Examination of Witnesses (Questions 120-138)
MRS ELAINE
HOLT, MR
MARTIN DEAN,
MR LES
WARNEFORD AND
MR IAN
DOBBS
14 NOVEMBER 2007
Q120 Chairman: Which stands for what?
Mr Warneford: I have no idea.
Q121 Clive Efford: Is it not the
case that bus companies have increased the price of single fares
disproportionately because the concessionary fares reimbursements
are largely based on single fares?
Mr Warneford: No, we have not
increased fares disproportionately, but the whole bus industry
is still subject to average annual cost increases which are well
above the RPI index. Our annual industry cost increases are around
6 to 7% per annum and we have to cover them.
Q122 Clive Efford: What is driving
that?
Mr Warneford: Labour, fuel, insurance,
most recently fuel again. We thought it had stabilised a year
ago and now it has rocketed again.
Q123 Clive Efford: Is that the same
for First Group?
Mr Dean: To support Mr Warneford,
we would also support the move towards a national concessionary
fare scheme as there is in Scotland and Wales and, yes, we have
the same sorts of cost pressures.
Q124 Clive Efford: London has a more
extensive concessionary fare scheme than elsewhere in England.
Does this give rise to any particular issues for operators or
the public?
Mr Dean: Obviously in London it
is slightly different in that the revenue risk is taken by Transport
for London. It is a well established scheme and I am not aware
of it causing any particular problems. One of the things that
will be interesting, to use my example of a few questions ago,
will be that London pensioners from April 2008 will now be able
to flash their London freedom pass in Scarborough, Whitby and
all over the place.
Chairman: We are going to have long day
trips. I am getting very concerned about these. Are you also providing
resuscitation?
Q125 Mr Clelland: If there were no
concessionary fares, is it not the case that bus operators would
need to—and indeed would—themselves introduce concessionary
fares in order to attract passengers onto their buses at offpeak
times?
Mr Warneford: I have heard that
suggestion over a lot of years but I go back a lot of years in
the industry and there never were commercial concessionary fares
offered. I think the answer would probably be in some cases there
would be and in others there would not and it would have to be
a commercial decision as to the viability, the level of service,
the type of demography. You could not say a plain yes or no answer
to it.
Q126 Mr Clelland: Certainly on the
railways that is something which has been introduced over many
years. Given the fact that we now have commercial bus companies
as opposed to public bus companies that we used to have, I am
quite sure that some sort of concession would have been introduced
in order to attract more people onto the buses. Otherwise it would
not have been viable to run buses in offpeak periods if there
was nobody riding on them. In that case, why is it that the bus
companies insist on the concessionary fares being based on the
prices of single fares—I think there is some evidence that
they have been increased disproportionately—and make no
contribution whatsoever to the increased ridership they are getting
as a result of the concessionary fare system?
Mr Warneford: To go back to the
first part of what you were saying, all the conventional price
elasticity formulae suggest that we would be better off if we
charged the full fare for the elderly and carried fewer of them—i.e.,
discounting never generates more money; it generates more passengers.
Q127 Mr Clelland: You have evidence
for that?
Mr Warneford: That is all the
conventional wisdom from the academics.
Q128 Mr Clelland: Do you have some
evidence for that?
Mr Warneford: The Department for
Transport rely upon it in the concessionary fares.
Q129 Mr Clelland: On the conventional
wisdom or the evidence?
Mr Warneford: On the evidence.
Q130 Mr Clelland: Can you produce
this evidence for us?
Mr Warneford: It is produced by
academics. There are published papers. Would we provide commercial
concessions? Possibly. You asked about the single fares. We do
not insist that the calculation is based on the adult single fare.
We are happy for it to be on the adult single fare, the return
fare where there is one and the day tickets. Where we do have
some disagreement is about how much the elderly would otherwise
use season tickets because they are casual travellers, so we do
have a disagreement about that going into the melting pot. The
debate is not really about the level of fare at all. I know it
has devolved into that because of the way the DfT has chosen to
produce what is called its toolkit, but the issue is really about
what it costs to run the bus. If you cannot afford to run the
bus, then the elderly cannot travel.
Chairman: Do you understand this commercial
argument, Mr Clelland?
Mr Clelland: No.
Q131 Mr Martlew: You have both said
that you would prefer a national scheme as in Wales and Scotland.
Is that because you think you would make more money out of it
or it would be easier to administer and you would not have the
bureaucracy and the difficulties that some councils get too much
and some get too little? Can we exclude London?
Mr Dean: Yes. We think from the
point of view of the operators and the local authorities it would
be much better if we could focus our minds on customer service
and running the buses rather than negotiating on a number of schemes.
Just to back up Mr Warneford's view, if you look at some companies,
if they straddle a lot of administrative areas, they have to negotiate
with about seven or eight concessionary fare authorities. This
is very, very time consuming for the local authority and the bus
company.
Q132 Chairman: They are not exactly
expecting to come out of it with no benefit, are they?
Mr Dean: No.
Q133 Chairman: You are not negotiating
in an abstract; you are negotiating for hard cash which belongs
to rate payers.
Mr Dean: I understand that, but
it would be better for everybody if we could get on with the more
positive aspects of managing the business. If there was a nationally
administered concessionary scheme, it means the amount of time
that the local authorities and bus operators were spending on
negotiating the correct level of reimbursement would be considerably
reduced.
Q134 Mr Clelland: I agree with what
you are saying on the national scheme. I wish we did have a nationally
administered scheme rather than the one we have. You have suggested
certain regional and county concessionary travel authority groupings.
Is that happening or is it still as fragmented as ever?
Mr Dean: At the moment there are
some county wide schemes so the money flows from the district
council but, for example, in the Essex area there is a number
of district councils but there is a lead travel concession authority
which is the county council. That does make things a little easier,
but it is not always the case. It depends upon the area and whether
they decide to have a county administered scheme or not. If there
was a move towards some sort of a regional administered scheme,
that would be better than the situation that there is at the moment.
Q135 Mr Leech: I want to come back
very briefly to through ticketing. When I took a ticket from Manchester
to London I can get a train ticket with the tube added on but
I cannot have the Metrolink before the train journey. Why is that?
Given that Stagecoach now runs Metrolink in Manchester, is it
going to change?
Mr Dobbs: That is back to me because
Metrolink comes under the rail division. I hope in the future
it will change. Ticketing in Manchester is entirely the responsibility
of the Greater Manchester Passenger Transport Executive. It is
not ours. We effectively run the managing contract on Metrolink
in Manchester. I am already talking to the PTE about ways that
we can improve integrated ticketing with the light rail system
in Manchester and the heavy rail system, partly due to the fact
that we are obviously doing a lot of the development work on smartcards
in the UK at the moment because we will be the first company that
has them on the ground. I think we have the expertise to help
the likes of our colleagues in Manchester towards that end. We
will look for similar developments in other parts of the country
as well. As was mentioned earlier by Mr Hollobone, we have just
taken over the East Midlands rail franchise in the last four days
and we have the Sheffield Super Tram at the north end of that
so we have exactly the same issue. We want to work with those
PTEs. The good thing is of course that the common platform is
going to be an ITSO platform. The PTEs are developing smartcard
systems that are compatible with ours. It is the same platform
and again the travelcard add-on in London will be possible on
our smartcards, so if you get a smartcard ticket from Sheffield
and you want to travel to Victoria—
Q136 Chairman: Mr Dobbs, I should
tell you that this is not the view of Oyster. This Committee was
told very specifically that that would not be the case.
Mr Dobbs: With respect, the Department
for Transport is in the process of developing with Transport for
London what is called IOP, ITSO On Prestige, which has the dual
reading ability for ITSO smartcards and Oyster to work on the
same readers. You will be able to buy a travelcard—
Chairman: I will take your word for it.
Q137 Mr Leech: We do not need smartcards
to be able to add on the Metrolink before a train journey and
we also do not need smartcards to add on a Stagecoach bus journey
into Manchester and then a train journey. When are we likely to
get some change and some movement so that these can be added,
because clearly that has a significant impact on the number of
car journeys into railway stations and persuading people to use
public transport?
Mr Dobbs: I, like you, would like
to see it happen sooner rather than later. I am not responsible
for either ticketing or fares on Metrolink. That is a GMPTE responsibility.
I am working with them to develop that but at the moment the technology
on the tickets that are sold there by the PTE is not compatible
with London for instance or the mainland rail system. It is a
different kind of ticket.
Mr Leech: If you buy a ticket in advance
you could add something that does not need to go through any smartcard
system or Oyster system or anything like that; it just needs to
be shown. Surely it just needs someone to knock a few heads together
between the companies and the PTE to make sure that it happens.
Q138 Chairman: Mr Dobbs, go out and
knock a few heads together.
Mr Dobbs: I am sure my customers
would be delighted to hear that they were going to have their
heads knocked together. We will certainly work with the PTEs,
all of them, to see what we can do in practical terms. I think
smartcards will beat all of the rest of the systems in practical
terms because we are not far away.
Chairman: Gentlemen and Madam, you have
quite encouraged us. I have completely revised my view of at least
one major company and I am so delighted to hear of these pacific,
philanthropic and tolerant companies that I did not know existed.
Thank you very much for coming this afternoon.
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