Alok Sharma leads an adjournment debate in the House of Commons on rail ticketing and overcrowding.
Alok Sharma (Reading West) (Con): I was recently told a story about Lenin and rail travel. In April 1917, ahead of the October revolution, Lenin arrived by train back in Russia at the Finland station in Petrograd. As he stepped off the train, he was asked by some of his waiting supporters, “Comrade Lenin, why did you travel sitting in the First Class carriage?” Lenin replied: “Comrades, after the revolution we will all be travelling sitting in first-class carriages.” The story sounds apocryphal, and my revolutionary zeal is more muted than Comrade Lenin’s. All I want is for my commuting constituents who travel in standard class to be able to sit, and not stand, in standard class.
Rail overcrowding at peak times and high rail ticket prices affect many of my constituents. I get the message from my constituents in my postbag, and I get the message in person as I commute daily from Reading to London. There are broadly three ways to tackle overcrowding and the high rail fares: first, more investment in new rolling stock; secondly, encouraging train operating companies, through the terms of their franchises, to make more effective use of existing capacity and to think more imaginatively about their product offering; and thirdly a reduction in the rail industry’s overall costs, which will limit future increases in rail fares.
Let us take each of those in turn. I know that the Government recognise very clearly the difficulties faced by rail commuters, which is why they are investing in new rolling stock. I welcome the huge investment in the sector across the country—the largest level of investment in rail, I understand, since the Victorian era. As an example, last November, the Minister announced funding for an additional 48 carriages on First Great Western services running through Reading and the Thames valley, and into London Paddington. By August, Reading will have seen 1,500 extra standard-class seats available during the morning peak and around 1,700 extra standard-class seats during the evening peak hours, which will be good news for many of my commuting constituents—and, I have to say, for me too.
The Chancellor’s decision in the autumn statement to cap rail fares at RPI plus 1% was also welcome recognition that rail commuters need help at a time when household budgets are stretched. The median average gross annual salary in Reading is around £28,000. A season ticket from Reading to London, including the London underground, costs just under £5,000 a year. For many, rail fares take up a very large proportion of after-tax income. That is why getting value for money is absolutely key for rail commuters. Season tickets can cost thousands of pounds, so value for money should very much include being able to get a seat on the train.
Let me turn to the more effective use of existing capacity. Ahead of this debate, I wrote to the train operating companies that operate both first and standard-class services to ask about their policies to deal with overcrowding. That included a request for any statistics they may have on overcrowding, and in particular any information on the number of occasions in the past 12 months when services were deemed to be overcrowded. I also asked about the train operators’ policies on declassifying first-class carriages for use by all passengers when no seating is available in standard class, and for any statistics they may have on the number of times over the past year when a declassification took place.
Some of the conclusions from the responses were surprising. In at least one operator’s franchise agreement, no definition of “overcrowding” is specified, suggesting a lack of consistency across franchises. Most operators were unable to supply any detailed statistics on overcrowded services over the past year. For most operators, individual train managers make the decision to declassify a carriage or a whole train. Again, however, save for one operator, it appears that no data are collected on how many times declassifications have occurred over a 12-month period. From my experience of rail travel over the years, and not just the commute on the Reading-to-London line, I have never once been on a train that has been declassified. Perhaps I have just been spectacularly unlucky.
With many franchise agreements coming up for tender this year and next, and with a rail Command Paper and a fares review imminent, I have some suggestions that the Minister may wish to consider. First, let us aim for longer franchises, which will help operators to fulfil the requirement for more investment in new rolling stock. There also needs to be less prescription on the minutiae of franchises and more focus on measures that matter to passengers. Industry sources have told me that in some cases the format of draft agendas for meetings between train operating companies and the rail regulator have been dictated in franchise agreements. I am not sure how that benefits passengers. There should be more of an obligation to measure overcrowding regularly, against set objective parameters, and to publish these measurements, perhaps on a monthly or quarterly basis. I understand that an annual assessment is made of overcrowding at peak times on the Reading-to-Paddington line. However, that is not necessarily sufficient, given that only passengers on the morning commute, from 7 am to 10 am, are counted. In Reading, some of the most overcrowded trains leave between 6 am and 7 am.
Each operator should clearly set out its declassification policy, and there should be an obligation to record and publish—again, on a monthly or quarterly basis—how often trains or individual first-class carriages are declassified. That level of transparency will undoubtedly help commuters and passenger groups to determine how well train operators are responding to the challenge of overcrowding. Perhaps we should also consider setting out in franchises a minimum ratio for the number of standard-class seats on peak-time trains compared with first-class seats. It is absolutely right that anyone who pays the premium for a first-class ticket should enjoy a premium service. However, there is nothing more disheartening than walking through several relatively empty first-class carriages to reach some very crowded standard-class carriages, with passengers standing in aisles and vestibules. This is not about penalising high-paying first-class passengers, but about getting train configurations right at peak times.
In its response to my queries, South West Trains noted that it offers expectant mothers who travel with a weekly, monthly or longer season ticket the opportunity to apply for a free first-class upgrade if no standard-class seats are available during their journey. I would like to see that extended across the entire rail network; indeed, it could be included in rail franchise agreements at little cost to the train operating companies. That would represent a common-sense approach. Also, where this does not currently happen, I am sure that the scheme could also be extended to include disabled passengers without operators incurring prohibitive costs.
With changing work patterns, and an increase in working from home or more than one location, it also needs to be recognised that not all business commuting requires people to travel every day of the week. Some of my constituents might travel to London only three days a week, and not always on the same three days. However, the only choice they currently have is between buying a weekly season ticket and buying more expensive daily tickets. That does not represent value for money. We need train operators to offer more value-for-money ticketing options, and smart ticketing is very much part of the answer.
Iain Stewart (Milton Keynes South) (Con): I congratulate my hon. Friend on securing this debate. He has made some excellent points that I heartily endorse. Does he agree that, as well as assisting commuters from Reading or Milton Keynes travelling into London, smart ticketing would assist inward investment to our respective constituencies for passengers who want to travel there on business, albeit not necessarily on a weekly basis?
Alok Sharma: My hon. Friend is absolutely right. Smart ticketing will make a huge difference to his constituents and mine. He is known as a great champion of the commuters in his constituency.
In the autumn statement, the Chancellor announced a £45 million investment to extend smart ticketing across the south-east. As my hon. Friend has just pointed out, smart ticketing could make a massive difference to passengers, and enable train operators to offer multi-ticketing options. For example, the three-days-a-week commuter could benefit from a pay-as-you-go system, but paying the reduced season ticket price, or buy 12 journeys for the cost of 10. There are many permutations that would bring more value for money for passengers.
If franchise agreements are to last for 15 years, they need to be flexible enough to cope with changes to technology, and I hope that that will be factored in. Train operators should also be encouraged to innovate in the way that train classes are categorised. Perhaps some lessons could be learned from the airline industry in that regard. In that industry, many operators now offer a range of options, including premium economy, and I do not see why that could not be replicated across the railways. As an example, Chiltern Railways is experimenting with the option of a new premium economy business zone, which allows passengers to upgrade by paying a supplement of £20. The upgrade includes a guaranteed seat and access to wi-fi, without the extra unnecessary and costly frills of first class. The new service can be purchased without having to buy a separate ticket or pay a full first-class fare. That represents the sort of imaginative approach that I would like to see considered in new franchise agreements.
I am happy to stand corrected, but I understand that it is not currently possible for the same operator to offer differential fares on the same line. Let us take the Reading to Paddington line as an example. A fast service takes 30 to 35 minutes, and a local stopping train takes about an hour, yet there is no difference in ticket pricing between the two services. One could imagine, however, that a significant fare discount for those using only the locally stopping service would be an attractive option for some commuters. In any such scenario, it would be important to ensure that those using the fast services did not suddenly see a huge uplift in their fares. Additionally, for the services to be viable, sufficient rolling stock would need to be available to cover both route options adequately. Longer franchises and the consequent greater requirement for operators to invest in new rolling stock could eventually present an opportunity for them to consider differential pricing.
Finally, I want to cover the reduction of overall industry costs that would in turn lead to reduced pressure on ticket price rises. The McNulty review concluded that UK rail was the most expensive in Europe, compared with some benchmark countries. The review also found scope for industry costs to be reduced by 30% by 2018-19, reflecting the fact that passengers and taxpayers in the UK currently pay an average of about 30% more in fares and subsidy than those in comparable European countries. McNulty noted that the key barriers to efficiency in the sector included the fragmentation of the industry and the current franchising and fare structures. I have already commented on franchising and fare structures, and I agree that industry fragmentation can be a barrier. The planned operational alliance between South West Trains and Network Rail on trains operating out of Waterloo is one way of getting industry players to work more closely together for the ultimate benefit of passengers, and if it works, it could be a model for others to follow.
I acknowledge the good work that the Government have already done to tackle overcrowding and rising rail fares, but there are imaginative solutions that train operators could adopt to provide much more value for money for rail commuters. I am looking forward greatly to the publication of the Government’s rail Command Paper and fares review and, of course, to the Minister’s response this evening.
The Minister of State, Department for Transport (Mrs Theresa Villiers): I congratulate my hon. Friend the Member for Reading West (Alok Sharma) on securing the debate, and on his interesting and well-thought-through contribution on the issues that face not only his constituents who commute but rail passengers across the country. There is no doubt that there are significant concerns about overcrowding on a number of routes at particular times of the day, including those used by his constituents. The Government take those concerns very seriously. We also take seriously the problems on routes into a number of cities around the country. That is one of the reasons why, even in these difficult times for the public finances, the Government have prioritised investment in our rail network.
As my hon. Friend has generously highlighted, the programme of capacity expansion to which we are committed is bigger than anything seen since the Victorian era, and a number of the most ambitious and important changes will be taking place in the Great Western franchise area, which serves my hon. Friend’s constituents in Reading.
Our programme includes a new fleet of IEP—intercity express programme— electric and bi-mode trains built in Newton Aycliffe in County Durham; electrification of the lines linking Paddington and Bristol, Cardiff, Oxford and Newbury; upgrades to signalling and train operating systems; provision of an electric suburban fleet; a massive redevelopment of Reading station; Crossrail infrastructure works and rolling stock introduction, including improvements to Paddington; and, last but not least, redoubling the Swindon to Kemble line. All that is on top of the current programme that is delivering the 48 carriages that will benefit the Great Western franchise. I am pleased to say that, as part of that roll-out, two additional three-car trains—class 150s—started in full service on the Reading to Basingstoke line just last week. This releases turbo trains from that route to strengthen the Paddington services and provides a capacity uplift in its own right on the Basingstoke line.
My hon. Friend focused his remarks, among other things, on the reporting system and its relation to crowding levels. We are in the process of re-letting the west coast franchise—and that new franchise will require the franchisee to use automatic passenger count equipment. We will, of course, consider similar provisions for future franchises. I note my hon. Friend’s particular concerns about the regularity of reporting. Franchisees have generally been asked to supply data for at least each quarter, but I acknowledge that modern technology means that more frequent reporting is becoming a more viable option, to which we will give careful consideration. By collecting better data about demand and usage than is available now, we have an opportunity to transform and improve planning in the rail industry.
We are at the start of an intense retendering programme for rail franchising. Through this, we plan to deliver the longer franchises, for which my hon. Friend rightly called, including on the Great Western network. We also propose to deliver greater flexibility to respond to customer demand in a commercial way, within a framework set by the franchise that protects key outcomes for passengers, taxpayers and the economy. That means giving operators more freedom to design service patterns and stepping back from the system that arose under the previous Government whereby timetables were effectively set in Whitehall. We want to see more decision-making power transferred to people who are closer to the front line. I believe that this is in tune with some of my hon. Friend’s remarks, and that these changes will lead to a better match of capacity and demand and better outcomes for passengers.
On 22 December 2011, the Department for Transport launched a consultation on the new Great Western franchise. We will ask bidders to consider how they would strengthen the reliability of services and improve stations and trains. Current franchises already include train planning requirements. For example, we have issued the invitation to tender for the west coast franchise, including obligations on planning timetables and stock in order to minimise crowding on short commuter flows —generally under 20 minutes—and to give passengers a seat on longer journeys. In cases where crowding cannot be eliminated, the new west coast franchise would require the operator to ensure the impact is not unduly concentrated on a single route or service. Every franchise has its own set of circumstances, and the consultation on Great Western explicitly asks for views on how we can best address overcrowding issues on its routes.
Of course, we have to acknowledge that there are many places on the UK network where using existing resources more effectively and efficiently will not be enough to meet the demand for rail. In some cases, crowding problems can be realistically addressed only with infrastructure improvements. It is not impossible for these to be delivered as part of a franchise agreement, particularly smaller-scale projects, and we have included provisions in the west coast ITT to make it easier and to encourage it. Medium and large upgrades will generally require Network Rail or Government funding, which brings me back to the major programme of investment to which I have already referred. Responding to concerns about crowding effectively requires both Government and train operators to play their part.
My hon. Friend made some good points about ticketing. As the number of passengers using our railways each year continues to grow, it is more important than ever for us to get fares and ticketing right. As my hon. Friend said, that was considered in the McNulty review. Our vision of a modern customer-focused railway includes smarter and more transparent fares and ticketing. We want buying a ticket to be a straightforward transaction, not an obstacle course, and we want passengers to be able to choose from a range of fares that are designed to meet their needs without having to understand every nuance of the underlying fares structure.
Like my hon. Friend, I recognise the benefits of smart ticketing. I acknowledge that the technology presents the possibility of more flexible season tickets, and we intend to explore it as part of our forthcoming fares review. The season ticket model has remained largely unchanged for many years, and I agree that we need to update it to reflect modern patterns of work and travel and the fact that increasing numbers of people no longer work the traditional nine-to-five, Monday-to-Friday week.
Rail ticketing can contribute to our efforts to support a more flexible working culture, as well as removing barriers to entry to the workplace by, for example, women who are weighing up the costs and benefits of returning to work after having children and are considering part-time work. The smart ticketing technology that is now becoming available could deliver a range of new types of ticket, with the potential to transform the way in which we think about and pay for rail travel. I assure my hon. Friend that the Government take the wider roll-out of smart ticketing very seriously. Indeed, that is partly why £45 million was recently committed to the development of flexible smarter ticketing on routes in the south-east.
My hon. Friend mentioned the Chiltern business zone product that runs on some services between London and Birmingham. That is the sort of passenger-focused innovation that we want train operators to consider when operating within the framework of the longer, more flexible franchise agreements that we will be rolling out as part of our reform of the franchising programme, because we want them to encourage more passengers on to trains when they have the capacity to get the best use out of rolling stock.
As I have said countless times at this Dispatch Box, I consider it vital for the cost of running the railways to come down. I agree with my hon. Friend that that is essential if we are to respond effectively to the concern expressed by passengers about the level of fares, in his constituency and in many other parts of the country. It is also the only viable means of delivering an end to above-inflation fare rises. It is fair for passengers to contribute to the cost of running the railways and to the coalition’s massive rail improvement programme, and the fares that they pay are making an important contribution to that; but neither fare payers nor taxpayers should have to pay for industry inefficiency.
In line with the recommendations in the McNulty report, we believe it is crucial for those responsible for track and for trains to work more closely together. A crucial part of delivering cost reductions is ensuring that both sides of the rail industry are subjected to strong shared incentives to reduce costs and improve services, and we will therefore expect train operators to deliver closer working relationships and alliances with Network Rail as part of wider efforts to deliver the savings that the McNulty study concluded were possible.
As my hon. Friend anticipated, we will shortly publish a policy statement—in the form of a Command Paper—on rail reform, reducing the cost of the railways, and improving services for passengers. It will set out a strategy for an affordable. sustainable, safe and high-quality railway that will deliver a better deal for both taxpayers and fare payers. I encourage Members to read the Command Paper when it is published, and to respond to the fares and ticketing consultation that we will be launching shortly. It is important that the concerns of their constituents are heard loud and clear as we take forward the crucial process of not only improving and expanding capacity on our railways, but reforming them in order to deliver lower running costs and better services for passengers.
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