Examination of Witnesses (Questions 400-417)
MR VINCENT
SMITH AND
MR NOOMAN
HAQUE
15 DECEMBER 2004
Q400 Miss McIntosh: My guess is it is
probably higher but they seem to do something right in encouraging
it. How many timetable changes would you expect in a year?
Mr Smith: Again, that I think
is not something I have at the end of my fingertips; it may very
well be that we would have to get the information from the Traffic
Commissioners.[3]
Q401 Miss McIntosh: When you look at
pricing, especially travelcards, do you look at what the revenue
anticipated from travelcards will be?
Mr Smith: I am sorry, this is
in relation to whether or not we think the travelcards comply
with the block exemption?
Q402 Miss McIntosh: Yes, whether they
fall within the competition—
Mr Smith: As I said earlier, we
are looking to be more flexible with the variety of revenue-sharing
options that we will allow under the block exemption. At the moment
we do it solely on a passenger-mile basis, but we have had strong
representations that that is too onerous a requirement for small
bus companies so we are planning to replace it with something
more general which says you can use anything you like provided
you can be clear it does not actually distort competition
Miss McIntosh: I am looking, Chairman,
at the report we published in, I think, 2001—the previous
Select Committee.
Chairman: I am sure Mr Smith's superiors
remember it.
Miss McIntosh: It is just that at the
time there did seem to be a slow uptake of the block exemption.
In fact, it was concluded that some existing travelcard schemes
had been withdrawn because of the concerns about the Competition
Act. You have been fairly critical in your comments of the way
the Competition Act is working. Do you believe that this calls
for a review and an amendment of the Competition Act?
Q403 Chairman: Can I add a rider to that?
Has the Enterprise Act made any difference to the way that you
operate?
Mr Smith: Can I take these two
questions separately, Madam Chairman, because they are slightly
different? In relation to the travelcard point, we are looking
at the block exemption and we might recommend extending it so
that we can actually get most travelcard options within the scope
of the block exemption. Again, this is something that is subject
to consultation as, clearly, the revenue-sharing arrangements
may be the subject of some contention, particularly as between
bus operators.
Q404 Miss McIntosh: You have had three
years to look at this, though. Why has it not been done? Not you
personally, but the OFT have had three years to look at this,
presumably.
Mr Smith: The block exemption
was made in 2002.
Q405 Miss McIntosh: Two years then.
Mr Smith: As I say, we have been
working with block exemptions for that period and we have been
collecting evidence on how it is working during that period. This
is one of the main complaints, I suppose, we have had about it.
I am sorry, Madam Chairman, I did not answer your question: how
has the Enterprise Act changed what we do? I think in two ways:
one is to do with the merger issue, which I alluded to earlier
in relation to railway franchising. We are now decisional as distinct
from making recommendations to ministers as to whether or not
the merger and, therefore, the refranchising situation should
be referred to the Competition Commission.
Q406 Chairman: So if, for example, by
some mischance, Virgin got the East Coast Mainline you would look
at that?
Mr Smith: That is currently under
consideration, Madam Chairman. I did write to the Clerk to point
this out. It is a sensitive issue, at this precise moment.
Q407 Chairman: I just want to make sure
that you would, in fact, look at it.
Mr Smith: We are indeed looking
at it, Madam Chairman.
Q408 Miss McIntosh: Can you give us an
indication of when you think you might have taken a decision on
what travelcards will come within the block exemption?
Mr Smith: As I said, we are hoping
to consult on our recommendation to the Minister in the early
part of next year.
Q409 Miss McIntosh: So the bus companies—
Mr Smith: Will be able to comment
on that.
Q410 Miss McIntosh: You would accept
that if travelcards, pre-paid tickets and electronic smart cards
help reduce boarding times and speed up journeys that would be—
Mr Smith: That could be a benefit
that we might want to take into account.
Q411 Miss McIntosh: It is up to them
to tell you?
Mr Smith: Yes.
Q412 Miss McIntosh: You said at the outset
that you have a shared competency with the Office of Rail Regulator
as regards railway competition, but that the ORR takes a lead.
Could you tell the Committee exactly what relationship you have
with the ORR and how it interplays? Presumably, on block exemptions
you are the ultimate word.
Mr Smith: We are the body that
makes the recommendation to the Secretary of State but, clearly,
given the ORR's sectoral expertise in this area, we take a very
great deal of notice of what they have to say, particularly in
relation to through-ticketing arrangements for the railway. So
it is not a question of us ignoring what they say—it would
be foolish of us to do so. There is also, on a case-by-case basis,
a working party which meets to consider who is best placed to
consider the cases where there is an overlap between rail and
other sectors and we do consider them on a case-by-case basis
at the beginning of the case to see who is best placed to take
a case.
Q413 Miss McIntosh: Just to recap, the
consultation will be in the early part of next year and it will
take two or three months?
Mr Smith: I expect it will be
a standard, three-month consultation period.
Q414 Chairman: Will the public be able
to write in?
Mr Smith: Yes.
Q415 Miss McIntosh: Outside formal consultation
periods, do you encourage bus companies and operators to come
and speak to you?
Mr Haque: Yes, we do. We already
have done, in a sense, as well. We have the recommendations and
we talk to bus operators and regulators about them informally
as well as to how acceptable they will be and whether they meet
the needs or we need to change them.
Q416 Mr Donohoe: I know the question
of the West Coast Mainline and the East Coast Mainline is sensitive
and you have written to the Clerk—and I am not dwelling
on that aspect of it—but when you are involved in such an
inquiry do you take into account the alternatives like cars—or
`planes for that matter?
Mr Smith: Yes, we do.
Miss McIntosh: Just one last question:
Wensleydale Railway have a through-ticketing arrangement with
Arriva on their buses. Can you say why that is allowed?
Q417 Chairman: Mr Nooman Haque, do you
know why Wensleydale escaped? Did they bribe you with cheese?
Mr Haque: From what I understand
of the scheme, Madam Chairman, the Arriva bus service connects
Northallerton to the beginning of the railway journey, so that
is the most basic through-ticketing scheme that you can imagine
where the two journeys do not overlap at all. So there is no problem
there.
Chairman: Gentlemen, you have been most
understanding. I apologise for making you wait at the beginning.
That is very rare. Anyway, thank you very much.
3 Note by witness: We do not have figures for
2004 but according to the Traffic Commissioners' Annual Reports
2002-03, there were 23,377 existing "live" bus services;
4,537 new registrations were accepted and 3,420 existing registrations
were cancelled. In addition there were 10,247 variations to existing
services in the same year of which 10,155 were accepted. This
relatively high number of changes must be seen in the context
that rail timetables are changed twice yearly and many bus services
are also likely to change in response, and bus companies often
offer different services over prolonged holiday periods (eg summer
holidays). Back
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