Transport and the economy

Memorandum from Passenger Focus (TE 17)

Summary

Rail passengers’ top three priorities for improvement in Britain are value for money, punctuality and service frequency. Punctuality is the single biggest driver of overall satisfaction with rail services, while the biggest driver of dissatisfaction is the way that the industry manages delays.

Bus passengers’ top three priorities for improvement in England (outside London) are punctuality, frequency and getting a seat. There is a wide variation in the factors which have the most impact on the satisfaction of bus passengers from one area to another.

We do not believe it is our role to tell elected representatives how much of taxpayers’ money should be spent on public transport, or how to divide the public contribution between rail and bus subsidy. However, we do feel it is appropriate to set out where passengers would like those budgets to be spent and to alert the Committee to the likely consequences of reductions in public support.

Passengers do not exist in a vacuum. They know that tough decisions on public spending are having to be made and that transport will not be immune. However, as the Eddington [1] report made clear, transport is essential to the economic well-being of the country. Rail and, in particular, bus travel, also deliver a range of social benefits.

In the rail sector demand has already returned to pre-recession levels and is forecast to double within the next 20 years. Rail plays an essential role in driving sustainable economic growth both in terms of commuting into urban areas and also through providing good connections between regions. Catering for this demand requires continued long-term investment. A significant reduction in spending will clearly have an impact on rail passengers both now and in the future.

A withdrawal or significant reduction of public subsidy for bus services could be bad news for passengers, since it would almost inevitably lead to service cuts and fare rises. If reductions prove necessary, bus operators and local authorities should consult on proposals and explain decisions. Government should place conditions on recipients of public funding to account to passengers and taxpayers for the outcomes achieved on their behalf.

Introduction

Passenger Focus is the independent statutory watchdog for Britain’s rail passengers and, since February 2010 for bus, coach and tram passengers in England (outside London, where passengers are represented by London TravelWatch).

The first part of our evidence summarises passengers’ priorities for improvement on rail and bus, and what drives satisfaction levels. The second part addresses the likely impact of cuts in public subsidy on passengers and the best way to protect passengers’ interests.

Rail passengers’ priorities and drivers of satisfaction

As part of its input into DfT’s High Level Output Specification (HLOS) process Passenger Focus commissioned research into passenger priorities for improvement. Around 4000 passengers were asked to rank 30 different aspects of rail travel [2] . The work was repeated in 2009 [3] .

The table below shows the top ten priorities in 2009 compared to 2007. It also shows the relative importance of each attribute ranking relative to punctuality - the higher the score, the greater priority passengers assign to that service aspect.

In the 2009 research there were three clear priorities for improvement: value for money, punctuality and service frequency. These, coupled with seats/capacity in fourth place, emphasise the continued importance passengers place on the ‘core product’.

Passenger Focus also conducts the National Passenger Survey (NPS). We consult over 50,000 passengers a year to produce a network-wide picture of passengers’ satisfaction with rail travel.

Multivariate analysis of the overall satisfaction and dissatisfaction scores reveals that punctuality is the single biggest driver of overall satisfaction, while the biggest driver of dissatisfaction is the way that the industry manages delays. This means that the best way to improve overall passenger satisfaction is to get the trains to run on time. This again emphasises the importance of the ‘core product’.

Bus passengers’ priorities and drivers of satisfaction

In March 2010 Passenger Focus published a report on a survey of over 3,800 bus passengers in England outside London [4] . This provides an indication of bus passengers’ investment priorities.

The table below shows the top ten priorities at the end of 2009. More punctual buses is passengers’ top priority, while more frequent services going to a wider range of destinations and cheaper fares are very important. Getting a seat also matters, although most passengers seem not to be experiencing difficulties at the moment. Interestingly, passengers placed a very high priority on flexible, multi-operator tickets.

There is a wide disparity between the views of paying passengers and those travelling on free bus passes. Both groups placed high importance on improving punctuality and getting a seat. Inevitably, those travelling on free passes were relatively unconcerned about fares and tickets, focusing more on features such as waiting facilities and low-floor buses, which may reflect their tendency to be more physically frail, as well as helpful and positive drivers. Unsurprisingly, paying passengers highlighted cheaper tickets as a priority for improvement.

It is also interesting to note some significant regional variations. For example, cheaper tickets are a relatively higher priority in the South West and the South East; personal security is a key issue in the West Midlands and the North West; and helpful drivers are regarded as more important in the North East and the South West. In the South East in particular, passengers want better information at bus stops – route maps, timetables and real-time information about when the next bus will be arriving.

Using the same multivariate analysis of the overall bus passenger satisfaction and dissatisfaction scores as we have adopted on the rail side, reveals significant local differences between areas. For example, the five factors which have the greatest impact on passengers’ overall satisfaction with their bus journey in Brighton and Hove, in order of impact are: length of time the journey took; appropriateness of the speed; length of time spent waiting for the bus; smoothness and freedom from jolting during the journey; and helpfulness and attitude of the driver. By contrast, the factors with the most impact in Cumbria are: electronic information showing the time of the next bus; value for money; length of time the journey took; comfort of the seats; and information provided on the outside of the bus (route number and destination).

Rail – what type of spending to prioritise

Passenger Focus has commissioned some initial work on deciding where rail spending should be best targeted in this difficult economic period. While the initial findings must be treated with caution due to the small sample size they are based on, some broad themes did emerge:

· Capital investment projects should be deferred until more funding is available – the current budget should protect current services.

· The prospect of fare increases was strongly resisted, especially if these were in addition to the standard annual rises that participants already experience.

· Potential changes to the frequency and punctuality of current services was strongly resisted by commuters who had built their lives around train times and frequencies. Participants felt peak services were already under severe strain and changes would not be tolerated. To a degree these represent captive markets.

· There was tacit admission that speed of services was of less importance than other core service factors. So, improvements to journey times could potentially be delayed. Other, ‘softer’ aspects of service provision might be altered as a compromise e.g. station cleaning, staffing levels (assuming more fundamental moves towards smart ticketing), and off-peak service frequencies.

It is clear from our research that passengers’ priorities centre on the provision of an affordable, punctual and frequent service. We feel that Government spending on rail should focus on these priorities.

It has been suggested by some in the industry that it is impracticable to go much beyond current levels of punctuality and that investment required to do so could be better spent improving some other aspect of the railway. Passenger Focus welcomes the continued improvement in punctuality across the network – though there are still pockets of poor performance that need to be addressed, but is concerned at the argument that punctuality targets should be ‘frozen’.

The existing measure of punctuality (PPM) classes a train as on time if it arrives within five minutes (for shorter distance services) and 10 minutes (longer-distance) of its scheduled arrival time. However, research by Passenger Focus [5] found commuters appear to notice lateness from the first minute, not just after five minutes or 10 minutes allowed by PPM, with levels of satisfaction dropping accordingly. This gap between PPM and passengers’ own experience of delay also reflects the way in which punctuality is calculated. For example, punctuality is only reported at the final destination rather than at intermediate points and so ultimately records the delay to the train rather than the passenger – e.g. a passenger could have been 15 minutes late at the point he/she got off but the train may have made up time later on and arrived ‘on time’ – in such circumstances the passenger was late but the train was on-time.

In a time of spending cuts it is inevitable that rail fares will also come under some scrutiny, with parts of the industry arguing that removing fare regulation and moving to airline style pricing models allows better utilisation of capacity (particularly during the ‘shoulder peak’ period). We believe this misses two fundamental points:

i. Captive consumers.

Many commuters have little (or limited) ability to change travel patterns in response to rising fares. Such decisions are often tied into longer-term choices on where to work or live. Some may be able to change modes of travel but others, especially when commuting into London, have little in the way of a viable alternative. Increasing commuting fares can, therefore, lead to either an increase in car use or the passenger having no option but to bear the cost in the short to medium term. Where competition within an industry is insufficient to control price then it is important that the market is regulated to stop captive consumers being exploited.

ii. Railways are not airlines

Our fares and ticketing study [6] showed that Great Britain benefits from some of the most frequent services in Europe. The benefits of this are lost if you are tied to a specific train. Turn-up-and-go frequencies do not align themselves well to airline style book-ahead restrictions. Not everyone is able, or wants, to plan their precise train journey weeks or days in advance.

Passengers understand that tough decisions on public spending are having to be made and that transport will not be immune. However, it is widely acknowledged that costs within the industry are too high and that it is still not as efficient as it should be. For example:

· opportunities for greater synergies between renewals and enhancement work

· Generating additional demand by reducing engineering possessions

· Increasing demand and promoting long-term benefits by aligning industry incentives

We also believe that some of the rigidities in the existing fares structure, and the complexities surrounding its use, suppress existing demand and revenues. There is a clear sense from passengers that the industry must look to address these before thinking about passing any of the ‘pain’ onto passengers in the form of higher fares or a reduction in services.

Bus – what type of spending to prioritise

All bus passengers rely on punctual, frequent and reasonably priced services.  These are at least partly dependent on public subsidy. A withdrawal or significant reduction of public subsidy could be bad news for passengers, since it would almost inevitably lead to service cuts and fare rises. There is a risk of a double whammy for passengers as local authorities are also making tough decisions on spending and tendered services are already being trimmed back.

Buses serving the edges of cities and towns and rural areas will be under most threat. Smaller operators making more modest profits are likely to come under severe pressure and have less room for manoeuvre.

It is in passengers’ long-term interests to have bus companies making healthy profits, but some of those profits must be used to help fund improvements to services. However, all operators must justify why they need to cut or reduce services. In the absence of a clear explanation for changes to services, the arguments for quality contracts and partnerships are likely to become more compelling.

Although naturally we would prefer it if Government were able to maintain current levels of support for the bus industry, we are realistic. We recognise that public finances are constrained and likely to remain so. If all areas of public spending have to contribute to repaying public debt, it would be understandable if Government wished to see a proportionate reduction in real terms public spending on buses.

However, any changes to public subsidy for bus services must be very carefully thought through and consulted on. Bus services are local and should be determined locally. Local authorities and operators should consult users. They should do so while plans are at a formative stage, providing local people with a rationale for their proposals, and alternative options. They should provide feedback once they have analysed the responses, explaining their decisions.

Any reductions in BSOG should be phased in to give bus operators, local authorities and passenger transport executives the time they need to do this effectively.

BSOG should be looked at in the context of all public funding for buses and what it is designed to achieve. Taken as a whole, taxpayer support for buses is considerable. Government should place certain conditions on recipients of this money to account to passengers and taxpayers for the outcomes achieved on their behalf.

Patronage figures are a poor measure of success, since they are likely to reflect external factors such as an expansion or contraction in the economy. Unless very carefully designed, an Incentive Per Passenger scheme risks skewing resources away from rural and edge of town services which may be performing well but which are unable to attract passengers in the same numbers as major routes in urban centres.

Instead, the outcomes sought by Government should be closely linked to passenger priorities and to delivering improvements to passenger satisfaction levels.

We acknowledge the risk of Government being overly prescriptive. We are not advocating central target setting. However, it is important that the Government knows what it is getting for its money, and that passengers have the information they need to hold their bus operators and local authorities to account. As a minimum, this should include accurate figures for the punctuality of bus services, disaggregated down to an appropriate level, and figures for overall passenger satisfaction and the satisfaction of fare-paying passengers with the value for money of their bus services. Government spends a lot of money on behalf of taxpayers and passengers supporting bus services; it should demand more in exchange. Now is a perfect time to introduce such a requirement.

As an immediate way forward, we would recommend trialling the independent collection and publication of passenger satisfaction and bus punctuality data on a sample of routes in some of the country’s big cities, prior to a wider national roll-out.

September 2010