Examination of Witnesses (Questions 1-19)
MR DAVID
ROWLANDS, CB, MR
BOB LINNARD
23 JANUARY 2006
Q1 Chairman: Good afternoon and welcome
to the Public Accounts Committee. Today we are looking at the
Comptroller and Auditor General's Report on Progress on Delivery
Chain Analysis for Bus Services in England. We are joined
once again by Mr David Rowlands, who is the Permanent Secretary
in the Department for Transport, and Mr Bob Linnard, who is Director
of Regional and Local Transport. You are very welcome. Mr Rowlands,
could I start with looking at the overall use of buses. The best
figure is probably figure 1 on page 10. Why is it that passenger
journeys are still falling in all regions outside of London?
Mr Rowlands: Bus passenger usage
has been declining for the last forty or fifty years. The picture
outside London is mixed. Overall it is declining, although the
decline has stopped in the south east and south west. It is a
function historically of people moving out of buses and into motorcars.
Q2 Chairman: The record in London
is very good, so it is all down to Ken Livingstone's commitment?
Mr Rowlands: I think it is down
to a number of factors. As the Report draws out, it is down to
the commitment of TfL and the Mayor of London; it is a reflection
of the scale of subsidy that has gone in; and it is a reflection
of some factors that are unique to London that you will not find
elsewhere. London has a low level of car ownership in relation
to the rest of the country. It has a very sizeable economy and
a very sizeable bus network. It is a mixed bag of reasons.
Q3 Chairman: It just shows that where
you have this personal commitment it can make a difference.
Mr Rowlands: The Report brings
that out. It acknowledges that outside of London: where you have
got strong leadership and strong commitment, you have seen the
difference there in bus usage as well.
Q4 Chairman: In relation to your
target for dealing with congestion and traffic emissions and accessibility,
which is what all this is about of course, paragraph 1.7 on page
25 states that the Department "has therefore not estimated
the likely scale of substitution and hence the extent to which
growth in bus patronage would contribute to the PSA target's underlying
objectives in respect of congestion and pollution." We do
not really know what is going on, do we?
Mr Rowlands: Looking backwards,
I think that is fair comment because we did not have the information
base. Looking forward, the next round of local transport plans
have to be in by March, and for the 10 most congested urban areas
we are looking to put into place congestion targets agreed at
a local level for each of those 10 urban centres. We will then
be able to link that back with what is happening with buses. In
the next generation of local transport plans all local authorities
will be required to have accessibility strategies and accessibility
targets, so again we will be able to link bus usage to accessibility.
Looking forward therefore it will be different.
Q5 Chairman: The cost of buses is
dealt with in figure 8 on page 28. I suppose that the public assume
that taking the bus is cheaper than motoring, but the transport
economists tell us the opposite. You will see under "key
risks": "Further widening of the gap between the cost
of motoring and local transport costs." To what extent will
the measures you have taken reduce this gap in costs of taking
a bus?
Mr Rowlands: It is not the measures
we have taken; it is measures that can be taken at a local authority
level. If we leave aside issues to do with Treasury and simply
the costs of motoring and costs of taxation, which is not my Department's
responsibility, as figure 8 makes clear, there are two key drivers
at local authority level. One is the level of subsidy going into
local bus services, and there is a difference there. You have
seen that for England another £350 million is going into
concessionary fares, so it is no longer statutory—half the
elderly and disabled and free fares within a local authority area.
It is not just about a push, if you like—it is a pull—but
it is about car restraint. In local authority areas where you
have seen a willingness to restrain car use, you have seen the
difference. It is making bus services more attractive, and it
is restraining car use that makes the difference.
Q6 Chairman Let us look at the structure
of the industry, which is dealt with in paragraph 1.8, figure
6, on page 25. We have five operators that cover two-thirds of
the bus market. Is this going to affect the possibility of meeting
your targets on growth? Obviously, if there is less competition
fares may go up.
Mr Rowlands: I do not think so.
There is no reason to believe that is the case. If you look at
those parts of England where bus use has been growing, it is fair
to say that you will find local authorities working in each locality
with one or other of these big bus operators, and they have still
been able to increase bus use. To take the oft-quoted example
of York, the council there is working with First Group, from memory;
so there is no reason to believe that that will result from these
people having 60% of the bus market; it is still a competitive
market place. In terms of attendance services, in 20% of non-commercial
services that is still a competitive market place; you will still
get three bids with each of the tender contracts.
Q7 Chairman: Let us look now briefly
at how you work with local government and the bus operators. If
you look at paragraph 1.3 on page 33 there was a voluntary code
of practice that was put in place in 2003 which was supposed to
result in greater stability of commercial services, and the public
would be warned of services coming off. Has that been the effect?
Mr Rowlands: I think it has had
an effect. It was intended to discourage the possibility that
timetables could change in any particular week of the year and
move it to a place where generally it would only change at fixed
points of the year. I think it has made a difference.
Mr Linnard: Some of the areas
where there has been bus growth and very strong partnership between
local authorities the major bus operators have embraced this sort
of arrangement and other aspects of partnership; but it is only
guidance from the local authorities' recommended best practice.
Ultimately, it is for local authorities and bus operators to decide
whether they want to use it.
Q8 Chairman: Let us talk about accountability
to the general public, which is dealt with in paragraph 3.37,
page 57: "Operators are not required to provide information
routinely on bus service performance to the Traffic Commissioners,
or to the public." Why do you not require bus operators to
be accountable to the public, who are using these buses?
Mr Rowlands: I think it is quite
a good point in the Report. We cannot turn over the information
we ourselves get from bus companies, which goes into the national
statistics. It is collected under the Statistics of Trade Act
1947, which contains some severe constraints in terms of putting
out information identifying an individual company that supplied
it. The new generation of local transport plans will have bus
punctuality surveys for each local authority in there. We need
to work together through the Bus Partnership Forum to get into
place the kind of information that this report suggests should
be there—although I am not sure that we can use quite the
route suggested in the report.
Q9 Chairman: Let us try and pursue
that relationship with local government, which is key, and which
is dealt with on page 29, paragraph 1.15. The heading is, "Local
authorities and bus operators are the primary agents for delivering
the PSA target . . ." Do you think that these local transport
plans and capital spending schemes give sufficient incentive to
address efficiency, or not?
Mr Rowlands: I think they do.
We have to recognise that there is a tension here between local
decision-making and local accountability, and what central government
would like, so we try to strike a balance. The local transport
plans are on an agreed basis. We are structuring the disbursement
of local capital back to local authorities in a way that incentivises
them in terms of performance. We are requiring them to report
against their plans. As the Report acknowledges, we set up a new
unit in my Department twelve months ago to work with local authorities.
That is what we plan to do once we have finalised the local transport
plans—not simply sign off at that point but continue to
work closely with them for the five-year life of the plans, or
at least work with the key local authorities on their plans.
Q10 Chairman: Let us look at this
tension again. Take Scotland, for example, which is dealt with
on page 56, paragraph 3.35: "In Wales and Scotland the concessionary
fares schemes have changed to allow national free travel . . ."
They can cost concessionary travel nationally in Scotland, but
that is not possible in England. Why not?
Mr Rowlands: If I have misled
you, forgive me. Nobody is saying that free concessionary travel
England-wide is impossible. What is being introduced from April
is free concessionary travel at a cost of another £350 million
in each local authority area. That could be extended to replicate
the Scottish or Welsh schemes, but it would require primary legislation
to replicate the Scottish scheme at a cost of another £160
million, because that would be nationwide, and Scotland includes
the morning peak as well. It is a choice, and the choice was to
spend £350 million additional subsidy, not £500 million,
which is what they would need to replicate the Scottish scheme.
Q11 Chairman: Do you think it is
a rather confused picture, with you having to meet these targets?
The levers for meeting these targets sometimes break in your hands;
the local authority also has a finger in the pie; and the market
place apparently has a role: who is in control?
Mr Rowlands: I do not think it
is a confused picture. I think it is a complex picture. It is
a challenge, but the evidence is that both the Department and
certainly some local authorities can rise to it. The challenge
going forward is to work in a way that gets everybody to rise
to that challenge. We cannot change in many ways the delivery
chain outside of London; it reflects local government structure,
which is way beyond my Department's responsibility. We have to
work with a world where we have PTAs, PTEs, met district councils,
shires, shire district councils, unitaries—it is a fact
of life. We have to work with it. We understand the delivery chain,
and you can see some evidence in some places. It is not just the
Yorks and the Brightons but places like Nottinghamshire where
bus use has grown. You can make this complicated and complex chain
work.
Q12 Chairman: To conclude, can you
reassure us, in answer to the point made in the summary in paragraph
6 on page 10, which tells us that the public revenue spending
on bus services totals some £2 billion, that you are delivering
value for money and not supporting empty buses?
Mr Rowlands: That decision is
in part for the local authorities to take, and, if you will forgive
me, for the Audit Commission to take an interest in because there
is a point when it goes beyond us. Remember, the revenue support
that goes into local authority bus services comes out of RSG,
which is an undifferentiated sum of money, so we have no control
over what is spent; we can merely report what is spent and then
work with local authorities to make sure it is value for money.
Q13 Helen Goodman: I represent Bishop
Auckland in County Durham, so I am quite interested in the difference
between what is going on in London and what is going on in the
rest of the country. One of the things that comes out of the Report
is that without any intervention at all from the state, the opportunities
for a growing bus market, a buoyant market in London, are greater
than in the rest of the country, because it is more compact and
there are already more routes. Do you accept that?
Mr Rowlands: As I said earlier,
I accept that there are some unique characteristics of London
that are not replicated outside: the size of its economy, the
number of people and the level of car ownership.
Q14 Helen Goodman: One of the things
that disturbs me is that according to paragraph 2.8 the level
of subsidy is almost three times higher in London than it is in
the rest of the country. Have you done any modelling on what would
be the impact of having an even subsidy per passenger journey
across the whole country?
Mr Rowlands: No.
Q15 Helen Goodman: Would you consider
doing it? Is the Department capable of doing that? Have you got
the data to do it?
Mr Rowlands: I think it would
be quite difficult. When you say "even subsidy per passenger",
I am not sure how that works in modelling terms. That would be
the same subsidy for somebody travelling on a rural bus with few
people on perhaps, and the same subsidy in a crowded bus in central
Birmingham with lots of people on it, so I do not think that works.
Q16 Helen Goodman: Do you not think
it is rather odd that in the place where the market is the most
optimistic for bus services, that is where we also have the highest
subsidy? Normally, we subsidise those things where there are most
problems, not where there are the least problems.
Mr Rowlands: To some extent this
is about choices at local authority level. I do not think it is
odd that the level in London is necessarily as high as it is;
that is a reflection of the difficulties with congestion in London.
If you look outside of London and look at what has happened to
subsidy levels, over the last five years or so the real level
of subsidy in PTEs has not changed; it has been flat in real terms.
In the urban areas, outside the PTEs, it has increased in real
terms. Maybe it is a consequence, but passenger usage of buses
in PTEs has declined in the face of flat real subsidy, but it
has stayed stable in rural areas outside the PTEs where the subsidy
has gone up. Somebody has to make choices at a local level in
terms of where they want to spend their RSG money. The RSG itself
has gone up a third in real terms since 1997. Council tax has
gone up 50% so it has made some choices about where it spends
the money.
Q17 Helen Goodman: I accept that
people have made choices; I am asking you whether the money is
as well spent as it could be when it is so unevenly spent across
the country. You are telling me that the Department for Transport
is not in a position to make that judgment, even though the Department
for Transport is the owner of the target to increase bus use.
Mr Rowlands: Yes.
Q18 Helen Goodman: Can you imagine
that in a constituency where 21 bus routes are being reduced and
one is being abolished altogether—and last week we had the
news that one of the bus operators is withdrawing completely—there
might be some disappointment that the Department for Transport
is not taking a more active interest in the way the money is spent
outside London?
Mr Rowlands: We are taking an
active interest, but I did say earlier that there is a balance
here between local accountability and local decision-making, and
where central government is. We take an interest, clearly, through
the local transport plans, which each local authority is responsible
for putting in to us. Those plans will have agreed bus targets
for the next five years. We will work very closely with a number
of people over the next five years to make sure they are delivered.
What my Department cannot do is get down to the level of individual
bus services throughout England and take a daily interest in what
is going on. That is partly the responsibility of private-sector
operators and partly the responsibility of the local authorities,
which can, if they so wish, put these things out to tender.
Q19 Helen Goodman: I am interested
that you said it is the responsibility of local operators because
if you look at figure 14 on page 14 you will see that the bus
operators are answerable to bus users for what they do, and also
to the traffic commissioners. As you know, the responsibility
of the traffic commissioners is to ensure that the Competition
Act is implemented and abided by. You also know that that Act
prevents the different bus companies from co-operating to make
a more integrated transport network. In what sense in relation
to the strategic responsibility does the Department for Transport
have any leverage over these bus operators?
Mr Rowlands: The leverage, if
that is the right word for it, has to come, as I said, through
the individual local transport plans—what it is that both
the local authority envisages in those plans and what it is we
want to work with them for, and through the local authority—the
partnership they have with their local bus companies.
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