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The Parliamentary Under-Secretary of State for Transport (Mr Robert Goodwill)
It is a joy to serve under your chairmanship, Mr Crausby. I congratulate the hon. Member for Croydon North (Mr Reed) on securing this important debate on London transport zones and Croydon. I recognise that the zoning of stations has a real impact on the cost of travel in London, and I am aware that this is a matter of some concern locally. We do, as a Government, understand how important rail travel is for this country’s economy and for all of us who use these services to get to work, to visit family and to get around. That is why this Government are investing £38 billion over the next five years to improve the national network, generating faster, more comfortable and more punctual journeys. I understand how important it is to keep travel costs for hard-working people down. That is why last year we curbed the rail industry’s powers to increase fares. It is also why we will hold down rail fares next year to retail prices index inflation for the second year in a row.
We recognise the importance of investing in transport in London. That is why we have provided Transport for London with more than £10 billion during this Parliament, which has enabled upgrades to the tube network that have already increased capacity on the Jubilee line by 33%. We will also see a 20% increase capacity on the Northern line from next month. The investment will also bring the first air-conditioned walkthrough trains to serve customers on the Metropolitan, Circle, District and Hammersmith and City lines. We have also transformed major London stations including King’s Cross, St Pancras, Stratford, Blackfriars and Paddington. The Crossrail project is on track to deliver a brand new railway across London by 2018, transforming journeys across the capital.
We are improving rail travel in Croydon. The Government’s investment in London transport has enabled the Thameslink programme of upgrades, transforming the line, which serves East Croydon station. Capacity will dramatically increase by 2018. A fleet of 115 spacious new trains will run every two to three minutes through central London at peak times.
Mr Goodwill
The hon. Gentleman need not worry. As he has left me plenty of time to speak, I thought I would put the debate in the context of the unprecedented investment that the Government are putting into rail, not only in London, but across the country.
Croydon receives an excellent and frequent train service. Someone would be hard-pressed to find an area in zone 5 with better services to central London than Croydon. The hon. Gentleman mentioned that Croydon is closer to central London than other stations in zone 4. Ultimately, there will be winners and losers in any simple zoning system, as stations near the boundary of a zone will be closer or further from London stations than others. Distance is only one factor in determining the zone in which a station falls.
The hon. Gentleman’s arguments for re-zoning Croydon stations are interesting, and it is important to have these debates, but there is an established process for re-zoning stations, which works as follows. The travelcard map, which shows the zone in which each station falls, is set out as part of the travelcard agreement made between the train operating companies and TfL. The Government are not a signatory. Any changes to station zones must be proposed by a signatory to the agreement; the Government are not able to do that. The proposal must then be agreed by the remaining signatories. The Department for Transport can approve or reject the change proposals. The decision is made by the Secretary of State for Transport on the basis of the business case. If the proposal does not represent good value for money, it is unlikely to get approval. The Government cannot and should not promote or back any proposal outside that established process.
Mr Reed
I thank the Minister for his explanation. On the basis of what he has just heard and the link to the dramatic and bold £9.5 billion regeneration bid being proposed for Croydon through a regeneration and growth bid—we hope the Chancellor of the Exchequer will endorse it in the autumn statement—does he personally think that the proposal should be supported?
Mr Goodwill
As I made clear, it is a matter for TfL and the train companies. In passing, I point out that eight stations in East Croydon’s zone are closer to central London. Indeed, one is only nine miles away, while East Croydon is 10.25 miles, or 10 miles and 34 chains, I think, from Victoria. There is no official rule about where distances are measured from. By convention, some measure London distances from Charing Cross, but we are not aware of any reason why that should be the overriding rule. Generally the distance from the terminus station would seem to be the most sensible choice. That is Victoria in this case, although London Bridge is slightly nearer.
If one of the train operating companies running stations in Croydon wishes to formally propose the change, a number of factors would need to be considered. First, changing the zone of a station does not come free. A season ticket for zones 1 to 5 costs £2,136. The season ticket for zones 1 to 4 costs £1,800, so the difference between them is the figure of £336 that the hon. Gentleman drew attention to. Reducing the cost of travelling from a station reduces the revenue brought in by that station, and that can add up to millions of pounds a year. Ultimately, those costs would be covered by the taxpayer. A loss at Croydon might need to be compensated by raising fares elsewhere. At a time of intense financial pressure, is it fair to ask taxpayers as a group to pay for travellers in Croydon to have cheaper fares? It might be.
Mr Reed
I am grateful to the Minister for his frequent kindness in letting me intervene. In looking at the cost of making the change, does he take into account the net economic benefit, as was the case with Stratford? The Greater London authority estimated that, although that change cost £7 million, the net economic benefit was £24 million, which is multiples more than the cost of making the change.
Mr Goodwill
I understand the sensible point that the hon. Gentleman is making, which contributes to the debate. It is possible that the economic benefits to the area would outweigh the costs, but the question cannot be answered without some serious consideration. How would re-zoning impact businesses in the area? How would it impact residents? How would it impact surrounding stations and the areas that they serve? For example, passengers who live slightly closer to a station that was in the next zone might decide to change their journey plans and travel to East Croydon to save on their season ticket. The change could put increasing pressure on the station, which is already very busy.
The train operating companies would need to investigate all those issues. The argument for re-zoning would need to be demonstrated in a robust business case. The effects of re-zoning a station are not only financial; there would also be changes to demand at the stations. If it is cheaper to travel from one station in an area than another, people will choose the cheapest journey. That is the logical response, but a change will also make stations more crowded. East Croydon is already one of the busiest stations in the UK outside central London, and re-zoning it would make that worse.
Jim Dowd
A constituent raised the issue that my hon. Friend the Member for Croydon North (Mr Reed) kindly allowed me to mention earlier. The Minister said that passengers will choose the cheapest option, but that is not true in every case. It is also about the service. In the case that I highlighted, Crystal Palace is eight stations from Victoria, but Penge East is a mere five stations away. It is a much faster service from Penge East, although it is more expensive. People choose to go from Penge East; they do not necessarily go for the cheapest option.
Mr Goodwill
The hon. Gentleman is right. The current zoning seems to as much be down to historical reasoning as anything else, but it is the basis on which the franchises have been let and the basis on which the train operating companies have calculated their revenue. In cases of re-zoning, compensation might need to be paid to those train operating companies to allow for the difference in income.
Is increased congestion at their station a trade-off that commuters are willing to make? Is it a trade-off that provides value for money? Finally, what consideration has been given to commuters who travel into Croydon for work? As the hon. Member for Croydon North has said, Croydon’s economy is flourishing and there are many jobs in the local area. If Croydon is re-zoned, travel costs for people living in London’s outer zones could increase significantly.
Mr Goodwill
Yes, if the stations moved into zone 4/5, but if they just moved into zone 4, there would be an increase in cost, which would be a consideration for fare revenue. The re-zoning could have an impact on train operating companies. All those things need to be carefully considered.
As we have heard several times during the debate, Croydon is not the only place where calls for re-zoning are being made. A formal proposal has been submitted requesting that the Stratford stations should be re-zoned, and my Department has received correspondence asking for stations to be moved into the London zonal fares area. Other hon. Members have made similarly passionate arguments in favour of re-zoning stations such as Kingston, Surbiton and Epsom. I am sure that there are many others for which local arguments could be made.
Clearly, a wholesale transfer of stations into lower zones would not be affordable. It is, of course, important that the station zoning is reviewed and that re-zoning can take place when there is a strong case. The established process for re-zoning a station ensures that value for money and the impacts on other transport users are considered. That is what will need to happen with the proposals to re-zone Croydon.
In summary, I hope that I have been able to clarify the process for considering proposals to re-zone London stations. As discussed, it would not be appropriate for the Government to comment at this stage on the merits or otherwise of re-zoning Croydon. We will reflect carefully on the points made in today’s debate but can make no promises. The proposal will need to go through the proper channels and the proper process, and there will need to be agreement between the train operating companies and Transport for London. We would want to satisfy ourselves that any re-zoning proposal for stations in Croydon represents value for money. The Government are committed to ensuring that value for money is maintained to allow us to keep transport costs affordable for the travelling public—a key part of our wider commitment to improving the transport network both in London and across the country.