Examination of Witnesses (Questions 60-79)
MR DAVID
ROWLANDS, CB, MR
BOB LINNARD
23 JANUARY 2006
Q60 Sarah McCarthy-Fry: Would it
be fair to say it is highly unlikely that we are going to get
any of these quality contracts?
Mr Rowlands: Not necessarily.
Our understanding—and it is only an understanding—is
that there are a number of local authorities now looking quite
actively at this. I understand that this is north of the Border
as well as south of the Border. I think that is right.
Mr Linnard: Yes.
Q61 Sarah McCarthy-Fry: So the requirement
will be on the local authority to have the courage to take on
bus companies and see it challenged in court.
Mr Rowlands: That is the way the
Act is structured, yes.
Mr Linnard: We said in the 2004
Transport White Paper that an example of a situation where a quality
contract would be the only practical way of implementing bus strategy
would be where a local authority wanted to introduce local road
pricing; and for that to be politically saleable, it would have
to be able to demonstrate that it could control the fares and
frequencies on the buses, in the same way that has been done with
the congestion charge.
Q62 Sarah McCarthy-Fry: So it is
not a quality contract, it is to deliver a better quality of bus
services; it is for a different purpose.
Mr Linnard: It could be part of
that package.
Q63 Mr Mitchell: Why is London always
the spoilt darling in these situations? Why does London get 31p
subsidy per passenger whereas the rest of us get 11p?
Mr Rowlands: Because out of the
monies available, London has chosen to pay 31p per passenger,
and others have made a different choice out of the monies available.
Q64 Mr Mitchell: It is generous to
itself!
Mr Rowlands: No. The point I was
making earlier is that if you look at the last five years or so
in PTE areas the subsidy paid for buses has stayed flat in real
terms, whereas the RSG revenue in real terms has been going up.
They have chosen to do that. It is a question of local authority
decisions and local accountability. Some of them run it differently.
Q65 Mr Mitchell: Let us look at it
another way. You are successful in achieving targets in London;
but it is disastrous in the rest of the country. How do you explain
that? Three things seem to stand out in the Report. One is the
congestion charge, so they are using a stick as well as a carrot;
second is that the system is better run and managed by Transport
for London than is the case outside London; and, third, they have
got more money. How would you rate those in order of importance?
Mr Rowlands: I do not think I
can rate those in order of importance.
Q66 Mr Mitchell: Surely you need
to know that!
Mr Rowlands: There are other factors
that play in as well, as the Report brings out. I do not think
you can pull one thing out and say that is the magic bullet and
that we will get the same result in London; you have to look at
the combination. It is something to do with subsidy levels and
restraint on car use; and something to do with political commitment
from the top; and it is something to do with building effective
partnerships either with other local authorities or with bus operators.
Some of that is easier in London, given the nature of the franchised
bus market, and some of it is certainly more difficult outside
London given the structure of local government. Those are the
parameters that are set out in this report. I do not think you
can pull one out, and I really do not want to put them in order
of priority, because it may well vary from local authority to
local authority.
Q67 Mr Mitchell: Would the Department
not like to know? It would be useful to find out why it is successful
in London and not successful outside, instead of going round muttering
that there is something in the air!
Mr Rowlands: No, this report explicitly
states that we cannot separate out these factors from the delivery
chain in London. The NAO and the Audit Commission were not able
to analyse it out, and I cannot do it either!
Q68 Mr Mitchell: Do you know why
you are doing badly in the rest of the country?
Mr Rowlands: We are not doing
badly in the rest of the country. We are not doing well in some
parts of the country, but there are other parts where it is going
quite well and where bus use is growing. As I said, it is growing
in Nottinghamshire; it is growing in Exeter. Everybody knows about—
Q69 Mr Mitchell: I am not interested
in Exeter!
Mr Rowlands: Well they are in
Exeter!
Q70 Mr Mitchell: Table 4 on page
15 shows the disastrous fall in usage of bus and light rail in
Yorkshire and Humberside, the east of England, the West Midlands
and the north east. Why is it? What is causing it? Is it due to
the factors that Jon Trickett mentioned, that local monopolies
are overcharging? Is it due to the fact that they do not have
enough—
Mr Rowlands: It has been doing
this since the 1950s.
Q71 Mr Mitchell: Is it a matter of
competition—
Mr Rowlands: It has been doing
this since the state ran buses. This trend has been going on since
the 1950s.
Q72 Mr Mitchell: Yes, but you are
dealing with where the state does not run buses and where you
are trying to encourage use. How are you doing it?
Mr Rowlands: If you look at the
top bars you can see that over the last five years the decline
in the south west and the south east has been modest. If you look
at the last couple of years, it has stopped. Bus use has just
picked up slightly in the south east and south west, so we are
beginning to see—although I realise that we all struggle
to understand the complexities outside of London—some shift
in the tectonic plates. We are beginning to see a shift in the
40-50 year trend.
Q73 Mr Mitchell: So your strategy
is to say there is something in the air and "fingers crossed"!
Mr Rowlands: No, the strategy
is not that there is something—
Q74 Mr Mitchell: Why is it that structures
that work in London cannot be applied to our bigger cities like
Manchester or Birmingham, which have very similar arrangements
and very similar problems? Why are they in so much difficulty
in encouraging bus use, whereas London is successful?
Mr Rowlands: It is because they
choose to put lower levels of subsidy in, because they have not
put in demand restraint on motorcars in the way that we have seen
there. Whether or not it would help if they had, effectively,
franchising arrangements similar to London is an issue to do with
whether or not any of them are going to pursue the issue of quality
contracts.
Q75 Mr Mitchell: It seems to me that
one of the reasons put forward in this Report is that concessionary
fare structures are more confusing and more difficult, and cause
more problems for the bus driver or bus conductor, outside London
than inside London, where you have a very simple system that seems
to work quite well. You mentioned the difficulty of having a uniform
concession without primary legislation, but why can we not have
a more uniform concessionary fare structure in order to make operating
the buses easier?
Mr Rowlands: Amongst the differences
between London and outside of London is the issue of the fare
box and who takes the revenue risk. In London, as we have seen
in the Report, Transport for London sets the fares and takes the
revenue risk, so it does not have to reimburse the operators for
any revenue loss coming from concessionary fares. Outside of London
it is completely the other way round: apart from some attendance
services it is the operator that takes the revenue in and takes
the revenue risk; and so you have to work out directly with each
operator what the passenger loss is in revenue terms from concessionary
fares. It is a fundamentally different arrangement to London.
You will only get a more simplified approach were we to move to
a system like Scotland and Wales, where it is a nationwide concessionary
fare, which would make it simpler. As I said, it costs more than
£60 million more in England. I think it is unlikely, although
I could be wrong, that you will see a move to a world where local
authorities outside of London are taking all the revenue risk
on the bus services.
Q76 Mr Mitchell: For instance, why
should district councils issue concessionary fares and not just
have it done by counties? I mention this because the last time
I dropped in on Stagecoach in Grimsby they were worried about
how other parts of the area to which their buses went were going
to apply their concessionary fare schemes.
Mr Rowlands: You have taken me
out of my responsibilities now because we are back into the structure,
roles and responsibilities of local government, and that is into
ODPM's territory, I am afraid, not mine. My Department simply
cannot change whom it is that issues concessionary fares; it is
a matter for The Deputy Prime Minister and his Department.
Mr Linnard: What we can do is
to encourage district councils to join together and run schemes
on a county basis, which some do very successfully.
Mr Rowlands: We are trying to
do that. We are currently in discussion with the government office
for the south west to try and get a regional-wide concessionary
fares arrangement, and we are talking to people in the north west
about a smart-card based concessionary fare arrangement that will
run across Lancashire, Cumbria, and places like Blackpool. Blackburn
has its own municipal bus company. We are working at it, but what
we cannot do is change the whole structure of local government.
Q77 Mr Mitchell: It states in the
report on page 31, paragraph 1.26 that the Department has not
identified the need to take any significant further action to
address the rising cost of bus use. Why is that?
Mr Rowlands: Well, we have prospectively.
We are working with the North West Centre of Excellence on bus
procurement in terms of the sorts of things suggested here about
bundling up bus routes to get more competitive tenders and keener
prices, in the way they have done in London. We want to use that
to get some real experience and get it out to the other local
authorities to help them get down the cost of the bus service.
Q78 Mr Mitchell: I have a final question,
and I am sure the Chairman will indulge me on this because it
is very parochial to him and I! The Humber Bridge Board charges
400% more for a public service vehicle than it does for a car.
That is the highest ratio in the country. By this policy of maintaining
high toll charges and the highest ratio of public service costs
to car use, the Humber Bridge Board has succeeded in driving down
bus use over the years and it has now taken that benign process
to its ultimate success of stopping it altogether because the
company cannot afford to carry on the service and pay the charges.
I just wondered, in the light of Government policy to increase
the use of buses, what the Department for Transport might say
to the Humber Bridge Board.
Mr Rowlands: Can I give you an
answer in two parts? I am not briefed for this. I am sure the
Department's formal position must be that this is a matter for
the Humber Bridge Board, or words to that effect. Speaking as
a human-being it sounds to me a dumb thing to do.
Chairman: Are you happy with that answer?
Q79 Mr Mitchell: I hoped for a better
answer.
Mr Rowlands: I am not an expert
on the Humber Bridge, I am afraid.
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