Oral evidence: Improving the rail passenger experience, HC 64Tuesday 5 July 2016

Oral evidence, 5 July 2016.

Witnesses

Dyan Crowther, Chief Operating Officer, Govia Thameslink Railway, and Charles Horton, Chief Executive Officer, Govia Thameslink Railway, gave evidence.

Chair

Good morning and welcome to the Transport Select Committee. Would you give your name and organisation, please?

Charles Horton

I am Charles Horton, chief executive officer for Govia Thameslink Railway.

Dyan Crowther

I am Dyan Crowther. I am chief operating officer of Govia Thameslink Railway.

Chair

When the franchise was set up, the Minister said that it would “deliver a step-change on key routes and drive up customer satisfaction.” In fact, the absolute opposite has happened. Passengers are very angry, and MPs receive emails and phone calls daily from people who are angry that they cannot get to work or get home to collect their children. Some are very upset that they are losing their jobs, because they can no longer guarantee that they can get to work on time. You have already admitted that 40% of the delays are your direct responsibility, and you have been fined. Only this morning there was an official announcement of hundreds of services cut in a very abrupt manner. There does not seem to have been any consultation at all about which services those are or what is happening. Are you fit to be running this railway?

Charles Horton

Yes, we are fit to be running this railway. We are in the middle of an extremely difficult moment in the franchise at this stage. It is a difficult and challenging franchise anyway, but the problems over the last few weeks following the industrial action taken by RMT conductors have added to some challenging circumstances that are inherent in the franchise. If I may, I will say a word or two about what the franchise is there to do. We have three significant tasks. First, we have to introduce a number of new trains both on the Thameslink route and on other parts of our network. Secondly, we have to train a large number of additional drivers to drive those trains, and to put in place a more resilient service going forward. Thirdly, we need to introduce a new service pattern in 2018 that will deliver the improvements in service that the Minister spoke about before the franchise started. Before I finish, I want to say to all our customers that I am extremely sorry for the poor service they have experienced, particularly in the last few weeks. I understand that it is not just delay to a train; it has a massive effect on customers’ lives and I want to apologise most sincerely for all the difficulties that have been caused.

Chair

But you knew about a lot of the difficulties before you took this on. You knew about the major works that were taking place. Surely you should have been able to plan better. In particular, one of the issues is to do with drivers and management. On the remedial plan that you have now been forced to agree with the Department because of your failures, there are all kinds of objectives about improving numbers of drivers, managers and all the rest of it, but not until September 2017. Doesn’t that suggest that you were wholly unprepared for running the service? This is entirely separate from the industrial dispute that is going on now.

Charles Horton

I think it is commonly understood now that the impact of the works at London Bridge were underestimated right across the industry. The London Bridge works involve digging up the railway, in effect, while continuing to operate services. The effect of that in terms of additional delays and cancellations has been much more significant than anyone understood before the franchise started. The remedial plan makes a commitment on our behalf to add a number of additional drivers, to make some further improvements to the reliability of our rolling stock and to add some additional management posts to put in place additional service management arrangements. It reflects the fact that, compared with the previous situation on this part of the railway network, when a delay occurs we see a fourfold increase in the reaction to that delay.

Dyan Crowther

Could I add something, Chair? I understand the point that we could have planned for this. We had planning assumptions that were given to us by Network Rail and by the Department. For example, the planning assumption around the impact of the London Bridge works was a decrease in PPM—public performance measure—of 1%. We dropped by nearly 7% after the London Bridge works commenced. Delay minutes were assumed to be 10,000 over the course of a year. We incurred 10,000 minutes in a week. We took the planning assumptions and we planned with what we were given. As Charles said, the whole impact of London Bridge and the diversion of the Thameslink services was completely underestimated.

Karl McCartney

Your passengers will be very interested to hear some of the answers to the questions today. One of the ones I have initially is, regardless of your managerial experience, what railway insiders do you already have on board looking at your service patterns, and have you brought in any others since your recent troubles?

Charles Horton

We have a very experienced management team running the franchise. Both Dyan and I each have 30 years’ experience in this industry. Our directors’ team has very wide managerial experience within the rail industry, and we use a number of advisers to assist us on specific aspects of running our service—for example, around driver management and resource planning—and to assist us in bringing the best practice from right across the industry into our company.

Karl McCartney

What general area do you both live in?

Charles Horton

I live in Horsham.

Dyan Crowther

I live in Baldock, which is on Great Northern.

Karl McCartney

I just wanted to check whether you use the service quite a lot.

Charles Horton

I am a daily user of our service, so I have the same challenges as our customers at the moment.

Martin Vickers

Mr Horton, you seem to be blaming everything on the problems at London Bridge, which I think we all recognise caused unexpected delays and so on, but staff shortages are entirely the responsibility of the company. You knew what the timetable commitments were, and you simply did not have enough staff to deal with them. Why not?

Charles Horton

At the start of the franchise, we had fewer drivers than we anticipated based on the evidence that we had in the data. Immediately on taking over the franchise we launched the UK’s biggest ever driver training programme to address that shortfall, but unfortunately it takes 14 months to train a driver off the street. It is taking time for us to get driver numbers up to the level we need to be in a situation where we do not cancel a train as a result of a shortage of drivers, particularly at the very busiest periods during, for example, a holiday season. We have made substantial progress on bringing additional drivers into our company, and we continue to do that. At the moment we have something like 270 drivers in training right across the GTR franchise, and 82 in training on Southern.

Martin Vickers

When you knew that you had that problem at the start of the franchise, with the timetable commitments you had made, did you discuss with DFT the fact that you were not going to be able to deliver on your franchise commitments?

Charles Horton

We have an ongoing dialogue with DFT on all sorts of matters in relation to running the business. We explained the situation to them. We spoke to them about what our plans were to address the shortfall, and we put in place plans to address it immediately.

Martin Vickers

Were DFT satisfied with that, knowing that it would cause the delays that have resulted?

Charles Horton

Ultimately, we were in breach of our franchise obligations for cancellations. That led to the establishment of the remedial plan. DFT then required us, as is entirely proper, to put in additional investments to address the shortfall and improve services for passengers as quickly as possible.

Martin Vickers

In relation to the investment you speak of, how much additional cash resource have you put in?

Charles Horton

Directly, £7 million of additional money has gone into employing more drivers than we anticipated, and for the additional management and rolling stock programmes.

Martin Vickers

From an economic point of view, is that a sensible investment? Do you still get a return on the operation?

Charles Horton

We made a commitment and we stick by our commitment. We have committed to delivering a number of franchise commitments and obligations. The plan we put in place was our evaluation of what was necessary to improve services for customers as quickly as possible. Our judgment was very much centred on the right thing for passengers and not on a direct economic evaluation of the plan.

Chair

Let me go back to drivers, because they are pretty fundamental. When you were awarded the franchise you claimed that you would have the correct number of drivers. Why didn’t they materialise?

Dyan Crowther

There were a number of reasons. There was a larger vacancy gap than we anticipated when we took over the franchise from First Capital Connect. In addition, the drivers that were available were less productive than we anticipated; again this was all on assumptions. That gave us quite a significant gap. We were expecting just over 650 drivers and we had something like 607, so every driver’s turn would cover eight services. It becomes quite significant. When you have one driver not available, that is eight trains that cannot be—

Chair

What do you mean when you say less productive?

Dyan Crowther

Things like higher levels of sickness and higher levels of rest-day working than we had planned for.

Chair

You are talking about what you had planned for, but this is all pretty basic, isn’t it? When you applied to be awarded the franchise you stated that you had the necessary number of drivers. Was it immediately that you found that was not the case?

Dyan Crowther

Yes.

Chair

They did not exist. You did not do much checking, did you? Where did the figures all come from at the beginning?

Dyan Crowther

I was not part of the mobilisation of the franchise. When you take on a franchise, there is a mobilisation team. There were a number of meetings that had taken place between the handover and the commencement. All the information that we were given at the time led us to believe that we would have a robust enough resource pool.

Charles Horton

It is also fair to say that, in the time between the franchise award and immediately at the start of the franchise, there was an increase in driver turnover. The average driver turnover had been something like 3.4%. I think it rose to something like 5.6% in the immediate period, which meant that we lost a lot of drivers quite close to the start of the franchise.

Chair

Why did that happen?

Charles Horton

Because of other driver opportunities and jobs elsewhere in London and the wider industry.

Chair

Why did they find those more attractive to go to than staying where they were?

Charles Horton

There is always movement of drivers around the industry. People for all sorts of reasons—

Chair

If there is always movement, why did you not build that into your assumptions?

Charles Horton

Because the level of turnover in that period was unusual and higher than expected.

Chair

Do you know now why that was?

Charles Horton

Those people left the business before we took over, so we do not have that data. What we do know is that there were other jobs coming up in the industry—

Chair

But why couldn’t you anticipate that? As you have just said to me, drivers move and people go to work elsewhere. You must have known it was a possibility

Charles Horton

But, of course, we do not know where people are likely to go. At the end of the day, what we have is the number of people who start with us on day one when we take over.

Chair

But it is pretty basic. If you are awarded a franchise and you do not have the number of drivers that you said you were going to have, it is pretty basic stuff

Charles Horton

But we are given the number of drivers we inherit at the start of a franchise. There were fewer than we expected and we immediately took action to put in place additional driver training and resources. We opened a new training centre. We tripled the number of courses. We put in place a significant programme of recruitment, and we have now established the UK’s biggest driver training programme. We could not have taken action more quickly than we did. The challenge for us, of course, is that, given that it takes 14 months to train a driver, there is no magic answer and no magic wand I can wave in these circumstances.

Chair

One of the reasons you were fined was the driver problems, wasn’t it?

Charles Horton

Indeed.

Chair

It was a real problem. Let me look at another point in the remedial plan that was agreed. You said it takes time to train a driver. That is correct, but this is a remedial plan when you were in major trouble with the Department for not implementing what you should have done. It says, “Appoint a Business Excellence Improvement Manager,” but that will not be done until September 2017. Why?

Charles Horton

Just to explain, there are a number of posts and a number of commitments in the plan. The fact that there is a 2017 end date or review date does not mean that we are waiting around to recruit or appoint those people.

Chair

When will that person be appointed?

Charles Horton

That person is already appointed.

Dyan Crowther

They were appointed three months ago.

Chair

And the resource training and risk manager? Has that person been appointed?

Dyan Crowther

They are in place, yes.

Mary Glindon

You have already alluded to rest-day working. To what extent are Southern services dependent on rest-day working? Did GTR impose a ban on rest-day working during the strike? If so, why?

Charles Horton

I will take the first of those, and maybe Dyan can take the second. I am really pleased to have the opportunity to explain this and to confirm absolutely that there is no ban on rest-day working and there never has been any ban on rest-day working. Anybody who wishes to work overtime can work overtime—conductors and drivers. If we have a job for them to do, we would be delighted if they would come and work overtime. On the question of how much reliance we place on rest-day working, I turn to Dyan.

Dyan Crowther

We rely on rest-day working, as do many other train operators. It is not just something that happens in GTR. We go through a process of negotiating with trade unions, both ASLEF and the RMT, an agreed establishment—the minimum number of resources that we would require to operate a specific timetable cycle. Some of the inputs to that establishment are things like current sickness levels and future training requirements. Because we are going through so much change at the moment, our drivers are required to undertake a significant amount of training on new rolling stock and new infrastructure layouts. We take all of that and then we agree a sensible level of overtime. There is a recognised agreement, where we agree with the trade unions the level of overtime that we would expect to be worked over a future period. Generally, we have a stated aim of 5%.

Huw Merriman

Following on from that, is it the case that your drivers and conductors are not contracted to work on a Saturday and Sunday? Is that what you mean by rest-day working?

Dyan Crowther

Yes, that is correct. We have different terms and conditions. Sundays are not part of the working week, so we are very reliant on voluntary and rest-day working for those types of turns.

Huw Merriman

Effectively, you are reliant on the unions in terms of the services that you can operate at the weekend.

Dyan Crowther

Yes.

Huw Merriman

I am going to come back to that, if I may. I want to touch on the reduction of about 15% of your services. I waved it as an irate passenger at the union, so in the spirit of fairness, I shall now do so with management. I have noticed that the Ashford to Brighton line, which affects the constituents I serve in Bexhill, is going to be impacted by that. I was at Bexhill station on Friday and I watched cancellation after cancellation come up. To a certain extent, this will not actually make much difference because so many services are being cancelled. What guarantees do you have that, by taking this action, the 85% that are left will actually run?

Charles Horton

The intention behind what we have done with amending the service, which is a decision we have taken reluctantly, was on the basis that we believe it will give us the opportunity to guarantee passengers a more reliable service than they are getting today. You are absolutely right that at the moment we are having a very high level of cancellations. Those cancellations are random and many of them take place in the peaks when many more customers travel. What we are doing is moving our train crew resources around to cover a service plan that concentrates on providing more capacity at peak times and on the predominant passenger flows, but also seeks to add more resilience behind the scenes so that when we get short notice problems we are able to recover more quickly from delays. Reliability is designed in—

Huw Merriman

Have you modelled it, so that you know that if you take one service out the other one will run?

Charles Horton

That is very much the way in which we have designed the timetable. At the moment, some of the cancellations are simply because train crew themselves are disrupted by a cancellation and are not able to get to the next train on their duty because the train they should be travelling on is not in place. This plan will deliver a better, more resilient and more reliable service for passengers. We are also taking the opportunity to use some of the rolling stock we are cancelling at the moment and putting it on to additional services where we can, to lengthen the service.

Huw Merriman

That is vital, because I am talking about two carriages on a busy line with an hourly service. It is already bedlam, so if you take one out it is vital that you have modelled it and that it is going to be right. I want to move on. When I asked the unions, it seemed to me that their issue is not so much the current situation—they recognise that their conductors will have a job—but some form of guarantee that in the future there will always be a second person on the train. Going back to my first point that you are so reliant on the unions in terms of co-operation to run your service, surely it makes sense to work with the Department for Transport to offer that. I cannot see any way through this dispute otherwise. It is quite a simple dispute really. One side is here and the other side is there. I do not know if other Committee members feel this, but it does not strike me as that difficult to decipher. Can you meet them halfway as far as that is concerned, and offer them something in the future and not just jobs right now?

Dyan Crowther

We have already said to the trade unions that we will guarantee the number of on-board supervisors to the end of our franchise. We have already given that guarantee. What we have not been able to do is enter a negotiated agreement with them, because of the position they have taken.

Huw Merriman

They said to us that they want to negotiate with you. What more can you do to make that occur? What have you done already, and what more do you think you could do?

Charles Horton

We have met with the RMT a number of times, both formally and informally, over the past few months to talk about these proposals. The last formal meeting was at ACAS. At that time, we said to them that we were prepared to give commitments on no compulsory redundancies; we guaranteed 440 on-board supervisors to the end of the franchise; and we said that the conductors we need to retain, because we need to retain a number of conductors, will be in a ratio of 2:1 for every turn. Those are all things that we are prepared to put on the table and guarantee to the trade unions.

Huw Merriman

That suggests that as you can only guarantee to the end of your franchise, which I understand, it requires the Department for Transport perhaps to offer something beyond the franchise.

Charles Horton

Yes. To put it in legal parlance, I cannot fetter the discretion of a future Secretary of State. I have to run my business to the end of the contract, and make commitments on that basis. I cannot fetter a future franchisee either.

Huw Merriman

We might need to ask the Rail Minister whether she can actually do that, notwithstanding the fact that she may not be in post beyond 2020. Ultimately it seems to me that the key to resolution is with the unions and, ultimately, with the Department for Transport.

Charles Horton

It is with us as well. We have to take our responsibilities and manage the situation, because we are the employer of the people who have taken strike action. It is our job to work with them and find a way through this challenge and this problem ourselves.

Chair

Do you accept the need for safety training for the second person on board?

Charles Horton

Sure. The on-board staff will be trained in safety. The change that we are seeking to make is for the driver to take full responsibility for closing the doors. The driver already opens the doors, but what we are looking to do is to get the on-board supervisor no longer involved in the task of closing the doors. That frees up the on-board staff to spend more time with passengers, moving through the train, selling tickets, giving information and providing a reassuring presence, which is what we want to achieve.

Chair

What level of safety training will they have?

Charles Horton

They will be trained to deal with emergencies, to deal with evacuations from the train and to deal with the on-board emergency equipment we have on trains in those circumstances; they will have safety training.

Mary Glindon

I want to go back to something you said, Mr Horton. You said that there is “compelling evidence” that a rise in staff sickness and absence during the industrial dispute, in effect, amounts to “unofficial strike action”. What is the compelling evidence that you have?

Charles Horton

At the time of the first strike, we saw a doubling of sickness among conductors. We saw the clustering of that sickness in a small number of locations. We also saw that the change was completely unprecedented for us. We have not seen sickness change like that on that basis. There were three things: clustering, unprecedented change and a doubling overnight. That seemed very unusual to us.

Mary Glindon

Did you know what the sickness was for each individual? Why was each individual saying they were sick? Did you not believe them, based on what you are saying?

Charles Horton

It seemed unusual to us to have that sudden change. Before the dispute, we had approximately 21 conductors off sick at any one time. Overnight, we saw that double to 40, and in the subsequent period that has increased and then come back down again on occasions. It has been a pretty unusual lengthy period of very unusual sickness patterns.

Mary Glindon

You said you had compelling evidence. It rather adds to the industrial problems and the dispute if you are saying that someone who may genuinely be ill perhaps isn’t. Could it lead to more stress and sickness if people feel threatened in that way?

Charles Horton

Like every employer, we have an attendance procedure. Every person who is off sick at the moment will be covered by that attendance procedure. It will involve interviews when people return to work, to check on their welfare and talk to them about why they have been off. It involves managers making welfare calls on a regular basis when people have been off for a protracted period of time. It also involves the services of our internal occupational health department to deal with people’s sickness when they are off sick. We have a comprehensive programme to deal with that. We do not make assumptions. We deal with every individual and look at every individual case, but, as I said, that sudden and unprecedented rise was very unusual for us.

Mary Glindon

Did you think it was helpful to the situation in overall terms to suggest that the sickness was part of unofficial strike action?

Charles Horton

I do not know whether it is helpful or not, but I think that is the conclusion I draw from what I have seen.

Chair

Did the Department agree with you the 350 cuts to services every day that you announced this morning?

Charles Horton

No. This is our initiative, based on our understanding of the best way in which we can provide services to passengers. The Department have not approved or agreed the plan that we have put in place. It is for us to persuade them and tell them why we think that delivering a reduced level of service is the best way of guaranteeing that more passengers are able to get a service when they need one.

Chair

The Department did not agree this with you; is that what you are saying?

Charles Horton

No. They did not approve the change.

Chair

How did you decide which services were to be cut?

Charles Horton

We knew that we needed to do something to address the problem of capacity in the peaks. What we were seeing were very significant levels of peak cancellations. Of course, that is the time when more customers are travelling. First, we looked at how we could improve the resilience of our peak service. We looked at where there were no alternatives for customers to use other train services. We run alongside a number of other train operators, and we tried to protect services where there were no alternatives. In a couple of instances, we also looked at where we could use road transport as an effective replacement for the train services that we were planning to withdraw. Finally, we looked at what levels of train crew cancelling those services would provide to us. Where relatively higher numbers of train crew were made available by cancelling those services, we targeted in on those. Those four measures allow us to make the most effective use of the crew resources we have available while protecting services to passengers, which is our primary concern.

Chair

I have had representations already from people saying that the area where they live will be cut off from their access to, for example, Gatwick and Eurostar. They will not be able to get to those very important places. Was any of that under consideration?

Charles Horton

We certainly looked at the effect on the airports on our network. We happen to have two major airports: Luton and Gatwick. Obviously Gatwick is most affected by the current situation. We have tried to preserve capacity for the airport, as well as for other services to London, but when you are cancelling that many services there are no easy choices. We think we have made the most appropriate service pattern we can, taking into account all the factors I outlined.

Chair

Will there be any refunds for people who have season tickets?

Charles Horton

Passengers are able to claim delay repay compensation against the normal timetable. Their delay repay will be based on what they would normally get, and therefore many of them will be claiming delay repay compensation on a regular basis. It will be based against the normal timetable. As you will be aware, the Prime Minister made mention at Prime Minister’s questions last week of an intention to look again at the question of compensation for passengers on Southern. We have provided some information to the Department for Transport to help them with their deliberations on that matter. It is something we understand that the Department will wish to make an announcement on in due course.

Chair

Will it be made easy for people to claim their rebate when the service is not there, or will they have to fight to get it?

Charles Horton

The process for claiming delay repay compensation is very straightforward. It involves a simple uploading of the ticket you have and a very simple web form on our website. We have spent a lot of time promoting delay repay compensation to passengers, and we want to make it as easy as possible for customers to get their delay repay compensation. We have also automated our delay repay system behind the scenes in the back office to pay compensation claims more quickly. We have a clever piece of technology helping us to pay claims as quickly as possible.

Dyan Crowther

In terms of the total number of contacts that we have on delay repay, 80% are paid out on first contact. We try to smooth things as quickly as possible so that customers do not have to come back again.

Martin Vickers

You are talking about refunds and so on. What is the estimate of the cost to the company so far of the problems you have been experiencing?

Charles Horton

I do not have those figures to hand.

Martin Vickers

You must have some idea, surely.

Charles Horton

As I said, I do not have those figures to hand. They are something that we would need to collect and gather together. It is a very substantial cost to us, because we are employing additional resources. We are bringing in many people to support the temporary timetable and to provide some assistance to customers. We made a loss last year on GTR. This year we do not expect to make a profit. This is a very challenging business from a financial point of view.

Martin Vickers

I want to return to an earlier point in the questions I asked. Are you now saying that on the day the franchise started you and the DFT knew that you did not have sufficient staff to maintain the services you were committed to?

Charles Horton

When we walked into the franchise on the first day, we expected 636 drivers, and I think from memory we had 611.

Martin Vickers

On day one, in effect, you knew that you could not provide the services you were committed to.

Charles Horton

We were then reliant of course, to provide those services, on levels of overtime and rest-day working. We obviously encouraged people as much as we could to get them to work overtime and rest days, but of course that is at their personal discretion.

Martin Vickers

But it very soon became evident that you were not in a position to maintain the services. Did you inform DFT? Were they fully informed and did they know?

Charles Horton

As soon as we realised that the number of drivers was short of where we needed to be, and we had made an assessment of the productivity of the drivers that we inherited, we of course informed DFT and told them of the challenge that would present to us.

Karl McCartney

Your passengers will want to know that this claim that it is a temporary new timetable is just that—temporary. In your view, how long is temporary? What is likely in reality? You have also told us that it takes 14 months to train a new train driver. One presumes that it takes less time to train a new conductor or on-train supervisor. How quickly will you get your staff levels back up and be able to reintroduce some of the services that passengers currently rely on but will not have during this temporary period?

Charles Horton

You raise a very good point. We have said that the timetable will be in place initially for four weeks. During that four-week period it is our intention to work tirelessly to get people back to work and get people who are currently sick back to work with us. It is also our intention to press ahead with the introduction of the new on-board supervisor role and make the changes there. What we hope to do, and plan to do, is to get services reinstated as quickly as possible. We do not want to do that until we can guarantee that customers are not going to have what they have had over the past few weeks, which is the random level of cancellations that have created all sorts of problems. Added to the conductor issue, we have seen a reduction in appetite for rest-day working among some of our drivers and an increase in driver sickness. We will also be addressing that point at the same time.

Mary Glindon

In relation to Gatwick, you said that you were trying to preserve services for the airport. With the expansion still possible at Gatwick, that could mean that over 25 million people were using the Brighton main line service. What are you saying to the airport about that? What kind of capacity would you have to give the service travel feasibility?

Charles Horton

The plan for the franchise includes a substantial increase in capacity on the Brighton main line. The new Thameslink trains that we are introducing are 12-car trains with very significant large through gangways, which will allow us to add very substantially to the capacity on the Brighton main line. As part of our 2018 timetable we are also introducing additional services on the Brighton main line and through the Thameslink core. Through the Thameslink core we are going to be running 24 trains an hour, which is a very substantial boost in capacity.

Dyan Crowther

In so far as the amended timetable is concerned—the revised timetable from next week—our passenger services director Angie Doll has met with Gatwick Airport Ltd, and we have tried to match the capacity to when they have peak flows. We have tried to make sure that we protect the Gatwick Express service in line with when the airport itself has peak flows coming through. We have good dialogue with the airport, we understand their issues and we try to work closely together to make sure that we minimise any impact on customers.

Mary Glindon

You can understand why there could be concerns about that.

Charles Horton

We understand that. Gatwick airport is an important partner for us and an important business on our route. We work extremely closely with them.

Huw Merriman

A question has just come through that has been brought to my attention. How can reducing services by 15% allow you to run a better timetable? Is it the case that you think you will end up with more services operating because you will be cancelling less than 15%? Does that answer the question that has just been posed? You are reducing by 15%, so how can you deliver a better service when you are reducing 15% of the services? Is it because you will end up with more services, even with a reduction of 15% because you will be more organised?

Charles Horton

The problem with the services at the moment is that, given the random nature of the cancellations, we are seeing consecutive cancellations, for example, on lines of route because of the shortage of train crew during this period. By using the train crew we have available to us, we will be able to make sure that we deploy train crew on services that allow us to maximise the number of services that we operate and provide a bit of a buffer for resilience behind the scenes.

Huw Merriman

The other point I want to touch on is this. You have said yourself that you are not making money on this service. In the past, the east coast franchise was returned by the operator. Are you guaranteed on this franchise until the end of your term?

Charles Horton

We have said that we are committed to delivering on the promises and commitments that we have made. This business is an important business for us. We are committed to delivering the improvements that the Chair spoke about right at the beginning. The fact that we have significant difficulties at the moment does not diminish our enthusiasm, our energy and our commitment to deliver the improvements passengers want to see and which we desperately want to deliver to passengers as quickly as possible.

Huw Merriman

In a way, you are in quite a good negotiating position with the Government on this. Somebody very senior in the Department for Transport has been quoted as saying that he could take the franchise back in-house but he would run a worse service than your team and it would take him 18 months to get up to speed with it. Actually you have good bargaining power. You are not making any money from it. You are taking a lot of flak. Surely, it comes back to the point about getting something extra from the Government in terms of the future for the second person on the train. You are in quite a good position to squeeze the Government a bit.

Charles Horton

Our objective is to meet the promises we made to deliver on the commitments we entered into. That is our focus.

Chair

But you are getting paid to run the service; that is why you are doing it. You have been fined £2 million. What proportion of the fee that you are receiving from Government is that?

Charles Horton

Our turnover is about £1.3 billion. Just over 90% of that comes from a fee for running the franchise, but we do not take any of the passenger revenue, which normally would be the case in a train operating company.

Chair

But how much do you get? What is the fee you get for running this franchise?

Charles Horton

I do not have the figure for this year to hand.

Chair

What is the order of the figure?

Charles Horton

The order of the fee is over £1 billion for running the franchise. As I say, I can advise the Committee subsequently where we are with that. We receive a fee because we do not receive any of the passenger revenue.

Chair

But you are receiving in the billions, so a fine of £2 million is not going to worry you too much, is it?

Charles Horton

Given that a lot of our costs are fixed in this business—they come from payments we make to Network Rail and for the leasing of trains—as a proportion of the discretionary costs in our business it is a relatively significant fine.

Chair

How much?

Charles Horton

Again, I do not have that figure.

Chair

You do not have the figure, but I suspect that £2 million is not much of a problem to you. What prospects do you hold out for all the angry people who are totally fed up with the pathetic service they are getting? What can you promise them now?

Charles Horton

I repeat what I said at the beginning to all the customers who have been badly inconvenienced over the past three weeks. I am genuinely very sorry. I commit to them that we are working very hard to get people back to work. We will implement the amended timetable to give them more certainty in the meantime, and we will move on with implementing this role and make sure that we make the changes they want to see in terms of investment in new rolling stock, in improved services and in better information. They are all the priorities they say they want to see.

Chair

But when? When are they going to see this?

Charles Horton

During the course of the summer, passengers will start to see parts of the new London Bridge station opening. Towards the end of this year, a fourth approach track will open at London Bridge, which will unscramble the tracks on approach to the station and help to improve the quality and reliability of services there. This autumn we are introducing further improvements on ticketing, so our KeyGo product, which is pay as you go for the railways, is going to be implemented. We are putting in place additional information improvements over the course of this year. We are training more drivers than any other train operator. We have the biggest UK driver training programme in place. Passengers will see the new class 700 trains coming into service on Thameslink during the course of this summer. We have our first one running at the moment. By the end of the summer, the Gatwick Express will be totally operated by the new trains.

Chair

How much overcrowding is there going to be on the trains that are running because you have cancelled the other services?

Charles Horton

Compared with where we are today with the random nature of cancellations, crowding levels should improve because we will provide a more evenly intervalled service than at the moment. Many customers have raised concerns about how uncomfortable services are at the moment.

Chair

Will that get worse?

Charles Horton

We expect to see crowding levels evening out because of more regular intervals between trains.

Chair

The things you have said all sound very good, but it does have a feeling of being far away for the individual passenger who wants to be sure that when they go out in the morning they are going to get to work on time. When is that going to be the case?

Charles Horton

From the start of next week, with the amended timetable, passengers will have a basis on which they can plan their journeys. I am genuinely very—

Chair

A basis on which they can plan their journeys. That is not quite the same, is it? From next week, will somebody catching a train to get to work be assured that they are going to get there?

Charles Horton

What is happening at the moment is that we are seeing, as I said, random cancellations and people not able to plan their lives.

Chair

When will they be able to plan them? Next week?

Charles Horton

From Monday of next week the—

Chair

From next week people who go to catch a train to get to work can be reasonably assured that they are actually going to get to their job on time.

Charles Horton

Indeed. That is the intention of putting in the amended timetable. Your point is a reasonable challenge around the improvements we are making and about when passengers will see some improvements. The new trains are this summer. The improvements to London Bridge are this summer. The ticketing improvements are at the end of this summer. There is a lot happening and a lot coming on stream. Those are just the start of the improvements we will be making during the life of the franchise. There is lots to come next year as well.

Chair

Most urgently, people want to know that they can get to work and get home. Can those simple things be fulfilled?

Charles Horton

Yes, and again—

Chair

The answer is yes. When? From next week, did you say?

Charles Horton

That is around the amended service pattern that we are putting in place. It should give customers a much better opportunity to have their guarantee that they get to work. What they tell me when they write to me is, “You’ve messed up my childcare. You’ve messed up my opportunity to see my family and put my child to bed.” Those are the things that really matter to customers. We understand that, and that is why we want to give customers more certainty.

Chair

From next week?

Charles Horton

Indeed.

Chair

We will hold you to that. Thank you very much. Oral evidence: Improving the rail passenger experience, HC 64 5