4Fairer compensation schemes
Calls for a fares freeze
83.Regulated rail fares, which include tickets on commuter routes, are linked to the Retail Price Index (RPI) measure of inflation, in a system that has been in place since 2004.114 The next annual rise, due to be announced shortly, will be in January 2019 and capped to July 2018’s RPI figure of 3.2%.115 The table below shows what a maximum fare rise would mean for a selection of standard annual season ticket prices on routes badly affected by the May timetabling disruption:
Table 2: Maximum fare increases in 2019 based on RPI inflation, July 2018
|
Train operator |
Route |
2018 price |
3.2% increase = |
2019 price |
|
Great Northern |
Royston to London |
£4,784 |
£153 |
£4,937 |
|
Thameslink |
Harpenden |
£3,820 |
£122 |
£3,942 |
|
Northern/TPE |
Leeds to Manchester |
£3,172 |
£102 |
£3,274 |
Source: Published TOC fares and National Rail Enquires (accessed 5 November 2018)
84.Given the immense difficulties faced by passengers in the wake of this year’s timetabling crisis, there have understandably been calls for regulated fares to be frozen for 2019. Anthony Smith of Transport Focus believed it was the very least the worst-affected passengers on GTR, Northern and TPE, deserved:
“That is a minimum, just to show some recognition that things went wrong and that they are sorry and trying to put it right. It may be a gesture, but it would be an important one in winning back trust and winning people back to the railway.”116
85.The Secretary of State, however, argued that a fares freeze would likely be counter-productive within the current system. As fares are linked to the rate of inflation, a freeze in 2019 would have a compound effect in future years, while train operators’ costs continue to rise. This could inhibit investment, further degrading services, and would likely increase taxpayers’ subsidies of the railway. Mr Grayling said:
“We have looked very carefully at the implications of freezing fares. [ … ] The problem with a fares freeze is that if your costs continue to go up every year, and you continue to pay more to your staff, you build a long-term and growing underlying problem within your own finances. Over a period of time, you are sucking a cumulatively larger and larger amount out of the money available to run the network. The only way of counteracting that is that people who do not travel on the railways have to pay more and more taxes to provide a counterbalance.”117
86.We wanted to know how it could be fair for GTR’s passengers, in particular, to shoulder the burden of a fares rise next year when the company had been found to be particularly culpable in the timetabling problems. GTR had also in effect bought out elements of its financial performance penalties for the period covering the height of the crisis, as noted in chapter 2. We put it to DfT witnesses that it would appear to passengers that GTR was effectively “getting off scot-free”.
87.The Secretary of State rejected this suggestion and insisted the DfT still had “plenty” of contractual levers to use against the operator. He denied the Department had given GTR “carte blanche to under-perform”.118 While a fares freeze on GTR would be counter-productive for the reasons discussed above, he was “looking very carefully at what we are going to do about GTR and their poor performance this summer.”119 He suggested options included “alternatives for making sure that passengers feel the benefit of any consequences that GTR face.”120 He could not, however, reveal any details before a decision had been made, which he suggested would be “within a small number of weeks.”121
88.We understand and sympathise with calls for, at the very least, a freeze of regulated fares in 2019 for Thameslink, Great Northern, Northern and TransPennine Express passengers. They do not deserve to see their fares increase in line with July’s Retail Price Index measure of inflation of 3.2%. Ultimately the level of fares increase up to this cap will be a matter of commercial and political will, but we accept the practical difficulties of applying a fares freeze within the current annual, inflation-linked system. However, around a fifth of rail passengers have suffered appalling services and been very badly let down by the whole system; a fares increase in these circumstances would confirm that the current fares system is broken. Establishing a clear link between passengers’ daily experiences of using the railway and the fares they pay must be a first order priority for the Williams Rail Review. We urge the industry and Government to consider all options to keep any regulated fares increase in 2019 to a minimum, particularly on parts of the network worst affected by the timetabling crisis. We further recommended that 2018 Northern, TransPennine Express, Thameslink and Great Northern season ticket holders receive a discount, equivalent to any increase announced in December 2018, on renewed season tickets in 2019.
Delay Repay and the additional compensation schemes
Delay Repay
89.Mr Grayling believed the right approach was to focus on compensating passengers for the disruption they had experienced. He told us that, rather than reduce or freeze fares next year:
“We judged that the important thing was to get compensation to those passengers quickly. If you look at the package that has been provided to those affected, a month’s free travel plus [the standard compensation scheme] Delay Repay is almost the equivalent of 10% of their annual travel. Our judgment was that, to make sure that those passengers were properly compensated for what had happened, it was a quicker and more straightforward way of making sure they received that compensation now as opposed to later.”122
90.Most passenger train operators, including GTR, Northern and TPE, provide Delay Repay passenger compensation schemes, which offer up to 100% reimbursement of the relevant ticket depending on the length of the delay to a service. In almost all Delay Repay schemes, 50% of the single ticket value can be reimbursed for delays of at least 30 minutes, rising to 100% for delays of an hour or more. Delays of two hours or more can attract 100% reimbursement of the return ticket value.123
91.In October 2016, in recognition of prolonged disruption to Southern services, the DfT announced that GTR would be the first operator to introduce Delay Repay 15 (DR15), in which, in additional to the compensation for delays of up to 30, 60 and 120 minutes, 25% compensation is payable for delays of between 15 and 29 minutes. The DfT’s intention is to introduce DR15 across all operators as commercial franchises are re-let or directly awarded.124 On 13 September 2018, the DfT announced that Northern would move to DR15 in December 2018, in recognition of the effects of the timetabling crisis.125
92.There was widespread concern about the adequacy and fairness of Delay Repay compensation schemes. Passenger and consumer groups objected to:
- the level of compensation available;
- the onus the schemes place on passengers to make a claim for each individual delayed service;
- complex and often lengthy claim processes; and
- a lack of advertising of the schemes and consequently low awareness amongst passengers of their compensation rights.126
93.In a report that considered the dire service experienced by Southern passengers in 2016, our predecessor Committee concluded that:
“Given the scale and prolonged nature of disruption on parts of [GTR’s] franchise, it is unacceptable that a standard Delay Repay scheme, in which the onus is on the passenger to make individual claims each time they are delayed, continues to apply.”127
94.On 1 October 2018, the DfT published research that shows significant improvements since 2016 in passenger satisfaction with DR schemes, including the ease with which they found information about the schemes, the method and value of compensation payments and the speed with which compensation payments are made. The research shows, however, that only 35% of all passengers who were eligible for DR made a claim. This is an increase of 4% in two years.128
Additional compensation schemes
95.Northern, TPE, Thameslink and Great Northern announced specific compensation packages, over and above their standard DR schemes, for passengers affected by the timetabling chaos. The additional schemes offered compensation of either the full cost of one week’s or four weeks’/one months’ travel, depending on the type of ticket held and level of disruption to services at particular stations.129
96.The eligibility criteria are complex. The DfT explained that the level of compensation for GTR customers was based on the percentage of total rail services provided by Thameslink or Great Northern at particular stations. Where this was 50% or more, passengers were entitled to claim the higher, one month/four-week reimbursement. Where the figure was between 25% and 49% of total services, compensation was limited to one week’s travel costs.130
97.The Department did not offer a similar explanation of how the different levels of entitlement were arrived at for Northern and TPE passengers. Northern’s website states that “Level 1” (four weeks/one month) compensation was available to passengers affected by a combination of overrunning infrastructure works and implementation of the 20 May timetable change. If affected only by 20 May implementation, passengers’ entitlement was restricted to “Level 2” (one week).131
98.Northern and TPE’s additional compensation was available to passengers who held tickets for four weeks’ worth of travel between 1 April 2018 and 30 June 2018. Initially the schemes were limited to season ticket holders, but the Northern scheme was extended to other regular passengers on 24 September.132 On Thameslink and Great Northern, the additional compensation was initially only available to holders of weekly, monthly and annual season tickets valid between 20 May and 28 July. Following pressure from passenger groups, including the national Watchdog, Transport Focus, GTR announced in August that the additional compensation would also be available to those who held daily or carnet tickets (books of single tickets for use over a specific period) for at least three days travel in any week in the relevant period.133
99.We asked passengers whether they thought the additional compensation schemes were fair, timely and adequate. Emily Ketchin, who gave oral evidence on 5 September, believed they were “absolutely not”. She noted she was still awaiting an email from Thameslink, which would be the signal that she could make a claim. Thameslink and Great Northern have since confirmed that they have completed “phase 1” of the additional compensation process, by emailing “63,000 eligible season ticket holders who we had identified from sales records.” In “phase 2”, season ticket holders who were not contacted by email were invited to claim between 25 September and 30 November. Thameslink/Great Northern intended to begin “phase 3” of the process, opening the scheme to claims from non-season ticket holders, by 30 November.134 This is more than six months after 20 May.
100.Some passengers were scathing about the additional compensation schemes. St Albans Commuter and Passenger Action Group, for example, described GTR’s scheme as “an insult”, which did not accurately reflect “the damages suffered”. The St Alban’s group and others emphasised that the schemes were limited to a period shorter than the total period of disruption; did not compensate passengers for additional costs; and did not adequately reflect the “human impact”.135 Emily Ketchin told us: “Obviously, refunds are welcome, but they do not compensate for the time, stress, missed appointments and missed family time [ … ].136 She also understood that GTR’s additional compensation was payable to season ticket holders against the 15 July interim timetable. She felt this was “vastly unfair” because many season ticket holders would have purchased their tickets earlier in the year on the basis of the service that had intended to be delivered from 20 May.137
101.Stephen Brookes told us the schemes had been “negatively received” by many disabled people and emphasised that they were particularly difficult for people with “learning disabilities and basic communication problems” to understand and navigate. He had heard anecdotally that people in this situation had decided “not to bother” applying.138
Moving towards automatic or automated compensation
102.Alex Hayman of the consumer group Which? believed that the events of this summer had:
“[ … ] highlighted something we have been trying to get public for a very long time. The compensation landscape is totally unfit for purpose, and so many barriers are created for people to receive the money that they are owed. [ … ] At the heart of it, understanding of the compensation system among passengers is very low, and that is because it is incredibly complex and not consistent [ … ]. After suffering from delays and cancellations [ … ] the last thing you want to do when you get home [ … ] is to spend that time filling in forms. There is a massive burden of responsibility for the passenger to remember the train that you meant to take, even though during the chaos they were always changing and you were running between platforms, and that is incredibly difficult.”139
103.There have been recent attempts to legislate, via Private Members’ Bills, for fairer, consistent and automatic compensation schemes, in which digital technology eliminates the need for passengers to make claims, across the whole railway network. For example, Huw Merriman MP, a member of our Committee, has introduced a Bill that would require train operating companies to ring-fence for these purposes a proportion of the compensation they receive for delays caused by Network Rail’s infrastructure works. All ring-fenced monies would be invested in technology which would allow passengers to tap on and off the train. The Bill would then require train operating companies to use this technology to automatically monitor for compensation entitlement and pay directly to passengers’ bank accounts when due (without the need for the passenger to apply). This Bill has been co-signed by many members of our Committee.140
104.On 1 October 2018, the Secretary of State announced that rail passengers would benefit from “simple, ‘one-click’ automated claims systems, available via smartphones and smartcard registration.”141 The DfT has previously pledged to work with the industry to ensure “every passenger will have the choice of travelling without a paper ticket by the end of 2018” and pilot smart phone barcode ticketing.142 The new automated claims systems would “form part of stronger obligations for future train operators under UK government-awarded franchises, ensuring that passengers are more aware than ever of their right to compensation.”143
105.Mr Grayling said that, as the industry moved towards implementation of smart ticketing options, the Department would “move rapidly” towards “simple one-click systems for compensation.”144 Given that the new obligations were explicitly to be applied to “future operators” within the franchising system, we were concerned that rapid process was likely to be impeded by the DfT’s franchising schedule. According to the current schedule the last existing franchise will not be re-let until 2029.145
106.Mr Grayling said the Department would “push that forward as rapidly as we can with the contracting structures we have” but confirmed that automated compensation enabled by smart ticketing would have to be a new obligation in franchises as they come up for renewal or renegotiated into existing franchise terms.146 Peter Wilkinson told us:
“Moving people on to smart [ticketing] allows us to know that they are on the train; who they are; and something about their account details so that we can make the process of returning money to them much simpler. We can make those changes in the life of franchises. We do not have to wait for franchise competitions, but there is a process to go through. Taxpayers’ interests matter as well. There is a business case to be made around that kind of investment, so we have to make sure that the costs and revenues are fair and in the interest of taxpayers as well as fare payers.”147
107.We acknowledge that the Government acted reasonably quickly to ensure train operating companies put in place additional compensation schemes over and above existing Delay Repay arrangements. We do not, however, accept the Secretary of State’s assertion that the additional schemes have ensured passengers were compensated straightforwardly and quickly. The schemes have complicated eligibility rules and place the onus on passengers to make a claim through relatively complex processes. Non-season ticket holders were not able to apply to Thameslink’s and Great Northern’s schemes until 30 November, more than six months after 20 May.
108.While it may be the case that it would be theoretically possible for the worst-affected passengers to claim around 10% of the cost of their annual season ticket, this would require them to navigate the additional compensation scheme and make individual claims for each delayed service. In the chaos of this summer, when at points it was not clear that significant portions of the railway were operating to any timetable at all, this would have been virtually impossible. Even if passengers were able to make the claims, in many cases the level of reimbursement would be insufficient to compensate for additional costs incurred, such as for taxis and additional childcare, and unmonetised costs to working and family lives.
109.The events of this year demonstrate an overwhelming case for automated, or automatic, compensation schemes. We therefore welcome the Government’s announcement of stronger obligations on future train operating companies within the franchising system, including the provision of simple, one-click automated schemes enabled via smart card registration or smart phone apps. The key to this is successful roll out of smart ticketing technology across the network, which the Government has committed to achieve by the end of 2018. The Government must now set a measurable target for implementation of “one click” automated compensation schemes on commuter rail routes. These schemes must be written into contracts as they are re-let. Those who suffered most in the timetabling crisis should also benefit from automated compensation schemes as soon as possible. We recommend the Government ensure, through franchise renegotiations if necessary, that smart automated compensation schemes are piloted are on Govia Thameslink Railway, Northern and TransPennine Express commuter routes by the end of 2019.
115 See “Season tickets: 2019 annual rail fares could be more than £100 higher”, BBC News, 15 August 2018
123 Transport: passenger rights, compensation & complaints, House of Commons Library briefing paper SN3163, December 2016
124 “Government announces improved compensation scheme for rail passengers”, DfT press release, 13 October 2016
125 “Compensation boost for northern passengers as ‘delay repay’ is extended”, DfT press release, 13 September 2018
126 See, for example, Meldreth, Shepreth and Foxton Community Rail Partnership and Rail User Group (RTC0068); Miss J Baron (RTC0075); St Albans Commuter and Passenger Action Group (RTC0096); Which? (RTC0077)
127 Transport Committee, The future of rail: Improving the rail passenger experience, Sixth Report of Session 2016–17, HC 64, October 2016, para 88
128 DfT, Rail Delays and Compensation 2018, October 2018
129 See ‘Additional Compensation Scheme FAQs’, Northern (accessed 6 November 2018; ‘Additional Industry compensation scheme’, Thameslink Great Northern (accessed 6 November 2018)
131 ‘Additional Compensation Scheme FAQs’, Northern (accessed 6 November 2018)
132 ‘Northern to launch extended compensation scheme for regular travellers’, Transport for the North (accessed 6 November 2018)
133 “GTR extends industry compensation scheme to non-season ticket holders on Thameslink and Great Northern”, GTR press release, 28 August 2018
134 ‘Additional Industry compensation scheme’, Thameslink/Great Northern (accessed 6 November 2018)
135 St Albans Commuter and Passenger Action Group (RTC0096)
140 ‘Automatic Travel Compensation Bill 2017–19’, UK Parliament (accessed 6 November 2018); see also ‘Rail Passenger (Compensation) Bill 2017–19’, UK Parliament (accessed 6 November 2018)
141 ‘Rail passengers to benefit from ‘one-click’ compensation’, DfT press release, 1 October 2018
142 ‘Government plans £80 million smart ticketing rail revolution’, DfT press release, 5 October 2017
143 ‘Rail passengers to benefit from ‘one-click’ compensation’, DfT press release, 1 October 2018
145 DfT, Rail Franchise Schedule (accessed 16 November 2018)
Published: 4 December 2018