Memorandum by the Association of Train
Operating Companies (ATOC) (IT 72)
THE GOVERNMENT INTEGRATED TRANSPORT WHITE
The Association of Train Operating Companies
(ATOC) is the official voice of the passenger rail industry and
is a provider of important mandatory and voluntary activities.
The Association welcomes the inquiry of the
Environment, Transport and the Regions Committee into the Government's
Transport White Paper "A New Deal for Transport: Better for
Everyone" (CM 3950) (and its associated Rail Paper "The
Government's Response to the Environment, Transport and Regional
Affairs Committee's Report on the Proposed SRA and Railway Regulation",
(CM 4024). The Association is also responding to the papers "Travel
Choices for Scotland" (CM 4010) and "Transporting Wales
into the Future" (Welsh Office).
ATOC members warmly welcomes and endorse the
Government's proposals and stand ready to help implement them.
They have a shared objective with Government of attracting more
passengers onto rail through improving customer benefits and value
for money. The response outlined below is the initial comment
from passenger train operators to these published papers based
on the information currently available. ATOC feels more clarification
is required in a number of areas, and that this will form a focus
for further discussion over the detail and implementation of the
2. SUMMARY OF
1. Strategic Rail Authority (SRA) should be
strategic, not operational, an "engine for growth" and
"railway's champion" in arguing for rail investment.
SRA should also resolve conflicts over priorities between different
types of operators. More clarification is required of the SRA's
interaction with other bodies such as the Scottish Parliament,
Welsh Assembly and Greater London Authority, and in promoting
local transport plans.
2. ATO welcomes the establishment of new funding
sources and strongly endorses the introduction of congestion charging
and non-residential car parking charges with hypothecated revenues
in order to fund public transport schemes prioritised in local
transport plans. Such hypothecation was clearly backed by ATOC's
own MORI poll.
3. Capacity limitations (i.e., "pinchpoints")
should be addressed to meet the reasonable requirements of the
train operators and to avoid potential mismatch between passenger
growth forecasts and train path capacity.
4. Train companies welcome the Government's
intention to form a positive new relationship, but emphasise a
more supportive approach and greater recognition of real gains
being made by train companies is required alongside fair criticism.
5. Train operators readily accept that future
franchises will be awarded on the basis of performance. The Government
needs to lay down its preferred criteria for renegotiation or
extension of franchises at the earliest stage to avoid an investment
hiatus. A select number of franchises should be re-negotiated
early to avoid bunching as franchises come up for renewal.
6. ATOC welcomes proposed regulatory changes
as answering the call for simpler regulation and avoidance of
duplication. The balance between incentives and sanctions must
be carefully judged.
7. Train operators regard safety as paramount
and are co-operating fully with the HSC/HSE review. Adequate safety
controls should apply to all other modes.
8. ATOC are guardians of network benefits and
will co-operate closely with the SRA to promote, enhance and safeguard
the benefits to customers of the network.
9. On fares, recent research shows average fares
(pence/mile) have fallen in real terms over the last three years
and this has occurred before further cuts under an RPI-1 per cent
formula for regulated fares comes in in 1999 for four consecutive
years. This is in contrast to a 21 per cent rise in real terms
in 1986-95. Inter-available and through tickets are fully protected
and continue to be fully available nationally. Unrestricted walk
up fare sales have increased by more than advance purchase fares.
10. Train operators now offer a wide range of
excellent value and locally tailored fares that have been a big
contribution to 7 per cent annual growth in rail journeys (twice
the rate of economic growth).
11. The railways now carry more passengers than
before the Beeching Axe and more than the BR boom of the late
1980s. The Government's objectives would be more successfully
met by the SRA setting the strategy for growth with operational/commercial
decisions left with operators.
12. Train operators endorse and will co-operate
in helping the Government to create a national public transport
information service. ATOC signed a contract to provide the Rail
Journey Information System (RJIS) in July 1998.
13. On ROSCOs, train operators have concluded
that agreement rather than regulation is the best way forwardthough
effective implementation of codes of practice is required.
14. Open access rail competition is complex,
with both benefits and pitfalls. Co-operation between operators
may bring greater benefits than through competition.
3. DETAILED RESPONSE
3.1 The Strategic Rail Authority (SRA)
1. Train operators welcome the establishment
of an SRA. We believe the SRA must be strategic and not operationaland
that this is well reflected in the Government's proposals.
2. ATOC believes the SRA should be an "engine
for growth" and a source of pump priming funds. The proposals
to set targets, to provide investment funding in order to overcome
capacity constraints, and promote local partnerships are all consistent
with this model.
3. ATOC sees the SRA as the "railway's
champion" in arguing the case for rail investment with other
Government departments and bodies such as Regional Development
4. Train operators look to the Government to
set the strategic overview for the pattern of services required
by national transport, environment and economic policies. Franchises
are contracts that are flexible enough and disciplined enough
to be used to implement a chosen strategy.
As the paper makes clear, it is for the Government
and the SRA to specify which services they wish to purchase. Train
operators are more than willing to provide this specified service
for a fair return.
5. Train operators recognise a potential conflict
of priorities between different types of operators, e.g., between
passenger and freight trains, and high-speed and stopping trains.
An SRA can play a useful role in helping to resolve such conflicts,
with due regard to commercial imperatives but without getting
involved in the minutiae of operational planning and control.
ATOC looks to the SRA to ensure that both passenger and freight
growth is optimised.
6. The SRA's role in the delivery of network
benefits which are of genuine value to the passenger is welcomed.
Train companies will be very willing to co-operate in order to
satisfy their customers.
7. Similarly in regard to fares the SRA will
need to acknowledge the differing needs of different sectors of
the market, both regionally and locally, and different segments
of the population. One of the advantages of the devolved operating
units is the closeness of them to their markets. This valuable
bond should not be stifled by centrally imposed national programmes,
or value for money for customers with local needs may be compromised.
8. More clarification is required too of how
the SRA will interact with other bodies, such as the new Greater
London Authority, Scottish Parliament, Welsh Assembly and others.
Though this will become clearer through the process of evaluation
and development, at this stage there seems to be a risk of bureaucratic
muddle if boundaries are not tightly defined. For example, the
Scottish Executive will have responsibility for the funding of
rail services in Scotland, and the relationship with the SRA and
exact division of responsibility needs clarification.
9. Further details are welcomed of the SRA's
role in helping to promote the railway within an integrated transport
system. ATOC has argued for a more generic attitude-changing Government
advertising campaign to promote public transport.
10. Train operators are enthusiastic about the
pursuit of growth, and franchise contracts already anticipate
TOCs achieving a 25 per cent increase in passenger numbers over
the length of their franchise periods. More details of how targets
will be arrived at by the SRA would be helpful, and what action
will be required to assist Railtrack in providing the necessary
track and signalling capacity.
3.2 Public Transport Investment: New sources of
1. Train operators are delighted at the Government's
establishment of new funding sources for investment in public
transport£100 million pledged for an Infrastructure
Investment Fund with extra funds for Rail Passenger partnership
Schemes and to establish 150 new public transport plans. ATOC
believes investment is the key to delivering better public transport
and to cater for desired growth in rail travel.
2. ATOC regards the introduction of congestion
charging and non-residential car parking charges, with the revenue
stream derived being hypotheticated to fund public transport schemes
prioritised in local transport plans, as a vital component of
a solution to road traffic congestions.
ATOC's own MORI survey (May 1998) indicated
that there is a strong need for radical action: 92 per cent of
people think road congestion is a serious problem, 89 per cent
think the Government should make it a high priority, and 76 per
cent would be happy to see car use restricted if there was a better
integrated transport system.
The importance of hypothecation is vividly illustrated:
71 per cent would support an extra tax on vehicles entering
urban areasas long as the money raised is used to improve
the public transport system; but 75 per cent would oppose
a congestion taxif the money just goes to the Treasury.
3. Such road regimes would help rebalance public
understanding of the true costs of different modes of transport.
4. ATOC members identified capacity limitation
or "pinch-points" on the network as part of the evidence
given to the Environment Transport and Regional Affairs Committee
(in the transport Sub-Committee's previous inquiry into the SRA
and Regulation). The majority are those identified as Annex F
of the White Paper. The focus of an Infrastructure Investment
Fund in addition to Railtrack investment will provide funding
for important projects of strategic value but with longer term
paybacks. These are sort of important projects which franchise
term investment lengths do not made commercially feasible.
5. It is important to ensure the infrastructure
capacity provided by Railtrack meets the reasonable requirements
of the train operators and their customs, to avoid a potential
mismatch between passenger growth forecasts and train pact capacity.
6. The 25 franchised train operation companies
already have strong local relationships with local authorities
and use groups (please see Appendix ). These are vital and must
be built on in order to develop the Rail Passenger Partnerships
the government has envisaged. Train operators welcome the opportunity
to develop better local and regional rail services in co-operation
with such bodies.
7. More details are required on the funding
and criteria for the success of such partnerships, so that train
operators can prepare to play a highly active part in participating
in and driving such schemes.
3.3 Franchise Management, Re-letting and Extensions
1. Train operators very much welcome the Government's
intention to form a positive new relationship with train operators
and also their emphasis on combining pragmatism with a strategic
view based on our substantial common goals. Train companies stress
that this will necessitate a more supportive approach and a greater
recognition of the real gains being made alongside the criticismwhere
that if fair and justified.
2. ATOC believes that it is essential for the
Government to lay down its preferred criteria for the award or
extensions of franchises at the earliest stage, to allow train
operators to plan well ahead, and to avoid an investment hiatus
in the intervening period.
3. ATOC believes a substantial passenger dividend
in terms of enhanced investment in new trains, better stations,
more services, can be gains from the re-negotiation of franchises
4. Train operators fully accept that the Government
will award future franchises on the basis of performance. The
train operators' commercial objectives coincide with the Government's
political and economic objectives, which are to attract more passengers
to rail. Train operators readily believe that the service delivered
to the passenger is the most important basis on which to judge
a train company's success.
5. But such criteria must be fairly applied
and take into account the large variations inherent across different
franchises which were different in nature at the start and correspondingly
require varying levels of investment, and the performance of the
6. Train operators suggest that Government should
re-negotiate a select number of franchises quickly, and, if necessary,
in advance of the SRA, to avoid the bunching of franchise re-letting
and to spread the impact of investment uncertainty predicted at
the end of franchise periods.
7. Train operators are already heavily incentivised
and motivated through OPRAF and the fare box, to increase their
customer carrying through improved service, which both the Government
and train companies wish to see.
3.4 Regulations Regulators and Sanctions
1. We welcome the proposals for the new regulatory
structures, as answering ATOC's call for simpler regulation and
the avoidance of duplication. ATOC also welcomes a continuing
role for an independent Rail Regulator, particularly with the
emphasis on monopoly markets, as train operators recommended to
2. Train operators applaud moves to prevent
any penalties levied leaving the rail industry through payments
back to the Treasury's Consolidated Fund. This can create a vicious
circle: where penalties, which may have to be found from investment
funds, are lost to the industry in entirety.
3. In assessing sanctions, the Government should
weigh up the relative benefits of securing extra investment for
the gain of passengers in the place of financial penalties, which
may act to deter investment. Fines may not be the best sanction
available for passengers, the Government, nor train company investors.
4. The balance between incentives and sanctions
needs to be carefully judged.
3.5 Rail Safety
1. Train operators regard safety as paramount,
and every train company has safety as their top priority.
2. Train operators welcome the HSC/HSE reviews,
and are co-operating fully with them.
3. Train operators are encouraged at the Government's
recognition that "the long improvement in rail safety is
continuing" (in contrast to many misinformed media reports).
The train operators are not complacent and are very willing to
co-operate to enhance justifiable safety measures across the rail
4. Train operating companies also look to the
Government and the new Integrated Transport Commission to ensure
that adequate safety controls apply to all other modes.
3.6 Network Benefits
1. ATOC are the guardians of network benefits,
with responsibilities for core functions such as through and inter-available
ticketing, the National Rail Enquiry Service, revenue allocation
between operators, national Railcards and industry-wide initiatives
and codes of practice. Examples of ATOC's co-ordinating role over
network benefits are given in Appendix 2.
2. ATOC is developing a campaign to promote
the benefits of the network will improve customer understanding
and appreciation of rail travel, and throughout the country.
3. ATOC will co-operate closely with the SRA
to promote, enhance and safeguard the benefits to customers of
the network. Train operators are fully committed and many rely
heavily on passengers arriving and leaving on other operators'
services as well as other transport modes.
4. Connections are always planned to provide
maximum passenger benefit, within commercial realities. Daily
operations of connections must be managed to maximise total convenience:
to hold a connection for a few customers at one point may lead
to many missed connections elsewhere.
5. Train operators very much welcome the amendments
to prohibitions in the Competition Bill to allow mutual co-operation
in the interests of connections, timetabling and integration.
ATOC takes issue with the description of a fragmented railway;
the railway is disaggregated but it has not disintegrated. Train
operators work closely together, often through ATOC, for the benefit
of passengers. For example, there are voluntary codes agreed for
personal security; timetabling, disruptions, connections. All
25 TOCs voluntarily agreed to support the Government's New Deal
Photocard and were able to develop and launch the product very
3.7 Fares Issues
1. Train operators are very concerned with the
lack of understanding over issues of price and complexity of faresincluding
uncertainty over the stability of fare types. The key facts are:
the cost of rail travel rose by 75
per cent in real terms between 1974 and 1996;
rail fares rose by 21 per cent in
real terms between 1986 and 1995 (Source: DETR).
2. In contrast, major advances have now been
made on rail fares. The key facts are:
average rail fares have fallen by
1 per cent in real terms over the last three years, 1995-96 to
1997-98 (pence per mile);
fares regulation has worked: regulated
rail fares have fallen over the last three years, whilst unregulated
fares have held steady or fallen due to the disciplines of competition
(Source: OPRAF research);
from January 1999, key regulated
fares (savers/ordinary returns/season tickets) will fall
in real terms (by less than inflation)by RPI1 per
cent every year for four consecutive years.
3. It is not true that good value discounted
fares have taken the place of inter-available tickets. Inter-available
and through tickets are fully protected and continue to be fully
4. Nor is it true that unrestricted walk up
type fares, such as savers, have been marginalised at the expense
of advance purchase fares: these fares, as a percentage of main
ticket types, have increased from only 1 per cent to 2 per cent
while unrestricted walk up fares have increased from 34 per cent
to 37 per cent. (Please see Appendix 3).
5. One of the key benefits of the new railways
is more acute understanding of local market needs. This has been
a key contributor to growth of 7 per cent in passenger rail journeys
two years runningtwice the rate of economic growth. This
growth is at a much faster rate than that envisaged for franchises.
6. Train operators now offer a wide range of
excellent value fares. Some examples are listed in Appendix 4.
7. Rail travel has been grown through understanding
the customer's needs and tailoring products and services accordingly.
Success in attracting more passengers is better achieved with
a "bottom up" approach rather than a "top down"
one. We believe that to achieve the Government's objectives successfully
will require the SRA to set a strategy (for growth) but allow
operational and commercial decisions to be left with the train
8. The complexity criticised by the Government
existed under British Rail. Furthermore, greater choice may necessitate
Whilst special promotions have added to the
choice of fares available, new technology (such as the new Rail
Journey Information System) will be able to handle increasing
complexity of information accurately and speedily. Good value
rail fares are essential to winning passengers to the railways,
and there is a concern that too much central control could stifle
the very growth it is trying to encourage.
9. ATOC will be seeking further clarification
of the Government's concessionary fares proposals for buses, especially
where this might have adverse impact on rail's competitive position,
such as along local corridors.
10. Some train operators are already well advanced
in evaluating the benefits of offering a carnet-form product amongst
many other product innovations, and ATOC are happy to work with
the Government on this. ScotRail already offers a "Flexipass"
10-ticket carnet for travel in the Highlands, for example the
£21 Nairn Inverness Flexipass.
3.8 Role of New TechnologyInformation Systems
and Smart Cards
1. Train operators fully endorse Government's
commitment to a national public transport information system,
and are very willing to work in co-operation with Government to
assist them in meeting that target.
2. Such a system covering rail and many interconnecting
bus and ferry services already exist. Significant improvements
are also in hand. ATOC signed a £25 million contract with
ICL in July 1998 for "RJIS"the Rail Journey Information
System. RJIS will provide faster, more accurate and far more comprehensive
information at railway stations and inquiry centres. The extensive
"data warehouse" will be made available for Internet
and other information service access. Details of station facilities,
such as tax availability, bus times and disabled access would
all be available.
Such rail based systems will be the cornerstone
of any future integrated public transport information system.
3. Some operations are already evaluating smartcard
tickets and "ticketless travel" initiatives.
4. ATOC has already drawn attention to the need
for encouragement to be given to fellow integrated transport operators,
particularly some local bus companies, to provide regular an d
accurate timetabling, routing and fares information in order to
make a public transport information service workable.
5. Other transport providers will need to develop
a modal system to similar delivery standards. Integration will
require significant resources and management.
3.9 Rolling Stock Leasing Companies (ROSCOs)
1. Having evaluated the more detailed case for
regulation of ROSCOs, train operators concluded that the best
way forward was through agreement (with sufficient safeguards)
rather than through regulation.
2. Train operators will continue to work closely
in consultation with the Regulator to ensure a fair leasing market
through effective implementation of codes of practice; and will
review their position on the basis of that experience.
3.10 Open Access Competition on the Railways
1. Open Access competition is a complex issue,
with considerable potential benefits to customers but also with
serious potential pitfalls. Train operators vary in their support
for open access, depending on their ability to operate extra services
and the potential impact on their own franchise areas. Greater
benefit to the network may be achieved through co-operation between
train operators (such as the new GWT/Thames Trains Oxford to Bristol
service) rather than through competition.
2. The illustrated criteria of limited competition
subject to safeguards (not allowing undermining of existing services
supported by taxpayer nor of reducing network benefits) we regard
3. The viability must be judged on the potential
of added value to customers (and on the impact on existing services
and on the current contracts).
3.11 Planning Issues
1. ATOC welcomes the review of planning policy
guidance laid down in the White Paper, particularly the provision
of a proper framework to deliver integrated transport policy at
2. Land use planning is an essential determinant
of patterns and modes of transport use. It is essential that planning
policy, particularly at local and regional levels, acts to deter
the kind of development which necessitates excessive car usesuch
as out of town shopping, leisure, office and hospital developments.
Such developments can deprive people of choiceparticularly
the one-third of households without carsand require others
to become totally dependent on their cars.
3. A tightening of PPG 12 and 13 is desirable
to protect more successfully rail corridors which may have future
potential in the light of local transport plans and additional
4. Establishing an SRA, in partnership with
local authorities, can ensure a proper strategic view of the future
use of such corridors. If property is built across rail routes,
the consequences can either be extremely expensive to rectify
or totally frustrate restoration of rail lines.
5. Action to help encourage better liaison and
participation with local bus partner operators is welcome.
3.12 Commission for Integrated Transport
1. ATOC is interested to note the proposed establishment
of such a Commission, and would be more than willing to serve
as a member of such a Commission, if helpful, and to contribute
from our sources of information.
2. We feel clearer guidance is needed for the
Commission's relationship with the SRA, and of any inherent overlap
or capacity for confusion, particularly in the setting and monitoring
of targets. Further details are required of how the Commission
would seek to "foster consensus" among practical providers,
such as train operators.
3.13 Sale of British Railways Board (BRB) Lands
1. ATOC have been actively involved in the campaign
to tackle the problems inherent in the sale of railway lands by
the BRBas part of the Railway Lands group led by Transport
2000. We therefore welcome the supervision of land sales to allow
a considered reappraisal of sites. ATOC was a co-signatory of
the joint letter sent to ministers by the GROUP alerting them
to the issue. All train operating companies have been asked through
ATOC to highlight present and future land sites of potential concern
and, for example, there is a concern that a supermarket development
at Borough Green (Kent) would compromise plans to expand important
rail car park facilities.