passengers should be absolutely confident that they have made the right choice in the product they have bought. It is the Government's job to make sure that the structures are in place to make sure that that all happens. Smart ticketing, which I know is part of your inquiry, is already a reality in five of the rail franchises in terms of ITSO requirements being built into them and all future rail franchises that come up for renewal will also have those requirements put in them. As you know we are working with Transport for London to integrate ITSO and Oyster cards across London. The English Concessionary Bus Travel Scheme is encouraging the roll out on a massive level of ITSO cards because, as you know, all of the concessionary cards are ITSO compliant. I believe that is going to help create the commercial case for the roll-out of further ITSO products. More generally on the concessionary scheme, I think this is going to be of huge benefit to millions of eligible people who will qualify for a card. I should also point out that the Act itself does allow for changes in the structure and administration of the scheme at some point in the future if that is required. You will also know that the Department is working closely with the Association of Train Operating Companies to provide a brand new structure - we hope a very much simplified structure - of rail fares which will take effect next year in fact. That is basically where I am starting from.

Q264 Chairman: Thank you for that, Minister. You will not be surprised to learn that there has been a lot of praise for the impact of the concessionary fare scheme on people's lives in the quality of the passing of their days, but I do think that there is one question that we really do have to ask you before we start and that is: does the department have an overall strategy on how it wants all these different schemes to work? Has it thought through the implications of some of the different schemes working alongside one another? What are your views of where you want to end up with these schemes?

Mr Harris: When you say "these schemes" do you mean the local authority base concessionary schemes?

Q265 Chairman: The evidence we have taken has been very interesting because we have taken evidence both about the difference between the Oyster cards and the areas around London but we have also taken evidence from some of your immediate predecessors about the impact that this is having on some domestic rail lines and all sorts of other schemes. You realise the complexity of this; what we really want to know is whether you have a very clear view of what you want out of this scheme, where you are going, how you are going to get there and what you want at the end of it?

Mr Harris: I think there two aspects to it and I think the general social benefit of the concessionary fare schemes is one area that you might want to come back to. The other side is the technical implementation of it. Because they are ITSO compliant (you know that ITSO is the international transport smartcard organisation although it does not stand for that any more) all these local authority schemes are actually compliant because it is a national scheme anyone with an ITSO concessionary card can move from one scheme to another physically.

Q266 Chairman: I am going to stop you there. I am very happy that the Committee should discuss the implementation but frankly I need to know what your basic strategy is. Tell us how you see the overall future and implementation and particularly what your policy is in relation to these schemes. Tell us that first and then we can actually put you through the wringer on the way you make your mistakes.

Mr Harris: Essentially our vision is to allow as seamless as possible a local transport experience from buying the ticket in the first place to saying what product you want until right through to arriving at your destination. That will increasingly mean doing it on a cashless basis although it would not necessarily be cashless but a lot of people prefer not to use cash, to use smartcard technology. If we are going to encourage people to use more modes of transport to make their journeys rather than use their private car then one of the keys to that is to make it as accessible as possible and that does not just mean physically it means a seamless transaction. Crucially it not only has to be seamless, we have to provide a product and an experience that people understand how it is working. If it is not transparent I feel that people are not going to trust that they are paying the right amount of money on a particular product. They have to be reassured that it is transparent and that it works very, very efficiently. No doubt I will have an opportunity to come back later on to the technological side of that because that is absolutely crucial.

Q267 Mrs Ellman: You spoke about cashless transport, what about the people who want to use cash and just go and buy tickets? Is there going to be any room for them in the future?

Mr Harris: Yes, absolutely, as there is at the moment in London, if you do not want to use an Oyster card.

Q268 Chairman: It will cost you a hell of a lot if you want to stick with your commitment to cash. Some of us have this strange, old fashioned commitment to the pound, shilling and pence as were.

Mr Harris: Indeed.

Q269 Chairman: We like the feel of it.

Mr Harris: To answer Mrs Ellman's question, I do not foresee a position in the future where it will not be possible to use local transport without a smartcard. There will be an opportunity to use cash. Obviously in London, as you say Mrs Dunwoody, there seems to be a premium on using cash. I do not want to make predictions about how that situation might be rolled out for the rest of the country and I would not want to set any hares running or newspaper reports that say that the Government supports a scheme where you spend far more money using cash than smartcards. That is what has happened in London, but I just do not see the situation arising where you would not be allowed to use cash.

Q270 Mrs Ellman: What is the Government going to do to ensure that that is the case? We have had evidence that operators might find it cheaper not to have cash and want to make booking facilities more difficult? Is the Government going to do anything to restrain that?

Mr Harris: On trains the Government has a lot more influence, as you know, than as far as buses are concerned. Buses are completely unregulated outside London.

Q271 Chairman: "Piratical" is the word you are finding difficult to find, Minister.

Mr Harris: That may be a word you are comfortable using, Mrs Dunwoody; I will stick to "unregulated". The Government has little or very little influence on the level of fares charged by bus companies outside the capital. In terms of guarantees that I can offer, I could not, with hand on heart, tell you that we can offer a cast iron guarantee that that would not happen in terms of bus operators. The Local Transport Bill which I probably should have mentioned in my introductory comments will allow new structures in place where local authorities will have to a certain degree more influence over local bus operations and that may well include fares in a quality contract context. As far as trains are concerned, obviously we do not foresee any change to the regulation of train tickets that currently exists up to the end of the next control period in 2014; decisions beyond that will obviously be taken in the next few years.

Q272 Mrs Ellman: Will the Government maintain any instructions on the availability of ticketing for people who want to pay cash or pay on the day? Would the Government put any regulations on that?

Mr Harris: I do not want to perjure myself in front of the Committee by saying that we can offer that guarantee. At this stage, although I do not foresee a situation where people will be forced to use a smartcard, I am not aware of any mechanism that the Government actually has to enforce that.

Q273 Chairman: Mr Linnard, you always get the difficult ones.

Mr Linnard: There is on the railway something called the Ticketing and Settlement Agreement which governs a number of technical issues about the availability of tickets, including things like the opening of ticket offices. One of the things that the Government would not agree to would be changes in that that reduced the availability of the ability to pay cash for tickets unless it was quite clear that that was not going to disadvantage people.

Q274 Mrs Ellman: We have had evidence from local authorities and the PTEs saying that it is difficult to introduce integrated ticketing and smartcards in the deregulated environment. What difference do you think the Local Transport Bill is going to make to that?

Mr Harris: The Local Transport Bill will eliminate some of the obstacles that local authorities and PTEs across the country are having to navigate at the moment if they want to move to quality contract. This Committee will know far better than I some of the complaints and problems that local authorities have had trying to move towards quality contracts. The Local Transport Bill grew out of an awareness in Government that that situation should not go on. Obviously we have never said and we do not intend to go back to the situation pre-1996; I do not think anyone wants us to go back to that particular era. However, I do hope, not just in quality contracts, that the fact that local authorities and PTEs will be able to get a quality contract more easily at the moment will serve as an incentive to some bus operating companies to cooperate more fully with local authorities. Even before the Local Transport Bill comes into effect and becomes an act there is quite a lot of movement among the bus operating companies in terms of cooperating with local authorities, with Passenger Transport Executives to produce more integrated ticketing. Obviously that has to be done in cooperation with the Competition Commission because it is illegal for bus companies to talk to each other and set fares together; that is why we have the block exemption from the Competition Commission, but where that happens there is actually quite a lot of cooperation between bus companies and between those bus companies and Passenger Transport Executives. However, you are right, things will improve I hope with the Local Transport Bill.

Q275 Mrs Ellman: How much do you expect them to improve?

Mr Harris: I am sorry, I am not going to offer you a hostage to fortune; I think it will be significant.

Q276 Mrs Ellman: What can be done to make it easier to have bus tickets that enable people to travel on different buses instead of keep having to get different tickets?

Mr Harris: In January this year I was invited to launch not PlusBus but it was the advertising campaign for PlusBus. PlusBus - I am sure you have dealt with this already - is an add-on to a train ticket so that when you are travelling to one of the 220 different towns throughout Great Britain, if PlusBus is operating in the town or city you are going to you can be offered a Ł2 add-on to your train ticket and that allows you to use bus services at the end of your journey. It is the only such system in Europe which is completely organised, paid for, administered by the private sector. In that respect I do not foresee the Department for Transport trying to elbow in on that; I think it is actually a good product. My only reservation about this - I raised this with the Association of Train Operating Companies just yesterday - is that you could perhaps lay a criticism at the train companies that this is a tick box exercise, they have ticked the box saying they do integrated transport. The reason I am saying that they are vulnerable to that accusation but I am not actually making it myself is because the marketing budget for PlusBus is between Ł40,000 and Ł60,000 a year, which is almost nothing, and yet if you look at the take-up of PlusBus it has increased by more than 100% in the past year, so there is a market there. I am not sure that the Association of Train Operating Companies are properly exploiting that market.

Chairman: Heaven forbid, Minister, that you should suggest that the Association of Train Operating Companies do not take up commercial challenges; I cannot believe you could make such an unwarranted slur on these entrepreneurs.

Q277 Mr Leech: Do you think that this could be extended to include trams in areas where trams are in existence, like Manchester for example?

Mr Harris: In principle I have no problem with that at all, but as I said at the beginning this is and will remain a completely private sector initiative.

Q278 Graham Stringer: In your introductory statement and once or twice since you have said that there are enormous benefits from concessionary travel, it is always a benefit if you pay nothing or you pay less. What other benefits are there?

Mr Harris: In terms of social inclusion, in terms of saying to a group of people who perhaps did not feel they could afford to travel before, to say that you can now travel from A to B completely free of charge. I know from personal experience pensioners who are taking up the opportunity this scheme has afforded to them in Scotland who are making journeys that they would never have considered before. It is incredibly popular among those who qualify and I just think that in terms of social inclusion that is by far and away the highest benefit. Whatever you may consider the drawbacks of its administration - you might want to come back to that - I think the principle of offering pensioners, older people and disabled people free bus travel is one which is very difficult to criticise.

Q279 Graham Stringer: I just wondered whether the Government is moving or has thought of moving or would move beyond the sort of anecdotal evidence available - social inclusion, pensioners getting out who were housebound previously - to some measurement, some objective research that might be related to social inclusion, it might be related to health, it might be related to education. Have you looked at that or is the Government just relying on anecdotes?

Mr Harris: Going back to smartcard technology, it is actually very difficult to calculate the precise number of people using a particular concessionary travel scheme unless you have smartcard technology to back it up. An awful lot of the evidence that you are looking for about movement of people, about numbers of people, is something that you will be able to glean far more effectively once ITSO is being used nationwide.

Q280 Graham Stringer: I was thinking of something more than movement of people. When those people move, apart from them moving, is their quality of life either in health, education or in other ways, is the Government looking at measuring that?

Mr Harris: To be honest I am not aware of specific bits of research that the DfT have made in this case.

Q281 Graham Stringer: That is slightly surprising, is it not? There is a billion pounds being spent on concessionary fares, or thereabouts, more than Ł200 million nationalising the scheme, would it not be normal to look at a cost benefit analysis to look at the benefits of what is happening?

Mr Harris: We will do once the 2008 scheme is fully implemented.

Q282 Graham Stringer: So you are going to do this kind of research.

Mr Harris: There will be an analysis after it is fully implemented. By then of course the scheme will have been implemented. I should think this is a political decision the Government has made. This is political and we have made a deliberate political decision because we think this is a good thing.

Q283 Graham Stringer: You and I signed up to the same manifesto and the same policies which are based on evidence, are they not? What I am trying to do is get to what evidence there is because there has been criticism of the scheme in that you could spend money to better effect if you did not give free transport to pensioners and made them pay something but you extended the scheme to young people, poor people, the unemployed and so on. Have you looked at that or is this a straightforward political decision without evidence?

Mr Harris: We have looked at making the scheme as flexible as possible within the legislation so that in future, depending on experience and basing any changes we might want to make, we will base that decision on the experience of running the scheme up to a certain point. I do understand the argument for widening the scheme.

Q284 Graham Stringer: What the Commission for Integrated Transport was saying was not widening it, it was using the same amount of money to have a different scheme which would be wider but would not be free.

Mr Harris: Yes, I was going to say widening some areas perhaps and narrowing other areas. I think that is a perfectly legitimate approach to take. Within the current legislation there is flexibility for individual local authorities to add increments to the baseline national scheme.

Q285 Graham Stringer: I understand that but what I am trying to get at is whether there is an evidence base or not behind the Government's choice between the free scheme for pensioners and, as you described it, the more extended scheme.

Mr Harris: To be honest, Mr Stringer, that is something I would have to write to the Committee about, unless Mr Linnard has extra information which I am not privy to.

Mr Linnard: We know the costs of extending the concessions from half price to free and then from within the local area to national. We have not tried to do an assessment in economic terms of the benefits of it. As the Minister has said, it is essentially a political decision for wider reasons.

Q286 Graham Stringer: We had some witnesses earlier on who were talking about the perverse consequences of the current concessionary fares in the south west in particular (this is before the scheme goes national). The way the concessionary fare scheme has been implemented has meant that services have been withdrawn, dealing with larger companies who are looking for subsidy, who will look at the change in demands and change their services. Are you aware of any evidence or have you done any analysis of what is likely to happen, whether there will be any perverse consequences when the scheme is nationalised?

Mr Harris: I am not aware of examples like that, but what I can tell you is that the actual number, the net number of bus services that are operating outside the major conurbations has actually increased more in those areas than in conurbations since the 2004 scheme was actually introduced. I do not see this as some kind of disincentive to running services at all; I just do not accept that.

Q287 Graham Stringer: So you do not accept the anecdotal evidence we heard earlier today.

Mr Harris: I was not present.

Q288 Graham Stringer: Will you look at that?

Mr Harris: Yes, of course I will.

Q289 Graham Stringer: Going to the nationalosed scheme, I have just done a quick count round this table and I think there are six of us who represent constituencies near either the Welsh or the Scottish border. Does the Government have any plans to come to agreements with Wales and Scotland so that our constituents, when they go on holiday to Wales or Scotland, can have the same facilities as if they go to the south west of England?

Mr Harris: The short answer is no, although I understand there are some local arrangements in Cumbria and in Chester so far as cross-borders services there are concerned. The reason I say no is because the scheme in Scotland for instance allows free travel for concessionaires at all times of the day but the one in England will only be from half-past nine onwards. There are major technical difficulties to be overcome if you are going to allow that scheme to be Great Britain wide purely and simply because the baseline schemes are not exactly the same. That makes it very difficult to actually roll out the same scheme throughout Great Britain.

Mr Linnard: There are powers within the Concessionary Travel Act to put in place reciprocal arrangements between England, Scotland, Wales and Northern Ireland should that be agreed with the devolved administrations in the future.

Q290 Graham Stringer: What you are saying is that there are no current negotiations underway.

Mr Linnard: That is right.

Q291 Graham Stringer: Do you not think it would a good idea to try to overcome some of these technical difficulties with the devolved administrations? Certainly my constituents would rather like it.

Mr Harris: I absolutely agree with you. I would love to see a Great Britain-wide scheme. I am a Scottish Unionist; I think people in Scotland and England should swap locations as often as possible. If there is technically feasible and cost effective way of doing that then I think the Government should be doing that.

Q292 Mr Leech: Mr Linnard, you said that you knew how much it was going to cost going to a national scheme, but is it not the case that the Government does not have a clue how much it is going to cost; it is your best guess. In fact, the only way of ensuring that local authorities do actually get the money to pay for the concessionary travel in their area is for the Government to actually pay the costs of each concessionary journey directly to the operators. Can the Minister explain why the Government is so opposed to this idea of direct payment to operators to ensure that every local authority area gets a fair deal?

Mr Harris: I am very confident in the financial settlement that has been agreed that local authorities are not being short changed over the concessionary scheme. There is, as I said before, flexibility in the current Act to allow a change of administration, probably initially to county level rather than district level and, if necessary, to a national level. You asked about reimbursement arrangements and athough it is mandated at a national level by the UK Parliament, this particular concessionary scheme is going to be operated by the local authorities for the very simple reason that they know who the concessionaires are, they are issuing these tickets and I think it is better that these tickets are actually issued by the local authorities. It makes sense for those reimbursement arrangements to be between the local authorities and the bus companies.

Q293 Mr Leech: If it is a national scheme why can it not be administered nationally? People are going to have the opportunity to travel all the way round the country, surely that is the fairest way of doing it.

Mr Harris: It is a national scheme but they can only use it on local bus services.

Q294 Clive Efford: How are you going to sort out the technical problems between Oyster and ITSO?

Mr Harris: We are working on it and I am very confident that we will get to a stage fairly soon where those two systems will be completely interchangeable or integrated. It is a big task clearly; no-one is under any illusion about that. I am confident that in the next few years we are going to have a situation where, if you are staying within London or coming in from outside London - for example South West Trains are going to be ITSO compliant too - that you will be able to use your ITSO card throughout the London area as well as on South West Trains and ultimately other train operators. I am fairly confident that that is going to happen.

Q295 Clive Efford: So you do not think there is any risk that incorporating ITSO will reduce the performance of London's transport system?

Mr Harris: No I do not at all. I was looking at the figures for the technical specifications on ITSO versus Oyster and it is something like 300 milliseconds for a transaction on an ITSO card and 200 milliseconds for a transaction on an Oyster card.

Chairman: We were given different figures for that.

Clive Efford: We were given 300 for Oyster and 700 for ITSO.

Q296 Chairman: Which actually would make a material difference. The difference between 200 and 300 is acceptable; the difference between 300 and 700 is not acceptable.

Mr Harris: On the tests we have done, Mrs Dunwoody, it takes about a second, regardless of the millisecond measurement for exactly when the computer recognises that chip. It takes about a second for someone with an Oyster card to swipe the card and go through the turnstile. There is no perceptible difference in the amount of time it takes you to do exactly the same thing with an ITSO card.

Clive Efford: We had an answer earlier on from London TravelWatch that said that there is a problem between ITSO and the pre-pay Oyster system. There is some information on the card that can be read by the pre-pay which apparently creates a technical problem. Are you aware of any of that?

Chairman: The Committee is adjourned for the division.

The Committee suspended from 4.16 pm to 4.31 pm for a division in the House.

Q297 Graham Stringer: I take it that you do not see that fares on trains and buses are wholly a private operators matter because when fare dodgers do not pay their behaviour is often related to other anti-social behaviour. What action do you think the Government should take to cut fare dodging? It is rather surprising that the private companies do not do more, but what do you think the public authorities should do?

Mr Harris: Let us take trains first. Private companies do take measures to protect their own revenue and consider their own interests. There was a lot of publicity recently about South West Train's revenue enforcement officers being a bit too heavy handed according to the media reports and maybe not giving people who were on board a fair opportunity to defend themselves and explain why. That is one side of the coin. Another side of the coin is that there are other ways of enforcing revenue, one of them is gating. Part of the South West Trains franchise, as it happens, is a commitment to gating at Waterloo. So there is gating and there are revenue protection officers. I think any level of revenue loss, whatever the percentage - somebody suggested the figure 5% to me - is too high a figure and I would not be happy unless that figure came down to zero. However, there has always been fare dodging on the trains, going back to British Rail days and train operating companies, because they are private companies and because their responsibility is revenue collecting, it is incumbent on them to do as much as they can to protect it. I am not aware of any particular train operating company being complacent about it.

Q298 Graham Stringer: I am a northern MP and I do not travel on the London rail system very often but the odd times I travel on it after eight o'clock at night it is free; transport is free in London on the trains at that time of night and it is dangerous, it is threatening. Often fare dodgers are young men with aggressive behaviour. Do you not think that the public authorities should do something about that? It surprises me that train companies allow it, but do you think, for instance, ticket inspectors on trains and buses should be given more powers to take names and addresses? What action do you think could or should be taken?

Mr Harris: Can I pick up on one point you made earlier on in that question, you said that travelling on the train is threatening. You said it was dangerous and then you said it was threatening and those two are quite separate.

Q299 Graham Stringer: Threatening is a better word.

Mr Harris: Threatening is more accurate I think. At the moment a ticket inspector is entitled to ask for the name and address of whoever they have caught. I received a letter the other day from one of our colleagues representing a constituent whose name and address he claims were given completely falsely by somebody else. There is always a danger that even if you get a name and address it is not actually the right person. I am actually quite concerned about the safety of train staff in that situation. If somebody is employed to collect and inspect tickets I do not think it would be fair, certainly not on every occasion, to expect them to start to tackle anti-social behaviour. I met a delegation yesterday from JNB union who are very concerned about perceived increases in very violent and sexual crime on the Nottingham tram. These are people who are not on terrific wages in order to protect and collect revenue. I do not think we should be putting people unnecessarily in harm's way by asking them to do more than simply collect tickets and identify where is safe and the people who are evading the fares. I think it is a very difficult issue but I think the actual apprehension of people who are creating anti-social behaviour has to be left to British Transport Police rather than to staff who are trained in checking tickets who are not trained and should not be expected to tackle sometimes quite violent people.

Q300 Graham Stringer: Do you think that there should be more funding for British Transport Police?

Mr Harris: I am always in favour of more funding for the British Transport Police but the one caveat I have on that is that British Transport Police should continue to be funded by the train operating companies.

Q301 Graham Stringer: With all respect your answer is saying that there is a problem; you are accepting there is a problem, particularly on the south London network, but actually there is nothing the Government can do about what is at least a threatening situation. Incidentally, the estimate given by previous witnesses was Ł400 million lost in fare dodging. There are two questions there, do you not think that the public authorities should do more to protect people, it is not just a private sector problem? Secondly, you are the train minister, will you be having discussions with the train operating companies to ask them what action they are taking to protect their shareholders and their bottom line as it were to collect tickets which will have a beneficial effect?

Mr Harris: Yes, I will be raising this with the Association of Train Operating Companies next time I meet them. Train operating companies have a commitment in their franchise for revenue protection but they are also, I think, under an obligation to make sure that the service they provide which, after all is paid for and specified by the Government, is a service that is of a certain minimal quality and that is not just in terms of how punctual they are, it is also about how safe people feel on board a train. We are progressing very successfully with the Secure Station Initiative; certain stations are certified by the British Transport Police as secure stations if there is a certain level and type of lighting, presence of close circuit television cameras et cetera. That has proved very successful in reassuring people. I think that is what it is about, people should not think that travel by train is a particularly dangerous activity. It is not, but I do understand that people do feel vulnerable so it is very important not just on trains but at stations as well. I mentioned gating earlier on. I accept there is only anecdotal evidence but there is evidence that gating at a station can make people on the other side of the gates feel quite secure because they then know that nobody without a ticket is going to join them and a lot of the difficulties and trouble caused at stations, especially at night, are by people who do not have tickets and who are just using stations to congregate at.

Q302 Chairman: Can I ask you about ITSO? Are you quite confident that it is fit for purpose, if it actually is evolved right the way across the United Kingdom?

Mr Harris: Yes, is the short answer to that. I think ITSO has many advantages. The comparison is always made between ITSO and Oyster for obvious reasons - I am a big fan of Oyster; I have two Oyster cards - but I think the ITSO standard allows us to do more with an ITSO card than will ever be possible with Oyster.

Q303 Chairman: I should explain to you that we had evidence that it is a slow system, that it is not very businesslike, it is two years behind programme because it has not been fully tested in-house. TranSys have made it clear that someone really has to take control of this programme. How effective is ITSO as an organisation?

Mr Harris: The DfT has committed to funding ITSO over the next year by Ł750,000. A condition of that funding is that we are going to carry out a full review of the organisation to make sure that they have proper resources, expertise, personnel to make sure it is effective.

Q304 Chairman: How likely is it that all these new technologies such as contactless bank cards and mobile phones are going to make ITSO obsolete?

Mr Harris: ITSO is not a smartcard, it is a standard.

Q305 Chairman: A standard that we are told has been overtaken by all sorts of other new bits of technology which can do the job better and faster and perhaps more efficiently. You know yourself, Minister, from your own office that when you came in here originally you must have had one level of computer, we are now waiting on different technology, faster, smarter, easier to use for people like me. It is not beyond belief that this standard has now been past by other people going faster and better.

Mr Harris: The big selling point of ITSO is that it is very flexible. For example, although it has been rolled out as part of the concessionary scheme next April, it is currently possible, if the commercial will is there, to put ITSO information on your mobile phone and use that as a smartcard. ITSO is not simply a credit card sized card with a chip in it, it is a standard which can be applied to all sorts of things that in future will become far more normal to consider using.

Q306 Chairman: Is Transport Direct fully integrated with the system?

Mr Harris: With ITSO?

Q307 Chairman: With the travel information coming from local authorities and PTEs?

Mr Harris: Transport Direct is a website which gives up to date information about, for example, carbon footprint of different modes of transport, travel times et cetera. There have been 20 million visitors since it was launched. I am not aware of any direct interface with ITSO but in future whatever journey you are going to make I hope more and more people become aware that Transport Direct can absolutely contribute to making that journey seamless.

Q308 Chairman: Your view is that ITSO is a good standard, it is flexible, it can be adapted to new increases in different technology. That is your view.

Mr Harris: Yes.

Q309 Chairman: You intend to do a very full assessment of the workings of these systems.

Mr Harris: There has been an on-going assessment of ITSO's workability, if you like. Once we are into the new National Concessionary Scheme we will certainly do an analysis of that and that does use ITSO smartcard technology.

Q310 Chairman: What about people who are not very happy with all the new gadgets and who like the old fashioned tickets and money and things like that? Are you going to look at the price difference between electronic tickets and conventional tickets?

Mr Harris: Whether you choose to pay by cash or whether you choose to use a smartcard on trains your fare will continue to be capped if it is a regulated fare by 1% above the rate of inflation. If a train operator, however, wanted to reduce the cost of a regulated fare as much as through a smartcard then they would be perfectly entitled to do that provided that nobody choosing to pay by cash is going to pay above what the regulation states should be paid. That is the flexibility that train operating companies could use; whether they will or not is another matter.

Q311 Chairman: Is Transport for London right when it says that the cost of adding ITSO to Oyster would be Ł50 million?

Mr Harris: I do not have a figure.

Mr Linnard: It is subject to the study we were describing earlier. It is only when we have seen that and when we have the negotiation with TfL informed by that study that we will know how much it is going to cost.

Mr Harris: This takes us back to the question that Mr Stringer was asking just before the break about this difference between the time it takes for an ITSO card to be read through the reader and an Oyster card. I think the point here is that if we were simply going to change the information on the card so that an Oyster reader could read an ITSO card, that is where the delay comes in, that is where you have quite a big differential between an Oyster card and an ITSO card. The Ł50 million or whatever the figure is of the capital cost is about changing the actual readers throughout London so that they will read ITSO and Oyster cards. When that happens that is when you get almost a negligible difference in the time it takes to read an Oyster and ITSO card.

Q312 Chairman: Is all the personal information that is stored on this card going to be absolutely safe?

Mr Harris: No information is stored on the chip.

Q313 Chairman: Why are we being told that district councils are placing personal information like name, age and address on smartcard chips?

Mr Harris: They certainly do not need to on ITSO. All the information on an ITSO card is held in the back office. The only information in total on the card is what is on the face of the card, your photograph and your name and that is for fraud purposes. All the other information about you should not be held on the chip, it should be in the back office.

Q314 Clive Efford: Just before we broke for the vote I asked you about the information that is stored on the ITSO card that apparently, we were told, can be read by the pay as you go Oyster card which causes a delay when the card is swiped. Are you aware of this problem?

Mr Harris: There are two ways of making ITSO and Oyster compatible in London. One way is to allow the Oyster reader to read both cards. That is where you hit the delays and nobody wants that. I understand why Transport for London do not want that because you end up with having a lot of people backing up on the turnstiles and causing a lot of delays and probably some safety issues as well. What we foresee happening in the next few years is the actual readers being replaced so that they will read ITSO and Oyster cards and you do not have to choose which reader to go; you can go to any reader whether you have an ITSO or an Oyster card. The time taken to read that, because we are actually upgrading the hardware and not just the software, will be negligible; there will be no noticeable differences. There is a difference, as I said earlier on, between 200 and 300 milliseconds.

Q315 Clive Efford: Are you aware that one of the on-line ticket sales companies believes that it can provide an ITSO type smartcard that will work with the current Oyster system without requiring any new gates or readers?

Mr Harris: I am not aware of that but I would be very interested to read what they have on offer. Let me make it clear, I do not have an interest in making any of these processes either longer or more expensive than they have to be.

Q316 Clive Efford: We have introduced the zones in London to make through ticketing easier to understand between different modes of transport and we have allowed huge fare increases on the basis of that from which train companies are currently benefiting, is that fair on the travelling public to introduce those zones well ahead of the benefits actually coming along and should the increases not be delayed until such time as they accept, say, Oyster pay as you go.

Mr Harris: I do not think it is accurate to say that the train companies have benefited. We made it quite clear when we gave a derogation on regulated fares that the move to zonal fares would have to be revenue neutral and I am not aware of any evidence to say that it has not been revenue neutral. There were some people, because of historically artificially low fares, when the zonal system was introduced they did find themselves paying a much higher percentage increase on a one-off increase. So there were losers when that happened but there were also winners. If the Committee has any evidence that the train operating companies have made substantial profits rather than being revenue neutral I would be very interested to see that. My understanding of the second point of your question, was it necessary to move to this right away, I suppose the argument could be made that it could have been postponed. There may be a technical reason why it had to be done earlier - Mr Linnard might want to come in on this - but I do suspect very strongly that whenever that change was made the kind of increases that we are seeing would have happened.

Q317 Clive Efford: Let me give you south east London as an example. There is no alternative to travelling into London other than the rail network; buses are not an option for the length of journey so far as commuters are concerned in my part of south east London yet they are paying massive increases on the basis of the London zones being introduced with no justification whatsoever.

Mr Harris: The south east, of course, is slightly different from most of the other franchises because there 3% cap on average on regulatory fares because of the very substantial risk that is going into rolling stock in that particular area. However, I take your point that smartcard technology has not yet been introduced that that one-off increase - and in some cases a decrease - because of the introduction of zonal fares. Can I just point out to the Committee that we have moved from a position where there were more than 97,000 different fares to a situation where there are 21 because of the introduction of zonal fares? I said right at the beginning that part of the attempt to encourage people onto public transport is to make that journey more transparent, more seamless; I fail to see how that can be done when there are 97,000 different combinations of fares.

Q318 Chairman: You have done that, Minister, but you have not actually sorted out the business of the district councils who have to negotiate with individual bus companies, have you? Since all of this is funded at national level why is that not done at national level? We have taken evidence of the numbers of individual district councils that are still negotiating; they are very large.

Mr Harris: You mean on concessionary fares?

Q319 Chairman: Yes.

Mr Harris: There are 219 local authorities who are dealing individually with the concessionary fare schemes; there are 1500 bus companies they have to negotiate with. I am not confident in the DfT's ability to devote the number of man hours necessary to achieve those negotiations.

Q320 Chairman: Could it not be done on a county level or a regional level because each district council having to negotiate with bus operators not only takes up an inordinate amount of time and administration, it does not always produce the result that people want, does it?

Mr Harris: No, I think that is absolutely valid.

Q321 Chairman: They have no control over the level of charges, do they?

Mr Harris: That is right. Once the scheme is up and running and once we see how it is working if a consensus emerges that we do want to move to county level then there are powers within the act for us to be able to do that. The caveat on that is that we have just agreed a three year local government settlement. I think it would be very difficult to move to county level before the end of that three year period. It is not impossible and if the authorities are determined to go down that road I think the Government have to listen to them, but I think it would be very difficult before the end of that three year period to start disaggregating the capital sums or the revenue sums that have been given to the councils and start recalculating that at a county level. That is why I think it is more likely to happen in three years.

Q322 Chairman: Do you have a workable estimate of the increase in bus patronage because of the English National Concessionary Travel Scheme?

Mr Harris: Not to hand.

Mr Linnard: I do not think we have. What we do know is what has happened since 2006 when the concession was extended from half price to free and there there has been a substantial increase in patronage, particularly outside the metropolitan areas.

Q323 Graham Stringer: Are you going to make any attempt to keep the statistics that the department keeps in such a way that you can compare 2009 statistics with 2003 statistics? We are going to be in a difficulty in looking at what happens to bus patronage when we get to 2010 or 2009 because we will have had three different systems over that period of time. Has the department looked at whether it can disaggregate the figures so that they can be compared?

Mr Linnard: It is quite difficult to do.

Q324 Graham Stringer: It may well be but will you try?

Mr Linnard: What we can look at is what has happened to bus patronage in areas where there was already free travel, some of the PTEs for example, compared to what has happened to bus patronage when free travel was introduced. Looking at the difference between those gives you some idea of the underlying trend in bus patronage compared to what is happening as a consequence of more generous concessionary travel being introduced.

Q325 Graham Stringer: It is an important point because it is a matter of both political debate and of government policy to increase patronage. We need to understand what is happening, so would you give a commitment to at least look at preparing statistics so that we can make those comparisons?

Mr Harris: Absolutely. I see no benefit in the Government trying to make those kinds of statistics less available or less transparent.

Q326 Clive Efford: Are you stipulating on the smartcard technology for the concessionary fare that it should identify where the card was issued from?

Mr Harris: I think all the cards do actually contain a mark about which authority issued them.

Q327 Clive Efford: In the long term, some local authorities you will be aware of are concerned about reciprocity, who is going to be paying for the journey undertaken, so if somebody comes to a tourist area, uses their concessionary fare card, goes back home, that local authority gets billed for that journey. If that could be recharged back to the local authority where the card was issued then some of those fears might not come about. Is there any plan in the long term to have the smartcard technology able to identify where the card was issued no matter where it was used so that recharge can be made?

Mr Harris: Mr Linnard may wish to come in on this after I have spoken. I am not aware of any plans to change the funding regime but, as I said earlier on, unless you have a working smartcard system you are never going to be able to actually trace and calculate what those passengers' journeys are and where people are travelling. I think the information we are going to get from the use of the smartcard system will actually make the funding regime more robust because we will actually now who is using it and what the numbers are, but I do not know whether that is part of the act.

Mr Linnard: The way it will work is that the local authority in which the journey takes place or starts has to reimburse the bus operator; that is the basis principle of it. To get a completely different system where the home local authority system pays for any journey regardless of where in the country it was made you would need readers in all the buses which do not exist at the moment. You would need a completely different level of technology.

Q328 Clive Efford: If that is the way you want to end up you should be planning for it now.

Mr Linnard: It is not necessarily where we need to end up. As long as we have got - and we think we have - a fair system for distributing funding to the local authorities that are going to meet the most costs.

Q329 Clive Efford: Can we ever have a fully operational smartcard or concessionary fare scheme whilst we have a deregulated market out of London or a fragmented market on the rail system?

Mr Harris: Yes, I think you can. Once you have that system there may be avenues for improving the whole scheme by changing that regulation, but I think it is certainly possible to have an effective smartcard system that works throughout the country that people understand and which give people the best deal for their particular journey. It happens in Scotland although the readers have not yet been introduced on the buses there, but there is a smartcard system, there is a concessionary bus system which is nationwide. The buses are not any more regulated there than they are here.

Q330 Clive Efford: Do you think we will ever get to a position where either the train operating companies or the bus operators will not act in their own interests against the interests of through ticketing scheme, whether it is smartcard or any other form?

Mr Harris: I think there is a very good commercial argument to say that the bus operators should embrace this kind of technology. I do not think this is a threat to bus operators' revenues; quite the opposite. I think there is a lot to be gained by bus operators in introducing this kind of technology. I do not accept the argument that bus operators will not want to have some kind of integrated smartcard system.

Q331 Chairman: I take it you do not know any bus operators.

Mr Harris: I have met a few of them.

Q332 Chairman: Are you satisfied that people can appeal satisfactorily against penalty fares?

Mr Harris: It is an independent appeals process.

Q333 Chairman: Forgive me, Minister, but it is not exactly, is it? The railway companies themselves actually appoint whoever is dealing with the penalty fare system and it is not very clear how they operate or what their criteria are.

Mr Harris: The criteria I think are quite clear. Penalty fare systems have to be approved by the secretary of state for transport.

Q334 Chairman: There is not an independent appeals panel, is there?

Mr Harris: It is certainly arm's length from the company where the dispute has taken place and anyone not satisfied with that can appeal.

Q335 Chairman: That is not total independence, is it? If someone was criticising you and I was the one who was sitting there, of course I would have your best interests at heart.

Mr Harris: It is certainly industry run but I have to tell you that I am not aware of any major serious causes for concern in terms of its effectiveness.

Q336 Mrs Ellman: If you do not know what the extent of the increased patronage will be from the National Concessionary Fare Scheme, how do you know it is going to produce value for money? What are its benefits actually going to be?

Mr Harris: I think the benefits are in terms of social inclusion, in terms of extra mobility and extra opportunity for people who qualify for the concessionary card. I accept that those are benefits that cannot be quantified; there is no cost benefit ratio. What we are trying to achieve is something you probably cannot measure in terms of giving freedom to people who might previously have felt that they cannot afford that level of freedom.

Q337 Mrs Ellman: The Commission for Integrated Transport suggested that better value would be gained from extending low fares for young people and for people on low incomes. Did you ever consider that as an option?

Mr Harris: The act is flexible enough so that that could be an add-on to the system at some point in the future. We have made a deliberate policy decision that older people and disabled people are, for the moment, a priority. However, for a number of years we have allowed local authorities to have their own add-ons or increments. If they want to add something on to the base scheme, whether it is young people, whether it is the carers of disabled people, then that is something that the local authorities have the opportunity to add onto the scheme.

Q338 Mrs Ellman: Would there be any financial support for that?

Mr Harris: No, that would be at the expense of the local authority.

Q339 Mrs Ellman: Does the Government have a view on that?

Mr Harris: Their view is that local authorities should be able to have the freedom to implement their own income. I do not think it would be right for us, having set out the base scheme, to say that if you want to have any increments at all we will meet the costs of that. I think that would defeat the purpose.

Q340 Chairman: One of the ways in which your smartcard systems would work would of course be making the whole system a closed system. That is why London Underground is so efficient because it is easier to organise. Do you have any idea of the implications for passengers of making stations which at the present time are open stations closed stations?

Mr Harris: We are never going to have a railway station in this country that is completely closed.

Q341 Chairman: No, but with respect Minister, many stations will be gated and this is going to present a hazard for anyone with a disability or young children or large bags or bicycles.

Mr Harris: I do not think that will be the case. The Government will expect the station operators at any station where there are gates to have staff available to make sure that disabled people, people with prams, people with bikes are able to access stations. It is everyone's right to access those stations. At Waterloo, for example, there has been some criticism along exactly the lines you have just expressed, and that gating simply will not happen if it results in significant numbers - or anyone - being excluded physically from Waterloo Station.

Q342 Chairman: You will understand that this is not a question that can be lightly dealt with because many people using railway systems will have considerable amounts of baggage. I notice that Virgin has put a notice on Crewe Station which says, "Only travel with luggage which you can conveniently carry" which is very kind of them, but if I wanted to limit the amount of luggage I would not go by train. As long as you can assure us that companies will not be allowed to get away with gating stations in such a way that somebody who is disabled or someone with young children in prams are going to find it very difficult to use the station.

Mr Harris: I can give an absolute guarantee that there will be very strict obligations on any station operator to make sure that where a station is currently accessible by people in those categories that they will continue to have access after gating comes in. The reason I phrase it like is because there are a lot of stations around which are not accessible already, but where they are already accessible when new gating goes in there must be accommodation made for those groups.

Q343 Chairman: Minister, it has been very interesting listening to you, but we are very concerned about the problems of integrating these two very different systems. Am I misinterpreting you if I say that you are assuming that within the first year of the operation of new schemes there will a proper assessment not only of the risk element but the benefits and general advances that are represented by working with these new schemes?

Mr Harris: Do you mean the Bus Concessionary Scheme?

Q344 Chairman: Yes.

Mr Harris: Yes, we will be doing our own assessments on the effectiveness and getting as much information as we can about the success of the scheme.

Q345 Chairman: Mr Linnard, how long do you think it will be before ITSO and Oyster are completely compatible?

Mr Linnard: I would not like to give a prediction of exactly when, but we would hope broadly within a couple of years.

Q346 Clive Efford: Is that because of the roll out of the equipment or because train operating companies will not agree to it?

Mr Linnard: First of all there has to be the completion of the study into the way we are integrating it. There then has to be negotiation between the department and TfL and its suppliers. That is obviously not entirely possible to predict.

Q347 Clive Efford: Are you holding up the process by which Oyster could read the ITSO cards until ITSO is fully integrated on the rail network. Are you blocking it? Are you stopping it? I understand that Oyster could actually read ITSO cards right now if you wanted it to and that is just being held up because you want to roll out ITSO before you actually have them compatible.

Mr Harris: I am afraid that is a new one on me; I am not aware of any deliberate action by the department in that respect.

Q348 Chairman: Can you assure us, Mr Linnard, that there is a constant monitoring of the changes and any possible gaps that could develop between ITSO and any new technology.

Mr Linnard: Yes.

Q349 Chairman: Minister, you have been very helpful. We are delighted to have had you here this afternoon and doubtless you will come again.

Mr Harris: I hope so.