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26 Apr 2007 : Column 363WH—continued
However, I accept the criticism that not everyone is capable of doing so. I have discussed with my hon. Friend the challenges that the internet presents when one is trying to buy tickets for particular journeys. I am no more an internet expert than she is, and I dread the day when I will have to do it myself instead of having staff book travel for me. Her point is well made, but I cannot accept that the amount paid by passengers is anything like the increase that we have seen. For example, in relation to running private cars, to quote again from page 5 of the Government’s response,
“revenue increases have broadly matched volume growth with the cost of travel (in pence/km) rising slightly. The AA Motoring Trust suggests car running costs (2006) are about 22p/km, even for a relatively cheap car.”
That is taking all the costs into account, not just the cost of petrol. I do not think that the case can be made that travelling by car is always significantly cheaper than travelling by rail.
My hon. Friend asked whether any level of rise in the price of open fares would encourage the Government to cap them. That opens up the argument about regulated and unregulated fares. The hon. Member for Wimbledon (Stephen Hammond) was quick to dismiss the distinction between them, but it is crucial. If the Government were significantly to increase the range of tickets that come under regulation, there would be a cost to the Exchequer. My hon. Friend suggested in her comments that that should not always be used as an excuse to do nothing. I understand, but on the other hand, given the Government’s huge and record levels of investment in the rail industry, the argument for extending regulation to other fares that are not currently regulated is not strong.
My hon. Friend mentioned saver fares, and I will talk a bit more about them in my main comments. Interestingly—this point was also made by the hon. Member for Ilford, North (Mr. Scott) and my hon. Friend the Member for Stroud (Mr. Drew)—she said that the industry was trying to price customers off trains. If that is the case—if it is a strategy of the train operating companies to alleviate capacity problems—it is hard to imagine a strategy that has had less success.
Mrs. Dunwoody: I did not say that they were doing it well.
Mr. Harris: My hon. Friend makes a salient point. If it is indeed a strategy, it is not being implemented particularly efficiently, given that patronage has grown, as she knows well, by 40 per cent. during the past 10 years. There is absolutely no evidence of it that I am aware of. If hon. Members present would like to offer me any, I would be interested to consider it, but I am not aware of examples on any route of a significant decrease in the number of passengers as a result of rail fare increases.
Mrs. Dunwoody:
We ought to accept one or two things. The reality is that most TOCs do not innovate. We are always hearing about their initiatives, but, frankly, they do not provide imaginative schemes to attract people. At present, they are quite happy, at best, to rest on their laurels and at worst, to try to make things so complicated that people can never get cheap tickets. Try to get a cheap ticket from any of the
companies that you normally have to deal with, Mr. Jones, and you will find that the number of cheap tickets is infinitesimal, and that somehow they always seem to have disappeared when you want to buy one.
Mr. Harris: That was an extremely robust intervention. I disagree with my hon. Friend about the ability of private TOCs to innovate. However, I agree with her that the fare and ticketing structure in the British railway industry is far too complicated. It was not acceptable that the hon. Members for Ilford, North and for Wimbledon were, as so-called mystery shoppers, given a range of varying fares for the same journey. That does not make any sense, and it is unacceptable. That is why the Government are working with the TOCs and the wider industry to develop a simplified structure. I shall say more about that when I go through my prepared comments.
Sadly, the hon. Member for Ilford, North has departed—from the Chamber, that is. He spoke about complexity, which I shall say more on later, and capacity and reliability. He was the first to mention his unfortunate experience as a mystery shopper, and he agreed with my hon. Friend that it was in fact a deliberate strategy of the rail operating companies to get rid of their passengers by pricing them out of the carriages. As I said, I profoundly disagree with that. There is very little evidence for it.
Paul Rowen: I understand the Minister’s point, but does he not accept that the rail operating companies are using price to constrain growth, and that if there were more capacity and a fair price, there would be much greater growth? That needs to happen if we want to get a shift from road to rail.
Mr. Harris: The hon. Gentleman is saying that fare increases over the past 10 years have been too high, while at the same time a 40 per cent. increase in capacity has been too low—it has not been enough for him. Even in 1996-97, if anyone had suggested that patronage on the British railway network would grow by 40 per cent. in the next 10 years, few people would have believed them. People would have said that that was far too ambitious and optimistic, but clearly the hon. Gentleman thinks that 40 per cent. is not enough—that growth should have been much higher—and that fares should have been lower. He believes that the price rises since 1997, which he says are unacceptable, have constrained growth. We have the fastest growing rail network in Europe, but its growth is still constrained and not good enough for him. I admire his ambition.
My hon. Friend the Member for Stroud asked about peak times. I can give him an answer, but it may not be exactly what he wants to hear. I understand that peak times are defined for each journey, and that they differ by route. Within London, the morning peak is normally 9.30, Monday to Friday, and that is for departing times. Whether it pleases him or not, I hope that he will accept that answer.
My hon. Friend said that the railway is in danger of becoming the rich man’s transport. I do not accept that. Most people who travel on the British railway network travel on a discounted fare, whether a
regulated fare or one of the other discounted fares. Unregulated tickets have not taken over the whole of the country. Because of past regulation, regulated tickets cost 2 per cent. less in real terms than they did 10 years ago. I cannot accept that that equates to a rich person’s transport. This point reflects the argument that we had about whether TOCs are deliberately pricing people off the railways. I shall deal with unregulated fares later.
Mr. Drew: I agree that it is possible to come up with statistics to show that there has not been a real-terms increase in fares across the terrain. However, we have all had the experience of being behind someone in the queue who is trying to get a ticket and is negotiating with the poor person who is trying to explain the different price ranges. There is no guarantee, even if someone were prepared to be entirely flexible about when they travelled or by which route, that they would necessarily end up with the cheapest, let alone the fairest, price. Would the Minister agree that that is part of the problem?
Mr. Harris: I do agree with that. The key challenge that we must meet is not only to make the structure more sensible and simpler but to convey that step change to the travelling passenger so that they will understand that it will be simpler the next time they try to buy a ticket, either in person or on the internet. If we do not get that message across, any simplification that is introduced—I hope that that will happen in the near future—will not have the effect that we want it to have. My hon. Friend is absolutely correct about that.
My hon. Friend also discussed his concerns about revenue protection, as did the hon. Member for Wimbledon. It is of course absolutely true that TOCs have an obligation to ensure that the revenue due to them by passengers is collected. It is galling to any honest passenger to have to put up with any kind of fare increase when they know that people on the same train are getting away with not paying their fare, especially if they do so deliberately. There is an obligation on TOCs to protect their revenue. For example, when the South West Trains franchise was re-let at the end of last year to take effect in February this year, there was a commitment in the franchise agreement for extra security at Waterloo station as a revenue protection measure. I would like to see such conditions in more of the new franchise agreements. Open stations should be gated to ensure that people pay before they get on a train.
My hon. Friend concluded by saying something with which I, and I am sure everyone in the Chamber, agree: passengers must be at the top of train operating companies’ priorities. The rail industry is not run for politicians, and it is certainly not run for the Department for Transport. It is not run for any of the vested interests. It is run for the passenger and paid for by passengers and non-passengers. It is up to TOCs to ensure that they deliver the best service that they possibly can. If they fail to do that, they fail in their most fundamental duty.
I go on with some relish to the comments made by the hon. Member for Rochdale (Paul Rowen). He claimed, as he has claimed before in this Chamber, that the British railways are the most expensive in Europe. I
am told that the Liberal Democrats allege that £10 gives more than 200 miles of travel in Italy. That is a good statistic and I understand why he has been using it, but it would be a better statistic if it were true. Simply using the website www.trenitalia.it to check the Rome to Florence fare on the Eurostar Italia fast train suggests that the actual figure is only 71 miles per £10, or €39.80 for 197 miles. I am sure that the hon. Gentleman will take that back to the editorial committee of the Liberal Democrats’ “Focus” magazine and that the figure will be corrected at the earliest possible opportunity.
Once again the hon. Gentleman discussed the value of more people moving on to the railways. I ask again—if he wants to answer me now he can, or he can go away and have a little think about it—as he is the Front-Bench spokesman for his party and is, presumably, involved in developing Liberal Democrat transport policy, is a 40 per cent. increase in patronage over the past 10 years enough for him? Clearly, it is not. He believes that the Government could have achieved more than 40 per cent.—without a major increase in capacity, that would have increased overcrowding and involved extra cost—and forced down fares. He is suggesting that over the past 10 years the Government should have paid billions of pounds to increase capacity and at the same time should have increased regulation, which is presumably what he is talking about in terms of holding down fares. I do not have the figures in front of me, but I am sure that someone in his party, perhaps one of his researchers, can invent or calculate exactly how much that would cost. If he wants to tell me now, I am more than happy to give way.
Paul Rowen: Does the Minister accept that I made my remarks in the context of taking rail policy forward—particularly in relation to the White Paper that has been published. I agree with the hon. Member for Wimbledon (Stephen Hammond) that there should not be total regulation, but in the context of the White Paper a number of measures would allow some regulation, and would also increase capacity and get more people on the railways. I talked about longer franchises. Does the Minister accept that if a company is given a franchise for 20 years rather than 10, that enables it to recoup the capital investment over a longer period and therefore the increase in fares that has occurred over the past few years would not be necessary? I did not mention that we are also considering weekend and off-peak working. Currently, Network Rail has a virtual shutdown at the weekends, but in the old British Rail days there was weekend working. If we went back to doing work without disrupting the railways, it would encourage more people to use the railways at off-peak times, which would also generate increased revenue. Those are two ways in which capacity and the number of passengers could be increased without necessarily having the large increase in fares that we have seen over the past few years.
Mr. Harris:
The hon. Gentleman may be surprised to know that I agree with him on at least one point that is very important. Network Rail has spoken to me about its wish and the Government‘s wish to move to a
seven-day-week network, which is vital for our economy. As the hon. Gentleman says, we should not have a less than desirable level of service at weekends. I join him in that ambition; any modern railway should aspire to be a seven-day railway. By working with Network Rail and other train operating companies, that is something we hope to achieve sooner rather than later.
However, I disagree with the hon. Gentleman on 20-year franchises. It would be a brave Minister for Transport who signed off a 20-year franchise while making a public statement that the franchise would hold down fare increases. What is to stop any train operating company increasing fares if they are not regulated? The hon. Gentleman did not say that he wanted to extend fare regulation, but if fare regulation was not increased when there was a 20-year franchise, what would stop a private train operating company imposing exactly the same fare increases as we have seen at South West Trains, for example, and at other franchises? The idea that doubling the length of the franchise would have that effect, and certainly the guarantee that it would have that effect, is not one that I or, I suspect, any of my successors would ever want to make.
Paul Rowen: I understand what the Minister is saying and I do not disagree, but the point I was making was that fare regulation would be built into the franchise agreement—as it is now. The Office of Rail Regulation would be beefed up to enable it to take action if companies went beyond the limits.
Mr. Harris: I am glad that the hon. Gentleman on behalf of his party has clarified that its policy is to have 20-year franchises with all fares under regulation. That is a very brave policy. He has just said that he wants the Office of Rail Regulation to ensure that fares do not rise; that is regulation—there is a clue in the title regarding what the Office of Rail Regulation does. I find that implausible.
The hon. Gentleman claims that the other advantage of a 20-year franchise is that train operating companies would get a return on their capital investment. Train operating companies do not buy rolling stock; they lease it according to the length of the franchise. Evidence does not support the idea that under a 20-year franchise, companies would start buying rolling stock rather than leasing it. However long a franchise is, a train operating company will enter a lease from the rolling stock company for the length of that franchise, whether it is 10, 15 or 20 years.
Paul Rowen: Does the Minister accept that under the current arrangements train operating companies lease rolling stock from intermediaries, but that does not provide best value for money? I understood that the Government were investigating that matter. We should be considering alternative ways of financing capital investment in railways.
Mr. Harris:
I am grateful that the hon. Gentleman has raised that matter because it allows me to publicly comment on the announcement today by the Office of Rail Regulation that it has referred the rolling stock companies to the Competition Commission. The Government do not want any major restructuring of
the leasing system, but we do believe that the public are not getting the best possible value out of the current arrangements and that is why we asked the Office of Rail Regulation to consider the matter. However, we do not envisage any major changes to the structure of the industry as it stands. I have for some time believed that, following many years of almost permanent revolution in the rail industry, it now needs a long period of stability to allow it to grow and consolidate.
The hon. Member for Wimbledon rehearsed some of the criticism that he has made in the past and I hope that he will forgive me for rehearsing some of the responses that I have made in the past. He mentioned the simplification of the fare structure and I will discuss that in length later. Could he clarify, perhaps from a sedentary position, from where his research came regarding the Passenger Focus research? I think that he quoted that seven out of 10 people who do not use trains cited the high price of tickets as the reason.
Stephen Hammond: I was citing the latest Passenger Focus report on passenger satisfaction that, I think, was produced in February this year. My office would be happy to provide the report for the Minister, or I am sure that Colin Foxall of Passenger Focus would also send it to him—it is a standard piece of work that is in the public domain.
Mr. Harris: I am sure that it is on my desk, but the point that I was trying to make was whether the figures the hon. Gentleman mentioned came from there or not. As with the health service, the railway industry suffers from a gap between perception and reality. People who do not use the railways have said in survey after survey that rail fares are higher than they actually are. Research has found that when asking people how much it costs to travel from one place to another, if they do not use the service, they will almost always come up with a higher amount than the reality. I compare that with the health service because it is well known that if someone’s only knowledge of the health service comes from the Daily Mail and they have not actually been a patient, they may have a lower opinion of it than in reality.
Stephen Hammond: I accept the point that the Minister is making, but none the less we have always had to deal with that situation; people’s perception is the reality. Either we change people’s perception or we must treat it as the reality. Appearance and reality are the great Shakespearean themes and that is exactly what we must contend with. The Committee clearly made that point in the report when it said:
“If passengers perceive rail travel to be too expensive, then in some senses it is too expensive”.
If that is people’s perception, it is the reality.
Mr. Harris: I agree with the hon. Gentleman to an extent, but frankly, if a perception is based on the wrong information, that is not a reason for reducing fares. I hope that he understands the point that I am trying to make—it is not about those people who already use fares; it about those who have no knowledge of them. I mention that as it is relevant to the argument that people who do not use train fares are surprised to find that in reality they are not as high as they expected.
The hon. Gentleman went on to say that the Government do not have a strategy for meeting capacity demands on the network. He will know that there is a commitment in the South West Trains franchise for a 20 per cent. increase in peak-time seats. He will know that in the First Great Western franchise—
Stephen Hammond I thought that there was a commitment to increase passengers by 20 per cent. in that franchise. Surely the Minister does not mean that the franchise will increase seats by 20 per cent., as they are actually taking seats out of a number of those passenger trains.
Mr. Harris: Seat removal was in fact undertaken before the commencement of the new franchise. However, I understand the franchise commitment by South West Trains to mean that there should be a 20 per cent. capacity increase.
Whatever the other issues with which it might currently be dealing, First Great Western is committed to increase the number of seats on the network by 35,000 by means of the refurbishment of its high speed trains, which will be completed by the end of the year. On 2 April 2007, the Secretary of State for Transport announced a plan for 12,000 additional commuter seats on daily train services into London, to be accomplished through the Brighton main line route utilisation strategy and purchase of new rolling stock. We should not forget the west coast main line modernisation, which has already increased the capacity of that route and will provide even more capacity by next year.
The hon. Gentleman said that it was a reality of life that the Department for Transport specifies the number of carriages on franchises. That is not a reality of life; it is wishful thinking. I am disappointed that he wants to repeat the nonsense that was put about when the controversy about First Great Western’s new timetable really started to hit the headlines in January—I assume it is that to which he was referring. A myth started to emerge—I kid you not, Mr. Jones—to the effect that the DFT had contacted First Great Western and asked it to remove carriages, presumably on the basis that there was insufficient overcrowding. It was a fascinating idea, and no matter how often I said that it was nonsense, there were those who insisted on repeating it. I trust that the hon. Gentleman is not about to do that again.
Stephen Hammond: I have merely restated what was said to the Opposition by the management of First Great Western, who surely ought to know the position. If that is a myth, perhaps the Government ought to tell them so.
Mr. Harris: I would be more than happy to tell First Great Western once again that it is a myth. On the day of our debate on First Great Western services in Westminster Hall, when the hon. Gentleman and I disagreed on the same point, First Great Western issued a statement accepting full responsibility for its capacity problems and saying that it had underestimated the number of carriages that were needed to carry out its franchise obligations.
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