Examination of Witnesses (Questions 120-139)
DFT, ATOC, NETWORK
RAIL, ORR AND
SRA
12 OCTOBER 2005
Q120 Greg Clark: In other words,
that is new money being deployed by the Department for Transport
through Network Rail, it is not through additional charges to
TOCs. That is useful clarification. Given that the £370 million
comes from Government and is going to be spent on improvements,
the Government is going to benefit from that financially, is it
not? The VAT is chargeable on disability upgrades, so of that
£370 million, £65 million is going back to the Treasury.
Is that correct?
Dr Mitchell: I had not considered
that, but I will take your word for it.
Q121 Greg Clark: That would be a
reasonable assumption, that 17.5% of expenditure on upgrades is
chargeable in VAT and comes back to the Treasury?
Dr Mitchell: I have not considered
that.
Q122 Greg Clark: Would it be reasonable,
if the Government's team are spending £370 million on DDA
improvements, that the whole of that is available for improvements
and that £65 million might be added back so that the whole
of it can be invested in making life easier for our disabled customers?
Dr Mitchell: That would be nice
if that could be done, but the decision on how much is available
is a matter for ministers.
Q123 Greg Clark: Dr Mitchell, would
you encourage your ministers to write to the Treasury to ask whether
that might be possible?
Dr Mitchell: Now that you have
mentioned it, yes.[8]
Q124 Sarah McCarthy-Fry: I would like
to start off with paragraphs 2.16 to 2.20. I would like to ask
Mr Newton, given that there was some failure by the train operating
companies to meet the requirements of keeping stations up to date,
evidenced by passengers' dissatisfaction, in retrospect, do you
think your inspection regime was robust enough?
Mr Newton: Yes. I think the key
principle to bear in mind is we do not micro-manage these franchises.
I think the Report very accurately describes how the early franchises,
of which there are still many, made an assumption that there would
be commercial incentives all over the network for operators to
keep stations maintained, keep them clean and indeed invest in
them. The reality—as I think Mr Muir described in the context
of Connex—was somewhat different, but that does not alter
the franchise agreement. I think with the latest franchise agreement—if
I can say this correctly—particularly the "one for
one", there are key performances indicated in there and there
are much clearer expectations of what is expected. In an ideal
world we would have liked to have gone back to the 1995 franchises
and rewritten them in that respect.
Q125 Sarah McCarthy-Fry: Did you
not think that you had the responsibility to monitor how the franchises
should be operated and followed up?
Mr Newton: There is a difference
between monitoring and knowing what the deficiencies are and having
a contractual ability to do anything about it; I think that is
the difference.
Q126 Sarah McCarthy-Fry: I am going
right back. The fact that you did not know, there was no opportunity
for you to do anything about it anyway. In retrospect, do you
think you had the responsibility to find out?
Mr Newton: Yes, we did have monitoring
arrangements in place.
Q127 Sarah McCarthy-Fry: In the ones
that failed, why did you require remedial action rather than using
the passenger dividend ability and power which you had?
Mr Newton: Remedial action might
include passenger dividend, in actual fact. There is a judgement
to make about the contractual materiality of the transgression.
Quite often the important thing to focus on is the deficiencies
remedied. I think if you develop a general approach which says
every time there is a transgression there is a financial penalty
at some point to the operator, then very soon those risks start
to manifest themselves in the bids and it starts to increase the
cost of the network. It is a contractual management judgement,
I accept, but it really is about if you are not keeping your powder
dry and demanding a dividend, it might be called a more significant
transgression.
Q128 Sarah McCarthy-Fry: You do not
think it would focus the mind of the train operating company if
you made an example of one or two to start with so the others
knew that it was not just going to be, "Oh, well, we can
leave it as it is and providing no one finds out about it nothing
is done, but if we are expecting a general inspection, then we
will make it right".
Mr Newton: Earlier in my career
I chaired the enforcement committee and part of the remedy we
had was to publish a notice if there was a breach. We published
a notice in the form of posters on stations. Certainly my experience
was that operators were not very keen to have notices put on their
stations which told their customers that they had failed. There
is always a question of balance, but my own experience was that
balance was reasonably successful.
Q129 Sarah McCarthy-Fry: When you
requested the remedial action, was it carried out to your satisfaction?
Mr Newton: There was any number
of them, but generally, yes. If it was not, then clearly the ante
was upped and we were moving towards, it is a ratchet process
and eventually there certainly was a demand for dividend and that
sort of action.
Q130 Sarah McCarthy-Fry: Did you
take any passenger dividends?
Mr Newton: It is difficult to
recall, but certainly, yes, there was any number of passenger
dividends taken.
Q131 Sarah McCarthy-Fry: Before,
you said it would not be value for money to set higher standards
of franchises, you are now saying with new franchises which are
being let, we are going to set more robust standards. In your
view is value for money static or is it a moveable feast? I take
the view that value for money is efficiency, economy, effectiveness.
In your view is that balance equal between the three if the effectiveness
is achieving objectives and one of the objectives is passenger
satisfaction, if passengers kick up enough fuss, does that mean
then value for money veers towards achieving passenger satisfaction?
Mr Newton: Certainly, I accept
it is not fixed because there is an issue about the passenger
expectations rising. To some extent that ought not to drive, through
a public sector experience and point of view, a natural increase
in expenditure, but in general terms, it will identify an appetite
for higher standards which I think we all subscribe to. If you
look at some of the standards across the piece in the public sector,
they are much higher now and they are accepted as legitimate.
I think they are a moveable feast in that sense. I did not say
that value for money did not justify high standards, what I said
was in a situation where you have got finite funding, you need
to prioritise your expenditures, so your pass-mark for value for
money will float up and down to some extent dependent upon the
available funding. As I said, there is also prioritisation, and
given where we were in 2001, there was a very clear priority to
address the fundamental service performance issues which the industry
was facing before we moved on to what were always recognised as
other passenger priorities, but lower than punctuality and reliability.
Q132 Sarah McCarthy-Fry: Can I move
on to Mr Muir. Do you think that voluntary rather than mandatory
commitments in your passenger charters are effective?
Mr Muir: Yes. An example of such
a voluntary commitment would be queuing times at booking offices,
which clearly is a sensitive thing. I think in the case of voluntary
and mandatory, what you are trying to do with train operators
is harness the ingenuity and management drive of people with a
local interest to get the best value for money for the Government
and do good for passengers. I think you do that best by a range
of things. At one end, you have hard wired obligations, they are
in your franchise agreement, for example you have to spend £10
million on upgrading eight stations in a particular way. As it
is in the franchise agreement it has got to be done. You have
things in the middle which are voluntary obligations, where the
train operator says, "I think I can promise some more and
I will put them in my passenger charter". At the left-hand
end, there are things which do not become obligatory, simply things
the train operator has done because he thinks it is a good idea.
On the way here I was speaking to Southwest Trains and they have
a franchise obligation to have 36 travel safe officers. They are
staff who are trying to keep passengers safe. They have now got
56, which is 20 more, and that is because the management of Southwest
Trains of their own views think, "I want to make life safer
and better for our passengers and I will spend more money".
To harness the drive of train operators you want the range, some
hard wired, some in the middle and some "let them make management
decisions".
Q133 Sarah McCarthy-Fry: I will move
on to Dr Mitchell, if I may. This particular issue concerns my
constituency; moving forward and how we are going to move forward.
In my constituency we are very anxious to have an additional station
to help us with our particular difficulty, Portsmouth is an island
and it is difficult to get in. Have you done any work on looking
at the balance between what customers want? Do they want an additional
station with fewer facilities or do they want the same number
of stations and have better facilities? Would you be interested
in doing that sort of analysis?
Dr Mitchell: No, that sort of
analysis has not been specifically done. The kind of work, for
example, that RPC has just completed is very much focused on existing
users of existing stations and what are the hierarchical needs.
Perhaps it not surprising that many of the conclusions are very
similar to the NAO Report. What we have not done a comparison
of is would people prefer a new station or perhaps a station half
a mile down the line rather than the one they have got.
Q134 Sarah McCarthy-Fry: Obviously
there is an issue with timetabling for additional stations like
that, but do you think it would help towards increasing passengers
if that sort of thing was taken into account? We are talking about
the issues which passengers want at the stations but, as I say,
in my constituency I am not sure they would bother whether it
was a Marble Hall, but they would like a train to stop near them
so they are not having to be reliant on their car.
Dr Mitchell: Inevitably I think
there has got to be a trade off between the number of stops on
a line and the overall service provided. Clearly, if there is
a station every couple of miles, then potentially the service
would be very, very slow, and I think the overall satisfaction
of passengers on that line might be affected. That is not to say
that there is no place for new stations, but I think we have to
take account of that trade off.
Q135 Mr Khan: Dr Mitchell, having
read the Report from the NAO and having heard the answers given
by your colleagues and indeed your answers, would you say the
quality of service received by passengers who use your stations,
our constituents, is excellent, satisfactory or unsatisfactory?
Dr Mitchell: I think we would
have to be guided by the responses from the public, both in the
NAO Report, which we accept, and in the reports produced by the
RPC. I think it is fairly clear that passenger satisfaction has
been slowly improving, but I do not think any of us can be satisfied
that is a position we want to remain in.
Q136 Mr Khan: How does your answer
dictate the urgency or otherwise of your response to concerns
raised by colleagues and by the NAO?
Dr Mitchell: I think Mr Newton
has to some extent covered this. In the early years of the 21st
Century the priorities had to be addressing the state of the network
in total, the safety of the network and the backlog of engineering
work which had to be done and which Network Rail, I think, have
addressed very effectively. Now we have dealt with that to an
extent—and I am not being complacent, I do not feel that
85% is where we need to be, we need to move far and further than
that—I think now we can start addressing some of these things.
Q137 Mr Khan: Talking about moving
on. Can I ask Mr Muir, Southwest Trains are in charge of Earlsfield
station which is in my constituency of Tooting. The sort of problems
experienced by the 11,000-odd pensioners, the 11,000-odd residents
with long-term illnesses and parents with pushchairs, difficulties
with access to the station, there are no disability facilities,
no lifts or escalators, other problems include no security, wooden
staircases and very steep staircases and problems with ticketing
facilities, so people are queuing outside on a Monday morning.
Are you satisfied with the answer just given, "we have other
priorities and now we will come on to these priorities"?
Mr Muir: I would certainly like
to see better facilities at your stations. Indeed, I noticed the
stations in your area, many of them are not accessible and do
not have wheelchair access and indeed some of them do have problems
with graffiti and vandalism. All I can do is assure you that train
operators are putting resources into it. Whether there is money
to make these wheelchair accessible? The ideal would be to make
it wheelchair accessible, but this is enormously expensive and
it is a priority for Government to decide as to whether they have
the money to make them wheelchair accessible. In the meantime,
what we are trying to do is do all the things we can do to make
it easier for people with disabilities to travel on the railway,
that is by improving information and improving the training of
staff. Last week ATOC approved an investment of £600,000
to improve the computer system which enables disabled passengers
to book assistance in advance. We have such a system and it works
very well now.
Q138 Mr Khan: In light of that, how
do you explain when a disabled person without a computer goes
to Earlsfield station in the evening, there is no staff there,
nobody can direct them to where they can go, there is no sign
up saying, "If you cannot get to the platform you can ring
this number and a cab will come around", so the station is
accessible. How are we helping them?
Mr Muir: The arrangement we have
got to address this issue is the best that we can do and we will
try and improve it—is that if people call train operators
24 hours before and make a booking, we will endeavour to make
arrangements for them to complete their journey. I cannot promise
that it happens in all cases because it is a complicated world
but, for example, depending on where it is, we might send taxis
or make other arrangements for people to use the railway.[9]
Q139 Mr Khan: I could put out a press
release to go in the Wandsworth Borough News, the local
Guardian in Tooting, saying, "Any disabled person
who wishes to travel and have the same rights that I have on public
transport in British Rail, in the stations locally of Earlsfield
and Wandsworth Common, can ring up this number and they will get
the same level of service that the rest of us receive"?
Mr Muir: What I would rather do,
if I may, is after this hearing write to you and confirm what
we do in individual circumstances.[10]
8 Note by witness: I have spoken to the Treasury
who confirm that the effect of VAT is taken into account when
the Government makes its decisions as to the appropriate level
of resource to be awarded a programme. Back
9
Ev 24 Back
10
Ev 24-25 Back
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