House of Commons - The Department for Transport: Letting Rail Franchises 2005-2007

The Department for Transport: Letting Rail Franchises 2005-2007 - Public Accounts Committee Contents

2 The rail passenger experience

9. Passengers' experiences across the eight franchises let by the Department have been variable (Figure 1). The most recent National Passenger Survey, carried out in autumn 2008, shows strong improvements in passenger satisfaction on most measures for First Great Western and National Express East Coast. But it also shows a fall in satisfaction on many measures for East Midlands Trains and London Midland. There has been a decline in satisfaction with the value for money of the tickets on five franchises, with facilities for car parking on four franchises, and with the room available for sitting and standing, ticket buying facilities and train punctuality or reliability, in each case on three franchises. Passengers have faced overcrowding on some services, and passengers are concerned about rising fares and car parking charges.Figure 1: Trends in passenger satisfaction on the eight franchises

% change in satisfaction between autumn 2007 and autumn 2008

FRANCHISE
oPERATOR
DATE FRANCHISE BEGAN OVERALL JOURNEY PUNCTUALITY/
RELIABILITY TICKET VALUE FOR MONEY SUFFICIENT ROOM TO SIT/STAND FACILITIES FOR CAR PARKING TICKET BUYING FACILITIES

First Capital Connect April 2006 0 1 -2 0 0 -1

First Great Western April 2006 7 10 6 3 0 +1

South Eastern April 2006 2 -1 -1 -1 -8 -3

South West Trains February 2007 2 5 0 4 -5 2

Cross Country November 2007 2 3 -3 -7 10 2

East Midlands Trains November 2007 -1 -1 -1 -2 -7 5

London Midland November 2007 -1 -6 1 1 -14 -7

National Express East Coast December 2007 5 6 -1 4 3 4

Source: National Passenger Survey: Autumn 2008 (Passenger Focus: 28 January 2009)

10. The 27% increase in journeys in the five years since 2003 has resulted in increased crowding, including on peak services into London.[11] This is not just a problem for London commuters but affects journeys throughout the country.[12] Train operators have been projecting revenue growth, mainly from increased journeys, of between 47% and 62% over a five year period to 2010-2011.[13] Although the rate of growth may fall in the short term, the Department expects it to pick up again after any downturn.[14] Commuters face increased crowding at peak periods, at least until planned investment delivers more carrying capacity. Trends in the number of passengers being carried in excess of capacity at peak times are worsening.[15]

11. In the eight franchises let between 2005-2007, the Department's initial plans to address overcrowding involved negotiating an average 7% increase in fleet capacity over the franchise term.[16] The Department subsequently planned to add 1,300 further carriages. If this is implemented in full, it will increase capacity by a further 15% by 2014.[17]

12. The Department has promised to bring the 1,300 new rail carriages into service by 2014. There are only 423 on order so far, with the first set entering service towards the end of 2010. Another 150 carriages are the subject of negotiations, and it will take 30 to 36 months overall to mobilise the supply chain. This suggests deliveries running into 2011-2012 for the current work in progress. The Department therefore faces a major challenge to complete the orders for delivery by 2014.

13. The average age of trains in the UK is the lowest in Europe, but the total fleet is short of capacity.[18] As a result, the Department faces the challenge of altering the commercial terms of most rail franchises to bring new, previously unplanned, rolling stock into service. This will stabilise, but not reduce, the level of crowding that many rail passengers currently experience.[19]

14. The Department regulates fares such as saver and season tickets, which account for 60% of passenger journeys.[20] These fares have generally risen each year by 1% above RPI. Nearly all regulated fares in the eight franchises examined, apart from Southeastern, increased on average by 4.8% in January 2008. They also increased by 6% in January 2009 (and Southeastern by 8%). The Department justifies these increases by reference to its broader policy on funding railway improvements. It aims to 'rebalance' the respective shares of the taxpayer and the passenger. This means an increase in the passenger contribution to the amount of subsidy needed for modernising the railway system, and a reduction in the taxpayer subsidy.[21] The Department's investment plans mean, however, that it projects that overall taxpayer support to the railway system will remain the same.[22] There is a possibility of falls in the retail price index during 2009. This should mean, under the current regulations, that on some 60% of journeys, hard-pressed rail travellers may see rail fares fall in January 2010.[23]

15. The Department does not regulate all the costs associated with travelling. For example, the overall journey cost for many season ticket travellers has increased by more than the regulated amount because station car parking charges are not regulated and may rise more than once a year.[24] The Department agreed that passengers would have reason to complain, but has no information on the extent of the problem.

16. Around 40% of fares, mostly relating to off-peak travel are entirely unregulated. Train operators have generally set increases in unregulated fares as high as they calculated the market would bear. Average unregulated fare increases in January 2008 ranged from 4.3% to 7%.[25] In January 2009, the average reported increase in unregulated fares across all 16 franchises was 7%. Some individual increases have been higher; for example, Stagecoach raised some unregulated fares by 20% in 2007. The Department does not have evidence that these increases have any undesirable side effects, such as persuading some passengers to travel in the peak or to make car journeys instead.[26]

17. Some special low fare offers are made available, generally in advance, and often through websites specially designed for the purpose. Many rail travellers, such as those without home computers, may need help to identify and book these fares. Some may inadvertently pay higher fares than necessary.[27]

18. Measures being introduced to ease crowding include 'airline-style pricing' for long distance journeys, which means fares are determined depending on demand at a specific time. At times when demand is high, this could lead to price increases for some groups of passengers. The Department does not have evidence of any undesirable side effects to this approach compared to the benefit of lower prices at times when demand is low.[28] It is possible, however, that some passengers face very high fares for ad hoc or infrequent journeys, such as visits to family members in other parts of the country.[29]

19. The Department has introduced a business excellence model into the franchising process which train operators must adopt.[30] Train operators have made commitments to improve service quality, notably in respect of traveller security and station accessibility. Yet one result of allowing train operators to self-certify compliance with obligations is that the Department may not always have full knowledge of aspects of service that matter most to rail passengers. In particular, concerns remain over the overall quality of service provided by companies. Travelling on crowded trains is not comfortable for passengers, and can pose significant challenges for the elderly.[31] One alternative to the Department playing a more active information gathering role itself would be to provide funding for occasional 'mystery shopping' surveys by Passenger Focus.[32]

20. Timetabling can cause problems for some travellers. With input from Network Rail, the Department evaluates whether a train operator's timetable is deliverable. This does not test whether an adjusted timetable is sufficiently stretching to deliver real punctuality improvements. Trains that run early and wait outside the station imply that the opposite may be the case.[33] Some existing targets that aim to improve punctuality might miss the greater importance, for passengers, of train cancellations, because of their effect on crowding.[34]

21. Train operators may also be able to withdraw passenger benefits that had originally been offered alongside franchise agreements. In the case of the National Express East Anglia service, let by the Strategic Rail Authority in January 2004, this flexibility has led to the removal at the end of February 2009 of the full restaurant car service described in the Passenger's Charter attached to the franchise agreement.[35] In the Department's view this change cannot be reasonably refused because the franchise agreement only requires, as a minimum, a trolley service which the train operator intends to continue.[36] This is a very regrettable example of a lowering of passenger service standards.

11 Q 27, London Assembly Transport Committee Report, The Big Squeeze: Rail overcrowding in London, February 2009; Office of Rail Regulation, National Rail Trends Yearbook, Five Years to 2007-08 Back

12 Qq 53, 62, 125 Back

13 Q 23 Back

14 Qq 22-24 Back

15 Q 27 Back

16 Q 24; C&AG's Report, Figure 11 Back

17 Qq 26, 114 Back

18 Qq 23-24, 63-64, 161 Back

19 Qq 29-30 Back

20 Qq 34, 46 Back

21 Qq 47-48; C&AG's Report, Figure 13 Back

22 Qq 19-20 Back