[Mr. Martyn Jones in the Chair] — Rail Fares

– in Westminster Hall at 12:00 am on 26 April 2007.

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[Relevant documents: Sixth Report from the Transport Committee, Session 2005-06, HC 700, and the Government's response thereto, HC 1640.]

Motion made, and Question proposed, That the sitting be now adjourned.—[Mr. Alan Campbell.]

Photo of Gwyneth Dunwoody Gwyneth Dunwoody Labour, Crewe and Nantwich 2:30, 26 April 2007

It is always a delight to see you in the Chair, Mr. Jones, particularly when we are discussing a subject such as this, which is of such great concern to everyone.

It is extraordinary that the House of Commons sometimes seems to be remarkably ambivalent, even about its own programmes. For example, I think we all agree that in the interests of the environment it would be sensible if more people travelled by train, and that we should modernise the system, some of which is 120 years old. Yet when it comes to the means by which we encourage people to take the train—the prices that we charge for that service—we get ourselves into an interesting and esoteric argument, which is, frankly, not entirely supportable, about taxpayers already paying so much for the railway system that we must ensure that the fare box is responsible for the cost.

In theory, that is right, but the reality is that people will not travel by train in large numbers if fares consistently rise beyond the rate of inflation or the sum that they believe is acceptable, not least because at a certain point they begin to think that almost any other way of getting to work is cheaper than using the railway system.

The Transport Committee decided that it should investigate train fares. We wanted to know how fair the fare system is, and whether it is acceptable that the price of train travel per mile varies enormously in this country, depending on route and train operator, whereas in many similar countries, not just in Europe, estimates are made on a totally different basis.

The travelling public are not entirely convinced by the argument that cheaper rail fares are available. It is true that in theory computer whiz kids with a lot of time available who are prepared to spend it surfing the websites of various companies may be able to find a fare that is cheaper than those that British Rail charged—not cheaper than all its fares, but cheaper than some. However, there is clear evidence that, unlike other sections of the transport industry, the railways are not too anxious that their websites clearly and simply enable people not only to know where the cheap fares are, but how to book them. The railway companies assure me that they will do something energetic about that, and that the fact that they have not done so so far is not to be taken as an estimate of the way in which they regard their customers.

Photo of Susan Kramer Susan Kramer Shadow Secretary of State for Trade & Industry, Trade & Industry, Shadow Secretary of State, Liberal Democrat Spokesperson (Trade and Industry)

I thank the hon. Lady for the important things she is saying. Does she agree that simplicity sometimes becomes a cover for increasing fares? For example, in my constituency, South West Trains has changed to a zonal system. For someone travelling to central London from Kingston, virtually every fare went up 35 per cent. in 2007, and fares to most other stations have gone up similarly, on the grounds that the new system provides simplicity.

Photo of Gwyneth Dunwoody Gwyneth Dunwoody Labour, Crewe and Nantwich

If the hon. Lady catches your eye, Mr. Jones, I am sure that she will be able to make those points.

The reality is that as a nation we have begun, over more than 10 years, to recreate and stabilise the railway system. A great deal of money has been poured into it, and we now have modernised lines. The west coast line is not only efficient, but comfortable and speedy. However, the difference in fares that passengers are required to pay is considerable. The last time I bought a first-class British Rail ticket from London to Crewe it cost £88 return; it is now nearly £287. I realise that there has been an increase in prices since then, but even I think that such a price rise constitutes a problem for passengers.

The trouble is that the travelling public are not convinced that there are now cheaper fares or that they are good value for money. The most recent data from the national passenger survey show that more than 43 per cent. of passengers overall and 55 per cent. of passengers on long-distance routes are satisfied with those fares, but only 38 per cent. of passengers in London and the south-east are. Those figures have not changed since the original two-year assessment, and in 2005 there was hardly any change.

Those poor levels of passenger satisfaction are important because passengers will begin to avoid rail travel if they believe it is poor value. The Government's response was that passenger satisfaction with rail travel's value for money has been consistently lower than all other indicators. They argue that although they find that disappointing it

"should not necessarily drive fares policy."

If passengers' perception of rail travel's value for money does not drive fares policy, perhaps someone would like to tell me what should.

The Committee took evidence and made it clear that rail travel is becoming significantly more expensive than coach or car travel, and in many instances even than cheap air flights. Given that many passengers are unable to buy the cheapest fares, either because only a handful are available or because they are unable to plan their trips sufficiently far ahead, is it not slightly disingenuous of Her Majesty's Government to quote the cheapest fares in their response to our report? Are not the cheap, advance purchase fares effectively a decoy to distract attention from the fares that most people actually pay?

If someone wants to buy a cheap flight, they can obtain the information easily and rapidly, and book the ticket online. If they want to buy a cheap train ticket, they will find that, first, the web pages are not easy to navigate, secondly, very few enable people to book easily, and thirdly, there are very few cheap tickets. That is a pretty bad deal.

The Committee talked about the number of unregulated fares, because we believe that the reason why so many passengers are dissatisfied is that they do not believe the increase in unregulated fares to be just. It is greater than they believe is acceptable. Virgin's west coast and Midland Mainline's fares went up by 6.6 per cent. and 5.9 per cent. respectively, although the average increase in unregulated fares on 1 January 2007 was 4.7 per cent. Average price increases are masking significant variations between different types of ticket. The price of some fares, particularly open fares, has increased significantly more than others. Year on year, new year's day brings an above-inflation rise in most rail fares. We do not believe that that trend should be allowed to continue, and if it does would someone please tell me where it will end?

The Committee concluded that open, flexible and walk-on fares are crucial because many travellers need flexibility in their travel arrangements, as Members of Parliament know only too well. Anyone seeking to book group fares for a visit from the House of Commons is frequently confronted with that problem. Members do not arrive together, do not leave together and go to different places at the same time.

We said that it was important to look at the train operators' attitude. Some seem to think that they can try it on to see how much they can get away with. That does not apply to all of them, but some make little effort to ensure that people receive value for money. The coverage that operators receive when, for example, the London to Manchester open fare passes the £200 mark, is indicative of public indignation about the prices that are charged for walk-on rail fares. The Committee said that the Government ought to cap those fares, but in response, we were told that they did not believe the fares to be disproportionately expensive. I must ask the Minister whether there is any price rise in open rail fares that would lead the Government to consider capping them, because it would be helpful to know.

The saver fare traditionally offered a good, value-for-money walk-on option for anyone who could travel outside popular hours. Saver fares are regulated, but train operators are gradually eroding their value by tightening terms and conditions and limiting the time when the tickets can be used. The Government hinted that they might change the regulatory regime for saver fares or even abolish regulation, but we need a guarantee from the Minister that he has no such intention. If the Government follow that path, would they like to put in place measures to prevent any further erosion of saver fares?

In the Minister's view, have train operating companies made adequate improvements in the transparency of information about the availability and quotas of advance purchase fares? Passengers have the right to such information before they purchase, and they have the right to be supported by adequate information systems.

Photo of David Drew David Drew Labour, Stroud

I have looked again at chapter 5 of the Committee's excellent report, and my hon. Friend may be able to help me with the definition of peak travel. I am genuinely confused, given that First Great Western Trains' current definition of peak travel is different from the definition it used before it acquired its most recent franchise. I am often asked when peak times are, whether they correspond to when one leaves or when one arrives, and in particular, whether certain train times fall inside or slightly outside peak time. It makes a great deal of difference, especially when people want to use a saver fare but suddenly find that they must travel during peak time.

Photo of Gwyneth Dunwoody Gwyneth Dunwoody Labour, Crewe and Nantwich

I sympathise with my hon. Friend, because some train guards—I insist on calling them train guards even though they are now called train managers—begin every journey with a list of qualifications: "If you have this ticket, you're on the wrong train; if you have that ticket, you're on the wrong train; if you have this ticket, you're probably going to have to pay five times when I come round." Although I very much sympathise with the staff who have to go through that liturgy, it demonstrates that train companies do not tell people the location of the cheap tickets or the times to which they apply, and that they print information in many different ways that are not easily accessible. It is very easy to be misled, which is a real problem.

The Committee was concerned that as more and more commuters travel further as house prices rise in city centres, they are forced out of the conurbations. We said that if train fares were to rise exponentially, it would have a direct effect on the availability of workers, not least because if the upward trend of house prices in large cities continues, large numbers of people will begin to say that they can no longer accept employment in which train fares represent a large percentage of their overheads.

We ought to be told about capacity and fares. The Committee was told that the Government accepted that there were capacity problems, but that they thought that they were mainly on commuter lines where fares were regulated. We said that train operators on unregulated lines were using above-inflation price rises to price their way out of capacity problems.

I do not know of any other industry that, faced with a highly successful product, in effect tries to price its customers out of the business. However, it could be rather fun: large numbers of the members of the Association of Train Operating Companies could stand at the entrances to main stations, refusing entrance to anyone who did not look as if they were capable of paying the train fare. Just as bizarre, however, is that the train companies feel that the way to deal with their capacity is not to plan ahead and talk to the Government about changes to rail gauge or the provision of extra rolling stock, but to say, "Well, goodness me, there are so many of these people, we will have to charge them a great deal of money, because with any luck, they will go away." One train operator increased its unregulated fares by twice the rate of inflation. What effect will that have on overcrowding on the line?

Photo of Susan Kramer Susan Kramer Shadow Secretary of State for Trade & Industry, Trade & Industry, Shadow Secretary of State, Liberal Democrat Spokesperson (Trade and Industry)

Is the hon. Lady aware that having priced people out of peak hours with high fares, about which I have a good example in South West Trains, locally, there are now special charges for the shoulders to peak hours, extending them almost to midday? At every opportunity, the pattern is an increase in price rather than capacity.

Photo of Gwyneth Dunwoody Gwyneth Dunwoody Labour, Crewe and Nantwich

At a certain point, commuters will become so irritated by the provision of insufficient accommodation—travelling on crowded trains, in unacceptable discomfort—and by having to pay enormous amounts of money that we will see the equivalent of the national fares strike that is suggested every time fares increase.

The Government must take action to ensure that there is a simple framework of three ticket types. The situation really is unacceptable. Under British Rail, people had a clear idea about the type and class of ticket that was available; under the current regime, they have no idea. The so-called flexibility increases neither capacity, comfort nor even utility. All it does is increase the amount of money that is paid to various large banks, which do not seem to be doing too badly anyway.

We asked the Government to look closely at regulatory complexity and weakness. The rail fares system is complex, and complaints about unregulated fares are difficult to deal with when the Office of the Rail Regulator and the Office of Fair Trading share powers to make judgments and enforce decisions. The framework does not work, and it is time that somebody analysed the system, simplified and improved it and made it possible for people to complain easily and effectively. The Government should be prepared to look again at the system's structure, but we have not received any explanation or indication that they believe that the complexity of the system makes complaining difficult for passengers.

Although the Government did not accept our recommendations, they must know that the Committee feels that it is an important subject. It is clear that more and more people are using the railways, and that is in everyone's interest as long as they arrive safely, comfortably and for a reasonable fare. It is exactly the way in which people ought to be encouraged to travel throughout the United Kingdom. A burgeoning economy, which ours has been over the past 10 years, inevitably means that more people want to travel, and it certainly means that more people will want to go by rail. The need for extra capacity therefore ought to be of comfort to the Government, and they ought to be able to say plainly and as a matter of policy, "We are looking at the relationship between the cost of rail fares and the environmental and commercial benefits of carrying people easily."

I can provide the Chamber with a simple example. I shall be travelling to west Wales to support in the Assembly elections a candidate who is also called Dunwoody. After a great deal of work, and with the assistance of some very talented people in the House, it has become clear that travelling from Crewe to west Wales is cheaper by chauffeur-driven car than by public transport. I do not think that I am alone in thinking that that is probably not a very sensible way of behaving.

Although I fully understand the difficulties that the railway systems face, the Government will have to take some tough policy decisions and look clearly at what we pay for our railway journeys. They are going to have to grasp the nettle. It is really no longer acceptable for them to say to the House of Commons, "Well, the money comes either from the fare box or from the taxpayer, and we therefore can't do anything about it—the fare box is going to be allowed to rise." The reality, however, is that the whole system is supported by the taxpayer. It does not matter which way we look at the issue, taxpayers pay because they need a good railway system that can carry large numbers of people who could not be carried efficiently and safely in any other way. Taxpayers pay because they understand the relationship between railways and the economy, if nothing else.

At some point, the Government will have to come clean and say, "This is an extraordinarily difficult situation". However, we cannot continue with the outlook that says that more and more train operating companies will be operating on the basis of management contracts, for which they are handsomely paid, while taking no responsibility for the track, the rolling stock, the stations or anything else, and the individual passenger is going to be told, "You must pay an economic price". By all means, let us have an economic railway, if that is what the people of Britain want, but let us ensure that the cost is equally divided.

Photo of Lee Scott Lee Scott Conservative, Ilford North 2:51, 26 April 2007

I shall keep my remarks fairly short and not repeat anything that the Chairman of the Committee has said.

If we want to encourage people to travel by rail rather than by car, we cannot expect them to need a BA honours degree to know what fare they are booking at any given time. During the Committee's questioning, we were told that the system had been simplified throughout the country and that anyone could, without question, phone up and be given the cheapest price straight away. So I decided to try that out. In three separate phone calls, I was quoted three separate prices for the same journey, none of which was the cheapest price advertised on the website. If the journey had been booked over the web, the price would indeed have been cheaper. What that journey was is irrelevant, but such incidents lead one to believe that passengers are not being given the best deal possible.

If we are to get people out of cars and on to public transport, we cannot expect them to travel in conditions in which it would be illegal to transport animals, nor can we expect them to pay an exorbitant amount of money for the privilege of doing so. The only way is to provide a clean system, on which people wish to travel. Then they will leave their cars and start to travel by public transport. I am an ideal example of that. Before entering the House, I used to travel up to Yorkshire quite frequently. I preferred to go by train, which was far better than sitting in a car for hours on the A1, stuck in jams. However, when it gets to the stage where one has to stand for the entire journey back down, one ends up deciding that it would indeed be better to travel by car. Instead of people being encouraged, they are being discouraged.

Passenger satisfaction for mainline travel through or near my constituency is quite low. I am sure that the Minister will tell me later that official statistics show the opposite, but I assure him that my mailbag does not. People complain not only about the length and price of their journeys, but about the conditions in which they travel, particularly in rush hour. Members of my staff who travel in from Essex continually experience tremendous problems, and have to phone in to say that they will be late because the train is delayed. That happens to journeys to this place, so I am sure that it happens to many thousands of people travelling into London on a daily basis.

To conclude these brief remarks, I reiterate that, as set out in our report, customers want a quality system, with a simplified pricing structure that they can understand and conditions that make them want to travel by train. If that is achieved, not only will numbers increase, but we shall see an end to the situation that we heard about from the Chairman of the Committee, on which I am honoured to serve, whereby people are discouraged—it is slightly unusual that any business would want to discourage people—by the prices that they are being charged.

Photo of David Drew David Drew Labour, Stroud 2:55, 26 April 2007

I am delighted to say a few words. I had no intention of doing so until I came into the Chamber, but given that there are not a great number of Back-Bench Members present, I thought that I might as well add my three pennyworth. I apologise to the Minister for missing his discussions on First Great Western earlier this week, but no doubt I will hear in due course about some of the problems in the company.

The report is useful and I want to make a few points, one of which I have already raised in my intervention on the Chairman of the Committee. I am genuinely confused—perhaps the Minister would clarify matters for me—about what are peak times, as they cause all manner of problems and change the nature of people's travelling times. With price discrimination, I accept that there is a reason to take more from those who travel when the trains are at their busiest—clearly that is during the commuter times—but there are now some bizarre applications of that. The obverse is that if an operator can take more at certain times, there must be a reason for providing cheaper saver tickets; otherwise, there would just be a standard ticket price and when people travelled would be irrelevant.

My second point is important and has been touched on, but I will put it bluntly. Travelling by train must not be seen as a rich person's form of transport. Sadly, however, that is somewhat the case now. I am not saying that rail transport has ever been able to compare favourably with the car on a purely price-based comparison, even in the good old days of British Rail, which some of us still look back on fondly. The reality is that if the full costs of the car are taken into account, including environmental costs, the train must come into its own.

However, it can be forgotten that, because of the pricing structure, a family travelling by train does not pay once, but as many times as there are members of the family travelling, which can be prohibitive. For young families who might not have a car or who might be being very thoughtful in taking the train, some of the costs can mean that travelling by train is still prohibitive, even with the cheaper fares, discounts and special arrangements. That can be a reason why people do not travel at all or why they use the coach. We must not see the issue as the train versus the car. One of the reasons why coach travel is so attractive in this country is that it is by far the cheapest form of transport. However, coaches do not get vehicles off our roads. That is something that we need to take account of.

My third point is to do with something that affects both the lines in my area—the Cheltenham-Paddington line and the Bristol-Gloucester line—and which is long overdue: the installation of automatic ticket machines. At one level, that is to be greatly welcomed. I get really fed up when I know that there are certain points in a journey between which people can travel and never pay a cent. If they sit in the right part of a long train, the chances of the guard—or ticket inspector, manager or whatever we call them now—finding them out are quite small. Even when the guard does find them, the experience can sometimes be quite unpleasant, because they never seem to have any money and things can get difficult. Again, that puts a lot of stress on the staff. It is galling when people regularly travel for free, because the burden is carried by those who pay. It is good that we have a system under which people can pay before they get on the train, even if they board from—this phrase is not politically correct—an unmanned station.

Photo of David Drew David Drew Labour, Stroud

All right. I have been put right; there is always a correct way of putting things.

I have yet to try my parliamentary card on one of the machines. The first time that I do will be an interesting experience; I hope that it does not keep the card. The difficulty with the machines is that if someone does not know the tariffs for their journey—that applies particularly to more complicated journeys—they will need a degree to navigate their way through the complications of the system, as Mr. Scott said. Sadly, the information in stations is as dire as it has ever been. One would think that clear tariff rates of what should be paid for what journey could be displayed in unstaffed stations, yet people go into the unknown. That is a problem.

I have talked to rail travellers. For a period that started at the beginning of April, people without tickets will not be fined. We have had a go at those who evade payment deliberately, but there are people who get on trains without a ticket for genuine reasons. They tend to get one on the train, and until recently that was the norm. I think that the period is a month, so it will end at the start of May. People will then be able to be fined heavily. Okay, we should deal with the people who do things wrongly, but some genuine people could be without a ticket, although it is always difficult to discriminate between the two.

For some people, the issue was the last straw. As regular travellers, they felt nervous, for whatever reason—the machine may not always be operative, but the train manager may say, "Tough—I'll fine you and you must come back and prove that it was faulty." There are some issues about customer relations, which are not as good as they could and should be.

In conclusion, what saddens me is that using the train should be the norm for anyone doing longer journeys but it is not. They should not fly, and I hope that they do not drive. Too much store is set by coach travel, which is not an environmentally sound form of transport. People have to be terribly well organised and entirely disciplined in how they go about getting a ticket, and they have to accept all the frailties of the rail system; a group came to see my hon. Friend the Minister about the reliability of First Great Western.

Regular travellers such as me know that we will have bad journeys; that is one of those things that we build into our expectations. It is not acceptable, but it happens. However, the occasional train user will have paid a lot of money for a ticket and had difficulty in getting it. They will then find that the trains that they were going to get do not come or are hideously late. Such experiences will stay with those people for the rest of their life and are the reason why—even though train usage has gone up—a lot of people would not dream of using the train. That is a shame, because the train has to be part of the solution to our transport problems, not part of the problem.

I hope that we can improve the fare policy, regulate it fairly and understand how companies could better appreciate the people who should be at the top of their priority lists—the customers. Sadly, they sometimes seem to be the last thing that comes into the companies' minds.

Photo of Paul Rowen Paul Rowen Shadow Minister, Transport 3:04, 26 April 2007

I congratulate Mrs. Dunwoody, the Chair of the Transport Committee, on her excellent report and apologise for having missed the start of her speech.

As I said, the report is excellent. It puts on the line some of the dissatisfactions of rail users in recent years about the cost and complexity of rail travel. We all now accept that UK train travel is the most expensive in Europe. The system is complex and bureaucratic and it is not obvious to anyone why certain prices are charged. We have to set that in the context of the rail White Paper that will be released next year, the continued growth of the railways, how we will deal with prices, the availability of seats, public subsidies and the distinction between regulated and unregulated rail fares.

The report makes public dissatisfaction clear: value for money is the biggest single issue for regular rail users at present. The hon. Lady cited her example of travelling down from Crewe; my example comes from travelling regularly from Manchester. If it is cheaper for me to fly than to take a first-class train journey or go further down the list of fare options, we have not got things right.

I accept that 43 per cent. of all rail income comes from subsidies and that 57 per cent. comes from fares. In the long term, we shall not be able to increase the amount of money from the public purse to pay for all we want on our railways. The first point made by the report is about the strategic importance of the railways in underpinning much of what we as a Parliament, and the Government, want to achieve for economic development, social cohesion and inclusivity. The Government response does not address the broader context. The Climate Change Bill is coming through Parliament and there is an ongoing debate about congestion charging. We should be considering those broad policy objectives. We know that cars are far and away the largest producers of carbon dioxide emissions. What needs to happen to enable people to move freely on our railways? There has to be a price—not necessarily one paid by subsidies—put on the value of being able to encourage more people to travel on the railways at a much better cost.

The Committee's report is clear and correct to say that we need a simplified, unified fare structure that is understandable to all. As Mr. Scott said, one can ring up and get three different prices for the same journey—that really shows what a nonsense the present fare structure is. The Government talk about discussions taking place with rail operating companies, but as a start, the first thing that has to happen is an agreed fare price structure. They apply to other forms of transport—aeroplanes and so on. There are agreed classes of travel. If we travel business class or standard class or whatever, we know what we are getting. However, when we buy a rail ticket, it is not clear what we will get. The structure needs to be simplified.

Photo of Stephen Hammond Stephen Hammond Shadow Minister (Transport)

I have listened carefully to the hon. Gentleman's argument. Surely he has chosen the wrong mode of travel for comparison. The one mode of travel for which we clearly cannot say what we are going to get or what price we will pay is air travel. The airline industry is the one industry that is absolutely not the right comparator. I am lost by that comparison and illustration.

Photo of Paul Rowen Paul Rowen Shadow Minister, Transport

I was talking about the structure, not necessarily the price. Yes, the airline industry does vary its prices according to demand, and that happens in the rail industry to some extent, but people know what they are getting in each class, whether they travel business, economy or first class, even though the price might vary. The first thing that we need in the rail industry, therefore, is a simplified structure, with fewer tickets and more agreements regulating the conditions for ticket use and when those conditions apply. In that way, we can have a standard agreement setting out what the peak, shoulder and off-peak times are. We need to have those things in place.

At the strategic level, we then need to look at what can be done to ensure that rail fares do not continue escalating at the rate they are now. In that respect, one issue that can and should be addressed—I hope that the White Paper will address it—is the length of franchises. Clearly, if a company has a franchise for only 10 years and has to put in a certain level of investment, it will, even with public subsidy, seek to use the fare structure to ensure that it gets a return. However, if it has 20 years to recoup the same investment, it will be much more sure that it can do so and it will not need to increase rail fares to the level that we are talking about.

We also need to look at capacity. It is an absolute insult that we charge passengers full price for standing. Anyone who turns up for the Manchester to Bournemouth train on a Friday afternoon without a ticket and assumes that they will be able to get a seat is living in cloud cuckoo land—they will be standing the whole way. Why, however, should they be charged the same as someone who has a seat? Indeed, given that they have bought a walk-on ticket, they may well pay a lot more than someone who has booked over the internet and who has a seat all the way. We need to introduce incentives to encourage train operating companies to increase capacity and we need to penalise them for the number of commuters and other passengers who have to stand each day for a good part of their journey. It is not acceptable that people should be put in such a position.

On intermodal comparisons, we need to begin making it more advantageous for people to travel by rail. It is not acceptable to say, as the Government response seems to, "Well, the railways are busy and full anyway, so we don't need to do anything." We want to see a shift away from forms of transport such as car and air and we need to be able to encourage that shift. That is where the strategic view is important. We should be using the debates about climate change, CO2 emissions and congestion charging to ensure that we have the additional resources to enable capacity increases to take place without massive fare increases.

I will close there, because I have covered the main points that I wanted to raise. I hope that, in responding, the Minister can give us a much more positive view than that contained in the Government's defensive and inward-looking response to the Committee's excellent and far-reaching report.

Photo of Stephen Hammond Stephen Hammond Shadow Minister (Transport) 3:14, 26 April 2007

On behalf of the official Opposition, I welcome the Transport Committee's report on fares and ticketing on the railways, just as we welcome all its reports. Although it is a shame that we have had to wait 50 weeks to discuss it, the report is none the less welcome. I suspect that Mrs. Dunwoody will not expect me to agree with all its conclusions, but it is none the less extremely useful. It raises some interesting and important points about the way in which train operating companies operate and highlights the fact that urgent attention needs to be paid to that modus of operation.

The report also highlights some crucial failings in the Government's management of our railways, and I want to underline that by addressing two issues. The first is people's experience of buying tickets and finding the cheapest fares. In that respect, it is the behaviour of the TOCs that needs to change to a large extent. The second issue is the level of fares and value for money.

The Select Committee report concluded:

"The structure of fares is deeply fragmented and highly complex. Names, conditions and restrictions often vary subtly between different train operating companies."

Rather more starkly, the Committee noted earlier in its report:

"The current complexity of unregulated fares and conditions is an insult to the passenger."

In the intervening 50 weeks, the Government have, for once, agreed with the Select Committee. Their response stated:

"The Government agrees with the Committee that rail fares appear needlessly complex, particularly for longer distance journeys."

They have announced their attention to work with TOCs to address the problem, but there has not been much improvement in the 50 weeks since the report or, indeed, since the Government's response.

Photo of Gwyneth Dunwoody Gwyneth Dunwoody Labour, Crewe and Nantwich

The hon. Gentleman is making great play of the fact that we have had to wait quite a long time for this debate, but I should point out that the timing was a matter for the arrangements of the House. As a Committee Chairman on the Liaison Committee, I was happy to see other reports go ahead. I have many things on which I can attack the Government, but the timing of this debate is not their responsibility.

Photo of Stephen Hammond Stephen Hammond Shadow Minister (Transport)

I was not attacking the Government for the length of the delay, but citing it in the context of the actions that they said they would take in their response.

I was about to quote the most recent research from Passenger Focus, which found that seven out of 10 leisure passengers decided not to travel because of the cost of the ticket, with 44 per cent. using the car instead. It also found that three out of five commuter and business passengers disagreed with the contention that tickets were generally fairly priced—I suppose that one could say that people will always disagree with that contention, but it is worth pointing out that finding in the interests of fairness. The research also found that four out of five leisure travellers and seven out of 10 business travellers agreed that they would travel more on trains if the fare were a bit cheaper. The Passenger Focus report commented:

"the public perception is that buying a ticket can be a minefield of confusion. That's why Passenger Focus is working with the Association of Train Operating Companies to find ways of simplifying the way fares are presented."

The point is simple. The TOCs and the Government can say for as long as they like that the fare structure is simple and that good value can be found on the network, but if that is not the passengers' perception, people simply will not travel by train. The Committee's report dealt excellently with that point, saying:

"The persistently poor levels of passenger satisfaction with the value for money of rail travel are important. If passengers perceive rail travel to be too expensive, then in some senses it is too expensive, and it may reasonably be assumed that they will try to avoid paying the set price".

That is a crucial point. Whatever we think about the fares, there is a perception that they are too high, and the modal shift will not go in the direction that we want.

It is worth mentioning one important point about fares and pricing that the report did not look at. There is now a move to smartcards and new ticketing technology across the networks, and anyone who travels on the London network will know that increases in cash fares have encouraged people to switch to Oyster cards. That is hitting some of the those on the lowest incomes hardest, although I accept that London is a devolved matter and that we are concentrating on train fares. None the less, the single minimum cash fare on the London underground is £4, but it is £1.50 if one uses an Oyster card. There is clear evidence from a recent Greater London authority report that the take-up of Oyster cards among the lowest-income groups is lower than it is among higher-income groups. One needs to be mindful of that, particularly as we move to introduce ITSO's technology across the network. If we do that, I hope that we will do so in a way that does not penalise those who most need access to affordable public transport, and I would be interested to hear what the manager has to say about that—sorry, the Minister. He is the manager of the railways; I get confused.

I want to talk about ways of finding the cheapest fare. In autumn 2006, the Passenger Focus group carried out the mystery shopping exercise that my hon. Friend Mr. Scott tried, and I have a sample of the results. During the off-peak period, almost 48 per cent. of passengers at the largest stations have to queue longer than the industry guideline of three minutes. During peak hours, 11 per cent. queue longer than the industry guideline of five minutes.

Passenger Focus also did a shopping exercise to test what sort of information can be obtained by telephone. Of the companies that it tested in autumn 2006, only GNER telesales was able to provide information to every caller; 40 per cent. of the callers to GNER, 32 per cent. of those to South West Trains, 28 per cent. of callers to Virgin Trains and 22 per cent. of callers to First Great Western waited more than 10 minutes to speak to an operator. As the group rightly commented:

"What a strange way to treat potential customers. People keen to pay up and use the railways are either being left standing in queues or are locked into listening to endless 'muzak'".

As Mr. Drew has pointed out, at some stations there are no ticketing facilities, and some passengers have to pay fares on board. Research shows that in a number of cases, because of overcrowding, revenue cannot be collected. I believe that the technical term these days for the personnel involved is not train manager or ticket inspector, but probably revenue protection officer, but none the less Passenger Focus found that on the routes that it examined 23 per cent. of its researchers were unable to buy a ticket at all. Over the weekend that figure rose to 58 per cent. That highlights the importance of the need for train operating companies to ensure that, before considering revenue increases, they collect the revenue that is already due to them. If the Government are to allow the rail companies to put through above-inflation fares, they should surely be establishing better mechanisms for collecting fares from existing customers with the TOCs within the franchise. For some people paying on the train seems to equate to free travel, and it cannot be acceptable to penalise travellers and passengers who are honest. A factor involved in the inability to collect revenue on trains is the fact that on the majority of routes trains are too overcrowded to enable rail staff to do their job properly.

That brings me to a central point about rail fare levels and value for money. More passengers are travelling on our networks now than there were before Beeching. That is a matter of fact. However, record patronage should not be an excuse for ignoring the problems of overcrowding. The Select Committee, in the report, accused the then rail Minister, now the Under-Secretary of State for Defence, Derek Twigg, of "breathtaking complacency" for saying in evidence that he believed passenger satisfaction with the railways would go up. He was of course ignoring—I think that the report made this clear—the two sources of passenger dissatisfaction: overcrowding and the consequent perception of the fare's value for money.

In its most recent publication on national rail trends, the Office of the Rail Regulator said that passengers are less satisfied with the level of overcrowding as demand continues to increase. That is something of an understatement. In recent months there have been protests and boycotts, as has been mentioned, about overcrowding and above-inflation fare increases. There is no official train capacity limit nationally, and there are specific targets only for peak commuter traffic into London and the south-east. That measurement is carried out, as I understand it, only once a year. The Government have set acceptable levels, but there is no current enforcement and no penalties if limits are broken.

Half the operating companies, however, are at the moment breaching the capacity limits on journeys into London during the London peak. South West Trains is now reaching a level 30 per cent. higher than what is suggested as the acceptable peak in the morning. In the afternoon, half the TOCs break the overall capacity limits, although they do so to a lesser extent than in the morning. Network Rail estimates that 70,000 passengers travelling into London must stand during what is now classified as the three-hour morning peak. However, things are somewhat worse when one looks behind those figures. Of those 70,000 people, 50,000 travel in the peak period between 8 and 9 am. There is a clear pattern of overcrowding.

Overcrowding is a problem across the railways, and research carried out four or five years ago showed that six out of the 10 most overcrowded routes are in the north. Indeed, there is a risk that current levels of crowding could reverse some of the improvements that have been made as a result of investment through Network Rail. The necessity for trains to wait longer at stations may lead to journeys being rescheduled to take longer. A key point, of course, is that, with overcrowding now a serious and endemic fault of our railways, it is hardly surprising that people are dissatisfied with the value that they get from the increasing train fares. The Passenger Focus survey showed that less than half of the people involved are satisfied that they are getting value for money on their routes. Complaints about fares come second only to complaints about train service performance, and the gap between the two has closed dramatically over the past year.

The railways have undergone record growth, but if there are more and more passengers on the railway, more and more capacity will be needed. Overcrowding has risen to unacceptable levels, and it is the fault of the Government that there has been a failure to meet the capacity challenge. The Government have recognised that challenge, but much of what will be put in place will not happen until 2014.

Photo of Tom Harris Tom Harris Parliamentary Under-Secretary (Department for Transport)

Forgive me for intervening so early, but that was a point of misinformation, which should perhaps be clarified from the start, because it has been repeated by the hon. Gentleman's Front-Bench colleagues. The investment in extra capacity planned for the next control period, 2009 to 2014, starts in 2009. The new trains will start to be delivered from next year.

Photo of Stephen Hammond Stephen Hammond Shadow Minister (Transport)

Let us press the Minister on that point. There has recently been an announcement about new trains for the inter-city express programme, and the figures given are between 500 and 2,000. Is the Minister telling us that we can expect 2,000 in 2009, or are we expecting 500? I do not know, because the announcement did not make it clear. It says that there will be between 500 and 2,000 new carriages to attack the capacity problem. The point is that 500 would be a basic replacement level, but 2,000 would make a difference. There is no timetable in the period in question. That is just one example.

Angel Trains, as the Minister will know, because he is the biggest buyer of trains, is the country's biggest train leasing company and has said that it could deliver the trains in 2010. Is that what the Minister has just told us? Is that when those trains will be delivered? It would be delightful to hear from the Minister whether that is what he means when, in answer to my saying that the new capacity will not come about before 2014, he says it will happen at some time in the control period.

Photo of Gwyneth Dunwoody Gwyneth Dunwoody Labour, Crewe and Nantwich

No one wants new capacity more than me, but the reality is that the railway industry has a lot of rolling stock mothballed throughout the country for various reasons, some of which are regulatory and many of which are commercial. Angel Trains knows that, and in many instances has been involved. If the rolling stock leasing companies were prepared to change their way of working, as well as their commitment, which I welcome, to new rolling stock, we could, in the event of a problem, undoubtedly use existing rolling stock in the interim, not only to update and improve people's train experience, but to carry many more people. I am interested in the views of Angel Trains, but I am not altogether convinced that it is being 100 per cent. straightforward.

Photo of Stephen Hammond Stephen Hammond Shadow Minister (Transport)

I am interested to hear what the hon. Lady has to say. Indeed, a great amount of rolling stock has been mothballed or has not been brought back in. If the Government were to allow the TOCs to do so, and if they had not specified that in some of their franchise processes, the stock could have been brought back in. That is the reality of life and why I cannot agree with all that is in the report. The report should recognise the role that the Government play, and not only that which they play in respect of capacity. Within their role in respect of capacity comes a role in fares, and it is hugely important that that should be accepted.

There is a view that the Government are using fares to attempt to deal with overcrowding. Last summer, The Times talked about the new deal that was being put forward between the Department for Transport and First Group on a number of the commuter routes north of London. At the time, The Times accused the Government of striking a secret deal with the biggest rail company to double fares on that route as a way of solving overcrowding. Restrictions on fares were certainly placed on people travelling between London and dozens of stations to the north of the capital. Cheap day fares were no longer valid at times when they had normally been valid. That was part of the franchise specification and is why more people were forced to buy more expensive standard returns. That was exactly the point that Susan Kramer was making about the length of the peak period and the shortening of the off-peak periods.

The Government's decision to award the Thameslink/Great Northern franchise to First Group, would, they said,

"deliver better services to passengers. There will be increased capacity into London during peak times, enhanced facilities for passengers on board trains and at stations ".

However, the Government made no mention of the fare increase, even though First Group had made it clear to the Department at the time that the £800 million that would be paid over the nine years to run the franchise, as the franchise had specified, would depend on restricting cheap tickets and increasing fares. That is the essence of the issue.

The Select Committee report rightly commented that the TOCs have operated a complex fare structure, but the root cause for a number of the fare increases is the Government. At the moment, the Government seem to be saying, "It's nothing to do with me, guv," when they are talking about deregulated fares, yet the franchising system that they have imposed is causing fares to rise. Part of that is to do with the length of the franchises, but in the recent tendering period it has been due to the ever-increasing desire of the Government to recoup some of the subsidies that they are paying to Network Rail through the premiums that they are imposing, which are getting the bids up. The vast sums of money that they have spent though Network Rail—we all accept that such sums have been spent—since the demise of Railtrack are being recouped through the franchises. The TOCs are ratcheting up their bids in the knowledge that the overriding point of interest to the DFT and the Treasury is the size of the premium that they are prepared to pay.

Christopher Garnett, the former chief executive of GNER, made the well-publicised comment that it was better to drastically overbid for a new franchise than to underbid and lose it. When those bids are accepted, as the DFT is accepting them, that extra revenue can come only from one source, which is the passenger. That is why fares have risen, why they are rising and why they will continue to rise. The TOCs are a symptom of the fare increases. In almost all cases, the cause of the fare increases is the Government.

Comments have been made about the length of the franchises. The franchises have been re-awarded so that they are tightly specified and the TOCs are left with little room to innovate or to invest. It is clear that the franchising process is part of the reason why we are seeing large fare increases and why the problems in capacity are not being dealt with. Brian Cooke, the chairman of London TravelWatch, talking about that first bid for the franchise, said:

"It was devious of the Government not to make clear what had been agreed in First's bid. Ministers wanted First to do their own dirty work. When a franchise is agreed, the Government should immediately publish all of the terms, not just the attractive bits."

Mr. Cooke said that it would have been far better to deal with the overcrowding by adding extra carriages rather than pricing people off the afternoon and evening services, and we agree.

In January this year, regulated fares went up by the maximum of RPI plus 1, which is 4.3 per cent. The highest unregulated fare increase that I have seen, part of which was the harmonisation in London, was 56 per cent. in my constituency for people who wished to travel from South Merton into London. The report advocates greater involvement in the setting of fares through greater regulation. I contend that we need almost diametrically the opposite. There is too much intervention by Government in the setting of franchises and timetables and the micro-managing of our railway system. In many cases, the franchising process is driving the fares so high.

In their response to the Select Committee, the Government cite one of the benefits of not increasing regulation, stating that competition encourages innovation in the railways. I agree, but another Select Committee report on rail franchising states that the Government's drive to extract higher premiums and their strict specification of franchises has hampered any efforts by the TOCs to innovate.

Photo of Paul Rowen Paul Rowen Shadow Minister, Transport

Will the hon. Gentleman explain how a train operating company is subject to competition, when no one else runs its route? That might be the case for a coach or bus operator, but it is certainly not the case for a train company. Does the hon. Gentleman not agree that there is a role for the Office of Rail Regulation?

Photo of Stephen Hammond Stephen Hammond Shadow Minister (Transport)

A train company is not subject to daily competition, clearly, but it is subject to competition at the renewal of the franchise. That is the time of competition. The hon. Gentleman and I are not subject to weekly competition for our jobs, thank goodness, but we are subject to review once every four or five years, at which stage we are accountable for our performance. That is the way in which the franchising process works.

I would contend that there is far too much intervention from the Government. The Government's failure on the franchising process is best demonstrated by a company that bid far too high, had to charge far too much and then found itself in difficulties. Such a company was GNER. Mr. Garnett, the chief executive, had warned the Government that they could face a backlash over the tightening of control over rail franchising. He said that companies were losing the flexibility to run more trains, change timetables and to ensure that revenue was set against the public travel demand.

L

Clearly a system that only has input from consumers/ the public on a 4-5 yearly basis doesn't work. It doesn't work for politics, the population becomes disinterested because they feel that they cannot influence anything and train companies become complacent because there is not a regular enough feedback into their business systems. Whole industries can be transformed in 5 years (just look at the airline industry) which can make the pricing models quickly irrelevant. Train companies are not answerable to consumers in the same way that almost every other business is. There is no such thing as consumer choice and no...

Submitted by Luke Vincent Continue reading (and 1 more annotation)

Photo of Gwyneth Dunwoody Gwyneth Dunwoody Labour, Crewe and Nantwich

Did Mr. Garnett explain why he bid the amount that he did?

Photo of Stephen Hammond Stephen Hammond Shadow Minister (Transport)

I quoted Mr. Garnett earlier, and he said that it is better for a corporate company to overbid seriously and to get the franchise than to underbid and not get it. That is a direct result of the franchising process and the Government and the Treasury's attempt to recoup through premiums in that process—

Photo of Tom Harris Tom Harris Parliamentary Under-Secretary (Department for Transport)

How does the hon. Gentleman equate that quotation from Mr. Garnett with the comment by senior GNER management that the premium that the GNER franchise was committed to was eminently deliverable?

Photo of Stephen Hammond Stephen Hammond Shadow Minister (Transport)

I do not know. We will wait and see. The Minister might remember that he said in the House at Question Time earlier this year that he expects to get the same premiums out of that franchise—

Photo of Tom Harris Tom Harris Parliamentary Under-Secretary (Department for Transport)

For the record, and I am sorry for having to intervene quite so often, that is clearly and unequivocally what I did not say. If the hon. Gentleman looks back at Hansard, he will see that I made no such commitment. I need that to be on the record.

Photo of Stephen Hammond Stephen Hammond Shadow Minister (Transport)

Of course I accept the Minister's word on that. I am sure that he will not mind if I go back to Hansard and quote to him exactly what he said.

Photo of Stephen Hammond Stephen Hammond Shadow Minister (Transport)

No. Hold on, please. I am sure that if we find that the quote from Hansard is slightly different from either of our recollections, the Minister, being the fair man that he is, will wish to put on record exactly what he said. We will leave Mr. Garnett at that.

It is incontestable and right that the Government spend a huge amount on the railways, which are recognised as a public service, but all the money is going to Network Rail at the moment. Network Rail is not the organisation focused on passengers, so the subsidy is not going to make the experience of the trebling number of passengers a happier one or one that they feel is value for money. The current franchising process is too short, embodies little incentive for extra investment, does not tackle overcrowding and ensures higher fares.

The Transport Committee is right to say that fare structures are chaotic and that if passengers perceive rail travel to be too expensive, it is too expensive in some sense. It is right to criticise the TOCs for their shambolic pricing structure, but the report's failing is its lack of recognition of the Government's role in causing the fare increases. It is patently absurd to say that pricing is absurd, because it is determined by commercial considerations rather than considerations of the public good unless one accepts that the franchise documents according to which the TOCs must operate those service—in other words, the commercial reality—are dominated by the Government. The Government are trying to extract premiums from those franchises, so the Government must shoulder some, or in my opinion the greater proportion, of the blame for the recent fare increases.

The report would have been stronger if it had acknowledged that, but it is none the less welcome. It makes increasingly urgent and important points about the TOCs' behaviour and the lack of transparency and fair pricing, but it also highlights some of the Government's failings in relation to the rail network.

Photo of Tom Harris Tom Harris Parliamentary Under-Secretary (Department for Transport) 3:42, 26 April 2007

I congratulate my hon. Friend Mrs. Dunwoody on securing this debate and providing the House with an opportunity to discuss the Transport Committee's report on fares. It is an unexpected pleasure to be left with just short of 50 minutes—

Photo of Stephen Hammond Stephen Hammond Shadow Minister (Transport)

An hour and 20, for the record.

Photo of Tom Harris Tom Harris Parliamentary Under-Secretary (Department for Transport)

I am corrected. That is not usually the situation in Westminster Hall. I am usually left with about 10 minutes to sum up during debates.

Before speaking from my prepared notes, I shall comment on some of the contributions, starting with those of my hon. Friend. She made an excellent contribution. It was clear to see that her knowledge and devotion to the railway industry was shining through. I guess that her experience and knowledge of the industry are second to none. She will not expect me to agree with everything that she said; I think that she would be very surprised if I were to do so.

I take issue with a couple of my hon. Friend's points. When saying that rail travel was becoming more expensive than travel by coach or car, its two main rivals, she suggested that fare increases were a decoy to distract attention from the fares that people actually pay. That is not a direct quote, but she said that she was worried that fares were rising much more quickly than those for alternative transport. I am sure that she is familiar with the piece of information that I am going to quote. It comes from page 5 of the Government's response to her report. It states:

"Although...revenue per passenger km has increased by 2.4% over the last decade, other data published by ORR shows a real increase in ticket prices of 9.3% (over 11 years). The difference between the two figures can be explained by the fact that the 9.3% reflects the price of all fares offered whereas the 2.4% reflects what passengers have actually bought...passengers are becoming more selective in their purchasing and keener to take advantage of the cheaper products."

I understand my hon. Friend's point. It is valid, and I shall talk later about what the Government are doing to facilitate simplification of the fare structure in the rail industry. However, it is simply not the case that passengers are being priced off the railways. Although fares in general have gone up by 9.3 per cent. over 11 years, that does not reflect what people are actually paying. Passengers, especially regular passengers—I accept that the weakness of this argument is that people who are not regular travellers do not have that expertise—have become expert over the past decade and a half at identifying the cheapest fares and exploiting the system, exactly as they should be doing.

However, I accept the criticism that not everyone is capable of doing so. I have discussed with my hon. Friend the challenges that the internet presents when one is trying to buy tickets for particular journeys. I am no more an internet expert than she is, and I dread the day when I will have to do it myself instead of having staff book travel for me. Her point is well made, but I cannot accept that the amount paid by passengers is anything like the increase that we have seen. For example, in relation to running private cars, to quote again from page 5 of the Government's response,

"revenue increases have broadly matched volume growth with the cost of travel (in pence/km) rising slightly. The AA Motoring Trust suggests car running costs (2006) are about 22p/km, even for a relatively cheap car."

That is taking all the costs into account, not just the cost of petrol. I do not think that the case can be made that travelling by car is always significantly cheaper than travelling by rail.

My hon. Friend asked whether any level of rise in the price of open fares would encourage the Government to cap them. That opens up the argument about regulated and unregulated fares. Stephen Hammond was quick to dismiss the distinction between them, but it is crucial. If the Government were significantly to increase the range of tickets that come under regulation, there would be a cost to the Exchequer. My hon. Friend suggested in her comments that that should not always be used as an excuse to do nothing. I understand, but on the other hand, given the Government's huge and record levels of investment in the rail industry, the argument for extending regulation to other fares that are not currently regulated is not strong.

My hon. Friend mentioned saver fares, and I will talk a bit more about them in my main comments. Interestingly—this point was also made by Mr. Scott and my hon. Friend Mr. Drew—she said that the industry was trying to price customers off trains. If that is the case—if it is a strategy of the train operating companies to alleviate capacity problems—it is hard to imagine a strategy that has had less success.

Photo of Gwyneth Dunwoody Gwyneth Dunwoody Labour, Crewe and Nantwich

I did not say that they were doing it well.

Photo of Tom Harris Tom Harris Parliamentary Under-Secretary (Department for Transport)

My hon. Friend makes a salient point. If it is indeed a strategy, it is not being implemented particularly efficiently, given that patronage has grown, as she knows well, by 40 per cent. during the past 10 years. There is absolutely no evidence of it that I am aware of. If hon. Members present would like to offer me any, I would be interested to consider it, but I am not aware of examples on any route of a significant decrease in the number of passengers as a result of rail fare increases.

Photo of Gwyneth Dunwoody Gwyneth Dunwoody Labour, Crewe and Nantwich

We ought to accept one or two things. The reality is that most TOCs do not innovate. We are always hearing about their initiatives, but, frankly, they do not provide imaginative schemes to attract people. At present, they are quite happy, at best, to rest on their laurels and at worst, to try to make things so complicated that people can never get cheap tickets. Try to get a cheap ticket from any of the companies that you normally have to deal with, Mr. Jones, and you will find that the number of cheap tickets is infinitesimal, and that somehow they always seem to have disappeared when you want to buy one.

Photo of Tom Harris Tom Harris Parliamentary Under-Secretary (Department for Transport)

That was an extremely robust intervention. I disagree with my hon. Friend about the ability of private TOCs to innovate. However, I agree with her that the fare and ticketing structure in the British railway industry is far too complicated. It was not acceptable that the hon. Members for Ilford, North and for Wimbledon were, as so-called mystery shoppers, given a range of varying fares for the same journey. That does not make any sense, and it is unacceptable. That is why the Government are working with the TOCs and the wider industry to develop a simplified structure. I shall say more about that when I go through my prepared comments.

Sadly, the hon. Member for Ilford, North has departed—from the Chamber, that is. He spoke about complexity, which I shall say more on later, and capacity and reliability. He was the first to mention his unfortunate experience as a mystery shopper, and he agreed with my hon. Friend that it was in fact a deliberate strategy of the rail operating companies to get rid of their passengers by pricing them out of the carriages. As I said, I profoundly disagree with that. There is very little evidence for it.

Photo of Paul Rowen Paul Rowen Shadow Minister, Transport

I understand the Minister's point, but does he not accept that the rail operating companies are using price to constrain growth, and that if there were more capacity and a fair price, there would be much greater growth? That needs to happen if we want to get a shift from road to rail.

Photo of Tom Harris Tom Harris Parliamentary Under-Secretary (Department for Transport)

The hon. Gentleman is saying that fare increases over the past 10 years have been too high, while at the same time a 40 per cent. increase in capacity has been too low—it has not been enough for him. Even in 1996-97, if anyone had suggested that patronage on the British railway network would grow by 40 per cent. in the next 10 years, few people would have believed them. People would have said that that was far too ambitious and optimistic, but clearly the hon. Gentleman thinks that 40 per cent. is not enough—that growth should have been much higher—and that fares should have been lower. He believes that the price rises since 1997, which he says are unacceptable, have constrained growth. We have the fastest growing rail network in Europe, but its growth is still constrained and not good enough for him. I admire his ambition.

My hon. Friend the Member for Stroud asked about peak times. I can give him an answer, but it may not be exactly what he wants to hear. I understand that peak times are defined for each journey, and that they differ by route. Within London, the morning peak is normally 9.30, Monday to Friday, and that is for departing times. Whether it pleases him or not, I hope that he will accept that answer.

My hon. Friend said that the railway is in danger of becoming the rich man's transport. I do not accept that. Most people who travel on the British railway network travel on a discounted fare, whether a regulated fare or one of the other discounted fares. Unregulated tickets have not taken over the whole of the country. Because of past regulation, regulated tickets cost 2 per cent. less in real terms than they did 10 years ago. I cannot accept that that equates to a rich person's transport. This point reflects the argument that we had about whether TOCs are deliberately pricing people off the railways. I shall deal with unregulated fares later.

Photo of David Drew David Drew Labour, Stroud

I agree that it is possible to come up with statistics to show that there has not been a real-terms increase in fares across the terrain. However, we have all had the experience of being behind someone in the queue who is trying to get a ticket and is negotiating with the poor person who is trying to explain the different price ranges. There is no guarantee, even if someone were prepared to be entirely flexible about when they travelled or by which route, that they would necessarily end up with the cheapest, let alone the fairest, price. Would the Minister agree that that is part of the problem?

Photo of Tom Harris Tom Harris Parliamentary Under-Secretary (Department for Transport)

I do agree with that. The key challenge that we must meet is not only to make the structure more sensible and simpler but to convey that step change to the travelling passenger so that they will understand that it will be simpler the next time they try to buy a ticket, either in person or on the internet. If we do not get that message across, any simplification that is introduced—I hope that that will happen in the near future—will not have the effect that we want it to have. My hon. Friend is absolutely correct about that.

My hon. Friend also discussed his concerns about revenue protection, as did the hon. Member for Wimbledon. It is of course absolutely true that TOCs have an obligation to ensure that the revenue due to them by passengers is collected. It is galling to any honest passenger to have to put up with any kind of fare increase when they know that people on the same train are getting away with not paying their fare, especially if they do so deliberately. There is an obligation on TOCs to protect their revenue. For example, when the South West Trains franchise was re-let at the end of last year to take effect in February this year, there was a commitment in the franchise agreement for extra security at Waterloo station as a revenue protection measure. I would like to see such conditions in more of the new franchise agreements. Open stations should be gated to ensure that people pay before they get on a train.

My hon. Friend concluded by saying something with which I, and I am sure everyone in the Chamber, agree: passengers must be at the top of train operating companies' priorities. The rail industry is not run for politicians, and it is certainly not run for the Department for Transport. It is not run for any of the vested interests. It is run for the passenger and paid for by passengers and non-passengers. It is up to TOCs to ensure that they deliver the best service that they possibly can. If they fail to do that, they fail in their most fundamental duty.

I go on with some relish to the comments made by Paul Rowen. He claimed, as he has claimed before in this Chamber, that the British railways are the most expensive in Europe. I am told that the Liberal Democrats allege that £10 gives more than 200 miles of travel in Italy. That is a good statistic and I understand why he has been using it, but it would be a better statistic if it were true. Simply using the website www.trenitalia.it to check the Rome to Florence fare on the Eurostar Italia fast train suggests that the actual figure is only 71 miles per £10, or €39.80 for 197 miles. I am sure that the hon. Gentleman will take that back to the editorial committee of the Liberal Democrats' "Focus" magazine and that the figure will be corrected at the earliest possible opportunity.

Once again the hon. Gentleman discussed the value of more people moving on to the railways. I ask again—if he wants to answer me now he can, or he can go away and have a little think about it—as he is the Front-Bench spokesman for his party and is, presumably, involved in developing Liberal Democrat transport policy, is a 40 per cent. increase in patronage over the past 10 years enough for him? Clearly, it is not. He believes that the Government could have achieved more than 40 per cent.—without a major increase in capacity, that would have increased overcrowding and involved extra cost—and forced down fares. He is suggesting that over the past 10 years the Government should have paid billions of pounds to increase capacity and at the same time should have increased regulation, which is presumably what he is talking about in terms of holding down fares. I do not have the figures in front of me, but I am sure that someone in his party, perhaps one of his researchers, can invent or calculate exactly how much that would cost. If he wants to tell me now, I am more than happy to give way.

Photo of Paul Rowen Paul Rowen Shadow Minister, Transport

Does the Minister accept that I made my remarks in the context of taking rail policy forward—particularly in relation to the White Paper that has been published. I agree with Stephen Hammond that there should not be total regulation, but in the context of the White Paper a number of measures would allow some regulation, and would also increase capacity and get more people on the railways. I talked about longer franchises. Does the Minister accept that if a company is given a franchise for 20 years rather than 10, that enables it to recoup the capital investment over a longer period and therefore the increase in fares that has occurred over the past few years would not be necessary? I did not mention that we are also considering weekend and off-peak working. Currently, Network Rail has a virtual shutdown at the weekends, but in the old British Rail days there was weekend working. If we went back to doing work without disrupting the railways, it would encourage more people to use the railways at off-peak times, which would also generate increased revenue. Those are two ways in which capacity and the number of passengers could be increased without necessarily having the large increase in fares that we have seen over the past few years.

Photo of Tom Harris Tom Harris Parliamentary Under-Secretary (Department for Transport)

The hon. Gentleman may be surprised to know that I agree with him on at least one point that is very important. Network Rail has spoken to me about its wish and the Government's wish to move to a seven-day-week network, which is vital for our economy. As the hon. Gentleman says, we should not have a less than desirable level of service at weekends. I join him in that ambition; any modern railway should aspire to be a seven-day railway. By working with Network Rail and other train operating companies, that is something we hope to achieve sooner rather than later.

However, I disagree with the hon. Gentleman on 20-year franchises. It would be a brave Minister for Transport who signed off a 20-year franchise while making a public statement that the franchise would hold down fare increases. What is to stop any train operating company increasing fares if they are not regulated? The hon. Gentleman did not say that he wanted to extend fare regulation, but if fare regulation was not increased when there was a 20-year franchise, what would stop a private train operating company imposing exactly the same fare increases as we have seen at South West Trains, for example, and at other franchises? The idea that doubling the length of the franchise would have that effect, and certainly the guarantee that it would have that effect, is not one that I or, I suspect, any of my successors would ever want to make.

Photo of Paul Rowen Paul Rowen Shadow Minister, Transport

I understand what the Minister is saying and I do not disagree, but the point I was making was that fare regulation would be built into the franchise agreement—as it is now. The Office of Rail Regulation would be beefed up to enable it to take action if companies went beyond the limits.

Photo of Tom Harris Tom Harris Parliamentary Under-Secretary (Department for Transport)

I am glad that the hon. Gentleman on behalf of his party has clarified that its policy is to have 20-year franchises with all fares under regulation. That is a very brave policy. He has just said that he wants the Office of Rail Regulation to ensure that fares do not rise; that is regulation—there is a clue in the title regarding what the Office of Rail Regulation does. I find that implausible.

The hon. Gentleman claims that the other advantage of a 20-year franchise is that train operating companies would get a return on their capital investment. Train operating companies do not buy rolling stock; they lease it according to the length of the franchise. Evidence does not support the idea that under a 20-year franchise, companies would start buying rolling stock rather than leasing it. However long a franchise is, a train operating company will enter a lease from the rolling stock company for the length of that franchise, whether it is 10, 15 or 20 years.

Photo of Paul Rowen Paul Rowen Shadow Minister, Transport

Does the Minister accept that under the current arrangements train operating companies lease rolling stock from intermediaries, but that does not provide best value for money? I understood that the Government were investigating that matter. We should be considering alternative ways of financing capital investment in railways.

Photo of Tom Harris Tom Harris Parliamentary Under-Secretary (Department for Transport)

I am grateful that the hon. Gentleman has raised that matter because it allows me to publicly comment on the announcement today by the Office of Rail Regulation that it has referred the rolling stock companies to the Competition Commission. The Government do not want any major restructuring of the leasing system, but we do believe that the public are not getting the best possible value out of the current arrangements and that is why we asked the Office of Rail Regulation to consider the matter. However, we do not envisage any major changes to the structure of the industry as it stands. I have for some time believed that, following many years of almost permanent revolution in the rail industry, it now needs a long period of stability to allow it to grow and consolidate.

The hon. Member for Wimbledon rehearsed some of the criticism that he has made in the past and I hope that he will forgive me for rehearsing some of the responses that I have made in the past. He mentioned the simplification of the fare structure and I will discuss that in length later. Could he clarify, perhaps from a sedentary position, from where his research came regarding the Passenger Focus research? I think that he quoted that seven out of 10 people who do not use trains cited the high price of tickets as the reason.

Photo of Stephen Hammond Stephen Hammond Shadow Minister (Transport)

I was citing the latest Passenger Focus report on passenger satisfaction that, I think, was produced in February this year. My office would be happy to provide the report for the Minister, or I am sure that Colin Foxall of Passenger Focus would also send it to him—it is a standard piece of work that is in the public domain.

Photo of Tom Harris Tom Harris Parliamentary Under-Secretary (Department for Transport)

I am sure that it is on my desk, but the point that I was trying to make was whether the figures the hon. Gentleman mentioned came from there or not. As with the health service, the railway industry suffers from a gap between perception and reality. People who do not use the railways have said in survey after survey that rail fares are higher than they actually are. Research has found that when asking people how much it costs to travel from one place to another, if they do not use the service, they will almost always come up with a higher amount than the reality. I compare that with the health service because it is well known that if someone's only knowledge of the health service comes from the Daily Mail and they have not actually been a patient, they may have a lower opinion of it than in reality.

Photo of Stephen Hammond Stephen Hammond Shadow Minister (Transport)

I accept the point that the Minister is making, but none the less we have always had to deal with that situation; people's perception is the reality. Either we change people's perception or we must treat it as the reality. Appearance and reality are the great Shakespearean themes and that is exactly what we must contend with. The Committee clearly made that point in the report when it said:

"If passengers perceive rail travel to be too expensive, then in some senses it is too expensive".

If that is people's perception, it is the reality.

Photo of Tom Harris Tom Harris Parliamentary Under-Secretary (Department for Transport)

I agree with the hon. Gentleman to an extent, but frankly, if a perception is based on the wrong information, that is not a reason for reducing fares. I hope that he understands the point that I am trying to make—it is not about those people who already use fares; it about those who have no knowledge of them. I mention that as it is relevant to the argument that people who do not use train fares are surprised to find that in reality they are not as high as they expected.

The hon. Gentleman went on to say that the Government do not have a strategy for meeting capacity demands on the network. He will know that there is a commitment in the South West Trains franchise for a 20 per cent. increase in peak-time seats. He will know that in the First Great Western franchise—

Photo of Stephen Hammond Stephen Hammond Shadow Minister (Transport)

I thought that there was a commitment to increase passengers by 20 per cent. in that franchise. Surely the Minister does not mean that the franchise will increase seats by 20 per cent., as they are actually taking seats out of a number of those passenger trains.

Photo of Tom Harris Tom Harris Parliamentary Under-Secretary (Department for Transport)

Seat removal was in fact undertaken before the commencement of the new franchise. However, I understand the franchise commitment by South West Trains to mean that there should be a 20 per cent. capacity increase.

Whatever the other issues with which it might currently be dealing, First Great Western is committed to increase the number of seats on the network by 35,000 by means of the refurbishment of its high speed trains, which will be completed by the end of the year. On 2 April 2007, the Secretary of State for Transport announced a plan for 12,000 additional commuter seats on daily train services into London, to be accomplished through the Brighton main line route utilisation strategy and purchase of new rolling stock. We should not forget the west coast main line modernisation, which has already increased the capacity of that route and will provide even more capacity by next year.

The hon. Gentleman said that it was a reality of life that the Department for Transport specifies the number of carriages on franchises. That is not a reality of life; it is wishful thinking. I am disappointed that he wants to repeat the nonsense that was put about when the controversy about First Great Western's new timetable really started to hit the headlines in January—I assume it is that to which he was referring. A myth started to emerge—I kid you not, Mr. Jones—to the effect that the DFT had contacted First Great Western and asked it to remove carriages, presumably on the basis that there was insufficient overcrowding. It was a fascinating idea, and no matter how often I said that it was nonsense, there were those who insisted on repeating it. I trust that the hon. Gentleman is not about to do that again.

Photo of Stephen Hammond Stephen Hammond Shadow Minister (Transport)

I have merely restated what was said to the Opposition by the management of First Great Western, who surely ought to know the position. If that is a myth, perhaps the Government ought to tell them so.

Photo of Tom Harris Tom Harris Parliamentary Under-Secretary (Department for Transport)

I would be more than happy to tell First Great Western once again that it is a myth. On the day of our debate on First Great Western services in Westminster Hall, when the hon. Gentleman and I disagreed on the same point, First Great Western issued a statement accepting full responsibility for its capacity problems and saying that it had underestimated the number of carriages that were needed to carry out its franchise obligations.

Photo of Stephen Hammond Stephen Hammond Shadow Minister (Transport)

We should be clear about what that statement said. It indeed said that First Great Western had underestimated the number of required carriages, but it went on to point out that that was partly attributable to the problem of getting back carriages that had been available to the previous franchise and that had been sent off for maintenance. It did not say that the Government had not issued a requirement; it said that First Great Western had made a serious error in relation to the sufficiently early return of the carriages that had been sent for maintenance. That is a different point.

Photo of Tom Harris Tom Harris Parliamentary Under-Secretary (Department for Transport)

I am a little weary of dwelling on the present point for too long, as it is not directly about fares. It remains the case that the Government cannot fairly be accused of telling First Great Western to remove carriages.

The hon. Gentleman made a different, substantive point, which I saw coming from so far off that I think I passed it on the way to the office this morning. He said that the root cause of fare increases is the franchise system, and he started his usual diatribe against the premiums that are paid by some of the train operating companies. He suggested that it was a bad thing, and that the Department should not be levering premiums out of TOCs.

Photo of Tom Harris Tom Harris Parliamentary Under-Secretary (Department for Transport)

As there is plenty of time, I give way to the hon. Gentleman.

Photo of Stephen Hammond Stephen Hammond Shadow Minister (Transport)

The Minister was keen to put matters categorically on record earlier, so I shall do likewise. I did not say that it was a bad thing, nor did I make a value judgment; I merely stated that the premium was a cause of fare increases.

Photo of Tom Harris Tom Harris Parliamentary Under-Secretary (Department for Transport)

That is a fascinating insight. The hon. Gentleman says that premiums are the cause of fare increases, but he is not prepared to say whether that is good or bad. That is a remarkable admission from the Conservative Front Bench. It is interesting that his right hon. Friend Mr. Cameron proposed a startlingly innovative policy on premiums just last week. He did not suggest that they should not be paid, even though he has obviously been told by the hon. Gentleman that premiums are the cause of fare increases. He ignored that, and suggested to the Government that, instead of the premiums going to the Treasury—into the pot of money that the Government spend on all sorts of things—they should go to the DFT so that they could be spent on rail.

That was real blue skies thinking by the right hon. Gentleman. Given that we have been doing that very thing with premiums for many years already, and that the premiums have never gone to the Treasury, I am surprised that the hon. Gentleman has not been called into his leader's office to explain why he did not brief him on what already happens in the DFT budget.

The right hon. Gentleman once again finished with a punchline: he said that there was too much Government intervention in relation to railway industry specification. I wonder whether the hon. Gentleman is aware that, since I was appointed, I have had meetings in my office with a steady stream of Conservative Back Benchers, who were not there to tell me that we specify too much, but invariably to tell me that they want me to interfere more in the railway network and in the workings of train operating companies, and to try to ensure that I use my influence to instruct those companies to provide more services in their constituencies. We have all heard of joined-up government, but I want to see some joined-up opposition.

Photo of Stephen Hammond Stephen Hammond Shadow Minister (Transport)

That is an interesting point. However, rather as the Government frequently wish that all their Back Benchers would exactly follow everything that the Government say—

Photo of Stephen Hammond Stephen Hammond Shadow Minister (Transport)

The hon. Lady says, "As they all do." That has not always been my recollection, nor indeed is it necessarily what the voting record indicates. Not all the Back Benchers who go to the Minister represent official party policy, therefore, whereas it is official party policy that has been stated today.

Photo of Tom Harris Tom Harris Parliamentary Under-Secretary (Department for Transport)

I do not wish to contravene either the rules of ministerial office or the conventions of the House by naming any of the people who have come to see me; I simply observe that they were not all Back Benchers.

I shall use the short time available between now and the end of the debate to make my prepared comments.

The Government recognise the importance of the rail network to the social, economic and environmental well-being of this country, and we intend to make sure that the network plays a full and increasingly important part within an integrated national transport system. We are working with the train operators and with Network Rail to tackle the various issues that need to be addressed: capacity and overcrowding, service quality and on-time performance, and other issues, including matters of fares and ticketing.

Our efforts, and those of the men and women who work for Britain's railways, are showing results. On-time performance across the network has reached 88 per cent. and is still climbing, passenger numbers have increased by more than 40 per cent. since 1995, and the number of passenger kilometres is currently higher than at any time since 1946. Slam-door trains south of the Thames have been consigned to history, and service frequency on many routes across the country has been increased or even doubled.

Modernisation of the southern part of the west coast main line has been completed, and the new service is steadily drawing passengers away from planes and motorways and on to the trains. The final section of the channel tunnel rail link—now, I believe, to be called, High Speed 1 and High Speed 2—will open, on time and on budget, in November, further speeding up Eurostar and ready for high speed trains to start running into Kent on domestic services in 2009.

I do not want to be accused of pretending that the railway industry in Britain is a perfect model, that nothing ever goes wrong, and that the Government are 100 per cent. satisfied with it. Sadly, however long I am in this job, I suspect that I will never be able to utter those words in honesty. However, I believe that the progress we have made has been significant and should be welcomed by the House. There is still much more to do, of course, especially if we are to meet the challenge of the further growth in passenger numbers that is predicted for the next decade. However, if all that I have mentioned is, as the media would have us believe, some sort of failure, then perhaps the country could do with some more such failure.

Having said that, this debate is about fares and ticketing, and I welcome the chance to explain what the Government are doing to address those issues. Let me say at the start that the Government do not agree with every opinion expressed in the Committee's report, but many of its recommendations are well thought out and well made.

My hon. Friend the Member for Crewe and Nantwich has rightly pointed out just how complex fares can be and has suggested that a unified fares structure should be introduced throughout the country. I agree, and we are working with train operators to see whether we can do just that. We are discussing a simple, logical fare structure, with a straightforward choice of three or four fares on each route, with consistent terms and conditions and easily understandable ticket names that, to quote from a well known advertising campaign, do exactly what they say on the tin. Work is still in hand and I am confident that ongoing discussions with the industry will bear fruit sooner than most of us expect.

There has been speculation about the future of Saver fares, which my hon. Friend raised. All options for the national fares structure currently under discussion include retaining and, in some cases, expanding the role of flexible walk-up Saver-type fares at affordable prices. Those tickets are extremely popular, and the flexibility that they provide gives rail a significant commercial advantage over air travel and allows it to compete effectively with the private car. It is in both passengers' and railway companies' commercial interests to keep such fares.

The new national fares structure will build on several initiatives that have already been implemented to make rail fares simpler. In March this year, National Rail Enquiries revised its website to simplify the way in which fares are presented online, so instead of a confusing list of every possible fare, only the cheapest fare in each of three categories—fully flexible, flexible with restrictions, and advance purchase—is shown. The new ticket names to be adopted under the proposed national fares structure will slot neatly into those three categories. The passenger retains a choice of fares, but that choice is now presented in a way that, I hope, they will understand easily.

In January this year, we simplified rail fares throughout London: 97,000 separate sets of station-to-station fares were replaced with one simple set of zonal rail fares, and the same price now applies between any two stations in given zones, whatever the route and whatever the operator. At this point, I ask the hon. Member for Rochdale whether he agrees with his hon. Friend Mr. Davey, who, during a debate in this place on Waterloo International, opposed that change. As the hon. Member for Rochdale has said in this debate that his party favours moving to smart ticketing forms of paying fares—I am delighted that he is on board on that one—I wonder whether he agrees with his hon. Friend on whether it was a good or a bad move to go from the 97,000 fares that were available before 1 January this year to the 21 that there are now. He might want to discuss that with his hon. Friend the next time he sees him in the Tea Room.

The new fares in London use exactly the same familiar zones used by London buses, London Underground and the successful multi-modal Travelcard fares. Those new London zonal rail fares not only simplify rail pricing in London, but will pave the way for smartcards to be extended to national rail services in London over the next few years.

London will not be the only city benefiting from the introduction of smartcards. We have specified the introduction of modern smartcard ticketing systems on five new franchises: the South Western, East Coast, Cross Country, West Midlands and East Midlands franchises. Specifying the standard smartcard format produced by the Integrated Transport Smartcard Organisation, or ITSO, means that those smartcard systems will be compatible with one another and can form the foundation of a truly national integrated ticketing system. As with the successful London Oyster smartcard, instead of queuing at the ticket office, passengers can touch in and out, saving time and adding convenience. The same smartcard may also work on connecting buses, trams or underground trains. I understand that it is a foul calumny to suggest as a national newspaper did that the right hon. Member for Witney is so posh that he thought the Oyster card was a luncheon voucher.

Our vision is a railway with simple, understandable ticketing, making use of the potential that modern technology offers, and integrated not only across the rail network, but with other forms of transport. If I have addressed ticketing, I will say something about fares.

Photo of Paul Rowen Paul Rowen Shadow Minister, Transport

Given the statement that the Minister has just made, is it proposed that that integrated system will operate for concessionary bus fares? If not, why not?

Photo of Tom Harris Tom Harris Parliamentary Under-Secretary (Department for Transport)

I may have to write to the hon. Gentleman about that. My understanding is that that would not be the case, but I am happy to write to him if that is acceptable.

UK rail fares are often compared unfavourably with those in Europe. However, in many cases, the old adage applies: "Never let the facts spoil a good story." Reports typically compare only the most expensive UK open fares, aimed at business travellers and bought by just 10 to 15 percent. of passengers on a route such as London to Manchester, with the regular fare paid by the majority of passengers in European countries. In fact, 85 per cent. of passengers on a route such as London to Manchester pay reduced fares, at prices broadly comparable with the fares charged for a similar distance in France or Germany, only a few pounds more than is charged for travel on fast trains in Italy, and significantly less than is typically charged in Switzerland. If the hon. Gentleman wants a copy of the information that formed the basis of those remarks, I would be happy to provide him with it.

We have also had to put up with reports that suggest that it is cheaper to fly within the UK than take a train. The hitherto well respected Which? magazine ran a report that purported to show that. The small print reveals that it failed to include air passenger duty in its flight costs. Simply adding that to the cost of the flight reverses the conclusions of the report and the message of the resulting news headlines. Which? magazine's own figures show that taking the train from Birmingham to Edinburgh or from Exeter to Manchester was actually cheaper than flying on four or five of the seven occasions that it checked. From London to Glasgow, taking the train was cheaper than flying on every occasion that it checked—after air passenger duty and the cost of travelling to Luton or Stansted airports were added to the air fare. On some occasions, taking the train was not only cheaper but substantially cheaper.

I must make it clear, however, that the Government do not set rail fares or, for that matter, coach or air fares. We must remember that all of those are private sector industries. Rail accounts for 6 per cent. of passenger miles nationwide—a figure that most people would not consider a monopoly share. As a result, the majority of rail fares are unregulated and set on the same commercial and competitive basis that determines fares charged by airlines or coach companies.

However, we recognise that, in certain areas, train operators have a degree of market power that justifies Government intervention. That includes commuter transport into London and other big cities, where there are few practical alternatives to rail. The Department for Transport regulates most fares used by commuters. That is a not insignificant proportion: more than 40 per cent. of fares revenue comes from regulated fares. Since 2004, we have permitted an annual average increase in those regulated fares of no more than 1 per cent. above inflation. That followed several years of limiting commuter fares to increases below inflation. As a result of our fares regulation, commuter fares remain more than 2 per cent. lower in real terms today than they were in 1996. I would not expect to read that in the newspapers, of course.

Over the same period, the earnings of the average commuter using those fares have risen well ahead of inflation, along with the general prosperity of the nation. In addition, we must never forget the big picture. In 2005-06, the railways earned approximately £4.4 billion in fare revenue from passengers. That was not sufficient to cover the full cost of the network. To cover the remaining cost of operating and investing in our railways, the taxpayer contributed £4.6 billion in subsidy.

It is easy to assume, as the media and public often seem to, that fares can simply be legislated downwards, with the money coming from private operators' "profits". The reality, unfortunately, is very different. The simple truth is that, if fares go down, the £4.4 billion in revenue reduces and the £4.6 billion in subsidy must go up by an equivalent amount to make up for the revenue that has been lost. That unfortunate law of railway finance—of finance in general, I would suggest—applies equally well whether we are making franchise payments to a privatised train company or subsidising a nationalised rail operator. Setting regulated fares therefore involves a balance between safeguarding the interests of passengers and looking after the interests of taxpayers. We believe that, in our approach to UK rail fares, we have looked after the interests of both, and we will continue to do so.

Photo of Gwyneth Dunwoody Gwyneth Dunwoody Labour, Crewe and Nantwich 4:29, 26 April 2007

With the leave of the House, Mr. Jones, I will speak again. This is a good report. At some point, Parliament has to take a number of decisions. I am not talking about individual parties; as a nation, we have to decide what we want to do. If we want a 21st century railway, we certainly have to address capacity, but this report was about fares. It was about the way passengers look at fares, the way the experience of the passenger is tied in to their view of good value, and their experience of day-to-day travel. I think that it is a useful report. I am grateful to the Minister and to everyone else who has taken part for an interesting debate. We may even return to the subject again.

Question put and agreed to.

Adjourned accordingly at half-past Four o'clock.