Q121 Phil Wilson: Lastly it is about the expense; apparently it can cost each bidder £5 million on top of the Department's own costs. Has there been consideration to reducing the bidder's costs?
Mr Paine: One of the hats I wear in the Department is that I am the suppliers' champion-some of them often wonder whether that is strictly true, but it is an intent and we try to deliver against it. What you are seeing there is a P&L output; when a company is asked what has the bid cost you they will inevitably put into that number everything they can. When we undertook our lessons learnt processes around franchising this follows what we call a debrief where we debrief the winning and losing bidders as to what went wrong, where they failed in their bid, how they can improve next time and so on. One of the feedbacks we had was that they were worried about escalating costs on bidding so we undertook to reduce the number of plans against which we judged their bids-for example previously, in most of the programmes the average number of plans that we measure were in the middle 20s; more recently there have been around 14 plans that we analyse. We also ask them to limit the volume of paperwork they send us, in other words a thinner bid, getting more emphasis on a pareto basis on the stuff we really wanted to see in the bid and the peripheral, less important information withdrawn. My immediate understanding from the bidding community was that that did reduce their costs, but the costs you are referring to often include things like a success fee or internal company bonuses based on the result of the successful bid. I would argue we have moved considerably towards reducing the bidders' costs- that is in the interest of the taxpayer because ultimately we pay as taxpayers for the bidders' costs-but they also do include some of these things I have mentioned such as success fees and bonuses.
Q122 Geraldine Smith: Does the Department have any concerns that overcrowding and high fare increases may lead to people not using the railways and using their own cars? In my own area if you are going by train from Morecambe to Preston it will probably cost around £6 per person; if you have a family of four that starts getting really expensive when you can drive there in the car for about £4- from £20 to £4 people are going to jump in their car. The high prices are deterring people from using trains, I am quite sure-it is becoming a form of travel for the rich or perhaps for MPs who are on expenses and can afford to travel by train.
Dr Mitchell: We have not seen any evidence that that is happening.
Q123 Geraldine Smith: You have not seen any evidence that that is happening.
Dr Mitchell: No, we have not seen any evidence that the demand for rail travel is slackening.
Q124 Geraldine Smith: It depends who is travelling on the train; do you collect any evidence towards the type of people who are travelling and the type of people who may be deterred from travelling by train?
Dr Mitchell: We do see evidence of that but we have not seen any change in the different types of people travelling by train. In fact, during the recent summer when of course petrol prices shot a way up for a period, the transfer to train increased quite dramatically and several of the train companies reported that in various statements they made to the public. We do not see any evidence of deterrence from people travelling by train but, clearly, it is an individual decision for the individual passengers.
Q125 Geraldine Smith: And you do not get feedback. I noticed that Mr Hill mentioned overcrowding in London; I can tell you that there is overcrowding on the Morecambe to Lancaster line every morning. Indeed, I used that train this morning and it was full; the ticket collector could hardly get round because there were so many people on the train and one of the reasons is that there is not enough capacity on the track, the train has to cross over the main line, Virgin Rail is always given priority, so one of the services had to be moved back to five minutes to nine which gets people into Lancaster at five past nine, too late for them to go to work and to use that train, so instead they have to use heavily congested roads. We seem to be in a crazy situation; I am surprised that you have not really noticed any evidence of people complaining about overcrowding and high prices.
Dr Mitchell: No, that is not quite what I said.
Geraldine Smith: My second journey was from Lancaster to London Euston. A first class ticket on Virgin Rail cost me £399-that is very, very expensive I think; do you not?
Q126 Mr Curry: You can fly to Singapore for less than that.
Dr Mitchell: You asked if we had seen any evidence of people being deterred and we have not seen that evidence. The Northern franchise, which I believe would operate the service that you refer to, has in fact seen continuous growth. In fact, I spoke to Ms Mottram the managing director only quite recently to ask her if she had seen any decline given the economic situation, and her answer was that she had not, she was seeing an increase.
Q127 Geraldine Smith: You have not seen complaints about overcrowding and high fares.
Dr Mitchell: That is a slightly different question.
Q128 Geraldine Smith: Is that a yes or a no?
Dr Mitchell: Have we seen complaints about overcrowding, yes, obviously we have. We get lots of complaints about overcrowding and that is one of the reasons that the secretary of state has given such a high priority to capacity relief in the current control period. So we are on the case but it does take time to alleviate.
Q129 Geraldine Smith: How can you get the capacity if you have not got the track down to start with?
Dr Mitchell: Part of the objective is to increase the track but also to increase the length of platforms.
Q130 Geraldine Smith: When will we have some new track in our area that we desperately need to run a proper train service?
Dr Mitchell: The other thing is to increase the length of platforms where that is required as well, but I take your point that it is not just about increasing the number of vehicles-in fact, that is a point that Mr Curry made-it is about how do you get more capacity into the system as well. Vehicles in a sense are the easy part.