A practical way forward

A practical way forward

Tim Loughton MP discusses his recently tabled Private Members’ Bill that would establish a network-wide Rail Ombudsman and redesign the system of compensation…


The Govia Thameslink franchise which includes Southern Rail is not working and hasn’t been for some time. The current industrial action by ASLEF and the RMT over a fabricated dispute about safety has made it virtually impossible for any train operator to run a decent service on this route; but the problems run deeper.

Essentially the unique franchise/management agreement granted to GTR was flawed. It is too large to handle, accounting for 23 per cent of the train travelling public in the UK even if GTR were up to running such a complex and crowded part of the network. When you add in the longstanding underinvestment in the rail infrastructure little changed from the 1930’s, a distinct lack of competent joined-up management between Southern and Network Rail when dealing with problems and anachronistic union barons spoiling for a ‘Red Robbo style’ fight then it was never going to work. Frankly no one comes out of this long-running shambolic state of affairs with any brownie points.

What has been lacking in all of this though is the absence of concern for the person who should be at the heart of the whole rail – the passenger. When things go wrong, and they have been going very wrong over the past few months, effectively the passenger has to like it or lump it. The system for compensation payments is cumbersome and inadequate and the financial pain it inflicts on the train operator is minimal, which I think has a lot to do with the lack of urgency surrounding settling the current dispute. It is incredible that in such an important industry there is no really effective statutory regulator or system of redress to take up the cudgels for the passenger.

To address this anomaly just before Christmas I tabled a Private Members’ Bill that would establish a network-wide Rail Ombudsman and redesign the system of compensation. The Bill is not intended to resolve the immediate shambolic problems of Southern but it should go some way to help disincentivise complacency over consistent failure in the future.

There are two types of compensation payments at present. The first are payments from Network Rail to the train operating companies, known as Schedule 8 payments. These payments are designed to compensate Toc’s when something goes wrong with the infrastructure, such as points failures or the notorious signal box fire at Penge of the Reggie Perrin era. Extraordinarily the Toc’s are not required to pass this compensation on to passengers, who actually suffer the inconvenience and cost.

The second form of compensation is paid out directly by the Toc’s to customers where they are themselves liable for delays and cancellations caused by staffing problems, rolling stock breakdowns etc. The problem is that this depends specifically on passengers lodging a claim which can be very bureaucratic and often rejected on technicalities. As a result the take-up rate for claims is very low. Indeed in 2014 the Office of Rail and Road calculated that only 11 per cent of passengers ‘always’ or ‘usually’ claimed compensation.

If passengers do not claim then Toc’s can actually profit from Network Rail failures and profiteer on strike days as they have reduced salaries and energy costs to pay. It has been estimated the some 60 per cent of rail compensation comes in Schedule 8 payments, indeed the Social Market Foundation calculated that in 2015 the Toc’s received £107 million in Schedule 8 payments from Network Rail, while passengers received just £26 million, which means the Toc’s profited by some £81 million.

Last year the then Rail Minister stated that just £2 million has been levied against GTR in respect of cancellations and falling short of performance benchmarks, while some £2.2 million was paid out to passengers in compensation. This totals less than 0.4 per cent of GTR’s £1.3 billion turnover – over £1 billion of which comes from the taxpayer via government to run the trains – and is hardly an incentive to run an efficient service. There must be a better way of doing it.

The compensation and complaints procedure largely relies on the goodwill of the Toc’s beyond the minimum DelayRepay 15 obligations. The consumer champion, Which? recently said: ‘The current handling landscape in the rail sector is inadequate. There are major gaps in the provision of alternative dispute resolution with no effective route for redress and escalation of complaints if a train company does not resolve a compliant.’ They are absolutely correct and I am delighted that they have announced their support for my Bill. We both agree, as do many of those who we represent, that it is quite extraordinary there is no industry-wide ombudsman for rail complaints, particularly since its absence prevents passengers being able to obtain compensation and redress beyond the current delay thresholds, which pale into insignificance when the true cost of endless delays and cancellations are taken into account.


Change the dynamics

If my Bill were to receive the support of the government it could solve the issues of compensation and redress in two ways. Firstly, it will overhaul the compensation scheme, creating much tougher financial penalties on Toc’s, and a fairer and easier way of compensating passengers with a more realistic reflection of the inconvenience and costs they have suffered. The new scheme would mean that every time a train is late beyond an agreed threshold or cancelled altogether then a penalty fine will be paid into a central pot independent of Toc’s. The primary purpose of the pot will be to compensate passengers who will be able to make a claim in a much simpler way than present.  I recently met a company that has devised an app that can track a passenger’s arrival at stations, automatically lodge a compensation claim where appropriate and the compensation will be paid directly into the passenger’s bank account without any paperwork being lodged. The app goes live in January and will remove an unwieldly claims process.

The pot would also be used to fund a new Rail Ombudsman, which would manage compensation claims, rather than the Toc’s, and any remaining funds would be used to offset fare rises thereby giving further payback to inconvenienced passengers. This would recalibrate the balance of power back to aggrieved passengers.

The Bill would also establish the aforementioned new Ombudsman and give it real teeth and proper statutory powers. It would be based on the Energy Ombudsman model which is already in operation and could be adapted in the rail sector. A Rail Ombudsman would not only greatly enhance the level of redress available to passengers but it would also help to improve confidence in the rail sector.

My Bill alone is not an immediate solution but does represent a practical way forward to change the dynamics within the rail industry. Most of our constituents are primarily concerned with being able to use a reliable rail service that gets them where they want to be roughly when they anticipated rather than compensation for an unreliable service. However the two are not mutually exclusive and I believe my Bill will help to achieve both.

Tim Loughton is MP – East Worthing and Shoreham

2017-11-27T14:36:53+00:00 January 25th, 2017|December 2017|