Select Committee on Transport, Local Government and the Regions Minutes of Evidence

Examination of Witnesses (Questions 20-39)



  20. Yes.
  (Mr Lockhead) No, we are highly regulated now, although it is referred to as "deregulation". In our submission we listed the regulatory authorities that we are accountable to outside of London, so it is not true to say that it is deregulated and it is not true to say we want more regulation. We want less rather than more.

  21. But you want to try to exclude, do you not, the low cost of entry to the industry?
  (Mr Lockhead) Not at all. In fact, over the last two or three years, the number of competing companies has increased and the number of bids per contract is growing. The industry is very competitive, and that is a good thing.

  Chairman: We will come on to some aspects of that. Mr O'Brien.

Mr O'Brien

  22. What happens to the buses that are made redundant after the 8 years you referred to? Are they sold on? Are they scrapped? Do you use them in other ways?
  (Mr Lockhead) No, that is the average age. A bus will run up to 15 years old.

  23. What happens after that?
  (Mr Lockhead) It is usually scrapped. It usually does not meet the emission standards. It does not meet the quality standards that we have set ourselves.

  24. That applies to all the companies?
  (Mr Clayton) We will sell some, but we do in fact scrap a significant amount.

  25. Do you sell them to people in this country, or abroad?
  (Mr Clayton) In the main, yes.

  26. In this country?
  (Mr Clayton) Yes, but we do scrap a significant number.
  (Mr Lockhead) We do not sell any. We scrap them all.


  27. What about Stagecoach? You sell them on to Africa.
  (Mr Cochrane) We no longer have operations in Africa.

  28. You sold all the buses.
  (Mr Cochrane) We sold the operations to the companies some three years ago to local businessmen. We adopt, really, a horses for courses approach, depending on what stage and what condition the vehicle is in.

  Chairman: Okay. Ms Jackson.

Helen Jackson

  29. Following on Mr Donohoe's questioning—following that 1985 in Sheffield. After deregulation, we saw fares shoot up, passenger numbers go down, and the quality of public transport generally almost disappear. Congestion went up as well. To what extent do you see the popularity of buses, which definitely took that significant dip, coming back, and how can you work better together to ensure that it does come back?
  (Mr Cochrane) Certainly we do not have specific bus operations in the centre of Sheffield.

  Helen Jackson: But you have got a beautiful tram, which could work a lot better with the buses.

  Chairman: If you could cut down on the publicity for Sheffield.

Helen Jackson

  30. Okay. Not a bad thing at the moment.
  (Mr Cochrane) Every piece of research that we do identifies that punctuality and reliability are the key measures that encourage bus use. In fact, I see a press release issued this morning by the Commission for Integrated Transport indicating that of a public survey of 1,700 individuals, 26 per cent said they would use buses more if journey times could be halved. So reducing congestion, improving punctuality and reliability are the most important issues.

  Chairman: We will come to bus lanes in a minute. Miss McIntosh.

Miss McIntosh

  31. I think all three companies have stated that they are in favour of bus quality partnerships. My concern is how you square this with the withdrawal of services. If I could just direct one question to First Group: I think it is your service that has been withdrawn from Weatherby to

  York, passing through some very rural villages which happen to be in the vale of York. You have probably received a bus subsidy over a considerable period of time to operate this: can you justify why the partnership has broken down here, and what lessons we can learn from that in the future?
  (Mr Lockhead) I am disappointed to hear that the partnership has broken down. I did not think it had. In fact, I thought we had a very successful partnership in York and that we had seen passenger growth of 10, 11 per cent, which is a good measure of the success that we have had. We are very reluctant to withdraw any services because it means that we are moving away from a market that we want to stay in.


  32. What sort of figure are we talking about overall? Do you have a figure for the proportion of commercial bus services?
  (Mr Lockhead) 84 per cent of our services are commercial, throughout the country.

  33. How many bus kilometres were withdrawn last year?
  (Mr Lockhead) I am told it is less than 1 per cent of the total. It is minimal compared with the amount of mileage we run. We will give you figures on that.

  34. You will give us that, and you can tell us whether you think that trend is going to continue?
  (Mr Lockhead) I think what we can say is that our focus is to ensure that we achieve growth and that we give the maximum network coverage that we can. There are occasions, however, when, from simply value for money and the number of people using the services, we can no longer maintain those services. We cross-subsidise many routes across our networks from both day of the week, time of the day and so on. But there comes a point, when, if there is just not enough people using it, then the option is that we would withdraw, and we would recommend that the Council would withdraw, as a partnership arrangement. If, in the event, the Council feel that they must provide that service, then they go out to tender, and we compete with other companies in that area to win that bid. So the Council can be sure that they get the lowest cost for providing that service, but on many occasions, we do not believe that it gives good value.

Miss McIntosh

  35. I think, to be fair, it is the hope that that particular service will continue. Following on the Chairman's question, what proportion of services do you think will be suitable—that question is to the three companies - for introducing bus quality partnerships, and can you give a split between urban and rural areas?
  (Mr Lockhead) I think every route we have should be part of a partnership. Every part of the network should be part of a partnership. The partnership gives us free movement of our buses on the very limited road space some of the communities we serve have. What we want to see is a focus on delivering punctuality and reliability that will allow people to give up their cars and move on to bus travel. We know it works. In many, many areas like York, Leeds, Manchester, throughout the country where we have provided this focus on quality, reliability, bus lanes and so on, we get growth.
  (Mr Cochrane) What I can see is that Stagecoach currently has 50 quality partnerships around the country, and we are currently in negotiations for a further 30. You raise a very valid point. There is perhaps a perception that quality partnerships are only suitable for urban networks. They are also suitable for small and medium sized towns across the City. For example, in Perth, Scotland, we have a very good partnership relationship with our local authority; similarly in Cambridge and Oxford. So they apply across a wide range of town size and network operations.

  36. So would the Committee conclude that it is more appropriate to urban areas than rural areas?
  (Mr Cochrane) No, I do not think the Committee could conclude that. It is horses for courses. The partnership form may take a different nature, but that is the beauty of the flexible structure that we have.

  37. Returning to the question of new buses, are you, each company, prepared to put new buses on every route as part of the partnership? Can we draw a conclusion that perhaps Cheshire only gets secondhand buses and Yorkshire gets new buses? One hates to draw that conclusion, but would that be appropriate?
  (Mr Clayton) There is a dilemma in that you have vehicles that are due to last 14 years and their average age at the moment is 8. If you have assets that still have life left in them they have to be used, and so I think the issue is about ensuring that the new vehicles are placed in areas where they represent the best value, both to us and to the customer.

Chris Grayling

  38. Could I ask you first of all about viability of services - you talked about commercial and non commercial and so forth - if you look across the whole range of your operations, what proportion of the services you operate are entirely free from subsidy, whether it be from other services or from Council finance, and are totally commercial in their own right?
  (Mr Lockhead) Maybe I could just take you through what is called subsidy. First of all, the main element of support that is given to us is directly to concession fareholders. The vast majority of what is called "subsidy" goes directly through our companies to selected groups, and they either get a discounted fare, or whatever, but it is measured, it is transparent: they count the number of tickets we issue, and then they discount the number of tickets we issue because they have arrived at what they call the "generation factor", so they believe that there is more journeys because of the discount, so the company is no better off. In terms of the other area of subsidy which is "secured services", routes that you have asked us about that we might feel are not viable or not giving good value, then again, it is not a subsidy in that we simply get a handout—in the old days we used to get block grants, the difference between cost and revenue in Europe, that is the traditional way of giving out subsidy. What we have to do is bid. It is transparent: you can see what you are buying, you can see what the frequency is, and you can also see how many people use the service after you have put the service back in. So again, I do not consider that a subsidy. It is a mechanism by which a Council or a local authority can buy back or can buy additional services. The third element is fuel tax, relief on fuel tax. Our passengers get 80 per cent relief, they have to pay 20 per cent of fuel duty. Airline passengers do not pay any duty and neither do railway passengers. What we say is that because the tax regime is pretty high on fuel here, and in the past—it is a mechanism by which fares are held down. It is audited, it is measured, the amount of miles—so again, it is transparent.


  39. I do not think Mr Grayling was asking you whether it was a fair or an unfair subsidy, he was simply asking you which subsidy you got.
  (Mr Lockhead) I say, on those three elements, which are the only elements, we do not get any subsidy.

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