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No one says that it will be easy and there is no one-size-fits-all solution, but the opportunities are there, provided we are bold and the right local
solutions are put in place. The prize is a transport system that will meet the challenges of the future and bus services across the country that give passengers in every community what they rightly expect.
Mr. Owen Paterson (North Shropshire) (Con): It is a pleasure to speak in this debate on the future of buses, but it is worth first looking back at what has happened over the past 40 years. The standard of living has improved over time and, to put it bluntly, as people have become more prosperous they have migrated from public transport to cars. Some of the most interesting passages in the Eddington report were the details of how car travel in Great Britain doubled in just seven years between 1953 and 1960. It doubled again between 1960 and 1967. By 1990, the distance travelled by car had increased to more than ten times the 1953 figure.
It is no real surprise, therefore, that bus travel should have declined. It was at its peak in the 1950s, when there were 16,455 million passenger journeys by bus per year. By 1971 that figure had halved. By 1999 it had halved again, to about 4,350 million. The number has picked up in recent years, to 4,719 million.
Ms Angela C. Smith: Car use in south Yorkshire increased significantly after deregulation. What is the hon. Gentlemans explanation for that?
Mr. Paterson: That is the point that I am making. With general prosperity, people have chosen to go by car and it is against that background that we should consider the use of buses. If the hon. Lady will let me develop my theme, I will come to that point.
Buses are still very important. The bus and coach sector today has approximately one seventh of its market share in 1952, when the industry accounted for some 42 per cent. of all travel in Great Britain. That share had fallen to 28 per cent. by 1960 and by 1973 it had dwindled to 14 per cent. Since 1991, the market share has stabilised at around 6 per cent. The overall cost of motoring has remained at or below its 1980 level in real terms. By contrast, public transport fares have risen in real terms since 1980. In 2004, bus and coach fares were 37 per cent. higher than in 1980. Over the same period, average disposable income increased by more than 95 per cent. in real terms. It is also worth pointing out that council tax receipts increased between 1995 and 2000 by 94 per cent.
Transport by any mode has therefore become more affordable, but with a significantly greater improvement in the affordability of car use than that of public transport, especially buses. Despite those external factors, the bus continues to remain critical. Many cities have been working hard to reverse the downward trend of bus use, as wealth creation has raised the importance of environmental and quality of life factors, as the Minister mentioned. There are still some 4.1 billion bus journeys per year in England, equivalent to some 187 bus journeys per household. Although the sector accounts for just 8 per cent. of all journeys, the bus remains the most widely used public transport mode. Interestingly, across the UK the number of bus trips is twice the number of rail and underground trips put together.
Ms Buck: Does the hon. Gentleman therefore support the measures that have been taken in London by the Mayor, including congestion charging, which has helped to speed up public transport journeys? Will he take this opportunity to make it clear that he dissociates himself from the initiatives by London Conservatives to undermine free transport for under-18s and the freedom pass for pensioners?
Mr. Paterson: I am happy to discuss that issue and I shall come on to the issue of London in a moment. There has been a huge increase in subsidy in London, which has unique circumstances. On the issue of fares for under-18s, it is a devolved issue, but as I understand it, my Conservative colleagues are concerned that the service is sloppily administered and it is not clear who qualifies for it. There is also a problem with public disorder and vandalism. However, the hon. Lady should take the issue up with Conservative members on the GLA, because it is a devolved issue.
Buses are critical in supporting labour markets in urban areas. A quarter of the work force in cities such as Liverpool, Manchester, Birmingham, Sheffield and Leeds travel by bus. A quarter of all households in Englandtwo fifths in Londonare without access to a car and that is a principal driver of continued bus demand.
As the Minister said, buses also have a role to play in tackling road congestion. In the right circumstances, buses can be important in encouraging modal shift from the car in congested areas. Although buses typically tend to support non-business trips, without them some such trips would, potentially, be made by car. Buses can therefore play a valuable role in attracting leisure and commuter travellers off the road network, freeing up road space and reducing travel time for business and freight traffic. Inevitably, there is a price to pay for that and it can be too high, as was beginning to be the case before deregulation.
At this point, I wish to pay public tribute to the late Nicholas Ridley, who became Lord Ridley of Liddesdale. I am completely partisan on the subject, because he was my wifes uncle. He was one of the most remarkable members of that Conservative Government. He had many talents and was a brilliant cook, water-colourist and architect.
Mrs. Dunwoody: I had the delight of opposing Nicholas Ridley when he introduced the Transport Act 1985 and he always had great clarity of thought. He had the simple attitude that buses cost too much, the people who used them were mainly poor and that they should be removed from that category as soon as possible. He was a sensitive colourist and a most insensitive Secretary of State for Transport.
Mr. Paterson: I am very grateful to the hon. Lady, who is my near neighbour, for that intervention. I predicted that it might come along. However, 85 per cent. of the decline in bus use over the past 40 years took place before deregulation, and 15 per cent. happened after it. Nicholas Ridley arrested the decline[ Interruption.] That is what the figures show.
Graham Stringer (Manchester, Blackley) (Lab):
It is appropriate that the hon. Gentleman should reply to
my hon. Friend the Member for Crewe and Nantwich (Mrs. Dunwoody) with humour and not objective facts. He is well informed, and will have read the report from the Transport Select Committee entitled Bus Services Across the UK. Does he agree that table 2, which disaggregates the effect of deregulation in the metropolitan areas from London, shows that deregulation added to the general decline in bus use?
Mr. Paterson: No, I do not. As I said, 85 per cent. of the decline of the past 40 years occurred before deregulation. That decline continued afterwards, but tapered off. In London and some other places, bus use has recently increased. The difference between us is that I believe that the decline would have remained precipitate had not deregulation taken place, but it is interesting that the Minister has had to battle today against a barrage of demands from Labour Members for more regulation. At no time in their 10 years in office have the Government hinted that deregulation should be reversed.
Mr. Kevan Jones: The hon. Gentleman has referred to London, but does he agree that bus transport in London was never deregulated?
Mr. Paterson: That is a good point. London is unique, as I shall explain in a moment.
The 1985 Act deregulated the bus industry outside London, and road services licensing outside London was abolished from October 1986. At the same time, proposals were introduced to change the structure of the bus industry through privatisations. As the hon. Member for North Durham (Mr. Jones) said, London was treated differently: the bus companies were privatised but the capital retained a regulated regime, and all services were secured following competitive tendering.
A complete change took place. In 1985, 75 per cent. of bus services were in the public sector, but the proportion amounted to only about 7 per cent. by 1997.
Ann Coffey: When did the hon. Gentleman last travel on a bus?
Mr. Paterson: I travelled on a bus from Euston station at about 2 pm yesterday.
The most obvious gain of deregulation was that it forced the franchise market in London and the deregulated markets in other urban areas to achieve substantial and dramatic reductions in operating costs. The largest real-terms reductions in operating costs between 1986-87 and 2005-06 were achieved in Scotland, where they fell by 48 per cent. The PTA areas achieved 47 per cent. cost reductions, and London 34 per cent. That shows that there had been huge waste in the industry, and that deregulation brought about a remarkable change.
The decline of the bus market has continued since deregulation, but it has slowed down. Overall, passenger numbers in Great Britain have fallen by 19 per cent. since 1985-86, although they have risen again in recent years. A rise of 8.5 per cent. since the
lowest point has been driven by London, which now accounts for 38 per cent. of the market. The London market has grown by 59 per cent. since 1985-86, but other areas have suffered major declines in passenger numbers, with the PTAs losing 49 per cent. of passengers and the English shires 57 per cent.
Labour Members want to believe that regulation works, but a look abroad shows that it does not. In France, in the 10 years to 2004, passenger numbers using urban transport rose by an average of only 1.4 per cent a year. In the same period, the proportion of costs met from fares fell from 51 per cent. to 39 per cent. That compares with average falls of 1.4 per cent. a year in England outside London, where passengers met 68 per cent. of the costs of bus services through fares. Many people look to France as an example of regulation, but the costs are high and the benefits are small.
In Italy, buses are the main component of public transport use. Between 2002 and 2004, that use fell by 14 per cent. in the largest cities, where all services are regulated and co-ordinated by public authorities. That shows that Italy has not been well served by a regulated public transport system. In Northern Ireland, where the market is still regulated, bus use fell by 3 per cent between 2000 and 2005.
The Government placed much reliance on the work of Sir Rod Eddington. His report was emphatic about buses, and it is worth quoting what he said in full.
This study is strongly of the view that competition forces rather than the alternative model of State ownership and control are the appropriate mechanisms for securing successful economic outcomes in urban areas and delivering bus services that users value. Competition forces create on-going incentives for efficiency and responsiveness of provision to the needs of users. The former has clearly been evident since deregulation, which led to a fall in operating costs in some markets of 50 per cent. There has also been considerable innovation in the bus market following deregulation including improvements in bus fleet, variable bus sizes, out-sourcing of maintenance, smart ticketing and the introduction of part-time working arrangements for employees in the sector.
A little earlier in the report, when discussing the three broad options that urban areas might adopt to deliver bus services, Eddington said:
Underlying each of these options is the principle of employing competitive forces. There is no evidence to suggest that there should be a return to the pre-1986 era where government owned buses.
I am sure that Ministers are aware that the former Secretary of State for Transport, who is now Secretary of State for Trade and Industry, told the House:
I would be wary of saying that we should go back to the pre-1986 situation.[ Official Report, 2 July 2003; Vol. 408, c. 404.]
Dr. Ladyman: The document being discussed today does not suggest going back to that. The hon. Gentleman is trying to argue that bus deregulation slowed down the decline in patronage, but that slowdown has taken place largely since 1997. Is it not possible that this Governments doubling of bus subsidies to £2.5 billion a year has had rather more to do with it?
Mr. Paterson:
The Minister needs to be practical. The 1986 measures were not going to have an instantaneous effect in changing peoples behaviour.
The smoky, clattering old nationalised buses that used to bumble around Shropshire, for instance, had to be got rid of, but that took time. I am trying to help the Minister by giving him some arguments to counter what Labour Members are saying to him.
Deregulation slowed the decline in bus use but, 20 years later, it is worth looking at imaginative techniques for improving the deregulated regime. My contention is that, without deregulation, the precipitate decline would have continued.
Mr. Truswell: Does the hon. Gentleman accept that deregulation has destabilised the bus system? It has led to services constantly being chopped and changed, and diminished passengers confidence in their reliability. People in Leeds have voted with their feet and taken to their carsnot because they want to, but because there is no alternative.
Mr. Paterson: I am sure that the debate will reveal major variations around the country. I shall come to some good examples of how local authorities have made use of the benefits of deregulation and entered into good partnerships locally. However, I do not dispute the hon. Gentlemans knowledge of his area, and it is clear that deregulation has not been so successful in some parts of the country.
My party is very much in favour of partnership working, but I am adamant about the basic contention that, without the huge efficiency improvements that followed deregulation, the headlong decline in bus use would have continued at a faster rate.
The Minister pointed out that the biggest change wrought by the Government has been the huge increase in subsidy to £2.5 billion. That has mainly gone on concessionary fares and increased expenditure in London. Indeed, the subsidy has rocketed from £572 million to £711 million recently. What have we got for this in London?
Mr. Paterson: Has it worked? It is interesting to look at the passenger figures. The Transport for London annual travel report 2005 stated that the average load was 15 passengers per bus. The mayors target for 2011 is to increase that average load by 40 per cent. to 19 passengers per bus. Yet the average capacity for a London bus, taking in all types, is 93. The Assemblys transport committee recently commissioned a value for money study of Londons buses. Its consultants, Colin Buchanan and Partners, showed that the productivity of Londons buses has collapsed. In 1997-98 the buses ran without a subsidy and the average bus carried 13 passengers. By 2005, the buses consumed an annual Government subsidy of £550 million and carried an average of 15 passengers per bus. The subsidy given is like paying the additional passengers to ride the buses.
Andrew Gwynne (Denton and Reddish) (Lab):
My constituents in Greater Manchester would love the equivalent to a London bus service operating in their area. Does the hon. Gentleman not recognise that in places like Greater Manchester, where there has also been a massive increase in subsidy to private bus operators, we have not got a lot in return? The benefit
of the London system, with its franchising arrangements, is that bus companies cannot just cherry-pick the profit-making routes; they must take on a whole network. Integration is part of that.
Mr. Paterson: I will cite some examples of partnership that have worked. The trick with partnerships is not to overegg the arrangement and kill the advantages of deregulation. The debate will probably reveal great regional variation. The London service is devolved. My Conservative colleagues are convinced that while the increased investment in buses has been good for London, we need to run them so that the services they offer better reflect when people need to use them. The contract should cater for that. However, most of the day buses are running around empty, and at the same frequency as in the rush hour because the operators pay the same either way. That means that the roads are getting more congested during the day because the operators are paid to provide a rush hour service for a fraction of the passengers.
Dr. Ladyman: I am enjoying the hon. Gentlemans analysis of the situation. He seems to be suggesting that the provision of public support for bus services has led to them becoming less cost-effective. As I am keen to learn about Conservative party policy, and I suspect that most of our constituents are too, can he confirm that it is Conservative party policy to withdraw or cut the current public subsidies for bus services?
Mr. Paterson: No, I do not know where the Minister got that idea from. We are talking about spending money more effectively. I have just quoted some independent consultants who have shown that bus service productivity in London has collapsed. The Minister stood up and trumpeted that he was cleverly spending a record £2.5 billion; I am quietly trying to analyse whether the money has been spent effectively and for the public good.
Dr. Ladyman: I got that impression from listening to the hon. Gentleman. If subsidy has led to the collapse of a cost-effective bus service, it follows that his party will do something about that. He obviously intends to cut the bus subsidy. Our constituents would like to know that the Conservatives do not support buses, do not want to see a successful bus service throughout the country and will start withdrawing bus subsidies. That will inevitably mean under a Conservative Government that the most vulnerable services, particularly to rural and isolated communities, will disappear first.
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