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Bus Services

4.30 pm

Steve Webb (Northavon) (LD): This afternoon’s debate has somewhat unusual parentage. Practically every hon. Member gets letters and e-mails about buses. Over the years, I have had meetings with many bus companies and have written to local authorities and, occasionally, Ministers on the issue, which has been one of many that I have taken up on behalf of local residents. However, I recently got involved with a social networking site on the internet called Facebook—I imagine that you do little else, Sir Nicholas—and young members of my constituency have been registering their views with me on that site. I wondered what young people in my area might be concerned about, thinking that it might be world peace, climate change or terrorism, but it turned out to be buses. They are the No. 1 issue that young people, perhaps in their early 20s, have contacted me about—not in ones and twos, but in droves. I was so struck by the strength of feeling among those young people, that I decided to do something about it. That is not to say that other people’s views on buses do not matter, but the overwhelming volume and concentration of those young people prompted me into action.

I have a second reason for mentioning those young people. Many of them think that we in this House—present company excepted—are a waste of space, and so many of them thought that saying something to me on the internet would probably be a waste of time, but slightly thought that it might be worth their while, that I was determined to do something about it now that they have registered their concerns. Consequently, their concerns are being aired, we will hear an effective response from the Minister, I am sure, and I will feed back to them so that they can see that the whole process works and achieves something. That is why I am standing here today.

Some of what I have to say is about economic theory and how bus services, which are, in a sense, local monopolies, should be organised and what is the best way to run them. However, much of what I have to say will give a local flavour from local young people. I shall start with a few excerpts from what young people have written on Facebook. One wrote:

That is a simple point. We live in an area of market towns and villages on the outskirts of a city, and most bus services run into and out of the city, although there are some between. Many villages have poor services, especially in the evenings and at weekends, and those services that are there are not very frequent. The service is universally regarded as being quite slow, expensive and often unreliable.

Another person said:

she goes on to say how good that was, and continues—

A lot of the figures I will quote are the cost of going from villages and towns in my constituency to the
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centre of Bristol, and return fares of £4.50, £5 and £6 are normal. Some constituents tell me that those fares are a significant proportion of their modest wages from a Saturday job, and others say that if they want to go to the cinema and a cinema ticket is £5, they need to double that amount to pay the bus fare as well. Others say that if two or three of them go out together, it is cheaper for them to get a taxi than for three of them to get a full return bus fare.

I have spoken to the director of Firstbus in the local area about those issues. It is easy to portray Firstbus as the villain of the piece—it is known locally as Worstbus—and that is partly fair, but it has to deal with congested roads and the local authorities that it works with must take some responsibility. The root of the problem is that Firstbus and other operators are private monopolies. There is a semblance of competition—in theory I could start the Steve Webb bus company tomorrow, get a licence and start competing—but in practice, a huge investment would be needed to compete against a big group such as FirstGroup, which has massive resources. It would undercut and outdo me, then jack its fares up again as soon as I had gone, so there is no real, effective competition.

There are areas in which it is good to have a vibrant, free market, such as with telecoms. We have gone from having one nationalised industry to having a vibrant, competitive market with entry and innovation, and that is great; I have no problem with that. In other areas, having a state monopoly is the only way in which to do things, such as with some elements of the health service, but the worst of all possible worlds is having a private monopoly trying to provide a public service.

4.36 pm

Sitting suspended for a Division in the House.

4.46 pm

On resuming—

Steve Webb: To continue seamlessly, I made the point that many young people contacted me about their bus service. I shall give another quote. It links with what I was saying about the right way to do such things. One young person from a village in my patch stated:

a misspelling, but one cannot have everything—

The interesting phrase in the message is

Later on, there was a reference to extortion.

That is the point that I was trying to develop when the bells rang. There are several different models for running a public service. One is complete competition, which operated for a period after deregulation in the mid-1980s. I remember that in Oxford, where I was a student at the time, the bus companies were fighting each other. A bus would pull up literally a minute before the time the bus from the rival company was expected, take all the passengers and bomb off down
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the road. One could barely move for buses. That all ended. The fittest survived, and eventually the situation degenerated into a monopoly.

A competitive model does not work for bus services, especially in market towns and villages. The situation may be different for urban services, but when we are talking about rural routes, infrequent routes and, often, not huge passenger numbers, the idea that two companies will run side by side—that there is the volume for that—and that there is always an entrant waiting to chip away at and threaten the incumbent is just nonsense. FirstGroup has huge resources—it could see anybody off. To all intents and purposes, it is a monopoly provider. Yes, the council occasionally lets out a franchise for evening and weekend services, and FirstGroup gets some of them as well. There are other small operators in the area, but FirstGroup overwhelmingly dominates.

So we have a private monopoly. When I ask the managing director why he does not lower the fares, his response is that at peak hours the buses are full, so if he lowered fares, he would lose money. The rest of the time, the additional passengers that he would get from lowering the fares would not make up the money that he would lose from lowering them, so it is not worth his while. The answer is always, “We are not a charity, we are a business. We run to maximise our profits.” He tells me that the rate of return for the bus business is not as great as it is for some of the other bits of FirstGroup’s business, so he is not interested in lowering fares.

The managing director’s tone has mellowed a little since I first spoke to him, but, in essence, his attitude is, “You want a public service, you pay for it.” Britain is unusual, in that 90 per cent. of the revenue for bus services comes from bus passengers. Some 10 per cent. is from subsidies of various sorts from central and local government, but the vast bulk of the cost is met by passengers. Belgium, where the figure is 30 per cent., has taken the view that public transport is a public service—I agree with that—and that therefore more Exchequer input is probably the only way to deliver it.

Of course, things can be done. Quality bus partnerships, bus lanes and real-time information are all good things and can help, and I do not wish to decry the efforts that have gone into making improvements. But, when it comes down to it, when my constituents contact me about the cost and reliability of buses and the routes run by the companies, I tell them that the bus company will not make changes because it will not make any money, and the council will not subsidise services because it does not have any money. Tough, get lost, go away—there is nothing that can be done because we are at the hands of a monopolist.

Bizarrely, the Select Committee on Transport looked into the Government’s draft Local Transport Bill, and said that when there is more than one operator and they want to co-operate—for example, one might want to cover one area and the other might want to cover another area, with through ticketing—competition law may crack down on that and deem that they would be acting collusively, which would undermine competition. Competition is the wrong model, and we
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must make it clear that local transport providers should be able to co-operate and work together in the public interest.

I could go on at length and give a large number of quotes from young people—for example, “The fares have gradually gone up and up, but the service has not improved”; “I would use the buses as it saves me attempting to park the car, but I can’t afford to”; “The bus goes once an hour and costs £4 return.” People talk about the proportion of their income spent on fares—for example, “I am spending a quarter of my wages on buses.” I am talking about young people, perhaps with Saturday jobs, and recent graduates with relatively low incomes.

The subject deserves much more time than we can give it this afternoon. I want to convey young people’s frustration, and the fact that because of the way in which the system is structured it is a private monopoly about which we can do very little. The Government are considering some sort of re-regulation, but my worry is that it will not go far enough. A bit more regulation will not make FirstGroup provide a quality public service. It is a private business, and if we want a quality public service, we, the public, will probably have to pay for it.

4.51 pm

The Minister of State, Department for Transport (Ms Rosie Winterton): I congratulate the hon. Member for Northavon (Steve Webb) on securing this debate about a matter that is obviously vital to his constituents and the public everywhere. I wonder whether this is the first stage of his leadership bid. If it is, I am honoured to be in at the start of it.

It is right to say that buses play a key role in our transport system. Two thirds of all journeys on public transport are made by bus, well over 4 billion journeys are made in England every year, and not far off 5 billion are made throughout Great Britain. During the past 50 years, bus usage has steadily declined, but in recent years patronage has stabilised and is now steadily increasing. The problem is that that does not apply in all areas.

The hon. Gentleman referred to young people’s reaction in his area. He is right in saying that too many of them give up using buses the moment they pass their driving test. I was talking to some young people in my constituency who said exactly the same thing, and our big challenge is to change that culture. We want young people to recognise the advantages of bus travel. Despite all the temptations for getting behind the wheel, we must try to change that behaviour and ensure that their peers do the same.

In Newcastle, I met the Bus Buddies, who are a campaigning group of young people, and the hon. Gentleman might like to inform his constituents of their work. They have tried to give a voice to the region’s young people on bus issues. They have developed links with local bus operators, the Government office for the north-east, and local authorities in their area. I notice from today’s cuttings that the bus company Stagecoach is launching a VIP ticket for young people to encourage them on to the buses in that area.

Some authorities offer discount or free travel to young people, and we have tried to find out through
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local transport plans what can be done to encourage more young people to use buses. By 2010, the travelling to school project will have spent around £140 million on finding out what we can do to get more young people to walk or cycle to school, and to use public transport.

Steve Webb: I accidentally under-ran, so I have a little more time than I thought. I want to make it clear that the sort of people who are contacting me are not going to school and are not of an age that would be covered by a local authority concessionary scheme. They are typically 19 or 21, and I do not know of any local authority in Britain that gives free travel to 21-year-olds. I should have made it clearer who I mean when I refer to young people, because many of those concessions do not apply to them.

Ms Winterton: I understand that. If the hon. Gentleman is talking about over-18s, such concessions would be outwith that group. However, he referred to high fares, fare increases, and the deterrent effect on passengers.

Obviously, the hon. Gentleman knows that bus services outside London were deregulated by a previous Administration around 20 years ago. The majority of those services are now provided on a commercial basis without subsidy. However, local authorities have the power to subsidise services that are necessary for the community but not provided on a commercial basis. Around 20 per cent. of bus services outside London receive local government subsidy.

All in all, public expenditure on buses amounts to around £2.5 billion, which is up from around £1 billion a decade ago. We have seen increased expenditure on bus services, and that includes reimbursement for concessionary fares. I am sure that the hon. Gentleman is aware of our schemes for older people, which have certainly led to increased bus usage, and the bus service operators grant from my Department to support socially necessary services.

We are of course aware that when bus services were deregulated, there was an expectation that there would be plenty of competition to keep fares low and customer services high. However, we now find that in many parts of the country there is no real choice of operator. It is open to other operators to challenge the incumbent if they think they can provide services more cheaply and efficiently, or better tailored to public demand, but the hon. Gentleman is right in saying that there is a certain amount of discontent in various parts of the country about the provision of services.

All our experience in this country shows that bus services work best when there are good relations between bus operators and local authorities, and when each is prepared to invest. The local authority might invest in better infrastructure, and the operators might provide better vehicles. Each side must play its part if we are to succeed.

During a recent tour of the regions, I visited the Bristol area, and became aware of the importance of that close working together. I know that there have been many problems in the greater Bristol area in past years, but local authorities and FirstGroup have jointly drawn up a major scheme to improve bus provision, underpinned by quality partnership schemes. That
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builds on the successful showcase bus route scheme that was opened a couple of years ago and achieved significant growth in bus patronage. At the moment, my Department is assessing that scheme as a bid for major project funding, and we hope to make a decision soon.

It is true that there has been dissatisfaction with the way in which bus services operate, which is why we want to give local authorities a better range of options to improve bus services in their area. The building blocks were laid down in the Transport Act 2000, and we accept that they need refining.

Last May, the Government published the draft Local Transport Bill for consultation and pre-legislative parliamentary scrutiny. A major part of that is connected with bus services. As the hon. Gentleman said, we also received a report from the Transport Committee, and it published our response today. I hope that the hon. Gentleman will read that and find it encouraging. The Bill will be similar to the draft, but we have changed it to account for views expressed in the consultation.

The hon. Gentleman referred to the London-type system. The Bill will say that when there is a strong case for quality contracts—a London-type system—we will make it a more realistic option. The draft Bill would provide more opportunities for quality partnerships and, particularly, it would allow them to specify minimum frequencies and maximum fares, which I am sure the hon. Gentleman would welcome. Obviously, operators would need to be willing partners to make the partnership work, but, crucially, the negotiating hand of the local authorities would be greatly strengthened.

The draft Bill also includes measures to tackle problems such as poor punctuality, which is clearly an area in which local authorities and operators need to act in harmony. When people face a situation in which they do not know when the bus will arrive, or when they think a bus will arrive but it does not turn up, they are completely put off getting the bus. Young people who want to keep appointments are unlikely to be attracted to a bus service that offers such poor punctuality.

Steve Webb: May I take the Minister back to her interesting remark about the power of councils to cap bus fares? I shall pass on her words, as she would expect, to the young people, and they will read every word. Is she saying that councils will have the power to cap bus fares, but only if the bus company agrees? Is that the position?

Ms Rosie Winterton: The idea of a quality partnership is that local authorities will sit down with bus operators and say, “We are going to commit to improving the infrastructure, either through bus lanes or real-time information,” and bus operators will reply, “If you commit to that, we will commit to this or that.” That is the idea of the partnership, but agreement is important; the partnership cannot be imposed. If quality partnerships or local bus services are not delivering, we could move to the next stage—the creation of a quality contract. Again, it would be possible for local authorities to specify the routes that they wish bus services to take and fares, and it would be
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up to the bus operators to tender to operate in the area, as happens in London, as we said.

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