Select Committee on Transport, Local Government and the Regions Minutes of Evidence

Examination of Witnesses (Questions 80-99)



  80. Some of the operating cost is paid for by the passenger but some of that is then creamed off to be re-invested. That must be a fairly big percentage of a charge. It is £172 there and back to Manchester. It does not cost that, does it, to get somebody by rail there and back to Manchester? Not even like that.
  (Mr Green) No-one is going to be a millionaire from running railways. In a good year we make about £20 or £30 million, in a bad year we lost £8 million.

Mr Bennett

  81. Let us look at that. You are saying people are paying the high price ticket in order to pay for the new trains. If we look at the ticket, how much would you cut off the top of the ticket to pay for the trains? Is it one per cent or is it ten per cent?
  (Mr Green) That really is an impossible question to answer. Do we mean the open tickets or the Savers or which?

  82. You have just justified the high cost on the basis that the travelling public are paying for the new trains. So they would like to know how much out of their ticket they are paying for the new trains.
  (Mr Green) You are paying for £600 million worth of new trains.

  83. How much on each ticket?
  (Mr Green) I would not know. You cannot just divide a train up into one ticket. It does not work that way.

Dr Pugh

  84. If you are saying you have the highest prices in Europe for train travel per mile gone, would you dispute that?
  (Mr Green) It is probably true except for Heathrow Express. The reason is that we get almost no subsidy.

Mr Donohoe

  85. I do not accept what you have just said to Mr Bennett. You must know, otherwise why would you load the price onto the ticket in the first place. You must know.
  (Mr Green) We do not work it out per ticket that way. We get as much income as we can from volume. If that does not then pay for the investment, we do the rest by pricing.

Mr O'Brien

  86. Is it on a percentage basis? If a ticket costs £100 and the amount you are looking for is a five per cent increase it is five per cent of £100 is it not? If you are saying that five per cent is going on to ticket charges to help pay for the new trains, then it is easy to work out.
  (Mr Green) If everyone were buying the same ticket that would be true, but as everyone is buying totally different tickets, it is difficult.

  87. It is five per cent whether it is a £10 ticket or £100 ticket. If you say it is done on a percentage basis and you are looking for a five or a ten per cent increase in tickets to pay for the new trains, it is five or ten per cent on each ticket surely.
  (Mr Green) Inflation would have been about two per cent.

  88. If it is inflation then it is 12 per cent or whatever. If you are using percentages, I would assume it is the same on every ticket, or is it? Is there a differential? Do some tickets pay more towards the new trains than others?
  (Mr Green) About one third of our travel on the West Coast is on business tickets and they are the ones which are taking the hit. The other two thirds are getting very, very cheap rates.

  89. In what way are they taking the hit?
  (Mr Green) They have the increase of five per cent.


  90. The Rail Passengers Council said, "Virgin's West Coast fares regime is highly unsatisfactory. Virgin has increased unregulated Open fares at an alarming rate, in order to suppress demand for journeys during peak times". They quote 67 per cent between 4/1/98 and 20/5/01. That is a particular standard class open Manchester-London return ticket.
  (Mr Green) Not in doubt. What people have not come up with is the alternative which is where we get no subsidy from Parliament, we get no fare increases from passengers and—

  91. But you knew when you took the franchise over. You cannot really have it both ways. If you take on a franchise, you do an estimate of what you are going to get out of it before you take it over. Or are you telling me that like Arriva you had no idea until you got there. Presumably you have some assessment of what you are going to have to charge for your tickets in order to get your money back. I would have thought that was called capitalism or something.
  (Mr Green) What everyone wants is a free Christmas where there is no subsidy, there is no fares increase and somebody buys a lot of new trains. That somebody would be bankrupted.

Mr Donohoe

  92. Over what period is this going to be loaded onto the ticket? Are you going to take that five per cent off ten years down the line?
  (Mr Green) It does not go on for ever. At the present we are talking two or three years out of the remaining ones.


  93. What have you said to the Strategic Rail Authority about the fares scheme? Have you said that you want the regulated and unregulated fares agreement changed in some way? What have you asked for?
  (Mr Green) The way the situation works is not very clever. The Saver ticket is over-regulated, so Saver passengers have not had a significant increase for three or four years, therefore the increases are all getting loaded on the business tickets.

Mr Campbell

  94. Could we go back to the 18 weekends between August and December when there will be a lot of frustrated passengers? Towards the end of that we are coming into the Christmas period. Would you simply run the 18 weeks or is it possible to delay at least the December period until January?
  (Mr Green) It finishes on 10 December.

  95. But in the last two or three weeks the pre-Christmas rush will begin.
  (Mr Green) And if we ask for the contractor to delay that it will simply delay the work and it will take even longer to get the acceleration later on. I think they are right to stick to plan.

  96. There is no way round then.
  (Mr Green) Only by delaying the work. Then we have to use the time before the next August to find a better way of doing it.


  97. I want to come back to GNER, if I may. High quality interconnecting services from other operators are important for you. Are you concerned that the new Northern franchise is not going to have the funding to achieve improvements?
  (Mr Garnett) Yes, we are. There are routes like York-Harrogate which I bore for GNER on, where you get off our trains and you get onto the old railway buses which go rumbling along the tracks to Harrogate. We keep saying to the SRA that the contrast in the experience is appalling. Harrogate is trying to develop itself as a conference centre and various political parties have various meetings there. You go up on our trains and then you get that experience and it is quite appalling. We have raised with the SRA that some funding needs to be made available to make some improvement in rolling stock.

  98. Are you suggesting that argument is falling on deaf ears?
  (Mr Garnett) Yes; it is not getting very much response.

  99. I come back to your own performance. You are saying that 27 per cent of the delays you incur are as a result of internal problems. What can you reduce that to?
  (Mr Garnett) Twenty-seven per cent is one of the lowest for TOCs, but we are not satisfied. We have to get lower. We are rebuilding our class 91 locomotives and a year ago those locomotives ran for about 10,000 miles between breaking down. At the last set of figures, they are averaging 17,000 to 18,000 miles between breakdowns. We have to improve our own reliability and leave Network Rail to get on with theirs and perhaps we have spent too much time worrying about Railtrack and not shining enough light on our own performance.

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