Select Committee on Environment, Transport and Regional Affairs Minutes of Evidence

Memorandum by Stagecoach Holdings Plc (IT 159)



  1.1 Stagecoach welcomes the opportunity to comment on the Government's White Paper on the Future of Transport.

  1.2 Stagecoach is one of Britain's largest transport companies, employing over 22,000 staff in the United kingdom (and a further 11,000 in Sweden, Finland, Portugal, Australia and New Zealand).

  1.3 Stagecoach operates 7,500 buses in the United Kingdom, through 20 operating companies ranging from Devon to the Scottish Highlands, and including a 1,000-bus operation in London. Stagecoach's UK bus market share is approximately 17 per cent.

  1.4 Stagecoach operates two rail franchises, South West Trains and Island Line, accounting for approximately 10 per cent of the UK rail passenger market. Stagecoach also owns Porterbrook Leasing, whose fleet of 3,700 rail passenger vehicles is currently leased to 16 of the 25 train operating companies. Stagecoach has also recently acquired a 49 per cent holding in Virgin Rail.

  1.5 Stagecoach also operates the Sheffield Supertram system.

  1.6 In April 1998, Stagecoach acquired Glasgow Prestwick Airport and is seeking to develop it further as a cargo hub and to extend passenger operations.

  1.7 Stagecoach has a strong track record of investment in both its bus and rail operations, having purchased nearly 4,000 new buses since 1992 at a total cost of £330 million, with 800 buses delivered in the last financial year alone. Porterbrook has been the leader in new train investment, with current orders totalling £470 million for five train operating companies. South West Trains has just taken delivery, for testing, of the first genuinely new commuter train since privatisation, the delivery timescale for which we believe to have been the quickest ever achieved.

  1.8 Stagecoach has already demonstrated its commitment to improved transport integration through innovative service developments such as its inter-urban Stagecoach Express network, its dedicated bus/rail links for South West Trains, and integration of Sheffield Supertram services with the local bus network. Stagecoach and Virgin Rail are now working together on an extensive plan for new bus/rail links, improved service integration, and through bus/rail fares, for implementation over the next 12 months. South West Trains acts as a supplier to the National Rail Enquiry System and our investment there in call centre technology has enabled us to meet the Rail Regulator's targets when other suppliers have failed to do so.


  2.1 On 13 November 1997, Stagecoach submitted a detailed response to the Government's Green Paper "Developing an Integrated Transport Policy" from which the current White Paper was developed. Our earlier response is included as an appendix[1] to this submission because it demonstrates the very considerable extent to which the issues we believed to be important have been addressed by the White Paper. We wish therefore to convey to the Committee our support for the proposals contained in the White Paper.

  2.2 We are particularly pleased to see, right at the beginning of the White Paper, in paragraphs 1.20 and 1.21, reference to the need to incentivise companies and the key role of investment:

    "We need a new approach, bringing together the public and private sectors in a partnership which benefits everyone. We want to ensure that companies have incentives to provide new services and raise standards, that taxpayers' money is spent wisely to make public transport available for all . . . "

    "More investment in public transport and more people using it will work together to crate a virtuous circle, generating more revenues further investment and even better services."

  2.3 We believe that from an operator's perspective these are the crucial statements in the White Paper, because of their references to partnership, incentivisation and investment. Each of these three, especially when working together, will be most effective within a stable policy framework allowing them time to develop, and we welcome the Government's desire to follow an evolutionary transport policy, to build on what is already in place.


  3.1 Stagecoach is a member both of ATOC (the Association of Train Operating Companies) and CPT (the Confederation of Passenger Transport) and supports their submissions made to the Committee. In the interests of brevity, we do not propose here to repeat the detailed comments made in those submissions, but to emphasise only main points of principle (our appended Green Paper comments in any event cover this ground in some detail).


  4.1 Transport is a derived demand, not an end it itself, and cannot be considered in isolation.

  4.2 We therefore welcome the Government's intention to treat integration in its widest sense as a strategic issue, rather than focus just on integration between transport modes. For public transport operators, there are four such key policy areas:

    —  land use planning policy;

    —  education policy;

    —  competition policy;

    —  fiscal policy.

  4.3 Public transport particularly buses, can both stimulate and be stimulated by, thriving traditional city and town centres. We welcome the Government's intention to strengthen its planning guidelines to protect and encourage existing urban centres. Where non-central developments are necessary, they should be located, as far as possible, where they can be effectively served by public transport.

  4.4 Education policy and transport policy must be considered together if the wider public interest is to be maximised. Education transport policy should first be aimed towards reducing the need for any motorised transport, to reduce peak hour congestion, and where bus transport is needed should be better co-ordinated with normal services to optimise the use of expensive resources.

  4.5 Stagecoach acknowledges that the public interest demands a strong and effective competition policy, but urges the Government to manage its competition policy in a way that recognises the rather different nature of transport due to its discrete geographical line of route nature. The bus industry and OFT worked together after 1986 to ensure that beneficial inter-operator arrangements did not fall foul of competition law, and this will need to be built upon as integration becomes more developed. The White Paper acknowledges this, and also the need in considering open access rail operations to ensure that long-term rather than transient user benefits are likely to be obtained. We think this is essential to ensure destructive on-rail competition does not threaten investment. We hope this principle will also be applied to bus operations, where the new Competition Act, by the threat of stronger punitive action against existing operators, may encourage transient low quality market entrants inconsistent with the Government's desire to raise standards. This risk would be alleviated by the introduction of higher entry standards and better quality enforcement, both of which have been promised on many occasions but never fully delivered.

  4.6 We believe that the Government's acceptance of hypothecation as a method of helping to fund public transport improvements is a major breakthrough and we wholeheartedly support it. The White Paper clearly intends that this will be part of a consistent fiscal policy of support towards the Government's integrated transport policy and we hope that the policy framework will be sufficiently strong to ensure this actually happens in practice.

  4.7 We welcome the intention to create a Commission for Integrated Transport, and we hope that its membership will reflect the widest sense of integration covered in the preceding paragraphs of this submission, and will include full representation from the private transport sector.


  5.1 We welcome the intention to create a Strategic Railway Authority. We commend the Government in particular for its decision to establish a shadow Authority at an early date to avoid loss of momentum, as we believe there are many matters where it is in the public interest for early progress to be made, especially franchise extension/renegotiation.

  5.2 We believe that the key task for the SRA will be to address the issue of the extra capacity the rail network will have to provide if rail is to help meet the Government's objective of modal shift from the car. We are concerned that neither the White Paper (nor the media) fully appreciates the stress placed on the railway system and railway performance by the extra trains now being operated by train operating companies. In the case of South West Trains, for example, 30 per cent more trains are now being operated into Waterloo in the average hour than in April 1994, and this despite the loss of three platforms to provide space for the Eurostar station. Without Government strategic direction and financial commitment at an early stage for increased capacity, the rail network may not be able to meet the tasks demanded of it sufficiently quickly.

  5.3 We believe that early franchise extension/renegotiation will significantly facilitate the ability of train operators and Railtrack to meet the increasing present and future expectations of the industry. All train operators are making major efforts to improve present performance but a step-change will only be achieved by investment in capacity, facilities and systems by Railtrack and operators working in partnership. The present short franchises do not enable sufficient resources to be allocated to address the present issues nor to make early enough plans for future improvements.

  5.4 We understand that the Government will shortly issue fresh instructions to the Franchising Director which will include franchise renegotiation, and we hope the Government will authorise the Franchising Director to enter into flexible commercial negotiations where train operating companies can make their own proposals, rather than restrictive negotiations which may not result in the best long-term public interest.

  5.5 Railtrack clearly has a major role to play in the implementation of the SEA's policies, and we believe that this could be greatly facilitated if it was able to create longer-term partnerships with train operating companies. Longer franchises would enable this to happen in the same way as brokered by OPRAF for the West Coast Main Line and which is now being developed and implemented by Virgin Rail and Railtrack.

  5.6 We note that while the Government appears still to have some concerns about the operation of the ROSCOs, the train operating companies themselves, who are most affected, have concluded that agreement rather than regulation is the best way forward. As the owner of Porterbrook Leasing, Stagecoach is fully committed to the introduction of an effective code of practice for ROSCOs which continues to encourage further rolling stock investment in a competitive marketplace.

6. BUS

  6.1 The White Paper's plans for integration with environmental, land use planning and other related policies are likely to have the most immediate benefit on bus services.

  6.2 Stagecoach fully supports the drive to extend Quality Partnerships, and we believe that given equal commitment from local authorities, the introduction of legally-enforceable Quality Contracts should be unnecessary.

  6.3 We believe very strongly that the ultimate success of the Government's integrated transport policy will lie with the willingness of local authorities to draw up and implement local transport plans that will encourage the use of and facilitate the development of public transport, particularly buses. In our earlier submission on the Green Paper, we stressed the need for measurable targets to be set in such areas as transport usage, against which funding decisions would be measured. We are pleased to see that the White Paper includes target setting, and hope that it will be developed into a fully effective policy tool.

  6.4 We would like to see strong quality standards implemented, including an upper age limit for buses, minimum standards for staff through mandatory application of NVQs etc., and minimum standards in customer service areas such as information and customer care.

  6.5 Stagecoach endorses the White Paper's intention to strengthen the role of the Traffic Commissioners, who play a vital role in maintaining standards and acting as an independent arbiter.


  7.1 For a truly seamless journey to be made by public transport, considerable attention needs to be addressed in certain areas, particularly information, fares and ticketing, and public transport infrastructure.

  7.2 Stagecoach welcomes the Government's challenge for the development of a national public transport information system by the year 2000, and will play a full role in the creation of such a system. We believe that all responsible transport operators acknowledge that it is their own interests to contribute to this effort, but the Committee's attention should be drawn to the fact it will not be commercially viable for bus operators to fund a scheme as extensive as the National Rail Enquiry System due to the very low unit sale price of bus journeys in relation to information transaction costs compared with rail journeys. This will mean that some public funding will be necessary at least initially to develop a scheme of the desired quality.

  7.3 The Committee's attention should also be drawn to the Dutch experience, where a nation-wide system supports Holland's admirable integrated transport network, but is now in danger of deterioration due to the reduction in public funding. This example underlines the necessity for sustainable funding of any developments, not just information, that are a key part of the Government's integrated transport policy and are not wholly fundable on a commercial basis.

  7.4 There is an urgent need for the development of a fully flexible integrated fares and ticketing system for public transport, although this must be developed in such a way as to leave operators flexibility to develop individual markets. We believe that such a system can in the long term only be provided by means of smart cards, and while much development is being carried out on a commercial basis, Government may have a co-ordinating or seed-corn funding role. It is also unlikely that on the rail side a fully comprehensive scheme could be funded commercially within a seven-year franchise.

  7.5 Such a system would facilitate the White Paper's planned national concessionary fares system, which Stagecoach fully endorses. Such a scheme must however be fully funded and not re-allocated from other public transport budgets if it is to have an overall beneficial effect.

  7.6 Public transport infrastructure must be significantly improved if public transport is to provide a real alternative to the private car. Stagecoach believes that the key areas for improvements are at bus stops and at bus and railway stations. Bus shelters need to be provided much more extensively in order to provide basic shelter (and to facilitate good information provision), while bus and rail stations are the key interchange locations. Railway stations are particularly important as a wide variety of interchanges take place—to and from trains to other trains, buses, cars, taxis and bicycles, as well as a significant degree of pedestrian access. We believe that government could make a major contribution to a credible transport integration policy by encouraging local authorities, train operators and Railtrack to select a number of key railway stations for development as advanced transport hubs, providing improved interchange between all the modes mentioned above.


  8.1 Stagecoach's Business Plan is now predicated on taking this enabling framework and building effective practical plans to move forward in partnership with central and local government.

November 1998

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