Examination of Witnesses (Questions 220-239)
MR LES
WARNEFORD, MR
DENIS WORMWELL,
MS NICOLA
SHAW, MR
MIKE COOPER,
MR PETER
HUNTLEY AND
MR JOHN
WAUGH
28 JUNE 2006
Q220 Graham Stringer: Can I just
go back to Stagecoach? If you are making as much profit in south
Manchester as you are in London or as much in London as you are
in south Manchester why have you sold your business in London?
Mr Warneford: For two reasons.
One is that we received an offer that was too good to refuse and
the other is that we believe our entrepreneurial style of management
is better suited to outside London than inside.
Q221 Graham Stringer: Could the different
companies provide us with figures for return on capital over the
last four or five years and profitability on a PTA and a Greater
London basis so that it gives you an opportunity to scotch some
of the figures that have been put round? Can you do that?
Mr Warneford: I think so.
Q222 Graham Stringer: Is that true
of the other groups?
Mr Wormwell: Yes.
Mr Huntley: We would be happy
to, although there is—
Q223 Chairman: We cannot record nods,
I am afraid. Ms Shaw, yes?
Ms Shaw: Yes.
Q224 Chairman: Mr Wormwell, yes?
Mr Wormwell: Yes.
Q225 Chairman: Mr Cooper?
Mr Cooper: Yes.
Q226 Chairman: Mr Huntley?
Mr Huntley: I am happy to provide
that data, Chairman, but I would point out that there is an annual
report that is undertaken independently of—
Q227 Chairman: Forgive me, Mr Huntley,
but we were just told by Mr Wormwell that the figures that have
already been taken from an annual report needed to be re-jigged
on the basis of all sorts of things, which obviously we can talk
about, like pensions and extraneous sums like that, so you will
forgive us if we say we are very happy to look at the annual general
reports; however, if, when we quote those figures you then say
they are not accurate, that confuses us because we are not terribly
bright. Which would you rather we did: take the figures that you
gave us, Mr Huntley, or the figures that you published in your
annual general report?
Mr Huntley: My suggestion, Chairman,
was that there is a report called the Annual Bus Industry Monitor
which attempts to equalise all the different accounting practices
between different groups and provide a comprehensive comparison
of profitability on an equal basis.
Q228 Chairman: I do not think that
is quite what Mr Stringer was asking you.
Mr Huntley: I am happy to provide
the data that Mr Stringer asked for.
Chairman: Good; that is very kind. Mr
Stringer?
Graham Stringer: No; I am happy to see
those figures.
Q229 Clive Efford: Mr Waugh has suggested
that his Uni-Bus was set up in response to an identified need.
Can you give us some idea of what steps you take in order to measure
need in the market place and how you go about responding to that?
Mr Huntley: I am happy to do that.
I should point out that I have been in my current appointment
for eight weeks so whatever I describe to you is the approach
that I took in taking up that appointment. Before I took the job
I spent two weeks travelling on the buses talking to passengers
and local representatives and understanding the relationships
in the area. I went on from that to spend a lot of time with our
driving and supervisory staff to understand their perspective
and points of view. I then commissioned a series of particular
surveys of customer requirements so that I understood what my
customers were requiring of me. Some of that, I have to say, was
not entirely complimentary about the services that we have been
operating and that was my basic agenda for improving the service
that I provide to my customers.
Q230 Clive Efford: It was not complimentary—in
what way? Give us some examples of what customers were saying
about the services.
Mr Huntley: We had in past periods
had problems with bus mileage due to driver shortage between 12
and 18 months ago. The standards of cleanliness on our buses was
not entirely satisfactory and we had to bring in new standards
and new cleaning arrangements for that. We had not always been
responsive to what customers had said to us in terms of getting
back to them and responding on our services, and we proceeded
to have an inquiry into that. Communication was a major issue
relating to our customers and I think that is where the difficulties
of being a larger operator compared to an operator like Uni-Link,
which is much more able to communicate with its market and its
customers more closely, more locally, come into focus.
Q231 Clive Efford: Can I push you
on that a little bit more? You are saying because you are a big
company you provide a worse service?
Mr Huntley: No. I am saying that
it is more challenging to ensure that our people relate to what
customers want on the ground and therefore it has been necessary
for us to address the restructuring of the company and the empowerment
of staff locally to be able to respond better to our customers.
Q232 Clive Efford: Can I have some
examples of how you go about measuring customer need in the market
place and how you respond from the other bus companies?
Ms Shaw: We review on a regular
basis the demographics of the areas in which we operate and where
people are travelling to or need to travel to. We undertake surveys
to understand what they are doing and we review on our own catchment
levels what is changing, and particularly where routes are doing
less well we sit down with the local stakeholder groups or local
authorities to talk about what we might change to try and improve
the performance of the route and keep reviewing it on a constant
basis. We try and do that on a regular basis across the network
so that we make sure that we look for other opportunities to serve
the area in which we operate.
Mr Cooper: The picture that Ms
Shaw has just described is a lot more accurate certainly in terms
of what I have seen in Arriva in the last 12 months. Mr Huntley
was describing a company that clearly was inefficient and his
predecessor was asked to leave, so I do not think it is at all
typical of large operators across the UK. I think Ms Shaw's description
was a lot more accurate.
Q233 Clive Efford: What about a large
company like Stagecoach?
Mr Warneford: It is much the same
as Ms Shaw has said. We also find increasingly that the promotion
of our website gives us lots of feedback from customers.
Q234 Clive Efford: Can I ask you
why in your view there are no quality contracts?
Mr Warneford: In our view because
they will not achieve anything more than the current system can
achieve.
Q235 Clive Efford: Can you elaborate
on why you have come to that conclusion?
Mr Warneford: Yes. By "quality
contracts" I take it that you mean effectively regulating
our business.
Q236 Clive Efford: Yes.
Mr Warneford: Confiscating our
business.
Chairman: Boring things like asking you
to turn up on time and be clean.
Q237 Clive Efford: It is a contract
for running a service and not having competition on a straight
competition basis.
Mr Warneford: I understand that
very well. I do not see that a change in who decides the timetable
is going to carry more passengers. I said in my opening answer
to your question that the real challenge is that we have rising
car ownership and use. If we are going to overcome that we need
better bus services. We are solely in the business of running
buses. We are solely motivated by carrying more passengers. That
is how we make more profit if we can.
Q238 Chairman: Mr Waugh wanted to
comment on that.
Mr Waugh: I would just like to
pick up the comment about running buses. I do believe that is
the problem. The industry is all about running buses and they
lose sight of the passengers. It should not be a problem for bus
companies to do as we do and put post-paid cards on every bus
asking people for comments. The amazing thing is that the comments
that come back are really rather nice because people want to be
talked to, they want to be involved in the service. It is not
a function of size. It is not so much a function of control either.
The examples of university sponsored bus services that I quoted
at the beginning are all different and all appropriate for the
local conditions. They are designed by people who have an investment
in the quality of the service. Before anybody starts thinking
I am going on to support this regulation business, I am very worried
about somebody sitting in remote County Council offices deciding
on our revenues and our services. We can do that perfectly well
ourselves because we have a contract in place and the ambition
to achieve what we need. What needs to be created, at the end
of the day, is dictated by finances. I have to go back to the
fuel duty rebate. At the end of the day, that should be used to
reward companies rather than them getting it automatically. If
they want the fuel duty rebate they should apply for it and justify
it on the basis of audited figures about reliability because it
is reliability at the end of the day that is absolutely crucial.
Chairman: You have started all sorts
of interesting hares running.
Q239 Mr Martlew: We are sitting here
and the Government have brought in a scheme that is going to allow
a fair proportion of passengers to travel for nothing and yet
there seems to be no enthusiasm from our witnesses for it. Surely,
where you have got a scheme where even the cost of the fare is
discounted you can raise passenger numbers. Has the effect of
the new concessionary schemes raised passenger numbers?
Mr Warneford: Without a doubt
it has, yes.
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