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Westminster Hall

Tuesday 10 October 2006

[Mr. Roger Gale in the Chair]

Bus Services

Motion made, and Question proposed, That the sitting be now adjourned.—[Mr. Alan Campbell.]

9.30 am

Ian Stewart (Eccles) (Lab): I am delighted to have secured the debate. October seems to be my lucky month. In October 2002, I had a debate on bus security, and in October 2003 I secured a debate on bus re-regulation. I make no apology for raising the subject again, as good, reliable, affordable and safe bus services are vital for social inclusion, economic renewal, the reduction of congestion and the improvement of our environment. As those arguments are universally accepted, I shall not repeat them.

I am optimistic about today’s debate, because I sense that the time has finally come for proposals for additional powers, or for the removal of barriers, to promote and deliver quality bus services. In the October 2002 debate, I said that it would be the first debate in a series that I wanted to have. The debate gains strength every year, and I pay tribute to the many hon. Members who have highlighted the subject in this Parliament. In June 2005, my hon. Friend the Member for Manchester, Blackley (Graham Stringer) tabled an early-day motion on re-regulation, which he followed up by securing an Adjournment debate in March this year. In February, my hon. Friend the Member for Ellesmere Port and Neston (Andrew Miller) introduced a Bill to deal with the unilateral removal of bus services and the needs of the least mobile passengers. In July, my right hon. Friend the Member for Newcastle upon Tyne, East and Wallsend (Mr. Brown) introduced a ten-minute Bill to enable passenger transport authorities in some metropolitan areas to regulate their operations. Those contributions have all helped to further this important debate.

This year, the Select Committee on Transport is conducting another inquiry into bus services, in which it is considering whether deregulation has worked and whether metropolitan areas outside London should be allowed to develop their own form of regulated competition. In its July report “Reducing Carbon Emissions from Transport”, the Environmental Audit Committee outlined its important recommendations on buses, and concluded that the Department for Transport should

The report went on to recommend:

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If, for some, that does not add up to an irrefutable case for change, they should consider that at the end of September an independent report from NERA Economic Consulting, commissioned by the Passenger Transport Executive Group, predicts that service levels and patronage will each fall by about 20 per cent., while fares will rise by 20 per cent. unless control of key bus services and fares policy is passed to local authorities. That is a sign of the failure, apart from a few notable exceptions, of the current deregulated system outside London and Northern Ireland. So, just when we are looking for one report to support our argument, like buses, three come along at the same time.

What are the core facts about bus travel? Bus services outside London and Northern Ireland have been deregulated for 20 years and are now predominantly provided by five large companies: Arriva, First group, Go-Ahead, National Express and Stagecoach. Buses account for 31 per cent. of the turnover of the big five, but 47 per cent. of their profits. The taxpayer subsidy to the industry continues to rise, and in 2004-05, it was estimated to be £1.86 billion.

Are we getting value for money and, most importantly, a bus service that meets the needs of local passengers? Sadly, in many instances, the answer is no. Since deregulation, bus use in Great Britain outside London has declined by 37 per cent., and fares have risen by 45 per cent. in real terms. Alarmingly, in our largest cities, the decline has been more severe, with patronage down 38 per cent. and fares up by 86 per cent. in real terms, yet 85 per cent. of all public transport trips in PTE areas are made by bus—1 billion journeys a year. The PTEs and local authorities support the bus industry with an investment of £500 million each year through concessionary fares, support for subsidised services and improvements such as new, sometimes expensive, bus shelters.

In Greater Manchester, the overall decrease in bus journeys between 1994-95 and 2004-05 was about 10 per cent. The Greater Manchester PTE is committed to the development of bus services and has a published bus strategy. It is investing more than £80 million in a quality bus corridor programme, which will include a total of 33 routes when completed by 2008. The strategy is already helping to improve reliability and reduce journey times. In contrast to the trend of declining bus usage in the UK, the GMPTE estimates that patronage on quality bus corridor routes is around 10 per cent. higher than it would have been if action had not been taken. The people of Manchester have also benefited from some joint ticketing schemes and the introduction of a central information service, so we in Greater Manchester have maximised the opportunities provided in the Transport Act 2000.

Graham Stringer (Manchester, Blackley) (Lab): I have followed my hon. Friend’s arguments with great care. He makes a good point about investment in quality bus corridors, but does he accept that when they are introduced in Greater Manchester as part of the deregulated system, private companies such as Stagecoach and First group withdraw their services from other routes, so we get a smaller network even though more people are travelling on those radial routes?

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Ian Stewart: Absolutely. I accept my hon. Friend’s important point.

I admit to having served on the Standing Committee that considered the Transport Act 2000, but as I and others then predicted, we were too optimistic about what could be achieved on a voluntary basis. In Greater Manchester, we have worked in non-contractual partnerships: the Greater Manchester passenger transport authority, the Greater Manchester district authorities, the Highways Agency, Manchester airport and the bus operating companies are all party to our voluntary “integrate project”, so I appreciate that voluntary co-operation brings some limited success.

In January, the SAFEST—the Salford agreement for ensuring safer travel—protocol was launched. It is a partnership of bus operators, the GMPTE, Salford police and Salford city council. In August, we were informed that the crackdown on bus crime in Salford had led to a drop in crime of nearly 25 per cent. in the first six months of 2006. We are confronting the problem of physical and verbal assaults on staff and passengers, and vandalism to buses and bus shelters, by the use of CCTV and special police operations targeting antisocial behaviour. Already, one evening bus service which was withdrawn in 2002 because of persistent vandalism has been restored. Things are better, but they are not good enough.

After 20 years’ experience of deregulation, we can say with some certainty when voluntary co-operation does not work and when further initiatives are needed. The quality contracts provided for in the Transport Act 2000 have not, in the main, materialised. My union—the Transport and General Workers Union—believes that that is because local authorities are concerned that they will be sued by private bus companies for undermining their share price. We still have a situation in which bus operators can, subject to minimum safety and operating standards, run the services they like at whatever cost they determine, with what is called light-touch monitoring—exactly the point that my hon. Friend made.

Mark Lazarowicz (Edinburgh, North and Leith) (Lab/Co-op): I am fortunate to represent a constituency that is served by the largest remaining municipally owned bus operator in the United Kingdom, Lothian Buses, which provides an excellent service to customers and the wider community. Does my hon. Friend agree that it would be desirable if changes to transport regulations allowed local authorities in other areas to develop further the idea of community-owned bus operators, as one way of ensuring that we provide a good service to customers, consumers and, of course, workers?

Ian Stewart: I thank my hon. Friend for that contribution. As I shall say later, no single model is applicable to the whole country, and we should learn from good practice in other areas, although it is patchy. I shall argue that, despite limited success, the voluntarist approach is not good enough in itself and that PTEs and local transport authorities need further powers.

In early September—thankfully before it successfully hosted the Labour party conference—Manchester saw its traffic grind to a halt along a major city-centre route, as private buses competed for a site to drop off
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passengers. The problems started when an operator launched a new service on a route that was already serviced by another operator. According to market analysis, that should have led to more choice and happy passengers, but it led to gridlock for public and private transport, and people were forced to use their feet to get to work. Police were needed to sort out the chaos.

Under the current system, local authorities and passenger transport authorities can franchise bus services in their area via a quality contract only if such a franchise can be deemed “the only practicable way” to achieve a local bus strategy. Under such a contract, the public sector specifies the service that is required, and the bus companies can bid for the exclusive right to provide that service. As a member of the Committee that considered the 2000 Act, I noted that those powers were inadequate for PTEs, and they still are.

So what is the solution to the problems that I have highlighted? I fully accept that I am speaking from a metropolitan perspective and I do not claim that the solution for the Manchester city region will necessarily be the solution for other regions, small towns or rural areas—or vice versa. I do not wish at this time to be prescriptive in my solution to the problem and I accept that there are a number of different potentials. For example, the Transport and General Workers Union believes that the Northern Ireland solution, under which buses are publicly owned, and bus and rail company policies are co-ordinated by Translink, would be best. It believes that the London model is the second-best alternative, although that would undoubtedly need to be modified if it were to be extended beyond the capital. Some argue, for example, that it would need modifying to cover geographical areas rather than specific individual routes. However, that is not my territory, so I shall leave it to my London colleagues to champion any changes that our capital city may require. It is worth noting, however, that the Government’s target for growth in passenger numbers will be met by growth in passenger numbers in London alone, while the numbers outside London will continue to decline in the main.

Some large cities outside London are not persuaded that the London model is for them. Indeed, PTEG has proposed that only minor changes to the 2000 Act are needed to solve our current difficulties. Local authority franchises or quality contracts can be introduced only if they can be demonstrated to be “the only practicable way” to achieve a local bus strategy. That is too high a hurdle, and PTEG says that the “practicable way” test should be removed, leaving the existing tests of economy, efficiency and effectiveness. It also believes that the current five-year limit on such franchises should be extended to act as an incentive for operators to invest.

Whatever option is chosen, it must enable us to meet our objectives of ensuring that buses connect rather than compete, and that they link up with local tram and rail services, provide more reliable services and penalise poor performance, integrate networks so that passengers need to purchase just one ticket and have access to clear and accurate information about buses, provide more stable networks, with less frequent changes to fares, times and frequencies, and develop networks that keep pace with the social and economic needs of our local communities.

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When I opened the debate, I said that I was optimistic. That is not only because the debate is being attended by a large number of hon. Members who, along with other Members of Parliament and a variety of outside bodies, support some form of managed regulation, but because the Minister has put on the record her intention to increase and improve bus travel. Furthermore, at the very successful Labour conference in Manchester last month, the Secretary of State for Transport said:

With such high-level support, a solution must surely be imminent. I should add that, in many areas of policy and delivery, the Government have already devolved powers to the regions and local authorities, and doing the same for transport would be a natural extension of that approach.

I want, therefore, to make an appeal to the Minister and to emphasise that whatever option is chosen, it must be implemented soon, not in two or three years’ time. If legislation is required—I think that it will be—it must be announced in the next Queen’s Speech on 15 November.

Finally, I want to address labour market issues in the bus industry. I am a proud member of the Transport and General Workers Union, which is the largest trade union in the bus industry, representing more than 100,000 employees in the UK. Those members are employed in various occupations in the industry and include engineers, inspectors and clerical staff, but bus drivers form the bulk of the membership. Unless we have the required number of bus drivers and engineers, we shall not achieve our desired improvements in bus services.

Since privatisation and deregulation, however, average wages in the industry have declined in real terms. Currently, bus drivers earn 57 per cent. of the male average wage, and the lowering of real wages has resulted in an estimated shortage of 33,000 drivers. Yet bus companies highlight fuel and staffing costs as key reasons for raising fares. Raising fares, however, contributes in turn to the loss of passengers and to service reductions. So we have a difficult problem to address.

Whatever form the new powers proposed by the Secretary of State take, I should like the new contracts, partnerships or whatever they might be called to cover minimum employment and pay standards for reasonable hours. The T and G recently issued a bus workers charter, which sets out those objectives, and I am sure that some of my colleagues will refer to them.

The union has also identified pensions as a serious block to flexibility in the bus industry labour market. Currently, many employees will not even transfer employment within the same group, let alone move to a new operator, because different pension schemes can operate in different subsidiaries. My union believes that that key barrier to labour market flexibility will remain unless a universal pension scheme is introduced for the industry as a whole. It proposes that the major bus groups should have access to the local government pension scheme, and I hope that that option will be explored as a matter of urgency.

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In conclusion, I referred to the NERA report, which was commissioned by PTEG. It concludes that if we are to meet our objectives of increasing bus usage for all the well-known social, environmental and economic reasons, we must deliver local control of key bus services, but it adds that that alone might not be sufficient and that we might need other measures to control the use of cars in our cities, such as park and ride schemes and congestion charging. Indeed, such measures have already been introduced in some of our towns and cities.

The issue is complex, and, given the time constraints, I have concentrated on regulatory reform powers. However, the Government are now in a position to put the next piece of the jigsaw in place and to champion a better bus service for all.

I look forward to the Minister’s reply. If hon. Members and Ministers want to engage in the debate further, they are welcome to attend the Greater Manchester PTE’s parliamentary reception, which will take place next Tuesday from 4 pm to 5.30 pm in the Members Dining Room. Our topic for debate is “Bus deregulation: has it worked well?”

Several hon. Members rose—

Mr. Roger Gale (in the Chair): Order. This is the first time that I have heard an opening speech end on a commercial.

I intend to call the Liberal Front-Bench spokesman at 10.25 am. The debate finishes at 11 am. Five Members have indicated that they wish to speak, and I know that others wish to intervene. If hon. Members choose to do the sums, they will work out that overly long speeches on their part may lead to a loss of opportunity for somebody else.

9.51 am

Mr. Paul Truswell (Pudsey) (Lab): I congratulate my hon. Friend the Member for Eccles (Ian Stewart) on securing the debate. As he said, it is one of many that have taken place in this Chamber and the House. Such debates tend to follow a familiar ritual: we fire off our arguments based on personal experiences and those of our constituents, only for them to bounce off stubbornly thick-skinned responses from Ministers. I hope that the Minister’s response will be different today.

The Secretary of State for Transport made some interesting comments at the Labour conference. He said that he would

Those are bold words. If things are as good as they sound, the Minister who is to respond to the debate stands on the brink of being the most celebrated bus Minister in living memory, and possibly of all time; beatification is just a few steps away. Let us be clear that it would be well deserved, because it is 20 years since the Tory Government garrotted the local, democratically accountable bus services. Bus operators have had 20 years to show that they can provide decent services, and they have failed. It is time that they were made more accountable to passengers and communities.

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Quality and standards have fallen dramatically, and fares have increased by almost 50 per cent. in real terms. For example, in west Yorkshire, First increased off-peak fares by 36 per cent. and peak fares by about 11 per cent just in the period from April 2004 to January 2006. Since 1986, the number of passengers has fallen by 40 per cent. in west Yorkshire. That represents more than 100 million passenger journeys, many of which will have been replaced by car journeys, with all that that entails.

As my hon. Friend the Member for Eccles said, public subsidy stood at an estimated £1.86 billion in 2004-05, which was an increase from about £1 billion in 1999-2000. Passenger transport executives subsidise about 13 per cent. of services; the rest are simply out of their control. There is little or no competition for contracts, so it is impossible to gauge whether the taxpayer is getting value for money.

Deregulation has meant that companies can pick and choose what services they provide. They are free to make profits while providing a poor service, resulting in many people having been denied a reliable and affordable service to their work, or to schools, colleges, shops, health centres and hospitals. We all know from our constituents’ letters that week in, week out services are chopped, changed, missing or late. Passengers suffer or they vote with their feet.

My hon. Friend should be congratulated on raising an important dimension that is too often omitted in this debate: bus workers. We must examine the impact on their pay and conditions, and the fact that they bear the brunt of passenger dissatisfaction. As we know to our frustration and to that of our constituents, there is little that passengers, communities, MPs, councillors or even PTEs can do in the deregulated system to make private companies maintain or improve services.

The decline not only affects passengers; it affects everyone. Poor services lead to increased car use, which creates even more congestion, pollution and road safety hazards in our communities. Other forms of transport, such as rail, have a role to play, but as my hon. Friend said, buses provide more than three quarters of local passenger transport journeys.

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