Select Committee on Transport Minutes of Evidence


Examination of Witnesses (Questions 120-139)

MR ROY WICKS, MR GEOFF INSKIP, MR DOUGLAS FERGUSON, MR ROBERT SMITH, MR MIKE PARKER AND MR MARK DOWD

21 JUNE 2006

  Q120  Graham Stringer: Mr Rowlands in that report brought up the Human Rights Act as a hurdle. Do you believe that was an act of sabotage on your attempts to get quality contracts or is there a consensus in the industry that human rights are different in London from the rest of the country?

  Mr Wicks: I think the latter point is probably true. On the specifics, in our own quality contract discussions we have also started to take legal advice and there is a real issue there in terms of whether or not the operators would have a case for compensation if their operating rights were withdrawn.

  Q121  Graham Stringer: Had the Department helped you and advised you on this matter before?

  Mr Wicks: The Department's position is that they cannot help us on this matter as they have to remain separate from the process. One of the complexities in making a quality contract application is as the Department for Transport will be taking a view on that application they are struggling to work through a way they can advise potential applicants as to how to make that application without compromising their own position particularly, and it goes back to my colleague's point, as were there to be an appeal or a judicial review against the decision it would obviously be the Secretary of State's decision that would be taken to appeal. That is not unusual, the Transport & Works Act is a good example of that and the Department for Transport have promised to set up appropriate Chinese walls within the Department in order to advise us. That process has been quite elongated because we have been working on quality contracts for over a year and, as yet, we have not had detailed advice on the case we will have to make. We will be putting that in as a "surprise" to the Department and I am not aware of any legal advice on the human rights issues which was presumably taken when the legislation was first made and subsequently being made available to any of us.

  Q122  Graham Stringer: This is a general question: you are putting more and more money in as passenger transport executives and you are getting a worse service out. Are you completely incompetent or are you victims of cartels?

  Mr Wicks: I would hope we were not incompetent. We are certainly victims of limited competition. That is why we are paying for it, it is quite a simple equation in South Yorkshire's case and I think Councillor Dowd made exactly the same point.

  Q123  Graham Stringer: Do you believe that it is limited competition by accident or do you believe that bus companies are organising themselves in an anti-competitive way?

  Mr Dowd: Can I say this: we are in the position now where, say, for instance a bus contract, a subsidised one, is for two or three years, when they come back for 30 or 40% over and in many instances we only get one or two applications for sometimes huge contracts, as far as I am concerned I find that strange.

  Q124  Graham Stringer: So do I. The argument you are putting is I guess that you do not have the evidence but you believe there is anti-competitive behaviour out there. I did a debate with Mr Souter not long ago, and some of you were present, and his view, and I would like a response to this, is that you are all dinosaurs based in the late 1960s and that the real model that you should be operating to is the Brighton, Cambridge, Oxford model, that is the way forward. It is Cambridge, Oxford and York as the model, not London. Can you respond to Mr Souter's point?

  Mr Dowd: Brighton, York, I should imagine that what we speak of are two bus companies, in Manchester there are 48, in Liverpool there are 37, so it is an entirely different ballgame when you have only got one or two bus companies to basically deal with, other than, say, for instance, me, I deal with 37, that is a major difference.

  Q125  Graham Stringer: Anybody else?

  Mr Smith: Madam Chairman, if the Committee is looking for a model there are many models not far from here in Western Europe which operate very successfully. There are many different models but they all have one thing in common and that is some form of bus franchising, so whether it is a quality contract or enhanced quality partnership or whatever, the bus franchising model is the one which does deliver results whether it is government objectives, local objectives or, indeed, objectives commercially for bus companies.

  Mr Inskip: Certainly the Brighton, York model, is great for those cities, I am sure, but try bringing something like that into Greater Manchester. At one level I have had the same conversation with Brian Souter, "So, okay, Brian, what is stopping you doing it in Manchester as well? Why are you not increasing growth? Why are you not increasing patronage? I am not stopping you, I will help you in every way I can, putting in bus corridors, putting in bus priorities to help you". Inevitably the overall shape of the market in Manchester is still in decline and, therefore, we have to make some changes and the changes are systemic. It is a systemic decline in this industry in the metropolitan areas unless something is done about it and the Brighton and York models simply will not work. Brian Souter, Moira Lockhead, and the rest of them, if they thought it could work, we could invite them to Manchester and throw the challenge down. Quite honestly, unless we take positive control over the networks and over the quality standards that people want, I do not think people are going to come back to the buses.

  Mr Parker: Chairman, I think there is also another point about the nature of places like York, Oxford and Cambridge. They are very historical cities with very limited access. They have managed to get political support for very, very significant car restraint and, therefore, the local authorities are delivering very good park and ride systems. If you like, the culture is there for people to cycle and to use buses, that culture is less in the big conurbations where the propensity to drive a car is much greater.

  Mr Ferguson: Chairman, one other point: in the west of Scotland we have a very extensive rail network and I can see nothing in the current legislation that would encourage Mr Souter to integrate with that rail network and provide services that feed that rail network, quite the opposite, it seems that the current rules encourage them to compete with the rail network.

  Q126  Graham Stringer: Mr Ferguson, I have trying to get out of the Government the figures for public subsidy per capita in all the regions of England. I have managed to get it for England, including London, and Northern Ireland but because transport is a devolved matter I cannot get those figures for Scotland. Would you be able to provide those figures?

  Mr Ferguson: I could certainly try and provide those, Madam Chairman, I do not have anything just now.

  Chairman: That would help us, Mr Ferguson, thank you.

  Q127  Graham Stringer: Two more questions, if I may. First, to Mr Inskip, I know Manchester very well, I have stood on platforms arguing for the re-regulation of these services. Do I take it from the submission from yourself and the chair of the PTE that the policy has not changed, that the Greater Manchester Passenger Transport Authority is still in favour of re-regulation?

  Mr Inskip: I think the issue for us is quite clear. We have been knocking on Government's door, we have been asking for a form of re-regulation and have been told that we have got to work within the existing confines of the marketplace.

  Q128  Graham Stringer: You feel you are being bullied into this position?

  Mr Inskip: I think that as far as we are concerned, we need to find a way through this with Government. To find a way which will bring us the control over the market that we want. I am not sure that there is a huge amount of difference between whether you want to call it a quality contract, whether you want to call it franchising or whether you want to call it an enhanced quality partnership. Certainly from our point of view an enhanced quality partnership gives us control over frequencies and fares and, therefore, there is not too much difference. I think where we come at it is saying that rather than wait three or four years to be able to put something in, if we can put something in much quicker on our terms through a binding partnership, albeit that that does require some change in legislation. We want services to change quickly and in order to do that we are proposing that this may be a way forward.

  Q129  Graham Stringer: Finally, I would be interested in all your views on the operation of a concessionary fare system. Do you think it is value for money? Do you think the money is properly accounted for and do you think the basis of the scheme, whereby there is an assumed subsidy to a full fare passenger who is eligible, is a scheme fit-for-purpose?

  Mr Parker: No, I do not, Chairman. In Tyne & Wear we are being hit most by the recent changes in the concessionary travel scheme because we have ended up with a £5.4 million deficit on funding. I think there are a number of issues. You asked earlier about powers and one of the things local authorities have is wellbeing powers which would allow them to give concessions to other groups that in some way are deprived financially. At the moment Passenger Transport Authorities only have the powers to give concessionary travel to pensioners and to children, yet if one of the key objectives, which certainly is in our PTA, is to use transport to reduce social exclusion then you need powers to be able to provide concessions to students, single parents on income support, et cetera, jobseekers and so on. At the moment we do not have those powers. I think if your objective is to reduce social exclusion then you need to say, "Well, how much money am I going to put that way?" Should you put all the money, if you like, in the pensioners' basket? I think I could refer the Committee to the Commission for Integrated Transport, which I used to be a member of, which produced a report about three years ago on the value of bus subsidy and they very clearly stated that once you went beyond half fare for pensioners then the return—it does not mean to say you are not reducing social exclusion—the actual return on your investment actually gets less. The half fare is sort of maximising the return. Of course, the basis on which we compensate the bus operators is on the assumption that the bus operator would charge that pensioner the full fare. There is a formula that relates to generation but basically that is the principle. I believe in a competitive market. If you have bus operator competing with bus operator and there are no concessionary fare systems, those bus operators would charge a lower fare for pensioners in order to attract pensioners on their services rather than someone else's services.

  Q130  Mr Martlew: On concessionary fares, you have mentioned pensioners and many of us represent rural areas where there are a great deal of problems with young people who wish to come into the city, they are living in the villages and get a bus but cannot afford that bus. Are you saying we should be expanding the concessionary system to those groups?

  Mr Parker: I am, Chairman. I think we should be able to provide cheaper fares for students, anyone in full-time education and jobseekers. If one of your objectives on transport is social exclusion then a crucial thing is the price of that transport journey. One of the frustrations that Passenger Transport Executives and local councils have had over the years is they have no control over that price. They used to, they have that control in London, but we have no control over the price and that is crucial. One answer might be to give those sorts of powers to allow us to be able to give concessions to those disadvantaged groups.

  Q131  Chairman: Mr Inskip on this.

  Mr Inskip: Madam Chairman, there is just one point I want to make as well. It is great giving people free travel but they have to have the buses and the services there to use them. If there are no services it is no good having free travel.

  Q132  Mr Clelland: I accept that last point, but on this question of giving concessions to young people, it is possible to give concessions to students in full-time education under 18.

  Mr Parker: Under 18 it is but not over 18. Over 18 has to be a commercial decision of the bus operator, we are not allowed to put public subsidy in.

  Q133  Mr Clelland: Even then, young people under 18 in full-time education, some might be going to further education colleges, not necessarily all going to sixth form, may have to travel across the boundaries of the Passenger Transport Authorities. Is there a case for having a wider than PTE regional scheme?

  Mr Parker: Absolutely, Chairman, yes.

  Q134  Mr Clelland: In order to finance that, presumably you would need the co-operation of other partners in the region. Is this something which Regional Development Agencies might help out with?

  Mr Wicks: If I could add to the comments which have been made and respond to the question. There are two or three things here which come together on what I would call the city region agenda. I think there is a strong argument and it is part of emerging government thinking to look at the role in the city regions and to recognise that transport does not necessarily neatly fit into the current administrative boundaries but it should fit within the city region boundaries. I think all the PTEs feel quite strongly about an alignment of powers which gives them more local accountability and local flexibility about how they organise those transport services, and it goes back to the debate about quality contracts and the debate about concessionary fares. It would seem to me they are local decisions at the city region level, not necessarily national decisions, and I think if you align those powers then you can address the cross-boundary issue.

  Q135  Chairman: Do you think the Department gives you a strong enough lead?

  Mr Wicks: In terms of what?

  Q136  Chairman: Sir David seemed to believe in the evidence that he was giving certainly to the Public Accounts Committee, " . . . The complexity of the delivery structure outside London is tied up with local authority structure". That is a rather passive response to the needs of the bus industry, is it not?

  Mr Wicks: It is, very much so. I think there is no difficulty with local leadership, local leadership is very clear about where it wants to take its public transport agenda. I think it is the ability of the local leadership to do that.

  Q137  Chairman: Should the Department promote buses on a greater scale?

  Mr Wicks: Yes.

  Q138  Chairman: Why does it not collect more data about buses and is that a problem?

  Mr Wicks: I think all of us suffer from a lack of data, most of that is not provided by the operators because it is commercially restricted.

  Q139  Chairman: Our Public Accounts Committee looked at that and said that it was not convinced that the Department monitored the operation of the market to the extent to which monopolies may exist; is that your view?

  Mr Wicks: Yes.


 
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