SOUTH HAMPSHIRE RAIL USERS’ GROUP NEWSLETTER
ISSUE 127 (MARCH - JUNE 2010) PART 1

THE EXTRAORDINARY HISTORY OF A FRANCHISE WHICH
* IS CONTINUALLY ASKING FOR MORE
* IS CONTINUALLY STRIPPING ASSETS
* TREATS PEOPLE WITH CONTEMPT

[This research paper was presented to the DfT as an annex to the South Hampshire Rail Users’ Group’s response to their informal consultation on the future of rail franchising.

It shows, through the voices and observations of many, including Ministers and other Members of Parliament, how an ethically-limited operator can consistently get away with taking more and giving less in return, whilst dismissing its critics in terms which bear little relevance to the truth.]

The extraordinary history of a poor operator
(Stagecoach South West Trains)

1. The first franchise competition

1.1 Stagecoach won the SWT franchise by undercutting the incumbent management’s bid by just £200,000. This was the first rail franchise award, and the company was widely perceived as getting a particularly generous settlement (£350 million over 7 years).

1.2 Steven Norris, a Conservative Transport Minister, later admitted: “Awarding the franchise to Stagecoach was really taking the fight to the enemy… It was the most aggressive decision we could take, and if we had tried to dress privatisation in its most acceptable form, it would have been better to award it to almost anyone else.”1

1.3 Mr Norris’ comments seem well-founded. Stagecoach chairman Brian Souter once told the Scotland on Sunday newspaper that, “ethics are not irrelevant but some are incompatible with what we have to do, because capitalism is based on greed.”2

1.4 The evidence inevitably suggests that this was a personal and destructive greed. Mr Souter and his co-founder Ann Gloag own a substantial shareholding in the company, and their wealth reportedly totals hundreds of millions. Yet Stagecoach first got out of the red by acquiring Hampshire Bus and then selling the less-profitable Southampton area bus operation, including disposal of the city’s bus station for commercial development. This brought them £4.4 million, twice the amount they had paid for the whole company.3

1.5 Bus stations are a well-appreciated feature of even some of Britain’s smallest towns. Yet, as a testimony to Stagecoach greed, Southampton’s 215,000 residents, with 40,000 university students and a large Polish community, are today served by a disjointed range of bus services which depart from different points around the city centre to avoid creating traffic congestion.

1.6 On ethics generally, Stagecoach scores no better. They had driven out some established bus operators by running parallel services just ahead of the existing timetables. This practice assumed a high profile in the case of the Darlington Bus Company. In 1995, the Monopolies and Mergers Commission, after a number of confrontations, described Stagecoach’s behaviour as “deplorable, predatory and against the public interest”.4 This might have chastened a responsible operator, but Stagecoach is noted for its contempt for regulation. Ten years later, SWT literature was referring to Mr Souter as ‘the tough Scots bruiser who came to dominate the UK’s bus industry by ruthlessly driving rivals off the road”.5

1.7 In 1996, Stagecoach was effectively branded a cowboy company when, on public interest grounds, it was refused a High Court injunction against the World in Action’s programme ‘Cowboy Country’ which exposed its contemptible business practices to a wide audience.

2. Benefits delivered by the first franchise

2.1 The Conservatives quickly came to realise their folly in franchising SWT to Stagecoach. The company sought to increase its profits by disposing of 125 middle managers and 71 drivers. It then had to cancel more than 190 services a week, causing uncertainty and anger among passengers.

2.2 Steven Norris lamented, ““We in the Conservative party were very happy at the way rail privatisation was going … new investment, new ideas, new services … SWT instantly unwound all that. It was so obviously a grave error of judgement, so obviously to the disadvantage of passengers, and so clearly an act committed by a private company. It left a bad taste instantly in people’s mouths about SWT.”6

2.3 Dr Alan Whitehead, subsequently elected MP for Southampton Test, commented: “We have the misfortune to live in the part of the country served by the worst single example of rail privatisation – South West Trains. Anybody who has travelled on the service recently will know that the whole system is in chaos, added to by South West Trains’ recent decision to scrap more than 190 of its services in a week. The problem arises through treating a public service as if it were just another marketing exercise.”7

2.4 John Watts, the Transport Minister called Stagecoach’s management ‘inept’, but the company was typically unchastened: “Souter poured petrol on the fire by suggesting that some of his customers had nothing better to do than to write letters of complaint in office time and wondered whether their bosses knew they were doing this. --- [Stagecoach Director Brian] Cox did not help by saying that ‘critics were fully paid-up members of the hindsight club’.”8

2.5 Dissatisfaction with SWT was rife, and it was never long out of the headlines: “A total of 28,000 complaints were lodged by passengers last year against the privatised South West Trains. That is more than 500 complaints a week and does not include the massive travel chaos in February and March this year after the company got rid of too many drivers to save cash and did not have enough left to run all the trains.”9

2.6 Passengers were soon complaining of ‘cattle truck’ conditions on trains.10 The Waterloo-Portsmouth service was so poor that there were calls for Stagecoach to lose the franchise.11 Clamping at Basingstoke station became so aggressive that there were death threats against the clampers. One clamper was so brutal that, even after a woman with a disabled pass agreed to pay a fine for briefly stopping to set down her aunt, he left her stranded while he took a 2-hour break. The woman sued and received a settlement of £460.12

2.7 In 1998-99, SWT was hit with performance fines of £3.6 million. This was after void days had improved the statistics. The true number of delays and cancellations was 72,482, equivalent to one for every 6 minutes of operation.13 Managing Director Graham Eccles commented that ‘morale had never been lower’, and dismissed the issue on the basis that morale is how you feel about yourself and how others feel about themselves.14

2.8 Mr Eccles’ inaction was followed by industrial strife. By the start of 2000, SWT’s complaints staff were issuing much-delayed responses which referred to “literally hundreds of train cancellations caused by us having an unofficial industrial dispute with a large number of our train drivers.”

2.9 During the later years of the first franchise, SWT became increasingly hard-faced. It introduced a new policy of omitting booked stops to improve its infamous performance. John Denham, MP for Southampton Itchen, stated: “Like most people I was amazed to find that this happens. Whatever the reason, some passengers pay a high price for unreliability.”15

2.10 While passengers suffered, Stagecoach continued to prosper: “South West Trains, heavily criticised for its appalling service to commuters, today announced record operating profits of more than £39 million. --- The 16 per cent increase, up from £34.4 million last year, infuriated passenger watchdog groups, who will accuse the company of continuing to put profits before passengers.”16 This perception was unsurprising given that SWT had suffered a record £3.8 million penalty for late or cancelled trains in the 12 months ending in January 2000. This included £598,000 for running trains without the contracted number of carriages.17

2.11 Towards the end of 2000, commuters’ lack of trust was highlighted in a special rail complaints feature.18

* A Wokingham resident called SWT “liars” for claiming that Waterloo-Reading trains were now running on time, and noted that “SWT are cavalier in their treatment of passengers and constantly give either no information or disinformation to passengers, not allowing us to make informed decisions about alternative routes”.

* A Guildford resident complained: “They clearly do not have a clue what is going on with their trains.”

* A Worcester Park resident commented, “Clearly, in SWT’s language, “normal” means one third of services cancelled and the rest crammed to the gunwales and 20-30 minutes late.”

* An Ashstead resident complained: “Over the last few months I have experienced the most appalling level of customer service. I have telephoned, faxed and e’mailed SWT and Railtrack on a number of occasions and all to no avail. The paying passenger is fobbed off with meaningless letters which avoid the subject or a grovelling poster on the platform that appeals for yet more time to put right the mess they have made”.

* A Claygate resident wrote “I haven’t been on a Claygate to Waterloo train that has been on time, in either direction for at least a month, with delays varying from 10 to 45 minutes”.

* An Esher commuter stated: ”The journey from Esher to Waterloo should take about 20 minutes. With the recent speed restrictions, weather etc, this journey has been increased to an average of 40 minutes. Passengers beyond Walton-on-Thames never get a seat and end up crushed in first class corridors or negotiating bicycles in the mail carriage. Announcements are hardly ever made, and when they are it is always about one minute before the trains arrive. Trains sit outside stations for seemingly endless periods of time (again no announcements). When asked, staff shrug off questions about next arrivals and walk away”.

* A Mortlake commuter complained, “How come, when they know how many trains they should be running each day, there never seem to be enough drivers or guards on duty? I would have thought some of SWT’s huge profits should be put towards actually employing enough staff to cover their timetables – if they ever start running to time that is”.

2.12 These comments reflected those of railway commentator Alan Williams, who had written a year earlier, “A couple of months back, I told you about the perception gap that seemed to exist between the SWT that I and everybody else use, and the clearly quite different organisation that produces glossy brochures in a desperate attempt to convince us that it should retain its franchise. Lots of you wrote to say that, look as you might, none of you could find this brave new SWT”.19

2.13 With the passing of time, Stagecoach spectacles have grown ever more rose-tinted, as in this statement from SWT’s tenth anniversary press release: “When we took over in 1996 the first few years were by far the hardest, but we put our heart and soul into delivering a railway to be proud of”.

2.14 The statement is perhaps best considered alongside the comments of an employment tribunal in 2002. It ruled that SWT had wrongfully demoted train driver Greg Tucker, dismissing much of the company’s evidence as “incredible”, “risible” and “implausible, even absurd”. One key witness appeared to give evidence “without regard for truth and solely with an eye to where the advantage lay”.20

2.15 In April 2000 the increasing instability of Stagecoach became apparent when the value of its group of companies fell to £1 billion, compared with £5 billion two years earlier.21 Critics considered that the company had overstretched itself in the US.22

2.16 The company’s rewards culture had hardly helped. The personal fortune of Brian Souter and Stagecoach co-founder, his sister Ann Gloag, had reportedly risen to £600 million. Stagecoach Director Mike Kinski received a £250,000 welcome bonus in 1998, a £777,000 salary in 1998/99, and a £1,400,000 farewell bonus in 2000.23

3. The second franchise competition

3.2 The Evening Standard commented that “For many Londoners, further evidence of a drop in accepted standards of service comes with the news that South West Trains has had its franchise extended for 20 years – on the same day that hundreds of passengers were hit by disruption on the network”.25

3.3 It is unclear what became of the Deputy Prime Minister’s demand that ‘support, or otherwise, for particular bids would be crucial’. With such huge and consistently negative focus on SWT in the preceding years, it is inconceivable that anyone could have thought there would be public support for the Stagecoach bid.

3.4 Crucially, the choice of Stagecoach bore no relation to any improvement in SWT’s performance. It remained the worst-performing passenger train operator in 2001. In the first 9 months of the year, passengers spent the equivalent of over 573 years waiting at its stations for late running trains.26 On a pro-rata basis, this would equate to more than 11 millennia under the proposed new 20-year franchise.27

3.5 Such evidence as is available suggests that Stagecoach bluffed its way into gaining some support for its proposals. For example, SWT Managing Director Andrew Haines publicised a £3.5 billion range of service and infrastructure improvements which were to be part of the Stagecoach bid and “offer real benefits for the people of Southampton”.28 In summary, he stated: “We believe that our proposals bring the most passenger benefits, and that they bring them more quickly than anyone else’s.” This was totally unrealistic against the background of Stagecoach’s declining finances. Nevertheless, only 10 days later, the news was leaked that Stagecoach was favourite for a new franchise and that “SWT had impressed the SRA by its straightforward approach to the bidding process.”29

3.6 Stagecoach’s “straightforward” approach was quickly exposed for what it was. Head of Stagecoach Rail Graham Eccles boasted that “For the big PR hit, what you do is add up guaranteed outputs, the primary aspirations and the secondary aspirations, and then you shout loudly”.30 SWT media affairs manager Jane Lee later confessed that: “It is for the Strategic Rail Authority to decide which of our proposals it wishes us to go ahead with”.31 With Stagecoach’s precarious finances,the exciting bid which SWT had advertised for public approval had been exposed as just an offer to spend more of taxpayers’ money than its rival bidders, and much more than was ever going to be available.

3.7 It was crystal clear that virtually none of the “real benefits” would be realised, let alone in a short timeframe. So further disappointment was to be heaped on passengers who were already dismayed that Stagecoach had been chosen for the second franchise. SWT was subsequently censured by the Advertising Standards Authority, following a complaint by the South Hampshire Rail Users’ Group that its leaflets were falsely claiming that the committed investment under the new franchise was “billions”.32 Mr Haines sought unsuccessfully to overturn the judgement.

3.8 Stagecoach was by now at real risk of losing the franchise altogether through SWT’s poor performance. This meant more problems for commuters, as the company intensified its policy of omitting stops and terminating trains short of destination in order to create the impression of improved performance.

3.9 Transport Secretary Stephen Byers admitted: “I agree that the SWT franchise is not being operated as well as anybody would like. I want the Strategic Rail Authority to use the franchise renewal as an opportunity to secure real improvements for the travelling public. The Strategic Rail Authority must use the time over the next few months to negotiate an agreement with SWT – with Stagecoach Group PLC. If the SRA cannot negotiate a franchise renewal that puts the interests of the travelling public first, it will be prepared to seek a new franchise operator which will put the interests of the travelling public first, drive up standards and improve reliability.”33

3.10 In June 2002, SWT was alone among the 26 passenger train operating companies to have its performance penalty increased compared with the previous year. The fine of £12.5 million was the largest ever levied under the performance regime.34 The Conservatives condemned the figures as a disgrace and called for remedial action by the Government.35

3.11 Stagecoach was now desperately trying to grant share options from which its directors might profit. Hundreds of thousands of options in the troubled company were worthless after its shares plunged from a high of 284p to just 30p.36 One report stated: “The shares have fallen more than 80% in six months and credit rating agency Moody’s recently downgraded the company to junk status”.37

3.12 Fortunately for Stagecoach, Richard Bowker had become chairman of the SRA. He was formerly a senior executive with Virgin Trains in which Stagecoach had a 49% interest; Mr Bowker’s father was a senior Stagecoach executive; Mr Bowker had visited Stagecoach chairman Brian Souter’s church in Scotland (a round journey of 1,000 miles from the SRA’s London base);38 and Mr Bowker once worked with Graham Eccles.39 In addition, Mr Bowker admitted to the House of Commons Transport Committee that the timing of a £106 million grant to Virgin Trains had been determined by the need to stabilise Virgin and Stagecoach.

3.13 The SRA gave SWT an additional £29 million in subsidy, partly in return for introducing a few extra evening services. One of these was a little-needed 19.43 Poole-Waterloo. This was a return working of the Poole portion of the busy 17.15 from Waterloo, due into Poole at 19.37. The six-minute turnaround meant that, when the 17.15 ran late, all stops between Southampton and Bournemouth were axed and tired commuters left behind at Southampton Central.

3.14 A London man wrote, “How can the SRA be serious about giving SWT yet more money? It is incapable of running the railway now. Its trains are a disgrace with smashed windows, missing internal doors and graffiti both inside and outside. Perhaps Richard Bowker should take to travelling on SWT daily and experience the disgraceful service that he is pumping millions of taxpayers’ pounds into”.40

3.15 After an extraordinary delay, the SRA confirmed the second Stagecoach franchise on SWT not because of the company’s success, but to give it a chance to put right the mess it had created. The franchise period was reduced from 20 years to just three, with Mr Bowker commenting that the agreement would mean the company focusing “on what matters to passengers – recovering performance to a level that passengers deserve and expect and the replacement of slam-door trains with the biggest new train order in the UK”.41

3.16 The Telegraph later commented that it was this deal which “pulled the company out of reverse gear, since when the shares have trebled in value. It turned out to be a licence to print money.”42

3.17 Rail expert Christian Wolmar commented similarly that “The interim three-year arrangement agreed by Richard Bowker at the SRA in 2002 … was far too generous to Stagecoach. Under that contract, Stagecoach has been making super-profits at the expense of passengers and the taxpayer, netting a fabulous £58.9 million in the last year on turnover of around £500 million. That’s 12% of turnover. As I mentioned in my book, ‘On the Wrong Line’, a senior Stagecoach executive told me privately that the SRA had been a pushover and the company had been delighted by the deal.”43

3.18 Brian Souter and Ann Gloag saw a meteoric increase in their personal fortunes, sharing dividends which totalled around a quarter of a billion pounds, including £65 million in 200444 and £175 million in 200645.

4. Benefits delivered by the second franchise

4.1 The Stagecoach bid was to deliver virtually nothing except a fleet of new trains which were in any case a mandatory requirement. These were distinct from the fleets acquired by other operators for the southern electrified routes. They quickly became notorious for having much less-comfortable seating than the trains they replaced, air conditioning which stings the eyes, and rough riding. Stagecoach had negotiated a cheap offer from Siemens at a time when the latter was facing the loss of 5,500 jobs.46 As if that were not bad enough, the order was cut from 785 to 665 carriages.. A report by the Liberal Democrats found that overcrowding on SWT’s peak morning services increased by 77% between 1997 and 2004.47

4.2 So tight was SWT staffing that, when the new trains were delivered, drivers could be released for training only by the cancellation of scheduled services. Sixty-four services a day were cut in the Guildford-Aldershot-Ascot area. One user complained of SWT’s “appalling mismanagement” with no forewarning or consultation with passengers.”48

4.3 In the period October-December 2002, SWT had the worst performance record of the London and South East train operators, with 59.9% of trains on time, compared with 65.4% in the same period of the preceding year.49 Chiltern scored 90.6%. A principal reason was that SWT had altered its timetable, creating track congestion, at a time when Anglia Trains was bidding to introduce an hourly Southampton-Norwich service. Revised up and down Waterloo-Poole trains were blocking one of the 4 tracks through Southampton Central from 10-past the hour to 20-past or 25-past, and another from 11-past to 30-past.

4.4 The SRA now decided that the way to make SWT more punctual was to cut services. It was accordingly announced that South Central’s trains from Victoria to Bournemouth would in future terminate at Southampton. This deprived Bournemouth of its direct services to the Sussex Coast and Gatwick Airport. For the same reason, some 70 of SWT’s own services were to be cut: “Among those trimmed will be two of the four trains an hour from Reading to Waterloo and one of the four trains hourly from Southampton and Winchester to Waterloo, a route where SWT already cruelly disappointed those who commute via what was once a fast, reliable and regular service. Though the cuts due to be removed are off-peak ones, the passengers concerned, who may have changed their working hours to avoid the cattle-truck conditions of peak-time travel, will suffer – and SWT admits as much”.50

4.5 At an operational level, it often seemed that SWT was running out of control. In August 2003, 100 passengers had a 9-hour journey, in a temperature of 30C, over the 79 miles from Southampton to Waterloo following a fatality. They were delayed at Micheldever, told they would backtrack via Havant, made to alight at Eastleigh, and then left in the single-carriage train of another operator for 3 hours with no water or ventilation. They had to smash windows to survive.51 On the same day, Mr Bowker opined that passengers were starting to see “real benefits” as the railways improved.52

4.6 In the same month, a Southampton mother who had never been on a SWT train received a letter from the company threatening a £1,000 fine or imprisonment unless a £10 fine for fare-dodging on a Bournemouth-Southampton train were paid. Despite the intervention of her husband and the media, SWT demanded a written statement from her.53

4.7 Perhaps significantly, given the links between Mr Bowker and Stagecoach, the popular and capable chairman of the Southern Rail Passengers Committee, Wendy Toms, did not have her contract renewed when it expired. Ms Toms had supported those calling for SWT to make sure trains were not cancelled and did not terminate short of their destination.54 Nobody at the SRA, which was responsible for the Committee, bothered to contact her before making the announcement public.55

4.8 At the end of 2004, SWT took another step to improve its performance by introducing a much slower timetable. The Rail Passengers Committee was scathing. Their press release stated, “On Monday 13 December, passengers will experience new timetables; and some will be shocked to find that there journey will take longer, or have a reduced service… Passengers want shorter journeys, not longer ones, but they are going to have to put up with them all the same. It will be completely wrong if targets are not made tougher and passengers do not get compensation for poor performance, even though their journey is slower than it was before and the performance figures show an entirely fictitious improvement”. The Daily Telegraph commented, “SWT has struck on one of the great philosophical truths of all time: the lower the standards that you set yourself, the easier they are to meet”.56

4.9 A SWT leaflet claimed that "Over 80 local authorities and passenger user groups across our network have been consulted and where possible their feedback has been acted on". There are only a handful of user groups across the SWT area. The South Hampshire Rail Users' Group and the Kingston Area Travellers' Association were not consulted, although SWT was well aware of their existence. The Alton Line Users' Association was approached but one member stated, “SWT sent us a draft of the new timetable. We wrote back saying it was completely unacceptable for users. They wrote back saying they were going ahead with it anyway. I wouldn’t call that consultation”.57 When challenged by Dr Julian Lewis, MP for New Forest East, Andrew Haines (who was soon to depart) gave the lie to the leaflet’s claim in responding: “It would be impossible for us to carry out detailed consultation on something as radical as a completely new timetable.”

5. The third franchise competition

5.2 The first manifestation of the new approach was the launch of SWT’s glossy e-motion passenger magazine. Then, in September 2004, the company announced it was to spend £750,000 on cinema, TV and newspaper advertisements telling the public how good it was when official statistics showed its performance from April to June had been the worst of the 10 operators serving London.59 The advertisements would promote its new trains but not refer to performance.

5.3 The core of e-motion’s persuasive PR comprised the Passengers Panel pages. These gradually turned into little more than anodyne monologues by ‘independent’ chairman, the non-executive Stagecoach director Sir Alan Greengross. He had formerly been a critic of SWT60 in his role as Chairman of the London Regional Passengers Committee. The Kingston Area Travellers Association recorded that “A member of SWT’s so-called Passengers Panel has resigned because it does not serve the interests of passengers. Venessa Wilkins of Norbiton said that passengers’ suggestions were rarely acted upon and were a waste of time. She was not even thanked for her 18-month contribution to the Panel.”61

5.4 The Panel was clearly intended to be SWT’s mouthpiece, as in this little item attacking MPs who speak up for their constituents: “Counting the spoons As the voice of train passengers on SWT, it’s vital that we understand the issues that really matter to you so that we can protect your interests and ensure your views are strongly represented. The politician faced with a rail problem and little idea of how to deal with it cries “We have to put passengers first”. If they have no idea at all, “have” becomes “determined” [sic] and they shout even more. Isn’t there a saying ‘the louder they shout their innocence, the faster we count the spoons?’”62

5.5 E-motion descended into a parallel universe when it included among a list of “frequently asked questions”: “I think that South West Trains has done a pretty good job recently and deserves a new franchise, and I’m not alone in this. Before all of you at the Panel groan and consign my letter to the waste-paper basket as just a note from another sycophant, let me hasten to add that there are a number of my fellow passengers who would not agree, which is exactly why I am writing. What can the ordinary passenger do to make his or her views heard by whoever awards the new franchises?”63

5.6 The perceived need for this purported FAQ - which is framed as though from a regular commuter - can be understood against the comments of Stagecoach director Rufus Boyd at the February 2005 meeting of the Hampshire Economic Forum.64 He opined that performance across the network was fine and the only problem was poor press coverage due to long-distance commuters who made the “ultimate distress purchase” in buying a home distant from their workplace. Any other kind of company would bankrupt itself by being so dismissive of its best customers.

5.7 Sir Alan’s spinning effectively refreshed Alan Williams’ ‘perception gap’. In the September-October 2005 issue of e- motion Sir Alan was ‘interviewed’ by some un-named person from SWT, making comments on behalf of the ‘independent’ Panel such as: “Everyone knows that things go wrong on the railway. We also acknowledge that much of it…is not the fault of South West Trains”; “You make a convincing case. If you can turn your plans into reality, you will be receiving and deserving of thanks from your passengers”; and “We at the Panel believe… that South West Trains has come a long way”.

5.8 Stagecoach’s prospectus for a third franchise was to bear what was, in the context of SWT, the Cloudcuckooland title Building on Success. It included claims such as, “Stagecoach’s success has been built on listening to customers and using their special insight to improve services even further. Local managers are empowered and encouraged to build relationships with the communities they serve – consultation lies at the heart of the Stagecoach approach.” But not in the case of timetables affecting huge numbers of people? And not with much credibility even in the case of the Passengers Panel?

5.9 Despite the importance of SWT in carrying 400,000 passengers a day, the new 10-year contract was apparently finalised under pressure, with wrangling over the terms continuing until 2am on the day the award was to be announced.65 For the first three years, the franchise was to continue to attract subsidy. Thereafter Stagecoach was to pay a premium. Press reports recorded that financial experts were highly sceptical of Stagecoach’s ability to deliver.

5.10 The Department for Transport was nonetheless nominated, though unsuccessfully, for the Whitehall and Westminster World award for the quality of their procurement process: “The Office of Government Commerce considered the valuation process to be sound, robust and auditable, and to have been conducted in full accordance with best practice. Key stakeholders were noted to have worked together as a very effective project team, and team spirit was seen to be strong. The assessors particularly commended the integration of all relevant parts of DfT into the project, and the continuous drive to make the bid process more efficient, reducing costs for both sides.”

5.11 Two months after the franchise award, the Transport Committee’s press release on their report Passenger Rail Franchising struck a remarkably discordant note, declaring that, “The system of passenger rail franchising is a complex, fragmented and costly muddle which is unlikely to provide the innovation and investment needed for the passenger railways of the future. The system has had a decade to prove itself, but it has failed to achieve its core objectives.”

5.12 SWT held an on-line poll to see whether passengers thought Stagecoach should have retained the franchise. At 16 December 2006, the poll showed 70% saying ‘no’ and 30% saying ‘yes’, just as SWT’s new e-motion magazine published figures of 39% saying ‘no’ and 61% saying ‘yes’, with its ‘independent’ Passengers Panel claiming there was no doubt that a ‘huge majority’ of passengers were glad about the franchise outcome. Passenger Focus confirmed that the figures published in e-motion were extracted on 28 November. The astonishing swing in the following fortnight inevitably suggests that people connected with SWT had voted early on, biasing the vote. So even 30% in favour of Stagecoach was probably too high as a genuine reflection of public opinion.

5.13 The sceptical views of Stagecoach’s ability to deliver were justified by data released under the Freedom of Information Act some 3 years later. The amounts of the 3 failed bids were broadly comparable - £636 million, £513million and £501million - whereas Stagecoach had bid almost £1.2 billion.66 By this time Stagecoach was engaged in a legal battle, still ongoing, with DfT over the terms of its contract. It wants the revenue support mechanism, under which DfT pays a proportion of franchisees’ losses if they fail to hit revenue targets, to be brought forward by 10 months. If SWT wins, there will be an estimated loss of £100 million to taxpayers. It might be deduced that the quality of the franchising process had not extended to the outcome. Extraordinarily, in view of its record, SWT would like to control tracks as well as trains. What hope then for infrastructure quality, or for a fair deal for other operators in the SWT area?

6. Benefits delivered by the third franchise

6.1 The major passenger benefit of the new franchise disappeared almost overnight. A Freedom of Information request revealed that the promised 20% increase in seating capacity would actually be standing room achieved by taking 72 seats out of every suburban unit (loss of 6,500 seats), and reduction of seats in 28 of the new outer-suburban trains.67

6.2 Within weeks, it was announced that the comfortable Wessex Electric trains, paid for by taxpayers specifically for the long-distance Waterloo-Weymouth route, would be taken off lease, despite commuters having suffered steep fare rises linked with their introduction. SWT consistently claimed that this was part of a rolling stock reshuffle to relieve overcrowding on the Waterloo-Portsmouth line, whose passengers lost many of their new class 444 trains to the Waterloo-Weymouth route. However, at a committee meeting of the Portsmouth Rail Users on 22 March 2007, the company admitted that the real reason for the reshuffle had been to avoid the relatively high leasing charges for the Wessex Electrics, and claimed this was not made public for commercial reasons. The reshuffle did nothing for passengers on the Waterloo-Weymouth line itself, because each Wessex Electric unit had 331 seats, and the ex-Portsmouth line units had 334.

6.3 The 120 Wessex Electric carriages were replaced, within the reshuffle, by the bargain-basement lease of 120 Juniper carriages which had already been returned to the rolling stock company because of their unreliability. After several years out of use, the Wessex Electrics are now to provide long-distance comfort on short-distance services between Victoria, Gatwick and Brighton, under a better operator. Overall, the changes look like a serious misuse of taxpayers’ money.

6.4 Following the rolling stock changes, most Portsmouth-Waterloo commuters were crammed into outer-suburban class 450 trains. Some of those affected set up a website which attracted 1,460 signatures. A number of MPs with constituencies on the route, such as Mike Hancock, have been strongly supportive of the protestors.This is an issue which refuses to go away. A recent survey by Portsmouth City Council found frequent complaints of cramped, uncomfortable conditions on board the class 450 trains. It discovered that 74% of passengers went out of their way to avoid them (thus boosting overcrowding on other trains), and many complained of sciatica and other back-related problems as a result of the 97-minute journey. Of passengers travelling from Portsmouth and Haslemere to London, 98.5% preferred the class 444 trains which had originally been intended for the route, and 85% found it no easier to find a seat. Now the council is calling for the class 450 trains to be taken off the line altogether.68

6.5 SWT has always rejected such complaints, contending that the change was necessary to provide more seats from Woking to London. In fact, the shortage of capacity from Woking has in large measure been due to cancellations and short-formed trains, in many cases arising from defective rolling stock. On many days, such failures have resulted in the loss of hundreds of seats, and the South Hampshire Rail Users’ Group has records spanning several years.

6.6 These failures were apparent from the independent on-line Journeycheck facility, provided by Nexus Alpha. Journeycheck is invaluable to commuters in giving full details of a company’s cancelled, late and short-formed trains, enabling them to work out where the worst overcrowding is likely to occur on any particular day. Nexus Alpha says passengers are increasingly relying on Journeycheck but, at the end of March 2010, SWT became the only London commuter train operator to withdraw from the scheme. A query to SWT elicited the remarkable reply: “I am sorry you have noticed we no longer provide the Journey Checker [sic] facility….it has been decided we will no longer require this facility”.69 So never mind that passengers found Journeycheck invaluable; just a pity they noticed when it was taken away.

6.7 The January 2007 fare increases ignored SWT’s promise of season ticket discounts for travel outside the peak,70 which were never to materialize. SWT did, however, increase the premium for first class travel from 50% to 80%. They also raised car parking charges by up to 21%. A Surbiton commuter complained in the Evening Standard that his annual fare to Waterloo was now £1,640, and his car parking charge £2,040.71

6.8 SWT also introduced a 20% surcharge on off-peak tickets on longer-distance trains arriving in London before noon, except from some stations (such as Basingstoke) where another operator provided alternative services. Such cynical exploitation of a monopoly inevitably suggests that all passengers need some protection against excessive fare increases. There was a huge outcry about what was widely perceived as the company’s abuse and exploitation of passengers. South Hampshire MPs Sandra Gidley, Mark Oaten and Chris Huhne signed a highly critical parliamentary motion calling on the Government to block excessive increases. Of particular relevance to this consultation, a Locks Heath resident commented: “I blame the franchise machinery as the root cause and SWT is exploiting it because it can…The Tories are to blame for the original misguided concept but it’s a typical New Labour centralised shambles to keep it going”.72

6.9 In order to make the existing off-peak tickets, re-branded ‘super off-peak’, even less attractive, a peak restriction from 16.00 to 19.00 inclusive was introduced from January 2010 (SWT’s warning announcements and posters signally fail to not clarify whether this applies to the Travelcard portion of a journey). These tickets are now some of the most time-restricted in Britain. Perhaps not surprisingly, footfall at Waterloo was down by some 3.85% in 2008-09, compared with a decrease of barely 1% at Victoria and increase of about 1% at Charing Cross, where no services are provided by Stagecoach.73 Stagecoach’s exploitive fares have expanded the field for parallel road coach services, to the detriment of the environment. National Express has increased its services between Southampton and London, and First Group has introduced Greyhound services between London, Portsmouth and Southampton. Stagecoach itself has stepped up its Megabus service.

6.10 Although there is a requirement to sell passengers the cheapest ticket for their journey, SWT’s pricing structure means people now pay a surcharge if they don’t book separate tickets either side of Woking. A peak return from Bournemouth to London costs £84, but a return from Bournemouth to Woking plus a return from Woking to London jointly cost £70. Barry Doe, a rail pricing consultant (who has in the past lobbied the South Hampshire Rail Users’ Group, in consultation with SWT management, on behalf of Stagecoach),74 calls Woking the “magical line” for price drops on the London route, and has described the higher prices as “legalised theft”.75 By way of comparison, a peak return from Southampton to Waterloo by SWT costs £63.90, whereas a Peak Daysave from Southampton to Victoria by Southern costs £30, or £20 each where tickets are bought for five specified days within a period of one month.

6.11 In 2007, a Times transport correspondent and a BBC Radio Solent presenter who had difficulty obtaining tickets at SWT stations were both penalised with hefty fares on board trains. This led to the Times and the BBC contacting the South Hampshire Rail Users’ Group, and to a radio report and article in the Times of 18 June. Stagecoach claimed that their policy had not changed, but a secret memo was leaked. Guards were being threatened with disciplinary action if they did not penalize passengers with maximum fares if they boarded without tickets. It meant a passenger might pay more than double the normal price. The memo told guards to treat passengers as fare dodgers even if they asked to buy a ticket. It also told them they would be accountable for accepting excuses even if passengers said they had queued for 15 minutes and could have missed their train. The memo also said that children must be penalized even at weekends and bank holidays when cheaper fares were available. Guards must tell passengers they could be liable for an additional £20 on the spot fine and could be prosecuted for fare evasion. “From now, your commercial duties will be measured in three main areas: the amount of revenue you collect; the type of tickets that you sell; and the number of penalty fare warnings that you issue.”

6.12 Chris Huhne, MP for Eastleigh, wrote76 that the policy was out of order. He called for a clause in franchises insisting on fair and proportionate treatment of passengers. Otherwise people would be put off using rail, at odds with environment policy. Far from responding, SWT carried on stripping out its permit to travel machines. These had been considered an essential safeguard for passengers who might have difficulty in obtaining tickets, when the penalty fares system was introduced. In addition, SWT’s leaflet ‘Buying your ticket before you board’ made clear that people who make genuine mistakes will be penalized: “We’ve produced a leaflet to help you make sure you don’t get caught out by accident and have to face the consequences…. Some people make costly mistakes about ticket types when they travel on our trains … Having an invalid ticket counts as having no ticket at all.”

6.13 RAIL editor Nigel Harris argued that SWT was damaging the reputation of the rail industry as a whole: “Maybe it’s because many railway people don’t actually pay fares – or not in full – especially very senior managers. But no-one likes to feel ripped-off and once you offend the British sense of fair play, you’re in trouble. Politicians forget this too but a bloody nose at election time usually reminds them. So, I watched in despair in mid-June as The Times ‘exposed’ South West Trains’ pre-meditated policy to “… fleece its passengers.” The harsh words “sharp practice”, and “profiteering” were used. SWT was “the unacceptable face of rail privatisation.” This is all enormously damaging – not just for Stagecoach, but the whole industry. RAIL was critical of SWT’s recent moves to manipulate the peak and impose 20% increases on off-peak fares and The Times was equally unimpressed. SWT’s protests about easing the post-peak rush were unconvincing: this is all about maximising revenues.”77

6.14 December 2007 saw the introduction of a new standard-hour timetable between Waterloo and Weymouth, which was a franchise commitment. The DfT’s objectives were to accelerate the Waterloo-Weymouth fast trains and use rolling stock more efficiently in meeting demand. Unfortunately, the DfT’s consultation on the changes was flawed, for example because the proposal to drop the stop at Totton (the fourth-largest intermediate town between Southampton and Weymouth) from the semi-fast services was omitted. Stagecoach has met the required stopping pattern for the Waterloo-Weymouth fast trains but not for the semi-fast Waterloo-Weymouth trains or the Waterloo-Poole trains. The substantial element of non-compliance was exposed following a protracted Freedom of Information struggle by the South Hampshire Rail Users’ Group.

6.15 The purported benefits of the new timetable are difficult to find. Weymouth-Waterloo trains became only 3 minutes faster, because of the slackness of SWT schedules, but journey times for services from the busy smaller Dorset stations of Upwey and Wool were extended. Poole, a much larger town than Weymouth, had its fastest London journeys extended by 4 minutes. In the busier London commuter belt east of Poole, off-peak London services from Christchurch and New Milton were reduced from twice-hourly to hourly, though not in the opposite direction. The direct off-peak journey time from London to Totton increased by 32 minutes. The service from Totton to Christchurch (the next town westwards) increased from 28 minutes to 59 minutes, with no train on Mondays to Fridays between 15.35 and 17.01.

6.16 Dr Julian Lewis, MP for New Forest East, called the changes an ‘appalling outcome’ for the people of Totton. Although faster journeys from London to Totton are theoretically possible by changing at Southampton, SWT insists on sending off the Totton train 30 seconds early, even when people are racing along the platform to make the connection. It argues that this benefits the ‘vast majority’ of passengers. However, since these trains are allowed 3 minutes for a Beaulieu Road stop which few of them are scheduled to make, leaving Southampton on time simply means standing at Brockenhurst for 28 minutes rather than 25. Punctuality is indeed important for passengers, but a major reason is the need to make connections.

6.17 Having stripped out permit to travel machines and introduced a savage penalty fares scheme, SWT introduced proposals for big cutbacks in ticket office opening hours. This brought widespread condemnation from MPs, User Groups, Passenger Representatives, the Unions, and individuals. Dr Alan Whitehead, MP for Southampton Test, laid an early day motion which attracted cross-party support:
“That this House notes with extreme concern plans by South West Trains to close ticket offices and cut ticket office opening hours at 114 stations; believes that such cuts cannot be justified when these stations have seen a combined increase in passengers of nearly 27 per cent. in the last year; is further concerned that the cuts will dramatically increase the number of stations that will lose their ticket offices entirely during weekends and will leave stations unstaffed at weekends and in the evening making railway stations and passengers who use them feel less secure; believes that replacing staff with ticket machines will also reduce the quality and range of services available to passengers; and calls on South West Trains immediately to withdraw its plans.”

6.18 Although the Transport Secretary, Lord Adonis, made SWT scale back the cuts by 80%, the company has recently proposed a second round. To some extent, these changes are academic because there is substantial anecdotal evidence that SWT ticket offices are often closed during opening hours. Making passengers use machines can increase revenue. Machines don’t sell time-restricted tickets until the time threshold is reached. So if passengers purchase a ticket just before the threshold, the machine will sell them the dearer ticket, even though the cheaper one is valid on the next available train.

6.19 Unsurprisingly, passengers at stations such as Southampton Central, Basingstoke and Guildford have been noted being led from long ticket office queues by SWT staff and instructed on the use of machines. Observations by a Surrey rail user have established that passengers at Guildford are routinely paying too much, and that it can be difficult or impossible to get cheaper tickets from the machines even after time thresholds have passed. In addition, long queues build up at the ticket office because, as is so often the case at major SWT stations, few ticket windows are open.

6.20 MPs John Denham, Alan Whitehead and Sandra Gidley attended a demonstration at Southampton Central on 18/07/2008, handing out leaflets about the cuts. Alan Whitehead said, “Without staff how can stations be as safe – all you will have is a button that means you can talk to someone five miles away and you won’t be able to talk to staff to make sure you get the cheapest ticket possible. If this goes ahead we may have to talk to a few ministers and see if they think South West Trains is giving the service it promised when it took on the franchise”. John Denham echoed these sentiments and added, “A lot of people will be affected by this and a lot took the leaflets away with them”.78

6.21 At 06.20 on the day of the demonstration, a member of the South Hampshire Rail Users’ Group spotted a SWT official putting up a poster, inside the main station entrance, which said that London Travel Card operators would be conducting a survey at the station that day, and that £2 would be donated to charity when people completed a questionnaire. We could find nobody who had heard of any similar survey, nor of such short notice being given of any passenger survey by a train operator. It is not clear why anyone would have wanted to conduct such a survey at Southampton, especially as passengers in London were being urged to use the new Oyster Cards wherever possible. This was pretty obviously a distraction technique by Stagecoach. Protests elsewhere included “crisis talks” between Woking MP Humphrey Malins and SWT management.

6.22 Southampton, which had lost its bus station through Stagecoach’s destructive greed, was to lose its busy railway station Travel Centre as well. At 6am on 23.9.2008, the desk computers were still switched on at the Travel Centre. At 6pm, the by-then former Travel Centre was veiled with polythene sheeting. A member of SWT confirmed that the haste in closing the facility was because of the big public pressure to keep it open. Travel Centres have now been stripped out across SWT (except Waterloo which continues to face an uncertain future), but they thrive elsewhere, with new or refurbished facilities at places as diverse as Leeds, Cambridge, Liverpool Central and Inverness. The severely restricted provision of ticket offices on SWT means that travel centres are more necessary there than across the responsibly-operated franchises.

6.23 A recent feature of SWT has been a raft of measures, sometimes in conjunction with the police who always claim to be overstretched, to intimidate passengers. Stations have a clutter of threatening posters, particularly about penalty fares. At Southampton Central, even ‘loitering’ is proscribed, yet what is a station except a place where people wait for trains? Passengers, including David Willetts MP for Havant, have been driven to distraction by announcements, many of them threatening penalties for holding the wrong type of ticket. Announcements on stations warn about smoking, skateboarding and cycling, when no smokers, skateboarders or cyclists are around.

6.24 An innocent passenger was accosted by armed police at Bournemouth station while shaking hands with a friend.79 He was apparently suspected of being the person who had earlier been behaving suspiciously in Basingstoke apparently just because they were both black. Twenty officers randomly stopped passengers at New Milton station on the pretext of looking for drugs, but no arrests were made.80 Police have reportedly been conducting random stop and search acts at Waterloo station.81 Students from Richmond College and transport police clashed after a ticket-checking operation led to a crush at Twickenham station, trapping people between the barriers and the ticket office doors (So what’s the point of barriers?). Three people were arrested and one person was taken to hospital.82 In March 2010, a 25- year-old musician was ‘invited’ to leave a Portsmouth-Southampton train by SWT’s Community Rail Officers. They had had nothing better to do than snoop on him, and noticed he had written the word ‘killers’, the abbreviated name of a pop group.83

6.25 Another feature of SWT is increasing secrecy. Removal of the Journeycheck facility, which was very helpful to commuters, but exposed the many services cancelled, late or short-formed, often owing to defective trains or crew shortages, is an example. Another is that the transcript of SWT’s most recent Webchat event stayed on its website only a week. These twice-yearly forums reveal dissatisfaction on a huge range of issues and invariably show SWT in a bad light. Previously, the transcripts were retained permanently on the website. An important change on which SWT apparently remained silent was that carriage interiors were to be wet-cleaned annually instead of monthly;84 it seems reasonable that passengers should know of the potential health hazard before boarding their train.

6.26 On 15 January 2009, transport correspondent Paul Clifton reported, on BBC South Today, that Stagecoach planned to cut SWT’s workforce by 10%, with loss of almost 500 staff. However, the losses were to be in administrative and managerial grades. An internal memorandum was then leaked to the BBC, showing that the losses included 93 full-time and 87 part-time ticket office staff, 62 full-time and 9 part-time platform staff, and just 22 full-time and 3 part-time managers. SWT refused to comment and the BBC discovered that the RMT had not been told. A video of Mr Clifton and presenter Sally Taylor, both shocked by the scale of the deception, was placed on the BBC’s website.

6.27 When Transport Secretary, Lord Adonis, made a 2,200 mile fact-finding trip on 40 trains, he singled out Southampton Central station for criticism.85 At 8pm there was no refreshment outlet on a station used by 5.5 million passengers a year. Writing in Parliament’s in-house journal, he described the experience as the “low point of the week”. In addition, he used the passenger helpline for another complaint but, like countless SWT passengers before him, got no reply.

6.28 SWT responded that catering outlets were not their responsibility. Yet an article about Brian Souter being in line for another, £6.3 million, bonus drew the response from the proprietor of Coffee Charisma, Godalming: “I am a tenant of SWT and they are asking me for a 140% increase in my rent, when the footfall at the station I have an outlet has increased 10% in 3 years”86 A report commissioned by Lord Adonis, following his tour, established that 11 of the worst 20 large stations nationally were managed by Stagecoach or the Stagecoach-Virgin partnership.

6.29 Despite huge previous concerns, SWT continues to get more disproportionate in pursuing revenue protection. Two examples of cases where members of the public have contacted the South Hampshire Rail Users’ Group, and a third case from the press:

Example 1

One morning in October 2008, a season ticket holder arrived at Southampton Central with his bike and found the gates unattended (a common event at the station), contrary to legal requirements. He therefore opened the manual gate, to avoid missing his train to work. Staff then appeared and he politely showed his season ticket. He was given a £55 penalty for opening the gate, under a remote bye-law which has probably been carried forward from the days when mail was carried on passenger trains and some stations had gates exclusively for postal staff.

He refused to pay as he considered he had done nothing wrong. He was then prosecuted and threatened with a £1,000 fine, 3 months in prison or both. A criminal record would have prevented him from continuing his charitable work with vulnerable serving and former service men and women.

In April, the Court directed SWT to release CCTV images to the passenger, along with details of the gate and its signage. SWT sent him just a polaroid image of the gates and confirmed in writing that they had looked at the CCTV images and destroyed them.

In July, the passenger had to come back from holiday in Spain to attend court. SWT pulled out all the stops, producing three members of staff to give evidence against him.

The passenger considers that their evidence was partly false, and the destruction of the CCTV tapes inevitably looks suspicious. In any event, the court found the passenger not guilty, said the case should never have been brought, and admonished SWT for wasting court time.

Example 2

In January 2009, a woman hampered by crutches made a 5-mile journey to Axminster station to buy a ticket to travel to Basingstoke the next day. She got the ticket in advance because she had read of reduced ticket office opening hours and would only have a short time to get from work to catch her train. She found the ticket office closed during opening hours (another very common occurrence on SWT), so had to use the ticket machine. The screen was difficult to read because of glare from the sun (a well-recognised problem on SWT). She therefore inadvertently obtained a ticket dated the day of purchase rather than the day of travel.

The train guard clipped her ticket without query. At Basingstoke, the barrier rejected it. A member of staff took her details but said it was a common situation which would probably be overlooked. SWT’s prosecutions department then wrote saying they had intended to take her to court, which could lead to a £1,000 fine, 3 months in prison, or both. However, as it was a first offence, and taking her mitigation into account, they would agree to a Caution with Applied Costs: £45 operational costs for dealing with the incident; £10 for writing the letter; and £29.40 for the fare avoided: a total of £84.40 to pay within 14 days.

The woman pointed out that she and her husband were known to the previous Managing and Commercial Directors of SWT, who could give character references. Her husband had arranged a ceremony for one of the Wessex Electric trains to be named “Bournemouth Orchestras”, and the couple had hosted a celebratory Promenade Concert at the Albert Hall on behalf of SWT. She felt the penalty fare was completely unjustified and would opt for the case to go to court. SWT staff from Axminster would be prepared to give evidence in court on her behalf and one had said that SWT would rather proceed than admit a mistake.

This drew the response:

“Please allow me to inform you that any member of Stagecoach South Western Trains Limited staff from Axminster station who is prepared to attend court on your behalf must do so in their own time. If they intend to appear during their allocated working hours an arrangement for compensation to reimburse the costs of staff and their replacements must be made between Stagecoach South Western Trains Limited and you; before the court date.”

“……With regard to your comment allegedly made by a member of staff at Axminster station, that ‘South West Trains would rather proceed than admit a mistake’, I find such an accusation to be a most scurrilous, malicious and disloyal statement, which I take personally, and I am in contact with the Area Manager for the West of England to ensure it is investigated as soon as possible”.

The writer ended by saying that “I have no doubt that a prosecution would have a devastating effect on you and I am therefore prepared to allow the offer of a Conditional Caution to stand until 12.00hrs, 31 July 2009”. Overall, this response recalls Christian Wolmar’s book ‘Stagecoach’ in which he detects, “an arrogance and deep conviction that the company is right and everyone else is wrong.” Dismissing reasonable criticism out of hand, sometimes in one sentence, is a familiar Stagecoach characteristic.

Just before the date of the hearing, the manager of Axminster station successfully pressed SWT to drop the case. The withdrawal was conveniently made on the basis that it had not been known the passenger was on crutches, rather than because the whole case against her was totally outrageous.

Example 387

A 29 year old man, who works for an animation company, was issued with a £2 unpaid fares notice in 2008. He was on his way to work from Strawberry Hill, where he lived with his father, to Richmond after forgetting his season ticket. He claims he tried to buy a ticket but the machines were not working and the inspector would not accept his bank card.

He did not hear from SWT until a year later — after he had moved to Bristol — when his father called to say he had been threatened by bailiffs at his home in Strawberry Hill. Debt collectors said that if he did not pay them £600 they would pick the locks and take double the amount in goods. The man said: “I went to the Citizens Advice Bureau and they said that it was illegal and that if it happened again to phone the police. My dad felt completely threatened.”

He went to Bristol magistrates’ court to say that he had received no court correspondence but about four months later his father told him he had been threatened by bailiffs again. On 10 March he received a summons to Richmond-upon-Thames magistrates but could not get time off work to attend. He now faces a fine of £217. A spokesman for Her Majesty’s Courts Service said: “This matter has not been brought to our attention previously. We would welcome details so we can look into it.”

The South Hampshire Rail Users’ Group has already submitted details of many other revenue protection abuses, in response to the DfT’s recent consultation on penalty fares. Overall, the administration of the penalty fares scheme is clearly abusive on SWT and there have been press reports of revenue protection staff earning commission, which would incentivise disproportionate behaviour. SWT’s ‘zero tolerance’ of people boarding without tickets can operate profitably because of long queues for tickets, ticket offices being closed during opening hours, and guards not being fully informed of such problems.

6.30 Another exploitive ruse: “---At a recent London Travelwach meeting, Transport for London (TfL) reported that only 3% of people who should be loading Oyster Extension Permits onto their Oyster cards are actually doing so. TfL also claim that Penalty Fares (PFs) are not being issued, in order to give people time to adjust. However a member of South West Trains (SWT) staff on Railforums.co.uk reported that SWT are openly flouting this instruction, and are charging PFs. Given that 97% of people are not bothering with this incredibly complex OEP system - indeed, it is likely they do not know about it, or do not understand it as they do not possess a master’s degree in Fares and Ticketing - it is quite sickening that SWT are acting in this way. But then it is only to be expected by a company owned ultimately by Brian Souter, who is infamous in the transport industry for controversial practices.”88

6.31 Stagecoach seems to be running out of ideas which might further boost its profits on SWT at the expense of passengers. Brian Souter has said:89 “the [Stagecoach] group had made £70 million of cost savings in its rail business but was unlikely to be able to deliver further savings in 2010.” His latest dividend was reportedly just £6.3 million, while SWT managers lost their performance bonuses in 2009 for missing financial targets. They have been told there will be no bonus this year unless “at least a further £7m of unbudgeted, sustainable savings are identified and implemented by year end”.90 Passenger income and car park revenue will be ignored in the calculation and, for the maximum available bonus to be paid, savings must be at least £10 million.

6.32 Since the third franchising exercise, there have been no good news stories of much substance on SWT apart from Network Rail’s infrastructure improvements at Axminster and accessibility measures at a few of its busier stations, welcome as these are. SWT’s February/March UPDATE’ leaflet therefore focuses principally on the latest National Passenger Survey figures. It may, superficially, look good that the company is now more or less level pegging with some other operators in its satisfaction ratings for the journey a passenger has just made. However, its 86% rating means that, of some 400,000 passengers a day, almost 400,000 a week are less than satisfied. It is doubtful whether any other kind of company would rush to celebrate such a score.

6.33 The leaflet then cleverly switches from actual percentages to percentage movements, to disguise some much poorer scoring:

* Satisfaction with car parking is a ‘3% increase’ rather than 44% peak and 46% off-peak;

* Helpfulness and attitude of on-train staff is a ‘4% increase’ rather than 66%;

* Availability of on-train is a ‘5% increase’ rather than 50% (taken in conjunction, these last two statistics suggest that about 33% of passengers find a member of staff and get the help they need);

* Provision of information during the journey is ‘a 3% decrease’ rather than 71% peak and 74% off-peak;

* On board toilet facilities are a ‘3% decrease’ rather than a shameful 31% peak and 39% off-peak; and

* The cleanliness of the train is ‘a 4% decrease’ rather than 71% peak and 75% off-peak.

6.34 Interestingly, the leaflet ignores the biggest recorded movements in the ratings. In the peaks, satisfaction ratings with room to stand or sit, and with ease of boarding and alighting, have increased from 39% to 50% and from 67% to 79% respectively compared with Autumn 2008. This surely reflects how steeply commuting has declined (footfall at Waterloo reduced by 3.5 million in one year).91 The corresponding ratings for off-peak periods show satisfaction falling from 77% to 75% and from 82% to 80%, presumably reflecting SWT’s shortening of trains. It seems shocking that a quarter of off-peak passengers should be dissatisfied with the room to stand or sit, given that they are paying some of the highest fares in Europe.

6.35 On the acid test of value for money, satisfaction has increased from an abysmal 22% to 24% among peak passengers, possibly reflecting the reduced overcrowding through loss of custom, whilst it has fallen from 46% to 42% among off-peak passengers, possibly reflecting discontent with the ‘legalised theft’ pinpointed by Barry Doe - and that was before the new evening restrictions were introduced.

6.36 On how well SWT deals with delays, only 34% of peak and 41% of off-peak passengers are satisfied. People don’t like being dumped like rubbish at intermediate stations when they are already delayed and may have connections to make or appointments to attend; they don’t like standing on bleak, unstaffed stations watching their train race past; and they don’t like having train doors slammed in their faces as they run to make a connection.

6.37 The lesson of the Stagecoach franchises on SWT is that, with a poor operator focused on greed, ‘heads’ the operator gains and ‘tails’ passengers and taxpayers lose. Mr Souter’s serious misjudgement in overbidding for the third franchise, thus again denying passengers the benefits of a better operator, has not caused him the personal hardship which many of his passengers have suffered. He recently decided to spend £100,000 to the further detriment of the environment, on jetting family and friends to a party in Moscow to celebrate his daughter’s 21st birthday and the 30th anniversary of the foundation of Stagecoach.92

Conclusion Franchises can deliver, but only under good operators. There is a fundamental issue of whether the railways exist as a public service, or as a cash cow for private operators.

Privatisation was supposed to release the benefits of competition but, under a poor operator, can release the exploitive powers of a monopoly.

The DETR’s ambition in 2000 for “A bigger and better railway with reduced journey times, higher standards of safety, service and comfort” by 2010 has, in most respects, spectacularly failed in the case of SWT.

The National Passenger Surveys don’t seem to pick up very real differences in quality between operators, perhaps because passengers’ expectations depend on the operator they normally use.

SWT is a rare example of a public-facing organisation which strives to be intimidating rather than welcoming. Compare Southern:

* few warning posters, but plenty of notices inviting people to apply for compensation for delays;

* no manipulative PR;

* conductors generally look for late-comers before closing doors;

* seats not stripped out of suburban units because people didn’t want it;

* cheap, system-wide Daysave tickets (with no price increases from last January);

* barrier staff always happy to open gates for passengers;

* prospective enhanced comfort from introducing the Wessex Electric trains on the Brighton main line;

* further timetable improvements planned from next December.

The leaders of all three major political parties have recently stressed the importance of transparency and integrity in politics. Corresponding qualities should be expected from private sector companies which have benefited hugely from public funds. Regular passengers have learned not to take anything that SWT says at its face value, for reasons which should be apparent from the preceding analysis.

It would involve excessive risk for passengers and taxpayers, who are in many cases the same people, to relax franchise requirements for poor operators. In addition, it would be perverse to incentivise a company such as SWT to reduce services, when its exploitive fares have been followed by a disproportionate drop in footfall.

APRIL 2010

FOOTNOTES
1 Source: ‘Stagecoach’ by Christian Wolmar.
2 Source: BBC Website.
3 Source: ‘Stagecoach’ by Christian Wolmar.
4 Source: ‘Stagecoach’ by Christian Wolmar.
5 Source: E-motion, January-February 2005 issue.
6 Source: ‘Stagecoach’ by Christian Wolmar.
7 Source: Southern Daily Echo 8.3.1997.
8 Source: ‘Stagecoach by Christian Wolmar.
9 Source: Evening Standard 24.4.1997.
10 Source: Bournemouth Daily Echo 27.2.1998.
11 Source: Portsmouth News 5.11.1998.
12 Source: Basingstoke Gazette 2.10.1998 and 9.10.1998.
13 Source: Daily Telegraph 18.3.1999
14 Source: SWT ‘On Line’ magazine.
15 Source: Southern Daily Echo 31.3.1999.
16 Source: Evening Standard 14.6.2000.
17 Source: Evening Standard 16.3.2000.
18 Source: Evening Standard 5.12.2000.
19 Source: Modern Railways, January 2000.
20 Source: Private Eye.
21 Source: RAIL, Issue 382.
22 Source: Guardian 4/4/2000.
23 Source: The Times 15.2.2000.
24 Source: Rail Professional, May 2001.
25 Source: Evening Standard 2.4.2001.
26 Source: Southern Sunday Independent 13.1.2002.
27 Source: Evening Standard 11.1.2002.
28 Source: Southern Daily Echo 6.2.2001.
29 Source: Guardian 16.2.2001.
30 Source: Rail Professional, May 2001.
31 Source: Southern Daily Echo 4.9.2001.
32 Source: Evening Standard, 6.3.2002.
33 Source: Hansard 21.5.2002.
34 Source: Evening Standard 6.6.2002.
35 Source: Metro 7.6.2002.
36 Source: Evening Standard 25.7.2002.
37 Source: Guardian 24.10.2002.
38 Source: Private Eye.
39 Source: Rail Professional, November 2002.
40 Source: RAIL No. 441.
41 Source: Evening Standard 6.11.2002.
42 Source: Daily Telegraph 23.9.2006.
43 Source: RAIL 11.10.2006.
44 Source: Evening Standard 6.7.2004.
45 Source: Evening Standard 27.6.2007
46 Source: Evening Standard 24.4.2001 and 10.5.2001.
47 Source: Evening Standard 20.7.2004.
48 Source: Evening Standard 20.1.2004.
49 Source: Evening Standard 12.3.2003.
50 Source: 26.2.2003.
51 Source: Southern Daily Echo 8.8.2003.
52 Source: Evening Standard 8.8.2003.
53 Source: Southern Daily Echo, 15.8.2003.
54 Source: Southern Daily Echo 29.12.2001.
55 Source: Southern Daily Echo 25.1.2003.
56 Source: Daily Telegraph 13.11.2004.
57 Source: Evening Standard 14.12.2004.
58 Source: Private Eye.
59 Source: Evening Standard 27/9/2004.
60 Source: Southern Daily Echo 17.3.1998.
61 Source: KATAlogue.
62 Source: E-motion Issue 4.
63 Source: E-motion Issue 13.
64 Source: CD record of the meeting.
65 Source: Evening Standard 22.9.2006.
66 Source: Times 11.6.2009.
67 Source: Evening Standard 2.10.2006.
68 Source: The News, Portsmouth, 22.3.2010.
69 Source: Letter from SWT Customer Service Centre dated 14.4.2010.
70 Source: Financial Times 23.9.2006.
71 Source: Evening Standard 5.1.07.
72 Source: Southern Daily Echo 9.5.2007.
73 Source: RAIL Issue 642.
74 Source: E’mail from Mr Doe dated 19.1.2006.
75 Source: Bournemouth Echo.
76 Source: Southern Daily Echo 23.6.2007.
77 Source: RAIL, Issue 569.
78 Source: Southern Daily Echo 21.7.2008.
79 Source: Metro 8.7.08.
80 Source: Southern Daily Echo 18.9.2008.
81 Source: Today’s Railways, UK edition, November 2008.
82 Source: London Lite 7.10.2009.
83 Source: The News, Portsmouth.
84 Source: Today’s Railways, UK edition, February 2009.
85 Source: Southern Daily Echo 28.4.2009.
86 Source: Evening Standard, 24.6.2009 and website.
87 Source: Evening Standard 29.3.2010.
88 Source: Railtalk magazine; Issue 42.
89 Source: Times, 10.12.2009.
90 Source: Leaked SWT memorandum.
91 Source: RAIL Issue 642.
92 Source: The Herald (Scotland) 29.3.2010.