How Fair are the Fares? Train Fares and Ticketing (HC 700-i) Transport Committee 23 Nov 2005

Q30 Mr. David Clelland: Just on this question of more public control over the railways for the purpose of producing cheaper fares, obviously that does suggest a greater public subsidy. Have you got any idea as to what the figures are on that?

Mr Crow: No, but we would be able obviously to provide the research for that, but quite certainly there is no sort of pro forma out there about how the fares have been arrived at. It is quite clear that once you leave the commuter belt where there is some form of regulation about what the fares are, it is literally how much a person is prepared to pay, so it becomes a bit of an auction really.

Q31 Mr. David Clelland: I do not think your arguments are going to go down particularly well with the Government really if you say, "This is the direction we should be moving in", but you have absolutely no idea whatsoever what it is going to cost.

Mr Crow: Yes, but the reality is, going back to previous arguments, that the train operating companies are getting three and a half times more subsidy than British Rail got.

Mr Joseph: We have done a specific calculation on a specific franchise for this. We calculate that with Northern Trains, if fares were reduced by 25 per cent, this would increase the subsidy by just 2.5 per cent, achieve a 20 per cent increase in passenger numbers and the value for money for the public purse from doing that would be 17 per cent, and that is on some fairly conservative assumptions about what would happen to passenger numbers. We have not done this across the network, but that suggests, using the elasticities that Mr Woracker has been using, that there are some cases where there is a good public benefit, a value-for-money benefit in bringing fares down and it is not a big additional cost to the public purse.

Q32 Mr. David Clelland: On this question of the actual fares charged, we talked earlier about the comparisons between here and Europe. These comparisons seem to be based on standard fares. You have complained, Transport 2000, that there is a huge array of different fares but is it not the fact that it is because we have a huge array of different fares that people can find quite cheap fares? I understand now you can get a first-class single from King's Cross to Newcastle for £29. I do not know if there is anywhere in Europe you can travel first-class for £29, tell me if there is? That seems a pretty good deal. People may have to search around to find that but it can be found. Is it not the case that if you simplify the system, as you want, and we have a much more simple and transparent system, that actually what will happen is the cheaper fares are going to rise?

Mr Crow: First, a lot of people have not got access to the Internet to find the fares. Secondly, I do not believe that those £29 fares that you talk about, first-class, are every day of the week but far between. The reality is that the company will sell the tickets to the highest bidder. If people are prepared to pay £200 for a ticket then they will let them go at that price, that is what happens, and other people have to stand up in second-class which we find is unacceptable.

Q33 Mr. David Clelland: Yes, but the point is people can find these cheap fares at the moment, can they not? It may be difficult for some people because of Internet access and that sort of things but that is improving every day. People can find cheap fares. Under the system you are suggesting, where it is less complex, is there a danger we will not be able to have the cheap fares?

Mr Crow: You can find cheap tickets if you have got an opportunity where you are going to London or York or Manchester in two or three months' time but if an instant crops up, for example you get a telephone call and you have to be in London in three or four days' time, you get really walloped by a high fare.

Mr Joseph: We have not gone as far with the analysis as the RMT have. Our point is that, first, there should be some base rules that certain walk-on discount fares are nationally applicable across the rail network. We do not want to remove the freedom of operators to offer others but there should be some national basic fares. Secondly, in some cases the fare structure has got so complex that it is completely confusing and impossible for passengers to work out what on earth is going on and what on earth the fare is.

+++

Q58 Mr. David Clelland: We have heard from our previous witnesses that fares on the mainland of Europe are higher than in the United Kingdom. Would you agree with that and, if so, why do you think it is?

Mr Foxall: I think comparisons are very difficult to make. We heard the discussion between the Chairman and the witnesses about how you base it and whether you look at purchasing power parity, costs and indices, how you cost it out there is a question of what you get. We have a relatively frequent rail service on many of our main lines, in other parts of Europe that is not the case. I think those comparisons are very hard to make and we agree on the face of it they are cheaper, and some of our fares are significantly dearer, but I think those comparisons are very hard. I think we have to operate within the UK and get value for money here.

Q59 Mr. David Clelland: Do you think there is a case for arguing fares ought to be lower in the United Kingdom and, if so, how could that be achieved without further public subsidy?

Mr Foxall: Clearly you can lower fares if you increase the frequency and the use of trains. More passengers mean more revenue. Railway companies actually collecting fares in some cases would be quite a good thing. Revenue protection is not always evident, so collecting fares that you are supposed to be collecting would be a good thing. We are glad to see barriers going up in various places to increase that. Clearly getting more people on trains is very important but if you get to a stage where the trains are so full that people are unsure whether they can get on the train you may have a negative effect on people's desire to travel. The basic answer to your question is of course we would like to see value for money. Cheaper fares is a difficult question to answer: what is cheap, what is dear? It is what is value for money to the customer.

Q60 Chairman: Do you want to comment on that, Mr Cartledge?

Mr Cartledge: Just to add a point. International comparisons are fraught with many difficulties. It is a well-known fact, and I do not think widely challenged, that the published rate of fares for travel around London is higher than the equivalent fares around most other comparable cities but London has a much lower level of subsidy and a much higher level of cost recovery from passengers. However, it is the case also that London has for many years had a very much more generous system of concessionary fares for older people and now has a much more generous system of concessionary fares for young people than is available in most equivalent cities. It depends very much on the category of passenger you are talking about as to whether or not these comparisons hold good.

+++

Q87 Mr. David Clelland: Why is the creation of a national railcard such a good idea?

Mr Smith: It would be a good idea if it encouraged more people to travel. If it encouraged more people to get out of their cars and to use the trains, it would be a good idea. It has a simplicity about it which is attractive.

Q88 Mr. David Clelland: You said "if" but presumably you think it would be because you are recommending it?

Mr Smith: We have put forward a policy position that we would like to see a railcard. To be honest, we need to do more work on it in the context of the research that has already been mentioned. It is clear that other types of railcards do encourage travel, otherwise the rail companies would not do it. It is odd that we do not have this type of national railcard when we have a national rail network which still describes itself as such.

Q89 Mr. David Clelland: What is the evidence from Sweden on that? In the evidence from the East Midlands there was mention of the Swedish system.

Mr Abbott: I think in some small European countries such as Sweden you can buy a pass which covers the whole country for a year. We have a similar sort of thing in this country for Greater London and the Metropolitan areas. I think that although a national railcard has an attraction, to me there is a danger, first of all, that the railways would carry more passengers for less money in aggregate, and it is a slippery slope to go down. I think there is also a danger that the train operators would tend to put up the price of unregulated tickets in the knowledge that many of the purchasers were getting a discount. I think there is evidence of this from the South East. From the brief study I did I found the price of a cheap day return in the southern counties is more expensive than we find in the East and West Midlands because many of the purchasers have a network card and are getting one-third off.

Q90 Mr. David Clelland: Should all the tickets be regulated? Would it help if we had more regulation?

Mr Abbott: I do not think we would want to see every type of ticket regulated but I do think the regulation issue needs re-examination. I am afraid I do not have any instant solutions to offer.

Mr Smith: On that particular point about the regulation of open tickets, it is a knotty problem that one. One of the first complaints I ever saw when I joined the RPC was a woman who went to travel from Newcastle to London for a funeral, who had not used the railway for years, who turned up at the railway station, and was astounded at the price of an open ticket.

This is an uncorrected transcript of evidence taken in public and reported to the House. The transcript has been placed on the internet on the authority of the Committee. Neither witnesses nor Members have had the opportunity to correct the record. The transcript is not yet an approved formal record of these proceedings.