Rail fares and franchises (HC 233-ii) Transport Committee 25 Feb 2009

Q272 Mr. David Clelland: Do you exercise any influence at all over how the train operating companies spend the revenues they raise from fares?

Lord Adonis: Of course we expect them to absolutely fulfil their franchise commitments and that takes up the great bulk of their revenue.

Q273 Mr. David Clelland: Do you monitor the profits of these companies to see if they have been making excessive profits, as opposed to the investment they are putting into improving the quality of service?

Lord Adonis: Our concern is not about their specific profit level. It is that they are fully meeting their franchise requirements. Of course, those franchise requirements are extensive, including specifying in some detail the service level they are expected to provide on each of the routes in the franchise. Your routes to the north east are specified in great detail in the franchise along with what the service level obligation is on the operator, which of course is what they have to do before they are able to make any profit at all.

Q274 Mr. David Clelland: Do you have any comment on the RMT’s claim that fare increases are fuelling dividend increases of between 10 and 33%?

Lord Adonis: It is not for me to determine profit levels of companies, except to observe that of course in a time of boom they were doing very well. This is not a time of boom at the moment so they will be under some pressure.

Q275 Mr. David Clelland: You are satisfied that the balance between revenues, profits and improvement in services is satisfactory?

Lord Adonis: The whole purpose of having the franchising system with competitive franchises is to get the best possible deal for the taxpayer and the travelling public. I am absolutely accountable to you and Parliament as a whole for the value we provide to the taxpayer and the service we provide to the passenger. We have highly competitive franchising arrangements which the National Audit Office looked at and said it thought were working extremely well, including on your franchises. As you will know, recently when that was up for competition and we think we are delivering the best value we can for both the taxpayer and for the passenger. It is not for me of course to determine profit levels over and above that for individual companies.

Q276 Mr. David Clelland: Overall, your observations of the performance of the east coast line, for example - I am not necessarily concerned specifically about that - and the overall performance since the franchise was let is an improvement in the quality of service and passengers are reflecting that with their comments.

Lord Adonis: The Passenger Focus study of passenger satisfaction showed I think, from memory, a four percentage point improvement in passenger satisfaction on National Express east coast. Punctuality has also risen appreciably in the last year. On the independent measures that we have both of train performance and passenger satisfaction, they have been improving. As I always used to say in my last job at education and I say in this one, my middle names are "no complacency." Do I think there is room for further improvement? Undoubtedly. I know that the train operating companies are aware of that. They never hear from me any statement that I am satisfied with how things are at the moment. I expect them to continue improving.

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.

The full transcript may be read here.