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Westminster Hall
Tuesday 6 September 2011
[Mr Gary Streeter in the Chair]
Bus Industry
Motion made, and Question proposed, That the sitting be now adjourned.—[Mr Newmark .]
9.30 am
Graham Stringer (Blackley and Broughton) (Lab): It is a pleasure to serve under your chairmanship again, Mr Streeter. It is now 25 years, a quarter of a century, since buses outside London were deregulated following the Transport Act 1985. We have a great deal of experience of what the implementation of the Act meant. By and large, it has been a very poor experience. It is sensible to call it a disaster for the bus-travelling public. In Greater Manchester, in the past 20 years, approximately 30% of the number of people who travelled by bus no longer do so. Bus deregulation has meant higher fares in real terms, a reduction in the networks and less reliability. It is not surprising, therefore, that the number of passengers has reduced.
I will not say that everything about bus deregulation has been awful—most of it has been. If I had to put a figure on it, it would be approximately 80%. A great deal of it has been bad. Bus deregulation has been successful on radial routes in major urban conurbations, where the service in peak times is often better than it was. The old transport authorities and county councils were guilty of having inflexible bus routes and of sending buses to where people lived 30, 40 or 50 years previously, before areas were demolished and rebuilt elsewhere. The commercial flexibility of the deregulated system has had some benefits, but overall the impact has been negative.
How does one disaggregate that from the natural trends in bus ridership in the past 25 years or so? Well, that is fairly easy because we have a precise comparison. When bus services were deregulated in the rest of England and Wales, they were not deregulated in London. Between 1986 and when the office of the Mayor of London was introduced in 1998, the regulated franchise system in London retained its passengers with very little subsidy. From the time of the election of Ken Livingstone in 1998, the number of bus passengers in London increased and the network became more extensive because a considerable increase in subsidy was put into the system. The period after 1998 does not offer an exact comparison, but the period between 1986 and 1998 offers a very good comparison. Bus passengers were retained in this city, but they were not retained elsewhere. The simple conclusion is that that is because of bus deregulation.
Behind all the statistics that I will use in my speech, there are real people. If people want to get a sense of the damage that has been done to individual lives by the loss of bus services—it affects family life and the ability to get into employment—I suggest that they read the recent Transport Committee report, “Bus Services after the Spending Review”. That report has example after example of people’s lives being blighted, their
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ability to obtain employment diminished and their ability to see their families reduced because bus services have disappeared.
I thank the officials at the Passenger Transport Executive Group, Sir Howard Bernstein, chief executive of Manchester city council, and his officials at Transport for Greater Manchester. They provided a lot of the statistics in this speech about transport in Manchester and transport nationally. Two thirds of all public journeys take place by bus, even after the reduction in numbers following deregulation. We are therefore talking about something that is important to many people’s lives, often the poorest people in our communities, and something that is vital to the economy.
My main point in this speech is that there will be cuts to an already reduced system. I do not want a sterile debate in which the Government say that it is all the fault of the previous Government that they are making cuts, and we on this side of the Chamber say that the cuts are too fast and too deep. Both those points have their place. What is interesting is that, because we are dealing with cuts to a deregulated system, it is possible to diminish the impact of those cuts by looking carefully at what are likely to be the recommendations of the Competition Commission, and by trying to use more effectively and directly the facilities in the Local Transport Act 2008. That is what I want to concentrate on.
To get some sense of the size of the impact of the cuts that are likely to happen, I will go through what the bus system is faced with. First, there is the 28% reduction in local authority grants, which will affect buses. Then there are changes in the formula for concessionary travel. Estimates on the impact that that will have on the bus system vary between £50 million and £100 million. The best estimate is approximately £77 million. From 1 April 2012, there will be a 20% reduction in the bus service operator grant. In passing, I say to the Minister that BSOG is not used in the most effective way. As a general grant to the bus industry it is fine—it helps. However, it would be better if it were given to transport authorities and passenger transport executives so that they could direct it to environmental improvements or particular enhancements to transport, rather than it just being given generally to bus companies.
Those are the three big areas where there will be cuts, but there is also the abolition of the rural bus grant and the 50% reduction for small and medium-sized public transport schemes from the integrated transport block. There will, therefore, be major changes and reductions in bus services in the coming years. PTEG has tried to estimate what will happen and its conclusions are pretty stark and frightening. It estimates that by 2014 fares will have gone up by 24%—nearly a quarter—in real terms, there will be a decline in service levels of 19%, which is nearly a fifth, and patronage will be down by about a fifth. That is in metropolitan areas, which is what is covered by PTEG.
According to the Transport Committee report, 70% of local authorities in non-urban areas have already cut their grants for buses and transport. My hon. Friend the Member for Hartlepool (Mr Wright) is present and I look forward to listening to his contribution later, but in Hartlepool 100% of the bus services subsidy has been removed, as is the case in Cambridgeshire, although I understand that that is currently subject to legal challenge. In Somerset, North Yorkshire, Shropshire
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and Northamptonshire, there have also been significant cuts, while in Luton and Peterborough there have been no cuts. The situation around the country is varied but, overall, it looks pretty bleak, given the PTEG projections for urban areas and the known cuts identified in non-urban areas by the Transport Committee.
Transport is a function devolved to local transport authorities but, I ask the Minister as the Transport Committee did, surely central Government have a responsibility, not to make local decisions but to know what is happening in every area, so that when the Government make decisions about their grants and where they spend their money, they can do so as accurately and effectively as possible, and that requires knowledge.
The Office of Fair Trading decided that it would refer the bus industry to the Competition Commission. There was already a great deal of evidence from Greater Manchester and other places that monopoly behaviour was effectively taking place. It has taken the competition authorities a long time to get around to looking into it. More than 10 years ago I wrote to the competition authorities and asked them to investigate—I was not the only person who did that—and they said, “Please produce written documentation of unlawful agreements between different bus operators.” Of course I could not do that—those documents would not be available to a Member of Parliament or anyone else, if indeed they existed—but by looking statistically at what is happening, we can see all the signs of real monopoly behaviour, and that is what the Competition Commission has found.
I will go through some statistics for Greater Manchester. In Oldham, for instance, 85% of the services are provided by First. In my own constituency the figure is about 67%, in Salford 77% and in the whole of north Manchester 70%. In south Manchester, we can see a mirror image of those figures, with Stagecoach monopolising: in Stockport it provides 82% of services, and in the whole of south Manchester about 74%.
My constituents suffer a real disadvantage in fare levels. I was told when I put my case to First that not many people buy the one-off fare, but that people buy weekly tickets. Even the weekly tickets bought from First by people in north Manchester are 47% higher—£17, compared with £11.50—than the price people pay in parts of south Manchester, where the average income is about £10,000 higher than for my constituents. So if they need to use buses, they are paying twice the percentage of their income on fares. Frankly, there is little on-road competition, which is what was originally intended to be the driver of better, more effective and more responsive services under bus deregulation.
Another indication of monopoly or anti-competitive behaviour is what in the system is called gaming the market, where bus companies use the fact that two different transport systems are in operation—the deregulated system, under which anyone can operate a bus service having given a small length of notice, and the subsidised, tendered services. In designed deregistration, the bus company is really saying, “We can make more money from this service, because it is an important service for the public, if we deregister it and then get the transport authority to tender it out.” Then, if it loses the tender, and a tendered service is running, the company
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reregisters the services, or parts of them, to undermine the subsidised service. An awful lot of such anti-competitive behaviour goes on.
As I said, the competition authorities were slow to get off the mark and to look at the area, but they have got off the mark, and credit to them for that. They have found that profits are much higher in the deregulated area than in London. In the past 24 hours Go-Ahead, for its out-of-London services, has just announced record profit levels of up to 10.4%.
Mike Weatherley (Hove) (Con): The hon. Gentleman mentioned that anyone may enter the bus market, but does he agree that one of the faults of deregulation was that it did not create a perfect market? There are significant barriers to entry, even if one does not go through the subsidised route but sets up an independent service.
Graham Stringer: The hon. Gentleman makes a perfectly sound point, which I will come to in my conclusions. The large operators own the garages and can afford to subsidise competition if there are new entrants to the market—it is a long way from being perfect competition.
I was talking about the profits of Go-Ahead but the profits of Stagecoach are truly staggering, especially when the economy is flatlining and we have been in recession. They are up to £153 million from £126 million, which is an increase from 14.4% to 17.1%. In the friendly debates I have with Brian Souter of Stagecoach, he once called Gwyneth Dunwoody and me “dinosaurs” because we believe in going back to a sane system of regulated buses—he even set up little models of dinosaurs. I do not know how many people in the Chamber remember the film made of the James Clavell book, “King Rat”. When the Japanese prisoner-of-war camp in Singapore was liberated by allied forces, there was one very fat prisoner among all the other prisoners, whose ribs were showing—they were starving to death. At a time of austerity and the economy not doing well, Brian Souter and Stagecoach are the King Rats of the British economy, doing enormously well out of public subsidy when everyone else is struggling to get to work and make a living. They are, in effect, subsidy junkies.
The figures in the Transport Committee’s report show that the bus industry outside London receives from the fare pot about £1.8 billion in a total income of £3.4 billion, so 47% of the bus industry’s income comes from taxpayers. It is as simple as that. Whenever a bus leaves a depot, an average of 50% of its costs are paid by taxpayers. Given what has happened with deregulation, is that sensible use of taxpayers’ money? Are we receiving the best possible value?
Mr Andrew Turner (Isle of Wight) (Con): The hon. Gentleman may not know that in my constituency there is only one bus company for the whole island, and there is no competition. What prevents large companies from competing in the parts of Manchester that he mentioned, where that seems not to happen?
Graham Stringer:
I am the wrong person to ask, but my view is that companies do not compete because then they can exploit the market using informal agreements or in nods and winks, by putting up fares in their own areas without the cost of competing. The statistical evidence in their profits and fare levels is that they are
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exploiting the market compared with what happens in the London market. That is voluntary. Companies are happier operating in their own areas. They say that they do not like the extra dead mileage if buses must be driven into areas where other companies operate from their depots, but that is a weak argument. They simply do not want to compete because it is more profitable for them not to.
The making of high profits was the first major finding in the Competition Commission’s interim report. The second was that many operators face little or no competition. It is welcome that the commission finally got around to writing the report, but it is flawed in many ways, as such reports tend to be because they look at statistics over the past five years, but the economic world is now different and more difficult. They estimate that anti-competitive behaviour costs £70 million, but they do not include the cost when people abandon buses; if that were included the real cost to the public would be much higher. In addition, they do not look at how the current bus system inhibits the use of simple integrated ticketing, which would drive up the number of passengers using buses.
I have a few requests for the Minister. First, when the Competition Commission’s report is published and he is considering what to do about buses, will he bear in mind that there is a lot of information out there, but it has to be culled at great expense from surveys and other sources, because the bus companies keep much of their information private, despite receiving 50% subsidy? Good-quality information is vital for local transport authorities when planning their services.
My second request is for through-ticketing. We know what brings people back on to buses: a simple, low-fare structure with through-ticketing. It is estimated that if fares are cut by 20%, passenger numbers increase by 13%, with a further increase if the ticket structure is simplified with through-ticketing. What can the Minister do to help that?
My main question, which goes back to the beginning of my speech, is how can the Minister support and help to build on the powers and structures in the 2008 Act? I know that he understands the legislation thoroughly, because he and I served on the scrutiny Committee. There are many barriers facing South Yorkshire, West Yorkshire, and Tyne and Wear passenger transport authorities. They are considering moving back to a regulated system of quality contracts, because the buses, bus drivers and depots are in the hands of the bus companies, which have rubbished the Competition Commission’s interim report—well, they would—and are threatening a scorched earth policy for any passenger transport executive or authority that decides on re-regulation. What help can the Minister give those transport authorities?
Everyone knows that we are dealing with a coalition Government. The Minister’s views are well known from the time before he was a Minister, as are the Secretary of State’s. The Secretary of State is more of a free marketeer, and the Minister believes in the instruments in the 2008 Act, but when the bus industry is declining, the balance between the two parts of the coalition, resulting in a watching brief and agnosticism on the industry’s future, is not satisfactory. I should be grateful if the Minister told us his view.
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My final point is that the present Government and Governments for the past 25 years have not done enough for the quarter to one third of people who do not have access to a car and rely completely on buses. One of the most appalling sarcastic comments made by the last Prime Minister, in response to a Birmingham Member who asked what he would do about the loss of a bus service in Birmingham, was that he would immediately call a Cabinet meeting. He said that sarcastically, but Cabinet Ministers should discuss bus services. They are vital for many millions of people in this country and they have been neglected or given too low a priority for long enough. I look forward to the Minister’s support in protecting and helping the bus industry at a time of inevitable cuts. That is possible.
9.58 am
Mike Weatherley (Hove) (Con): I congratulate the hon. Member for Blackley and Broughton (Graham Stringer) on securing this debate. Although passenger numbers are on the decline throughout the country, I understand that buses remain the most popular form of public transport. Usage is on the increase in Brighton and Hove, which bucks the national trend.
In the city of Brighton and Hove, which includes my constituency of Hove and Portslade, we are fortunate to have a good bus service. We benefit from a network of many routes, frequent buses, and well-maintained bus shelters. I pay tribute to the managing director of Brighton and Hove Bus and Coach Company, Roger French, for his excellent management of the network in previous years. Increasingly, the company has been able to make use of new technology, such as real-time information screens at bus stops and smartcard readers on buses. While that is great news for residents of Brighton and Hove, I would argue that more competition is needed to protect the interests of bus passengers in future.
The Brighton and Hove Bus and Coach Company is owned by Go-Ahead, one of the five biggest bus service providers that together account for 69% of the country’s bus services. In areas such as my constituency, where one company operates over 95% of the public bus services, not much can be done when fare rises are proposed, as will happen later this month. Passengers cannot go elsewhere to get a cheaper ticket.
More competition would go some way towards maintaining best value for consumers and continuing to keep pressure on efficiencies. As the situation stands, however, the many barriers faced by new companies that are setting up bus services effectively restrict competition. Although in theory schemes are open to all companies that wish to take part, the costs of doing so are so prohibitively high that in practice they are open only to large companies that can afford to take part. A case in point is the real-time information system. Electronic display boards are now located on most bus stops in the centres of Brighton and Hove and provide real-time information about bus times. I have witnessed at first hand the system in operation at the Brighton and Hove Bus and Coach Company’s operational centre, and it is very impressive. The system is open to all bus operators, but only if they pay substantial costs for the on-bus radio system, transponders and any necessary back-office equipment.
Some charges levied on transport companies are implemented in a way that penalises small companies. Although some charges vary according to the number
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of vehicles a company operates, meaning that larger companies pay more, other charges are fixed irrespective of size. Such fixed charges mean that small companies effectively end up paying a higher proportion of their income than larger ones. Charges for the registration of a public service, for example, or an application for an operating licence or a transport manager’s certificate of professional competence, are the same regardless of the size of the company or the number of routes and buses involved, meaning that larger companies can absorb the cost more easily.
In my constituency, there is a small bus company called The Big Lemon that runs its buses on waste cooking oil from local restaurants. It has been beset by problems as a result of being a smaller company, to the extent that, as I understand, it has had to submit evidence to the Competition Commission and the Office of Fair Trading in order to protect its interests and, ultimately, to prevent it from being forced to cease operations. Fare increases have recently been announced by the Brighton and Hove Bus and Coach Company, and much has been made locally of the scale of those increases. In some places, fares will rise by as much as 20% and on most routes a return fare will cost as much as £4. However, on routes where The Big Lemon is in direct competition with the Brighton and Hove Bus and Coach Company, the fare will be only £2.50. That means that passengers in some parts of the city will pay 60% more than in other areas where competition has forced competitive pricing.
The Brighton and Hove Bus and Coach Company has stated that the fare increases are being introduced to reflect the rising price of fuel. However, as the managing director of The Big Lemon, Tom Druitt, pointed out, fuel does not cost more on different routes, and the difference in price seems designed to stamp out the competition represented by the smaller company. The Big Lemon also encountered a barrier to extending competition in the city when it attempted to join the quality bus partnership. As I understand it, that partnership is an informal agreement between the Brighton and Hove Bus and Coach Company and the council, and is not open to other companies or routes at present. The Big Lemon has also encountered difficulties in publicising information and timetables. It found that priority for such matters was given to the Brighton and Hove Bus and Coach Company, with the main information about fares and timetables on the council’s website referring to services provided by the larger company. Smaller providers are mentioned and a link to their websites is provided, but the main emphasis is on the Brighton and Hove Bus and Coach Company. That situation could easily be rectified at no cost to the taxpayer, and it would encourage competition.
The attitudes and actions that I have mentioned are obstacles to increasing competition. If one small company has encountered such difficulties, how many more companies are experiencing problems around the country? Bus companies that benefit from large Government subsidies naturally have an advantage that small start-up companies do not have. In my constituency and across the city, the Brighton and Hove Bus and Coach Company receives a large subsidy from the city council—money that would make a huge difference to small operators
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such as The Big Lemon. There is a compelling argument that we should encourage the distribution of subsidies on so-called loss-making routes towards new, smaller, innovative companies, thereby increasing competition and benefiting passenger choice and transport quality in Brighton and Hove and beyond. As councils do not have direct control over the fares levied by bus companies, that is one way in which greater competition in bus services could be encouraged.
As mentioned earlier, there are other ways in which the council could assist in making the market more competitive such as providing fair website information and the quality bus partnership scheme. In summary, I would like to see measures implemented that are focused on delivering sensible competition and a code of practice that would put new operators on a level playing field, thereby reducing barriers to entry in the market.
10.4 am
Mr Iain Wright (Hartlepool) (Lab): Let me begin by saying what a pleasure it is to serve under your chairmanship, Mr Streeter. May I congratulate my hon. Friend the Member for Blackley and Broughton (Graham Stringer) on securing what I think is an important debate? He was kind enough to mention my constituency in his opening remarks, and I think that the example of Hartlepool and its bus users provides an almost perfect case study to illustrate why competition in the bus market is not working.
I would not disagree with the notion of competition in the bus market if it resulted in wider choice and a better-quality service for passengers. We would all agree that in an ideal situation, competition should keep operators on their toes, as they would be mindful of rivals securing a greater share of the market and would offer a more comprehensive service, a better fare and ticketing structure, more punctual journey times and more modern vehicles.
The situation in my constituency, however, is particularly frustrating because Hartlepool has all the ingredients for a good and comprehensive bus service. It is a relatively compact town; there are outlying villages, which I will mention in a moment, but at its heart is an urban centre just 2 miles wide and 5 or 6 miles long. Travel is self-contained and most journeys in Hartlepool take place within that urban centre, which therefore lends itself to a rapid, reliable, co-ordinated and integrated public bus transport system. About 40% per cent of households in my constituency do not have regular access to a car, which feeds into the need for a comprehensive public transport service to avoid isolation for many of my constituents.
Further afield, Teesside university in nearby Middlesbrough, the petrochemical and process industry cluster in Wilton, and the new logistical and distributional commercial opportunities at Teesport could mean that many of my constituents would have access to better employment rates and opportunities to participate in higher education if those places were connected by better public transport links. My constituency would benefit in every possible sense. From my experience in Hartlepool, however, it is clear that no effective market is in operation. My hon. Friend the Member for Blackley and Broughton touched on that with an example from Greater Manchester, and I will discuss that point in more detail later.
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Bus services are dominated by one provider, Stagecoach, which has a significant share of the wider UK bus market. Such dominance has led to inefficiencies and distortions in the market—that is true not only in my constituency but, as we have heard, across the country. My hon. Friend quite rightly mentioned the profits made by Stagecoach, and it is worth reiterating that point. For the year ending 30 April 2011, Stagecoach made operating profits of about £200 million. Over three quarters of that operating profit—some £153.1 million—was generated solely through its UK bus operations. The profit margin of its UK bus division was 17.1%, as opposed to a 6.5% profit margin for its north American operations and 4.5% for its UK rail division. In its annual report Stagecoach states—boasts—of “sector leading profit margins” within its UK bus operations.
How was that allowed to happen? The answer is contained in the company’s annual report. Its operating and financial review states that its business model for its UK bus operations in the regions is based on an
“emphasis on lightly regulated bus operations enabling management to vary prices, operating schedules and timetables in response to developments in each local market—”
“without significant hindrance from regulation.”
It is therefore clear that Stagecoach seeks to cherry-pick profitable routes and discards socially or economically vital services the moment the taxpayer fails to take the risk on its behalf and subsidies are ended. The company is able to do so without the hindrance of an effective regulatory regime that could insist that such services are maintained for the good of the community.
The business model boasted about in the annual report is shown to be true when one looks at my constituency. As I said earlier, Stagecoach is by far the most dominant bus operator in Hartlepool. Arriva and Go North East provide a small number of services that travel in and out of the constituency, but in the main Stagecoach has a monopoly on the market, with about 80 % to 85% of market share.
The bus market in my constituency is striking for the absence of medium-sized bus companies. It has been difficult, as we have heard in relation to other places, for small and new entrants to the market to gain ground. Promising new entrants such as Tees Valley Coaches have provided some new routes, but have found it difficult to gain a foothold in the market and are now pulling back from providing routes.
A far too dominant player in the market has ensured that there is no incentive to improve services. Punctuality is poor. The traffic commissioner’s target is that 95% of buses should be on time. In Hartlepool, that figure is 81%. As my hon. Friend the Member for Blackley and Broughton said, ticketing arrangements, too, undermine choice and competition. In my constituency, Stagecoach operates a ticket discount scheme, but it is available only for Stagecoach services, rather than bus services across the town. Passengers are dissuaded from using other operators—of which they have only a limited choice—because of the additional cost of buying yet another ticket.
Most damning of all—my hon. Friend kindly mentioned this—is the abrupt cancellation of services, which leaves my constituents without access to transport. Hartlepool
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borough council faces cuts in its budget from central Government of about 25%, and it has decided to stop all subsidised services. That means that there are in effect no bus services in my constituency after 6 pm or on Sundays. Some outlying areas of my constituency—villages such as Elwick or Dalton Piercy, as well as the central area of the Burbank estate—now have no bus service whatever, which has left residents in those areas completely isolated.
The recent report by the Select Committee on Transport, “Bus Services after the Spending Review”, cites many comments from residents of my constituency. Miss Raw, for example, says that the bus service from Elwick to Hartlepool has been withdrawn, leaving the village completely cut off from Hartlepool. She states:
“I do not drive and therefore am finding it very difficult to shop for essentials, visit doctors, dentists, opticians, banks, hospital visits etc. Also I no longer visit friends, go to the theatre, or cinema, especially in the evening. In fact we are completely isolated.”
Susan Elan Jones (Clwyd South) (Lab): Does my hon. Friend agree that whatever one’s general view on the bus deregulation of the 1980s, the one thing that we know is that it was an unmitigated disaster in villages and very rural areas, as buses were reduced either to a highly limited service or, in many cases, withdrawn altogether? That compounded the problem of rural poverty, which is often not addressed in an urban environment.
Mr Wright: My hon. Friend makes an important point, and my hon. Friend the Member for Blackley and Broughton referred to the same issue. Economic activity is very much contingent on the availability of good transport and connectivity. Concerns have been raised with me both by constituents living in the urban part of Hartlepool and by constituents living in outlying areas, who say that they cannot take up a job because they cannot get to the place of work as a result of the absence or removal of the bus service.
Another of my constituents cited in the Select Committee report is Mrs Powers, who states:
“Since the removal of the bus service my daughter…has NO way of getting to and from college…Is she surely not entitled to the education she deserves? My daughter works very hard and gets excellent grades and I feel appalled that her future education is being jeopardised in this way!”
It is important to mention the importance of access to education in rural areas. My hon. Friend the Member for Clwyd South (Susan Elan Jones) will be concerned about that as well.
It is clear that competition in the bus market in Hartlepool has failed. Deregulation since the mid-1980s has not proved to be a success. The market is characterised by too dominant a player, making excessive profits by cherry-picking the busy and popular routes and ensuring that passenger choice is left behind. For those services that remain, punctuality rates are behind what should be expected, because operators do not fear that another company might come along and provide a better service that takes away their market share.
Mr Andrew Turner: It is not the case that things have been tested and found to fail—they have not been tested. We have to try the competition route, which should be given the chance to work under the new system. We have to make it work, rather than pretending that it has already happened and been found to fail.
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Mr Wright: The hon. Gentleman makes an interesting point, but I would suggest that we have had more or less the possibility of open competition and certainly deregulation since the mid-1980s. I accept the point that perhaps that has not meant free and open competition and there may be barriers to entry because of the structure—the way in which the legislative framework has been put in place. However, looking at the examples from my constituency, I would suggest that there has been market failure and, as a Labour politician, I would suggest that where there is market failure, the state should intervene. The hon. Gentleman and I will possibly disagree in our analysis of the reasons for that, but certainly we would agree that there has been market failure. I will ask the Minister, in trying to respond to the issue of market failure, to consider a number of things.
Graham Stringer: I acknowledge the weight of my hon. Friend’s remarks. Does he agree that where serious competition has taken place in Glasgow, Edinburgh, Preston and Manchester, where bus companies have set about competing with one another and where, in the short term, bus fares have dropped and there has been a conveyor belt of buses, the consequences have been worse congestion and pollution and then one bus company withdraws?
Mr Wright: That is one of the fears because of the way in which the bus market currently operates, with the dominance of four or five big players in the market. They have the bargaining power and, frankly, the cash to be able to hound smaller operators out of business. For example, in the north-east a number of years ago, a new and ambitious operator wanted to come into the market, but the big dominant operator of the time, which was Stagecoach, hounded it out by providing zero fares—free fares—at certain times. Stagecoach had the cash flow to be able to do that, so there is market failure, with domination by big players.
I hope that the Minister will respond to a number of points. I urge him to be bold when considering the Competition Commission’s report on bus services. He needs to examine why there has been so little take-up of the quality contract partnerships introduced by the previous Government. I urge him to undertake further work to see whether such partnerships need to be made easier to operate and enforce. To help with that, the Minister should consider whether franchising of local bus services within an area such as Hartlepool could provide a better quality of service and ensure that local authorities can determine the priorities on behalf of their residents. The Government need to be bold and radical for the good of passengers in Hartlepool and elsewhere. I strongly believe that they should re-regulate the market to ensure that local bus services are run for the benefit of passengers and communities, rather than purely for shareholders.
10.17 am
Andrew Gwynne (Denton and Reddish) (Lab):
I congratulate my hon. Friend the Member for Blackley and Broughton (Graham Stringer) on securing this very important debate, as I know that he has taken a keen interest in these issues for a number of years. I welcome
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the chance to contribute to the debate from the Opposition Front Bench. It is a pleasure to see you in the Chair, Mr Streeter.
On the specific issue of competition in the bus industry, we need to examine the deregulation of the buses to understand how we have ended up with the current situation. As my hon. Friend outlined, it is now 25 years—almost to the day— since the deregulation of the bus industry outside London. Of course, in London, Transport for London, which is accountable to the Mayor, specifies in detail which services are provided. It decides the routes, timetables, fares—everything down to the colour of the buses. The services themselves are operated by private companies through a competitive tendering process, but there is no on-road competition.
In the rest of the country, such as in the Greater Manchester constituencies that my hon. Friend and I represent, there is, in theory at least, a free market, so anyone can start up a bus service as long as they meet minimum safety and operating standards. Bus operators are practically free to run whatever services they like, charge whatever fares they like and, as we saw with the UK North debacle in Manchester, use whatever vehicles they like. Monitoring and regulation of reliability and vehicle cleanliness is largely minimal. Although it is supposed to be a competitive market, the majority of services are provided by just a few bus companies. As my hon. Friend correctly outlined, the vast majority of commercial services in my south Manchester constituency are operated by Stagecoach, in contrast to his north Manchester constituency, where the predominant provider is First. Local authorities will fill the gaps where there is an inadequate commercial service, and such local authority-funded routes are operated by private companies through a competitive tendering process.
My hon. Friend was right to raise concerns about how some of these big companies play the deregulated system. In 2004, before I came to the House, I was a local councillor on Tameside metropolitan borough council. Just before the general election in 2005, Stagecoach Manchester removed the well-used 375 bus service, which used to link Stepping Hill hospital in Stockport, Stockport town centre, Denton, Ashton town centre and Tameside general hospital. That service between the two district general hospitals was an important link for the communities along the route.
The route was commercially viable, making about £50 a week profit, but it was never going to make Stagecoach Manchester a lot of money. Nevertheless, it was a commercial service, it was commercially viable and it made a profit, albeit at the margins. However, Stagecoach decided to withdraw the service to the two district general hospitals, so that the route went only to Stockport and Ashton. Anyone who wanted to go to the hospitals had to get on another bus at Stockport bus station or Ashton bus station.
Stagecoach then decided to split the new service in two. The 375 became the 317A and the 317B. In the middle of the route, people had to get off one bus and wait for the next one to arrive. That made the service non-profit-making overnight. There was no change to the route, but splitting it in two meant that it was not commercially viable. Stagecoach therefore went cap in hand to the Greater Manchester passenger transport authority for not one public subsidy, but two. That highlighted loud and clear how Stagecoach Manchester
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played the system, turning a service that was profit-making—albeit marginally—into two subsidised services, which is outrageous.
Across the country, the picture on deregulation is mixed. In some areas, services have undoubtedly improved, as we heard from the hon. Member for Hove (Mike Weatherley), and some bus companies have invested in new bus fleets. In many areas, however, it is fair to say that deregulation over the past 25 years has resulted in a much worse service, which costs taxpayers and passengers alike much more. Figures produced by the Passenger Transport Executive Group on behalf of the passenger transport executives in the six metropolitan conurbations outside London show that bus fares have increased by 94% in those areas in the years since deregulation, while the number of those using buses has fallen by 46%. In some PTE areas, the decline has been even greater, with ridership down by 65% in South Yorkshire since deregulation.
Deregulation has had a number of other negative knock-on effects. It is much harder for local authorities to put in place long-term bus networks or to properly integrate bus services with other transport modes, such as rail and light rail, particularly where those services are operated by competing businesses, as in north Manchester, where, until recently, the trams were operated by Stagecoach and the buses were predominantly operated by First. As my hon. Friends have said, deregulation also makes it much more difficult to provide a competitively priced multi-modal ticketing system like the London Oyster card.
One of the more worrying aspects of the changes is the effect on socially necessary bus services, as we heard from my hon. Friend the Member for Hartlepool (Mr Wright). There has been a gradual reduction in off-peak and lifeline estate services, with more focus on more profitable major bus routes. In a market-driven environment, commercially driven bus operators will of course concentrate more on the more profitable commuter routes and less on socially necessary services. With the scope for cross-subsidy removed, the cost of the diminishing subsidised network has increased massively—
The Parliamentary Under-Secretary of State for Transport (Norman Baker): It is 10.24.
Mr Gary Streeter (in the Chair): Order. The debate continues until 11 o’clock. Continue.
Andrew Gwynne: With many bus services used disproportionately by people on lower incomes and by those without access to a car, the socially excluded are worst hit by service reductions. For example, two out of every five jobseekers say the lack of transport is a barrier to getting a job.
When considering bus services, we really must take account of the policies being implemented by the current Government. Many of the cuts are happening not by chance, but by choice. The Government have made a number of critical decisions that I do not just fear but know will have a real effect on bus services. First, as my hon. Friend the Member for Blackley and Broughton said, there is the 28% cut to local authority funding for local transport, which includes money for subsidising unprofitable bus routes. Support will be reduced by £95 million between 2010-11 and 2011-12.
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Secondly, the Government are changing the way councils and bus operators are reimbursed for the concessionary fares scheme for older people, taking £223 million from the scheme between 2010-11 and 2011-12. Thirdly, from January 2012, they are reducing by a fifth the rebate for additional fuel costs for running unprofitable bus services, and that will particularly affect rural areas, as my hon. Friend said. That will take away a further £254 million in support for bus services between 2010-11 and 2011-12.
We are already seeing that these changes mean the end of council-funded rural, evening and weekend buses in many parts of the country. With rising costs, the need to maintain profit margins and the state of local budgets contributing to fare rises, the changes will largely mean service reductions in some of the most isolated parts of the country.
When the Prime Minister made his election pledge to protect free bus travel for pensioners, or at least to protect their passes, he did not tell them that, in doing so, he would take away their bus services instead. The sad fact is that the situation on bus cuts is likely to get worse. Forecasts by PTEG show that, by 2014, fares will have increased by a further 24% in real terms in metropolitan areas, while service levels will decline by 19% and patronage will decline by 20%.
Mr Andrew Turner: It is interesting to look at what the Prime Minister said before the election. In my constituency, at least some pensioners would rather pay half fares than face the possibility of having no buses at all. They would like to pay their bit on the buses.
Andrew Gwynne: Indeed. In places such as Greater Manchester, there was a long-standing concessionary fares scheme before the national bus pass scheme was introduced, and pensioners paid a small amount. Under the bus pass scheme, the concessionary fare was available on peak services until it was removed this year—in the peak period, pensioners now have to pay the full fare. My constituents make the same point as the hon. Gentleman’s and would sooner pay something than lose their service altogether. It is clear that all parties at the last general election pledged to protect the bus pass, but there is no point people having that bit of plastic if they do not have the buses to use it on.
The situation is already bad, but it will undoubtedly become increasingly difficult to maintain current service levels when spending reductions deepen in successive years. In non-metropolitan areas outside London, there have been significant cuts to supported bus services, with some local transport authorities withdrawing funding from all such services, and we have heard first hand about the appalling situation in Hartlepool.
Let me turn briefly to the level of competition between the bus companies. As we know, the Competition Commission is investigating the local bus market and published its provisional findings in May this year. Its provisional findings included the view that profits are higher than they would be if the market were competitive and that too many operators face little or no competition in their areas. The competition authorities recently looked at tactic co-ordination between bus companies, and that has certainly raised a few questions about how truly competitive the bus industry is. The interim report also found that short-term bus wars on the streets, such as we experienced a few years back in Manchester, when
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the big bus companies used an extremely aggressive approach to drive out the smaller competition and secure their monopolies, were not the way forward, and that more should be done to facilitate multi-operator ticketing. Although we await the full report later this year, the interim report makes interesting reading and helps to inform our debate today.
Of course it was the previous Labour Government who set the ground for improvements to be made to local bus services. We set in progress ways of tackling some of the worst effects of deregulation. Indeed, quality contracts—or the provision for them—were introduced by the previous Government as a key to improvements in bus standards. In hindsight I think that our party would like to have gone further with those improvements to service provision for passengers, and with the implementation of quality contracts. Certainly, those contracts could allow bus companies to concentrate on developing the local market for bus travel, but it is understandable, given the points that have been raised by my hon. Friend the Member for Blackley and Broughton, and given the burden of risk on local authorities as opposed to the bus companies, that those measures have not been pursued as vigorously as they should have been. Quality contracts would help to set minimum standards, making it possible for them to be more stable, with less frequent changes to fares, times and frequencies. In turn that would help bus services to be more reliable, because they would be monitored and good performance would be incentivised.
It is fair to say that the current set-up does not always benefit the passenger, and we need to consider other ways of making our local buses work more effectively. We need to think about ways of addressing the issues that have been raised today, and ways of empowering local authorities and communities, allowing them more of a say in the way their bus services are run, and what the routes should be. Perhaps we need to look at ways to make it easier for passenger transport executives and local transport authorities to enter into voluntary partnerships, statutory quality partnerships and a more balanced quality contract system. That could allow for a system of franchising bus services to local transport authority specifications, similar to the system used to provide bus services in London, allowing a service that is responsive to what passengers want and reintroducing some long-term planning to the system.
I want to ask the Minister what consideration the Government have given to allowing local authorities more powers over local bus services. What assessment has the Minister made with regard to quality contracts? Does he view them as a way to set minimum standards and to make service levels more stable and reliable? What assessment has he made of the greater powers that Transport for London has over local buses and the performance in relation to bus services in London, as compared with what happens outside London, particularly in major conurbations, although the problem is not exclusive to big cities, but also exists in large and medium-sized towns and rural areas?
There is clearly a wider debate to be had about the way we look at restructuring our bus industry. Deregulation has largely failed, and that has been recognised in the
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debate. We need to think about restructuring our bus industry. I am sure that the discussion we have had today will help to inform the ongoing debate.
10.33 am
The Parliamentary Under-Secretary of State for Transport (Norman Baker): I thank the hon. Member for Blackley and Broughton (Graham Stringer) for raising this important subject and doing so in his usual measured and thoughtful way. His knowledge is considerable, as I discovered when we served in Committee on the Local Transport Act 2008. I am delighted to have rather more time than I thought I might to respond to the debate.
The Government are committed to supporting local bus services and markets through concessionary travel reimbursement, direct operator subsidy and our funding of local government. However, as I have made clear before, with those significant amounts of public expenditure invested in the bus market, it is only right to consider whether it is delivering the best service for bus passengers and best value for the taxpayer. The Competition Commission has identified, in its provisional findings, aspects of the local bus market where competition is restricted, prevented or distorted. That cannot be good for passengers if it means that they enjoy less frequent services and have to pay higher fares as a result. If that in turn means that fewer people are able to make use of their local bus, and instead have to travel by other means or cannot travel at all, that has wider, and unwelcome, societal and environmental impacts.
Of course, bus markets are local in nature. Many of the effects will be localised, and I have encouraged the Competition Commission to set out where and in what circumstances it believes competition is failing to materialise. It is important that it should be specific in its comments in the final report. One of the concerns raised by the Competition Commission, which I share, relates to profitability—a point raised by the hon. Members for Blackley and Broughton and for Hartlepool (Mr Wright). Excess profitability is an important indicator of ineffective competition. Evidence commissioned by the Department for Transport suggests that profits are particularly high in the largest metropolitan areas, so I have asked the commission to consider whether it can identify specific areas where ineffective competition is most prevalent. A key test of potential remedies will be whether they result in more people travelling on buses and bring about wider benefits to society by helping to create growth and cut carbon emissions.
The inquiry is ongoing, and with representatives of local government and passenger and bus operators, my Department continues to engage with the commission as it prepares to publish its provisional remedies later this month. Hon. Members will understand why I do not propose to anticipate those remedies in my remarks today: it is important that we let the commission, as an independent body, come to its conclusions on the basis of the evidence placed before it. However, I will take this opportunity to respond to the points raised during this debate.
The Local Transport Act 2008 made changes to the provisions of quality contract schemes and partnerships and introduced new forms of legal partnership working. It came into force only in 2009, and the Competition Commission has indicated that quality contracts and
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quality partnerships may be remedies for the competition problems that it has identified. It is therefore sensible to wait for the final outcome of the inquiry at the end of the year before deciding whether further changes to the regulatory regime are needed.
The hon. Member for Blackley and Broughton asked about the coalition policy as it relates to the 2008 Act. It is on the public record and therefore no secret that the two coalition parties, when in opposition, had differing views on the Act. The Conservatives were more sceptical about the value of quality contracts than were the Liberal Democrats. When the coalition was formed, the decision was taken that, as the process was already under way, the sensible course of action was to wait for the Competition Commission to analyse the market and produce its findings, so that we could proceed on a sound basis, free of prejudice, relying on proper analysis and collated evidence. That remains the position. I do not accept that that is agnosticism—the term used by the hon. Gentleman. It is a sensible decision to wait for the evidence, at which stage we shall analyse it internally and decide what action, if any, we should take in response to the findings of the commission. That process is under way in relation to the structure and landscape of the market.
The hon. Gentleman no doubt expects me to make the point that the landscape about which he and his colleagues complain is largely the one that their party’s Government created, which we inherited. He and the hon. Members for Hartlepool and for Denton and Reddish (Andrew Gwynne) will also be aware that it is on the record of the Local Transport Bill Committee that, had the amendment that I tabled been accepted, many of the actions that Opposition Members now ask for would be unnecessary—the measures would already be law. We did not make more progress at that time because of the then Government’s reluctance to go further.
Before the Competition Commission report is published, however, I want to encourage joint working between bus operators and local authorities. We have seen good results, with local authorities and operators working effectively in partnership to improve bus services in places such as Birmingham, Brighton and Oxford.
My hon. Friend the Member for Hove (Mike Weatherley) and I are lucky in having good bus services in our area. I too pay tribute to Roger French, who has been most effective in driving up bus patronage. He has shown that it can work and that the moaning Minnies who say that bus patronage is going into decline are wrong, as the examples of Brighton, Hove and other places prove. My hon. Friend complained about the effective monopoly that operates in Brighton and Hove and the difficulties faced by the Big Lemon service; he clearly wants to give the Big Lemon aid in some form. The monopoly of which he complains is not terribly different from that which the hon. Members for Hartlepool and for Blackley and Broughton complained about. One operator having an 85% to 90% market share inevitably makes it difficult for other companies to enter the market, and it can be difficult to challenge. My hon. Friend is right to say that the cost of fuel does not relate to the route on which it is used and that differential pricing is clearly a result of competition along those routes. The absence of competition clearly enables Brighton and Hove to charge a higher rate for its bus services. That is a striking example, but I
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shall ask my officials to ensure that the entire report of our debate is passed to the Competition Commission so that it can see what has been said and take it into account, albeit quite late in its deliberations.
I want to encourage more of that sort of partnership activity so that bus passengers get the services that they deserve and expect. More partnerships need to tackle punctuality, which is the No. 1 priority for passengers and which can be compromised by any number of issues, from road works to poor planning. It is not clear whether the 81% punctuality figure referred to by the hon. Member for Hartlepool was the result of a failure of the bus company or of, for example, congestion, which is a problem for the local authority. Punctuality is not a matter only for the bus companies; there is also a local authority aspect. That demonstrates the need for authorities to be fully involved and to work sensibly with bus companies in their areas.
The Government are looking for operators and local authorities to work in partnership, sharing punctuality and traffic management data to benchmark and improve performance. To facilitate this, a significant number of Vehicle and Operator Services Agency examiners are being trained to engage proactively with operators and local transport authorities to ensure that proper procedures and lines of communication are in place. That new approach is being introduced gradually and has been in place in the north-west since June. I assure hon. Members that traffic commissioners will continue to take effective enforcement action when performance is poor, and that any lessons learned from the north-west will be absorbed before full roll-out takes place. The hon. Member for Hartlepool may want to contact his local traffic commissioner if he is concerned about punctuality in his area.
As the hon. Member for Blackley and Broughton said, another important concern for passengers is integration, especially in fares and ticketing. I share his view that what he described as a simple fare and ticketing structure, with through-ticketing, can be effective in driving up passenger numbers. I absolutely agree and the Department is focusing on that aspect. My vision is of seamless end-to-end journeys, with tickets being available at a decent price and being valid on all services in a city, not only those of the dominant operator.
I shall continue to encourage the development of integrated multi-operator ticketing schemes, and my officials are actively engaged with the Competition Commission and bus operators in helping to remove barriers to their successful implementation. I firmly believe that bus tickets should be valid with more than one operator, but they should also be valid over much wider areas and easy to use. That will be of clear benefit to passengers. That is why I am committed, with operators and public sector bodies, to delivering the infrastructure necessary to enable most public transport journeys to be undertaken using smart ticketing by December 2014.
In many places, including in Greater Manchester and other large metropolitan areas, smart ticketing is already being introduced by local authorities and major national bus operators. It is fuelled by the smartcard incentive offered by the Government through the bus service operators grant and other pump-priming schemes that we have offered since the election. The hon. Member for Blackley and Broughton referred to the use of BSOG, saying that there was a better way of targeting it. If I
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understand him correctly, he believes that it may be more effective to hand it to local authorities to be used for general transport uses. However, it is difficult to square the complaint that the money being made available for buses is diminishing with the argument that what is available should be deployed for wider transport purposes.
Graham Stringer: I apologise to the Minister if I did not make my position clear. I suggested handing the money to PTEs and local transport authorities, not for general transport use but for the targeted improvement of bus services. It should be used to help particular bus services, not for other transport schemes.
Norman Baker: I am grateful to the hon. Gentleman for that clarification; he wants the money to be ring-fenced for bus services.
My right hon. Friend the Secretary of State has asked me to initiate a review of BSOG to see whether it is deployed to the best advantage. As far as possible, our time scale is designed to coincide with the Competition Commission report, so that if changes are necessary to the landscape of the industry or to that form of financial help, things could be combined at that stage. To that end, I have been in discussion with the industry and local authorities to hear their aspirations and views on the matter. I shall try to come up with a solution that is satisfactory for both parties—I shall then go on to deal with the Israel-Palestine problem. I hope that we might make some progress. It is in the interests of local authorities and bus operators to come to a sensible arrangement on BSOG.
We understand that good bus services can contribute to both of the Government’s key transport priorities—creating growth and cutting carbon emissions. By providing an attractive alternative to the car, not only can we cut carbon but we can unclog the congestion that chokes off our local economies. However, it must be remembered that we also have to deal with the budget deficit.
I do not want this to be a sterile debate—a phrase used by the hon. Member for Blackley and Broughton—about why we are where we are, but I have to respond to the comments of the hon. Member for Denton and Reddish, the Opposition spokesman. It would have been helpful if he and his colleagues had acknowledged some responsibility for the financial situation in which we find ourselves, rather than pretending that the cuts are somehow malicious and optional, and could have been avoided. That is not the case. I would like to think that we could work across the House to ensure that the impact on bus services is minimised in the constructive way suggested by the hon. Member for Blackley and Broughton.
I shall deal briefly with the three elements of funding referred to earlier. About 80% of bus services are run commercially. I will leave aside questions about the consequences of that for the market and for local government support. The money from the Department for Communities and Local Government is not relevant to those services. At present, local authorities rely on BSOG. The reduction in that grant was trailed long in advance, at the time of the spending review, and it will not take effect until April next year. There has been an 18-month lead in, and the cut was much less than the
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bus industry anticipated—and much less than Members of Parliament expected. At the time, the Confederation of Passenger Transport, which represents the bus industry, indicated that the cut was manageable and could be introduced without a diminution of services or general fare increases. That is what it said. It is important to point out that bus companies can take the BSOG arrangements in their stride. That should not, therefore, lead to cuts in services.
The basis of the reimbursement arrangements has not changed one iota. The hon. Gentleman will know that primary legislation stipulates that bus companies should be no better and no worse off from handling concessionary travel. That legislative requirement has not changed, and local authorities are required to reimburse bus companies accordingly. All that has happened is that the Department for Transport has issued some guidance to help local authorities to calculate how they should reimburse bus companies, and that, as Members will appreciate, is quite a complicated business. The ultimate test remains the same. If bus companies are unhappy with the reimbursement they have received from a local authority, it is open to them to appeal and their case will be handled independently.
One of the changes that I have made is to ensure that, if there is an appeal, it is possible for a local authority to win. Hitherto, when bus companies have appealed, their contribution has either been reduced or it has stayed the same. Now the appeal process can assess whether local authorities have had to pay too much and reduce the costs to them. That seems to be a much fairer way of dealing with those matters. The appeal process is open, fair and independent and can deal with any complaints that people have.
As for cuts in funding to local authorities, we all accept that local authorities have a challenging settlement. That is particularly the case, may I say for the benefit of the Member who has disappeared, for rural areas and for those services that are supported by local authority funding because they are not commercial to run. Having said that, the pattern of responses from local authorities across the country is varied. Unfortunately, some councils have taken something of an axe to local services, while others have made very few cuts. That is a matter for localism. It is up to local councils to exercise their increased freedom and to decide how they are going to spend their pot of money. We will increasingly see a situation in which one person living in an area will say, “Why is it that my county council has cut these bus services when the county council next door has not cut bus services at all?” That is a perfectly proper question to ask and one that we are trying to encourage in our drive towards localism.
Mr Andrew Turner: Will the Minister consider the wish of some elderly people, in areas where buses have been withdrawn altogether, to make a contribution? At present, the system is no buses, no pay.
Norman Baker: I well understand why my hon. Friend made that point, which has been made by a number of others. All I can say is that the Prime Minister has made it clear that the concessionary fares regime for local bus travel is not to be compromised and that requiring a charge would do just that. All I can undertake to do is to ensure that my hon. Friend’s comments are passed up the chain so that others are aware of that view.
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The hon. Member for Blackley and Broughton mentioned the monitoring of cuts. Let me assure him that we are taking steps to establish the picture. I have asked my officials to do so on a rolling basis. We are checking where services are being significantly cut and where they are being protected. Ultimately, it is a matter for localism, but we have to understand what is happening.
The hon. Gentleman failed to mention the introduction of a £560 million grant, a significant amount, from the local sustainable transport fund, which can be used to drive up the number of bus services in a particular area as part of an integrated package to create growth and cut carbon. That has been well received. If we take the total package of measures under the loose heading of sustainable travel, the £560 million represents an increase in funding compared with what was available under the previous Government. Therefore, despite the difficult economic circumstances and the budget cuts that have taken place, we have made an increase in funding, which has been well received by councils. Every council that could qualify under that scheme, with the exception of the Isles of Scilly, has applied for funding. We had a good first round. I am happy to say that, in Manchester, the key component bid was approved, which is a cycling project for the city. Moreover, a large project from Manchester has applied for a significant amount of money and it has been shortlisted for the final approval process. Therefore, steps are being taken to address the issue of sustainable transport more widely as well.
Graham Stringer: I am not sure whether the Minister is referring to the cross-city bus scheme in Greater Manchester. If he is, will he agree to have a meeting with me to discuss it, because the scheme is not as good as it could be and it is not well thought out?
Norman Baker: I am happy to say that I was referring to an entirely different amount of Government funding that may be forthcoming depending on the outcome as regards the local sustainable transport fund. However, I am happy to meet the hon. Gentleman to discuss the particular scheme. He just needs to contact my office to arrange a time.
I am interested that both Conservative and Labour Members have indicated unhappiness—perhaps for different reasons—with the present arrangements in the bus market. Their comments are useful and timely given the nature
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of the Competition Commission inquiry and its report. I will pass on to the commission a copy of the transcript of this debate from
Hansard
so that it is aware of the comments that Members have made. I will continue to study carefully the representations not just from hon. Members but from people outside to ensure that we proceed in a sensible way.
Graham Stringer: The Minister is being generous with his time. Both he and I have had a lot of time in this debate because it has not been as well attended as it might have been and that is because it clashed with the Transport Committee, so some of the hon. Members who would have been most interested in contributing are on duty elsewhere. Mr Streeter, I wonder whether we could tell Mr Speaker that this has happened and in future scheduling of these debates, we could look to avoid such clashes of obvious interest.
Norman Baker: That is not a matter for me, but the comments have been heard and will no doubt be passed on.
The hon. Member for Denton and Reddish mentioned the situation in London. He was advocating that the powers that are held by TFL might be extended to the rest of the country, which would be quite a change in the arrangements. I am not quite sure whether that is official Labour party policy. If it is, I am interested that he has put it forward today. Although his argument interests me, it is not quite the panacea that some people think. For example, when competition started in Manchester, we heard how there were queues of buses down the main street. I have to say that we get queues of buses in London, many of which are empty, because they have, in some cases, been overprovided, so similar problems arise with one operator—TFL. It is also the case that London buses are much more expensive to run overall and there is quite a cost to the public purse. Although I am not negating the argument in total, I am just making the point that counter-arguments have to be taken into account when we consider the landscape after the Competition Commission has reported.
To conclude, buses matter to this Government. My focus is on ensuring that the right funding and regulatory framework are in place to ensure that passengers receive the best possible service, and that taxpayers receive the best possible value from public expenditure.
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Care (Older People)
10.59 am
Tracey Crouch (Chatham and Aylesford) (Con): Thank you very much, Mr Streeter, for calling me to speak. It is a pleasure to serve under your chairmanship for, I believe, the first time, which is an honour.
I am grateful for the opportunity to hold this important Adjournment debate on care and services for older people. As part of the younger generation of MPs, I am proud to initiate a debate on a subject that I hope will be of interest not only to those who are in their third phase of life but to the next generation and to the generation after that who will one day find themselves in need of care and services. The statistics show that those of us who are in our thirties will fuel the ticking time bomb that is the ageing population, so it is incumbent on us to try to provide solutions to meet this challenge.
My initial interest in care for the elderly stemmed from my late grandmother, who worked in community care for much of her life. She strongly believed, as I do, that people want to live in their own home and community for as long as they can physically do so, and that the delivery of certain services can prevent people from entering residential care, which benefits both them and the state. It was with that in mind that I chose such a wide-ranging title for this debate. It is very easy to focus entirely on the issue of funding care, but there is more to looking after our older generation than the issue of how to pay for their care. Services for older people, whether delivered by volunteers, charities or local authorities, also need our attention if they are to be developed and improved.
I want to start, however, by expressing my very strong support for the campaign to appoint an older people’s Minister. I believe that if that post had a cross-departmental remit, as there is for equalities or for women and equalities, it would be of huge value to the Government. Some of the issues to which I will refer do not fall within the portfolio of the Minister of State, Department of Health, the hon. Member for Sutton and Cheam (Paul Burstow), and although I have the greatest respect and admiration for what he is doing to improve social care, he is not responsible or accountable for issues such as transport policy, local authority spending or the provision of financial products and education.
Having said that, if the Government maintain their opposition to the creation of another ministerial post, perhaps they would consider two other options. First, we could establish a new Cabinet Committee on older people’s issues that would effectively scrutinise emerging policies. Secondly, we could consider introducing a new test within regulatory impact assessments that would specifically examine the effect of proposals on the over-65s, as other tests do for other defined sectors of society. We need to pay much closer attention to the impact of national Government policies on the older generation, and I believe that a Minister for older people or a new Cabinet Committee would help to do that. However, there should also be a far greater assessment of the impact of policies at local level and I would welcome the Minister’s views on that matter when he responds to the debate.
The publication of the report of the Commission on Funding of Care and Support—the Dilnot report—was welcomed as a much-needed examination of how to
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fund care in the future. It is an accepted fact that we are all living longer and that our care needs are greater but that funding in social care has not increased by anywhere near enough to match our requirements. Significant demographic change is not something that should surprise us—it has been predicted for many years—yet the long-term care system has remained unreformed. Dilnot’s findings are very sensible, and hopefully they will achieve the better and fairer funding system that we need. However, there are some questions that arise from the report that I hope the Minister will address.
The Commission set out a reasonable timetable for the implementation of reforms. If we are to begin a new programme of funding, one that should perhaps be aligned to some of the other changes affecting future pensioners, we need to ensure that legislation is passed soon. It may be brazen for me to say so as a new MP, but Governments of all colours appear to be adept at pushing difficult issues into the long grass and waiting for the next Government to address them. We are seeing that at the moment on public sector pensions, which is another ticking time bomb issue that was ignored for decades; dealing with it now will cause more pain than if it had been dealt with sooner. We must not let the funding of social care become the next big but continuously ignored problem.
With that in mind, I should be grateful if the Minister provided us with an update on the public consultation on the Commission’s proposals and told us when he will publish the White Paper on social care. Does he expect a Bill on this issue to be included in the 2012 Queen’s Speech and will implementation of changes to funding begin in 2013, as per the Commission’s timetable? It would help all of those who are involved in delivering care and those people who are planning for their retirement if we received some clarification at the earliest opportunity about the timetable for implementing the Commission’s proposals.
The Dilnot report rightly focuses on the issue of financial advice, guidance and product availability. It is estimated that about 130,000 people enter residential care each year. Under the current system, around 41% of those people are self-funders—in other words those who have assets exceeding £23,250. The increase in the threshold will raise that figure to £100,000, but given how much wealth is tied up in fixed assets such as housing, that will not necessarily change the numbers dramatically.
I am concerned that self-funders deplete their assets paying for care and end up becoming reliant on local authorities for future care funding. Earlier this year, the Local Government Information Unit estimated that a quarter of all self-funders fall back on the state, costing local authorities up to £1 billion per year. The unit’s own report indicates that key decision makers in councils are unaware of the problem or underestimate its cost by 50%. I was shocked to read that 61% of authorities did not know how many self-funders they have or how many self-funders fall back on state funding.
While we need to improve local authorities’ understanding of funding liabilities, it is also clear that those who are in a position to fund themselves need much better financial advice and planning to mitigate the premature exhaustion of funds. Dilnot mentions the variety of financial products that are available, and I should say at this point that although I entered Parliament
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after working for an insurance provider I have no registered interest in the sector. Nevertheless, from my time in the industry, I think that it is fair to say that there is an appetite for providing products in this area, but the market is not as wide or as competitive as it could be.
I recently met representatives of Partnership, a provider of immediate needs annuities, which is a product to which Dilnot refers to in his report. Like the Dilnot report, Partnership made it very clear that there is a need for improved advice and education. Raising awareness of long-term care needs is essential, not least because people’s expectation is that when they get old they will be looked after for free. I am not convinced that the Dilnot report changes that expectation. Although care costs will be covered, the so-called “hotel costs” of food and board will not be covered, so we need to improve individuals’ understanding of what they will be required to fund themselves.
David Simpson (Upper Bann) (DUP): I thank the hon. Lady for giving way and I congratulate her on securing this very important debate. I have not read the Dilnot report, but I understand that it indicates that we may have to increase taxes or cut public spending to provide care for senior citizens. All right-thinking hon. Members will agree that it is paramount that we provide that care. I may have misunderstood the hon. Lady, but is she suggesting that we should consider having some form of insurance policy to provide for future care rather than increasing taxes or cutting public spending?
Tracey Crouch: I am suggesting that we need to look at various ways to fund care in future. I believe that a market exists for this type of care insurance. There are people who can afford to take out such insurance, but they do not necessarily know that there are products out there that could prevent them from having to fall back on the state. For example, they could afford to take out a premium. It may be a hefty premium at the outset, but it could prevent them from draining all the assets from their home and then relying on state funding for residential care. Such insurance policies are certainly an option that we should look at, and indeed Dilnot himself looks at the financial services sector as one that could relieve some of the burden on state funding.
Rehman Chishti (Gillingham and Rainham) (Con): I congratulate my hon. Friend on securing this debate. With regard to the use of resources, we have looked at taxation but we must also look at Medway council, which is the local authority that she and I share and which was rated “excellent” in its use of resources by the Department of Health. Rather than increasing taxation, local authorities have a key obligation to ensure that resources for the elderly are available and are funded. For example, in Medway there is free swimming for the over-60s, concessionary bus fares start at 9 am rather than 9.30 am, and home library services are available for the elderly, so this issue is not simply about increasing taxation; it is about making better use of resources. Medway has done so and it is rated “excellent” by the Department.
Tracey Crouch: Indeed. This issue is about using resources wisely. However, it is very well discussing how resources are used now, but the problem lies in the future. At the moment, one in six people are over 65, but by 2050 one in four people will be over 65, and resources will only be able to stretch so far.
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We spend a lot of time—rightly so—talking about financial education for young people, but I am enormously sympathetic to the suggestion that we should consider providing free financial health checks for people in their 50s and early 60s, possibly funded by using unclaimed assets in banks and insurance companies, and possibly delivered by financial advisers, charities or through the new money advice service. The provision of good quality care is an emotive matter for all involved. Standards of care, and indeed of care homes, differ dramatically, not just across the country but across constituencies. I recently visited Amherst Court in Chatham, a purpose-built Avante Care and Support home that supports residents with dementia. I was really impressed with what it offered and could tell that a lot of thought had gone into the building and the care provision. Such quality, however, has to be paid for, and unfortunately not all residential homes offer the same standards. When homes close, sometimes because the buildings are no longer fit for purpose, there can be uncertainty for residents and their families. It is that postcode lottery of care that we need to mitigate as best we can through the consideration of our long-term care requirements, which is why one policy that we need to get absolutely right for the benefit of our elders is the one on building more homes.
We have a massive housing shortage in the UK, but it is the older generation who have the least choice as to where they live. If they decide to downsize from their family home, they find that there are few bungalows or smaller houses being built. There are not many purpose-built retirement complexes, whether flats or houses, and any new development with social housing rarely, in my view, considers the needs of the elderly.
Jim Shannon (Strangford) (DUP): There is a great focus on residential homes, but does the hon. Lady feel, as I do, that there should be a greater focus on letting people stay in their own home? They feel more confident there, and it is cheaper. I think that if they had a choice, a great many people would rather be in their own home than in residential care.
Tracey Crouch: That is precisely my point, and I hope that it will be the key theme to emerge from my speech. Homes must provide good-quality care for people who have to go into residential care, but we need to try to keep people in their own home for as long as possible. My late grandmother certainly believed, as do I, that if good-quality services can be provided people will have to rely less on expensive residential care, and we should therefore provide a greater choice of available private homes. Not many bungalows are being built, because their capital value is not that of a seven-storey apartment block on the same land, which poses a problem for our older people, who then have the choice of staying in their family home, which is incredibly expensive to heat and often impractical, or of moving into residential care.
We want to rely less on the state to fund our residential care, and it seems logical to put greater emphasis on ensuring that new developments have as much of a duty to provide for older people as for other younger sectors of society. The issue of choice extends into the social housing sector too. In my constituency, a few areas of social housing are allocated to the over-55s, but there is a huge difference in the lifestyles of 55-year-olds and
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75-year-olds, which often leads to antisocial behaviour problems. I doubt that many people would consider 55 to be old, and therefore we perhaps ought to consider revising the age allocation up, to the over-65s.
I am pleased to say that Kent Housing Group, which is a partnership of developers and local authorities across the county, is looking precisely at housing for older people, and I look forward to seeing the outcomes of that work soon. However, I fundamentally believe that there is a role for the new homes bonus, which could incentivise authorities to build bungalows or complexes for older people and lead to much more housing choice for those who wish to stay out of residential care. That could be one policy that would have a positive impact on the welfare of older people, and it would also benefit the Treasury by keeping people out of the more expensive residential system.
The funding of social care might be the hardest single problem to overcome in this policy area, but we often forget that the services side is equally, if not more, important. Good delivery of services can prevent people from needing to enter residential care, or from staying in hospital longer than the average patient. We have some excellent charities and volunteers who provide an essential community service, and they can be vital to the health and well-being of the people they look after. As brilliant as individual schemes are, however, our overall community service for the elderly needs to be much better. I heard a heartbreaking story from the WRVS about a lady whose light bulbs broke. She was unable to fix them herself, and so for a month she sat in the dark. As she used her television for light, the electricity company noticed that her bills were unusually high, contacted her and discovered what the problem was. A WRVS buddy was sorted out, and her light bulbs were changed, but it took a month and a concerned utility worker to alert others before she was helped. In these modern days of instant connectivity, I find such isolation utterly unforgivable.
Penny Mordaunt (Portsmouth North) (Con): I congratulate my hon. Friend on securing this debate. Does she think that when we are considering Dilnot and the future funding of care, we need to look not just at the baseline and at our well-recognised ageing population, but at the unmet need to which she has just referred? In Portsmouth, for example, which is a fairly compact city, we have 1,000 people with dementia who have no access to services.
Tracey Crouch: We need to improve the services available for different people with different needs as they age. I am vice-chair of the all-party group on dementia, but I decided not to talk specifically about dementia today because I am hoping for a future opportunity to do so. There are, however, some very good services. They are very localised, but often people do not know about them. For example, the wife of a constituent of mine who happens to be a good friend, has just been diagnosed with dementia. He found out about the excellent Admiral Nurses service by word of mouth; there was no one there to signpost him to it. He could have been provided with a hugely valuable service at the outset of his wife’s diagnosis. We need fundamentally to improve services across the country.
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The Centre for Social Justice has produced a report, which I highly commend and which is entitled “Age of Opportunity: Transforming the lives of older people in poverty”. The report states that more than 1 million people aged 65 and over feel lonely, and a similar number feel trapped in their home. Charities can do so much but, as the CSJ says, there is a fundamental role for the state in preventing such isolation. So many older people are already known to statutory bodies, so providing the link to charities is essential. The CSJ recommends a greater role for neighbourhood policing teams, in engaging with extremely isolated older people, and the extended use of the increasing number of health visitors. Those are sound recommendations, which would help to deliver a new relationship between the voluntary and public sectors, and also reduce social isolation.
The authorities and partnership organisations to which I speak are desperate to provide good services, but they are hampered by finances. Although we have to be realistic about the need to make efficiency savings across various services in the short term, that needs to be balanced by an understanding that good-quality services can benefit public finances in the long term. Keeping retired people active, for example, keeps them healthy and less in need of acute primary care. Helping those nearing retirement to plan financially prevents them from draining their assets before falling back on the state. Providing company for people in social isolation not only enriches their lives but improves mental and physical well-being. Good-quality housing designed for the older generation provides greater choice for people wishing to remain in their communities. All those areas are interlinked, and better delivery could save the state a significant amount of money in the long term, but for the people who need care we must ensure that it is of good quality and sustainable for our ageing population, but also fairly funded.
If we are to improve the standard and delivery of care and services for older people we need to deal with this issue today, and I urge the Minister not to let it get kicked into the medium or long grass, and to consult on and implement reform of the system as soon as possible, for the benefit of this and future generations of pensioners.
11.19 am
Jack Dromey (Birmingham, Erdington) (Lab): It is a pleasure to serve under your chairmanship today, Mr Streeter. I congratulate the hon. Member for Chatham and Aylesford (Tracey Crouch), both on securing the debate and on the sincerity that shone through in her contribution. I strongly agree with a number of the points that she made.
During the summer, I addressed a meeting convened by the Birmingham branch of Carers UK—an outstanding organisation nationally and in Birmingham. What shone through was that there is no more noble cause than caring. At that meeting, 200 were present, including people who were cared for, carers and the organisations that support them. Deep concern was expressed on two fronts, the first of which relates to an issue that we are not here to debate: the cuts to benefits and the work being done by the Hardest Hit coalition, which includes the Royal National Institute of Blind People, Mencap and others. The second issue relates to the growing crisis in social care. In one sense, the crisis is the consequence of a good thing—people are living longer—but
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there are undoubtedly two major problems. One, I agree, is that successive Governments have failed to implement a long-term solution to the growing crisis in social care. The other is the impact being felt now of cuts in public expenditure. The Government are going too far too fast, and that is having an increasingly serious impact on the most vulnerable in our society.
Looking to the future, the Dilnot review offers a new dawn. Its recommendations have been widely welcomed across the political spectrum. As we move towards implementation, it is key that Dilnot is fully funded and that its recommendations in respect of eligibility are carried through, so that what happened in Birmingham—I will say more about that later—never happens again. I agree strongly with the hon. Member for Chatham and Aylesford that its recommendations must be acted on as soon as possible. She is right that there has been a propensity in the past to kick such issues into the long grass. That cannot be the case in future. I sense that, across the spectrum, there is a desire in the House for the Government to act as soon as possible. They will unquestionably have the full support of the Opposition if they do.
Margot James (Stourbridge) (Con): I share the hon. Gentleman’s enthusiasm for enacting the Dilnot report in law as soon as possible, but I have reservations about whether we should enact it in full as recommended. To give one example of my concern, does he agree that the £50,000 cap above which nobody should have to pay out of their own purse for long-term care or personal care at home might represent a large proportion of some people’s savings and assets, but that for home owners in the property-rich markets of the south-east, it might represent a small proportion? I am concerned on that and various other points. We should not rush but should subject Dilnot to proper critical investigation.
Jack Dromey: I accept that some of the issues that Dilnot identified will have to be worked through, but I think that there is a broad welcome for Dilnot ending what has caused so much grief in the past. People have had to sell their homes. People who spent their lives hoping to pass on wealth to their children have found in the twilight of their years that that is not possible. We can have an intelligent debate about the detail of Dilnot, but the cap is welcome. The sooner we implement Dilnot, the better. The problem is that, even if everyone gets a move on, that might be some years away, in which case we must address the here and now during the next two to three years.
WRVS has done excellent work in the field, and has said rightly that the Government must both address the adequacy of the funding that they have made available and ensure that it is wisely spent and properly monitored. The inescapable reality is that the consequences of the cuts to public expenditure are devastating for the most vulnerable in our society. To use the city that I represent as an example, Birmingham city council has cut £212 million from its budget this year—the largest cut in local government history. It cut £51 million from the social care budget, rising to £118 million over three years, and consequently sought to remove substantial need provision for 4,100 people. The council was prevented from going down that path only by a judicial review taken by four brave families, whose cases were heart-breaking.
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I have seen some of the consequences in my own experience. One example is an absolutely wonderful couple, Faith and Frank Bailey. Faith Bailey is terminally ill. She left hospital some months ago, so that she could spend the remainder of her time on earth with her husband. They are a devoted couple; it is wonderful to see them holding hands at the age of pushing 80. The problem was that when she left hospital, her night-time care was restricted to two nights a week. She struggled as a consequence, and the impact on her husband was devastating. He was becoming increasingly exhausted, and neither of them could cope. The situation was causing them great distress. I am pleased to say that they are now in the admirable New Oscott village, where they will be cared for properly. However, those decent people who built Birmingham and Britain looked forward, in the twilight of their years, to being together for the remainder of her time, and to see them suffer in such a way was heart-breaking.
This is not just about the human consequences. As the hon. Member for Chatham and Aylesford was right to highlight, it is also about the financial folly of failing to recognise that not investing might cost more in the medium to long term. The King’s Fund report charts what happens in social care as a result: the number of people admitted to hospital rises. I am sure that we have all seen that in our respective constituencies. I remember one example in the constituency next door to mine in Birmingham. A fine young man who was seriously assaulted spent 18 months in hospital as the consequence of a failure to provide a social care package. After he had spent just over 12 months in hospital, he was told that he could leave if an adequate social care package were provided for him, but because it was not, he stayed in hospital. He was desperate to go home and his family wanted him back, and it was costing the national health service £2,400 a week in net additional costs to support him. That cannot be right. The impact on the national health service is an issue.
To give another example from Birmingham, all parties supported building 10 centres, such as the admirable Perry Tree centre, across Birmingham to provide intermediate care as a bridge between leaving hospital and going back home or into a home. Perry Tree is outstanding, and the atmosphere is wonderful. However, sadly, no more centres will be built. That will mean bed blocking on a massive scale in the national health service.
Tracey Crouch: Is the hon. Gentleman aware of the report by the all-party group on dementia that highlights that issue specifically? Dementia patients are extending their stays on hospital wards because they cannot go straight back to their residential care homes, and it is costing the NHS about £20 billion a year. It is a massive issue. Intermediate provision must be considered more closely to alleviate that financial pressure on the NHS.
Mr Gary Streeter (in the Chair): Order. Before the hon. Gentleman responds to that point, I would like to say that five other colleagues are seeking to catch my eye and the wind-ups will begin at 12.10 pm. If colleagues can moderate their speeches, I would be most grateful.
Jack Dromey: Thank you, Mr Streeter.
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The work that the hon. Member for Chatham and Aylesford has done, together with the all-party group, is admirable. She is absolutely right to highlight the dilemma. Before I conclude, I will give one other example of the impact of what is happening in Birmingham. It is a combination of the cuts to big society organisations on the one hand and the impact on carers on the other. On big society organisations, the budget of Age Concern Kingstanding—my constituency is one of the 10 poorest in Britain, and Kingstanding is the poorest area in Erdington—is being cut. A particularly heart-breaking case concerns a group called Elders with Attitude. It has one co-ordinator and a range of volunteers. I remember the first time that I met them. They are inspirational. People were brought together around a table and told their story. One individual—another Frank—said he had had a terrible stroke and had thought that his life was over. The group meets twice a week and, in his words, it brought him back to life. His granddaughter, who was sitting alongside him, burst into tears and said, “My granddad used to just sit at home, looking at the wall. This has given him a fresh lease of life.” This is essentially a voluntary initiative and initiatives of that kind should be supported, not least because, as the hon. Lady has said, stimulating people is of the highest importance to their quality of life and, ultimately, to their not having to go back into a hospital.
I want to give one other example of the impact on carers. In Birmingham, thousands of carers are employed directly by the council. I remember meeting a group of 20 of them in July. They were women who had worked for 10, 15, 20 or 25 years. They were the kind of women who go the extra mile in the job that they do. I remember meeting one of them coming out of Sainsbury’s in Castle Vale the Easter before last. She had a bag of Easter eggs. I asked, “Who are those for?” She said, “Half a dozen people I care for.” I asked, “Who’s paying for it?” She said, “Oh, I am of course.” She was buying Easter eggs for people who would not otherwise get them. Such was her bond of love and affection for the people for whom she cared. Sadly, she and all the people like her are now going to see cuts. They earn typically £14,000 a year. They will see, under the proposed Birmingham contract, a cut of £4,000. That is absolutely devastating.
What I hope unites us here is the focus on the need for the new dawn to be realised and for all parties to work together to put in place Dilnot’s recommendations, and to do so as quickly as we possibly can. Crucially, however, it is about what happens in the meantime, because the hallmark of a civilised society is whether we care for the most vulnerable in our ranks.
11.33 am
Anne Marie Morris (Newton Abbot) (Con): This is an important issue and probably one of the most important topics that we as a Government and a Parliament will need to consider. On current estimates, the number of 85-year-olds will double by 2026, so it is a serious issue and I congratulate my hon. Friend the Member for Chatham and Aylesford (Tracey Crouch) on securing this timely debate.
Dilnot focused on the financial issues and found that the current system is not fit for purpose. I think that there is another issue in relation to quality. The Government
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clearly want to ensure that we have a system that, ultimately, is fair, affordable and sustainable. They want to invest in a system that will ensure that we have more care and support in the community, so that we can keep people in their own homes rather than force them into residential care as the only option. However, if we want that quality, we need to ensure that there is proper monitoring and proper regulation. Although I am not a great fan of over-regulation, we have to bear in mind in this particular argument that we are dealing with consumers who are often not very vocal or not able to be very vocal. Therefore, it cannot necessarily be assumed that the way in which a market would normally self-regulate will be the way in which this market will regulate itself.
My comments are based on conversations I have had with the Care Quality Commission, a number of local authorities and private providers. I have a long-term interest in the issue. I was a county councillor and chairman of the health overview and scrutiny committee, and in Devon we currently have the largest number of retired individuals in the country. I will turn first to residential care, then to domiciliary care, look at how they are regulated and monitored, and raise some concerns that need to be addressed by the Minister.
Residential care is commissioned by the local authority. Although provision is monitored by the CQC, the commissioners, per se, are not. I have a concern about that, because it is the local authorities that are determining whether to commission in their own homes—where one might argue that they have a conflict of interest—or in the private sector. What I have found particularly disturbing is the price that is paid for each of these contracts. I hear that local authorities—I give this by way of an example—are paying £700 in the public sector, compared with £350 for a private provider. Whatever the savings might be, there is no way that, for half the price, the same quality of care can be provided.
There is no standardisation of contract in the current system. Although choice is clearly important, I think that, for a consumer who has a difficult time getting their voice heard, it is difficult to ensure that they get consistently good quality. If we are to ensure that there is real choice, genuine quality and fair pricing, we need to look seriously at how the commissioning bodies—the local authorities—might be monitored and regulated in future. I believe that the Government have looked at HealthWatch as a possible source. My concern about HealthWatch is that, first, it does not yet exist and, secondly, it seems to have been conceived as a reactive rather than proactive body.
The provider of residential care is, principally, either the local authority or the private home, and here CQC does monitor. Although the intention was to set out a new framework that, rightly, was more outcome-focused than process-focused, the challenge for the care homes is to comply with this new care quality regulation. I have talked to a number of homes and the majority have indicated that they expected a light touch from Government. They expected that they would be able to provide evidence of compliance and that there would not be many onerous visits. I hear that there are many visits, which surprises them and surprises me. They are saying that it is taking up an awful lot of administrative time. Given that, as a Government, we are committed to cutting red tape, something is clearly not working somewhere. The position needs to be reviewed. Clearly,
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it is important, because we need to guarantee quality, but let us find a way of doing it better. The other concern that homes have expressed to me is that, with the new outcome framework, there is no guidance as to how to meet the new requirements. In the old days, the CQC used to provide guidance, but now it does not see it as within its remit.
Domiciliary care is, perhaps, one of the most tragic and most important areas of concern. Commissioning of domiciliary care is done by local authorities. Here again, there is no monitoring and, I understand, no regulator; I would love to hear the Minister tell me that I am wrong. I cannot therefore see how we can ensure that our local authorities are really making sensible, informed choices about how they award contracts for domiciliary care. Indeed, I have heard stories of local authorities trying to take out costs and to subcontract their role to lead providers, who then take on the role of subcontracting further to find individuals and more providers of domiciliary care. In all that process, the quality control and the quality test seem to be lacking. I have talked to providers in the private sector who have seen some of what goes on, and the stories are horrifying.
Let me give one example. A provider indicated to me that she had gone into the home of an elderly person who was having to be put on to the toilet. The lady was literally sitting in her chair eating her sandwich lunch and the providers came in and lifted her up in a way that is apparently not appropriate or correct from a nursing perspective. They put her on the toilet, went out, smoked a cigarette and came back in. The sandwich was still in that poor old lady’s mouth. They then took her and stuck her back in her chair. That does nothing for the dignity of the older person.
The provider of domiciliary care is sometimes the local authority but, increasingly, it is the private sector. Unlike the residential end of care, there is no Care Quality Commission monitoring domiciliary care and I understand that there are also no spot checks. Although there is an obligation on local authorities to have a watching brief, what I am hearing anecdotally shows that very little of that is actually happening.
The concept of e-monitoring was introduced to try to assist with that. The idea behind e-monitoring is that, when someone goes in to provide care in a home, they pick up the phone in the individual’s residence and log in. When they have finished dealing with the client, they log in again through the telephone. However, the reality is that once someone has logged in, frankly, they can do almost anything. As in the case I mentioned, that could be putting a lady on the toilet and then disappearing outside and having a cigarette. Therefore, e-monitoring is not an effective way forward. The other thing happening is that, because there is no monitoring of quality, cost rules and consequently quality are going down.
I shall make this a very short contribution. In conclusion, the Minister should carefully consider having a regulator to deal with the monitoring process for commissioners both of residential and domiciliary care. In addition, certainly with regard to domiciliary care, some urgent and immediate action needs to be taken to examine current practice.
11.41 am
Alison McGovern (Wirral South) (Lab):
I congratulate all hon. Members who have spoken so far, especially the hon. Member for Chatham and Aylesford (Tracey Crouch).
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I feel sure that her grandmother would be incredibly proud of her today. Her contribution was important and she made many points that I wholeheartedly support.
I want to follow on from the comments of the hon. Member for Newton Abbot (Anne Marie Morris), who articulated part of the problem very well. Although we have focused on Dilnot, the review and funding, I argue alongside her that we cannot talk about money without talking about what people get for that money. What people are prepared to pay surely depends on the quality of care that they are going to get.
Rehman Chishti: The hon. Lady makes a point about resources. A crucial issue linked to resources is that of the principle and presumption of early intervention and prevention in improving the quality of care for the elderly.
Alison McGovern: I agree. In a moment, I will talk about some of the problems that local authorities are currently facing. They have had bigger cuts than any part of Government in Whitehall. Although I wholeheartedly agree with what the hon. Gentleman said, it is a challenge to all of us to support local authorities in that prevention role.
The hon. Member for Newton Abbot rightly made the point that quality matters above all else. Some of the examples given by her and others were compelling in terms of the moral requirement on us all to stand up for the dignity of older people. I firmly believe that, when we hear examples such as the one just given, we know what is happening is wrong. I have heard examples from my constituents: for example, older people are told that a “breakfast” visit to get them up can take place any time between 6 am and 11.30 am, regardless of their personal preference. That is not good enough and is an offence to somebody who prior to needing care was independent and perfectly capable of looking after themselves. We all know that instinctively.
The question is: how do we get from where we are to where we would like to be? I want briefly to make two points on the subject. First, I shall mention enforcement and some of the professional development issues. Leading on from that, I shall talk about the market for care provision and why there is an interesting and difficult problem that the Government will have to tackle regarding the market for providing care. I agree with many of the points made by the hon. Member for Newton Abbot about some of the anomalies surrounding enforcement. I repeat that local authorities are having to struggle with the fact that, if they were a Government Department, they would be experiencing the biggest cuts in Whitehall. That makes the job of having responsibility for the care of older people, which is a fixed cost, very difficult.
Margot James: Does the hon. Lady agree that, when we consider expenditure, part of the problem is that, over the past 10 years, the increase in local authority budgets for adult and social care has been minimal compared with the increase in many other local authority budgets, particularly that for children and younger people’s services, to name but one? With adult and social care, we are starting from a base that is already very low, which is one of the problems and is why local authorities are struggling so much.
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Alison McGovern: I do not know the statistics on that, so I am hesitant to comment. If the hon. Lady says that that is the situation, of course, I believe her. However, I do not know off the top of my head whether that is the case comparatively. I will make some comparisons with children’s services because there are some interesting parallels. If, as she mentions, the budget for children’s services has increased, I can only think that that is a good thing given the importance of child protection and youth services. I live in hope that we can move towards having better funding for older people’s services in the near future.
I return to the point I was making on enforcement. We have all had cases—since I was elected, I have had many cases—of people coming to surgeries who feel that the care provided is not sufficient. There must be a clear, easy process to follow for relatives or those concerned about a poor standard of care. At the moment, the system is confused. I will not repeat what has already been said, but that is my conclusion. If someone feels that the quality of care they have received is poor, the process they have to go through is not easy.
Some of the issues raised by constituents at my surgery have stemmed from the absence of professional development for those providing care. I have seen extremely good quality examples of both residential accommodation for older people and care provided in people’s homes but, by and large, the work force who provide that care are underpaid and neglected. It has to be said that that work force are mainly women who often have not received much workplace training over many years and are some of the lowest paid people in our society. Frankly, it does not do much for the dignity of older people that the job of looking after them is one of the lowest paid and least respected in our society. It is about time that we put that right. We should make it clear that looking after older people and protecting the dignity of our society is an important job. We ought to pay those people a decent wage and give them the training and support that they deserve.
The example of e-monitoring has been mentioned. In my surgery, I have been given examples of that. People are given time to look after people but not enough time to travel between appointments, and they are for ever catching up after themselves. By and large, the whole system is set up to make a profit for the company concerned, rather than to think first about the quality of service for the person receiving care.
On the profit issue, I am not an unreconstructed left-winger. [ Interruption. ] To the chagrin of some, I am not one who thinks that the profit motive has no place at all in public services. However, there is a structural issue here. We have a large amount of competition for the provision of care. Price competition, in an industry where greater profit cannot be extracted through the use of technology—this is a person-to-person service with a one-to-one relationship with the person, so we cannot invest in technology to make more profit—means that wages are the only expenditure that can be driven down. In an environment where the work of care is seen as low, wages have been driven down. There has to be a response from the Government on the structure of the industry, which effectively means that wages have been pushed down lower and lower, and people’s skills and time are not being invested in.
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I draw an analogy with the child care industry. In the 1980s and early 1990s we had a similar situation. Frankly, those involved in child care were seen as the lowest of the low and were paid as little as humanly possible to look after children. Those days are over now. By and large, those who look after children are now paid a bit better and are likely to have qualifications. Can we not set ourselves the challenge of better wages and a better skill level for those working in care for older people? That would meet the aspirations of the hon. Members who have spoken so far and would do a great deal to improve the quality of care. That would help us to deal with some of the funding issues. People would feel that what they paid for was worth having and worth investing in. Hopefully, it would also meet the challenge set to me earlier and ensure that the case is made to local authorities to pay for quality.
In conclusion, I agree with the comments that have been made so far. There has to be attention to quality and to standards, and an ability to uphold those standards. There is a problem, however, in the market for care that is forcing a driving down of the quality, and it could be dealt with.
11.52 am
Tony Baldry (Banbury) (Con): I am definitely going to send for a subscription to “Elders With Attitude”. It sounds like a very commendable organisation.
An aspect of public policy that is far too little debated is the consequences of us all increasingly living with an ageing population. It was about two years after I was first elected that I heard the word “Alzheimer’s”, but if I go around a nursing home in my constituency now, pretty much everyone there is suffering from age-related dementia of some sort. In my brief comments, I shall relate that to the problem of delayed discharge, or what is known as bed blocking. That is where the system needs improving.
Money has tended to be allocated to local authorities based on population and a multiplier of deprivation indexes, but I am not sure that those formulae take sufficient account of the ageing population. When a person is old, their requirements for care and support do not depend on their social background, but that is not sufficiently recognised in the formula. In medicine, at one end people stay for ever-shorter periods of time in hospital—one can now do such things as hysterectomies by keyhole surgery, which was impossible a few years ago, so some people go into hospital and come out very quickly—but at the other end, some people go into hospital and stay longer; largely, they do not need to be there, but an appropriate place cannot be found for them.
I understood, for example in domiciliary care, that the introduction of individual budgets would give individuals more control over their care provision. One hoped that that would lead to more providers coming into the system, but I see no evidence of that in Oxfordshire. Likewise, I do not see, and would be very surprised to see, substantial, or indeed any, increase in nursing home provision on what there was 10 years ago.
If one thinks about it and visits nursing homes, one sees that the point about wages is a good one. In the past decade, most nursing homes in my patch have managed by employing—I mean this in no pejorative sense; it is just the reality—Filipinos and paying them
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the minimum wage. At the end of their training, they have then gone on to find work in the NHS, and even though, with the cap on non-EU migration, that has become increasingly difficult, nursing home providers find themselves squeezed. On the one hand, the amount of money they receive from local authorities for placements is getting ever tighter; on the other hand, their wage bills and regulatory costs are becoming ever greater. There is little incentive for existing nursing home providers to increase the size or the provision in their own nursing homes, and there is certainly very little incentive for any new providers to come into the marketplace. There is a certain amount that the NHS or primary care trusts can do to fund intermediate care beds, but there is a limit to that and the cost still falls on the NHS.
We need to take a much better grip. I am not entirely confident about who has a grip on domiciliary care and is trying to ensure that there are sufficient providers of day care for those who need it. If we are to avoid ever-increasing fractiousness between the NHS and the social service providers over the thorny issue of delayed discharge, we will have to give more thought to how to ensure that there are sufficient places in the nursing home and residential care sector.
I agree with the point made by the hon. Member for Wirral South (Alison McGovern) about enhancing the professionalism of care staff. Those who provide domiciliary care in residential care homes provide a very important personal service. We should look at ways to enhance their reputation and status and encourage more colleges to offer HNDs and other courses for care staff. We will require more people in care services in the future, so it needs to be seen as an honourable occupation to which people aspire and where there are the highest standards of professionalism. There are important questions that need to be answered about the funding for local authorities for social care and how, with that funding, they are able to support both sufficient nursing home places and sufficient domiciliary care places.
For some time, many nursing homes were able to cross-subsidise, using the fees from private residents to subsidise the fees from local authorities. What I see in my patch is, effectively, two types of nursing home provision. Some nursing homes are now almost entirely privately paid; they are very expensive and provide a very good service. That means, however, that the only source of income for those nursing homes that provide residential care for patients funded by local authorities is the money that they receive from local authorities. They are stretched extremely tight to deliver a good service and have little incentive to expand that service. If we do not get our policies right, all that will happen is that the NHS will spend significant sums of money keeping in hospital people who no longer need to be in hospital and who could be discharged if there were places to discharge them to safely and properly.
11.59 am
Gareth Johnson (Dartford) (Con): I congratulate my hon. Friend the Member for Chatham and Aylesford (Tracey Crouch) on securing the debate. She feels passionately about the subject and made a robust and fair-minded speech.
Care and services for older people are of increasing importance, and I agree with the sentiments already expressed about how we must deal with the issue sooner
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rather than later. It is a growing mushroom that must be dealt with fairly soon because the population in this country is getting older, which is placing strains on our systems. That is a good and positive thing—too often we hear about longevity in a negative way, but it is a marvellous tribute to medical science that we have people living longer than they previously did—but greater reliance is placed on our care home provision and local authorities have to adapt to the changes in pressure placed on them as a consequence. I have disagreed publicly with my local authority, Kent county council, on decisions it has made about care home provision in my constituency of Dartford.
I accept that the future lies in a public-private partnership in care provision throughout the country. The Government face a dilemma: they cannot afford indefinite free care home provision and they do not want to penalise those who have saved for their retirement. Free care home provision for all without tax rises is completely unaffordable—I agree with my hon. Friend the Member for Banbury (Tony Baldry) about that. Such rises, especially in the current climate, would have a huge negative impact on the finances of this country. Equally, we should not be punishing prudence and forcing the elderly to sell their homes to pay for care. Prudence should be rewarded by the state, not punished.
Health and safety legislation has often added to the cost of care provision. The apparent necessity for all rooms in a care home to have en suite facilities was used as part of a reason to close care homes in my constituency, yet residents in those care homes would say that what they want is their home preserved and not the health and safety considerations met. I recently visited Emily Court care home in Wilmington in my constituency. The residents echoed the sentiments I have heard in every care home I have ever gone to: they like the facilities, but what is most important to them is that it is their home. That drives the affinity they have for the place.
What has staggered me since the upheaval in my area with the closure of care homes is how easy it is in this country to close them. I find it incredible that no real security of tenure exists for residents in a care home. Travellers have some rights over land they settle on—that is obviously an argument for a different time—and squatters have rights over empty properties that they occupy, yet residents in care homes can be moved almost on a whim. That might need further investigation, because the consultation exercises before any care home closes concentrate a bit too much on the bricks and mortar involved and not enough on the people.
Alison McGovern: The hon. Gentleman says what a bugbear health and safety legislation was and then mentioned the lack of security of tenure for residents. I find it difficult to know whether he thinks we need more or less regulation, legislation or sub-legislative guidance. What mechanism does he think is best to improve some of the standards?
Gareth Johnson:
The two issues are separate. When Southern Cross went bankrupt, for example, it blamed in part the increase in health and safety legislation, some of which was sensible and some completely unnecessary. Ensuring that people who reside at care homes have some rights over the land that they are
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living on is a separate matter. I do not see that as placing increased burdens on those running the care homes; it simply gives the individual residents the same rights that we would have if we leased a flat. Those living in residential care homes, who are perhaps among the most vulnerable in society, should surely have that extra protection. The challenge for the Government is to find a solution that is both affordable and fair—affordable, so that the Government can cope with the ageing population and the increasing demand on care homes, and fair, so that the elderly are not forced to sell their homes and lose out because of their earlier, sensible financial decisions.
Esther McVey (Wirral West) (Con): I am delighted to take part in the debate, which echoes the conversation I had earlier in the week with the residents of Hoylebank in West Kirby about the diverse and huge issues involved. Those residents believe that they are part of an invisible generation. They would like to be visible and, like my hon. Friend the Member for Chatham and Aylesford, they are calling for a Minister for the elderly to go through everything thoroughly.
Gareth Johnson: I am sure that the residents in Hoylebank have similar difficulties to many residents all around the country: they are often screaming loudly and not being heard by anyone. It is incumbent on Government to listen to the messages we hear from care homes and to see where we can make improvements to their rights to ensure that their homes are protected as well as possible. We need to find a more sensible balance than is currently in place. Care homes provide a vital link in the health chain. The hon. Member for Birmingham, Erdington (Jack Dromey), who is not now in the Chamber, made the important point that if we reduce the availability of care home provision, the amount of so-called bed blocking in hospitals will inevitably increase, with all the extra difficulties and costs arising.
We all want to facilitate elderly people remaining in their homes as much as possible, but the ideal should be about choice and not about forcing people who want to go into a care home to stay at home, or forcing people who want to remain in their own homes to go into care. Their individual choice should be paramount, and their opinion should count for a great deal. I therefore look forward to the spring, when the Government intend to announce their intentions regarding the Dilnot report and what happens thereafter. I look forward to finding a balance that works for the whole of the older generation.
12.7 pm
Emily Thornberry (Islington South and Finsbury) (Lab): It is a great pleasure to serve under your chairmanship today, Mrs Main. I congratulate the hon. Member for Chatham and Aylesford (Tracey Crouch) on securing this hugely important debate.
The terrible consequences of the massive spending cuts are becoming clearer and clearer. They focus in particular on underfunding in the social care system, which is getting to breaking point. Earlier I shared with the Minister my research on the effect of the cuts on local authorities and on adult social care. I am sure he is pleased to hear that I am doing further research.
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My preliminary research, which I put together with the House of Commons Library and which is a clarification or an interpretation of data published by the Department for Communities and Local Government, shows £1.3 billion in real-terms cuts in local authority spending on social care in both 2010-11 and 2011-12. For the oldest and most vulnerable, the picture is especially dire, with real-terms spending on social care for the over-65s lower than in 2009-10 by £60 million in 2010-11 and £1.3 billion in 2011-12. The Association of Directors of Adult Social Services has indicated that demographic pressures from an ageing population, physical disabilities and learning disabilities have placed a £425 million squeeze on social care funding in 2010-11, with fewer than half of local authorities allocating the funds to cover the bill. I believe that the Department of Health continues not to be able to provide a borough-by-borough analysis of adult social care funding, so when I have my full report available next week, I assure the Minister that I will let him have a copy.
As a consequence, care packages and care services are being renegotiated, with new and increased charges being imposed. Others are being denied state-funded care altogether, because of changing eligibility criteria. A recent report from Age UK warned that of 2 million older people in England with care-related needs, 800,000 receive no formal support from public or private sector agencies. With spending cuts, that number is likely to top more than 1 million between 2012 and 2014. The evidence is piling up.
The Minister may have heard yesterday’s “You and Yours” programme on the BBC, in which the UK Homecare Association gave an analysis of its recent research that showed a pattern of care in the home being taken away from people. In the cases that it looked at, 82% of councils were reducing the amount of time that people have with carers in their home, there was a widespread increase in very short visits—for example, the notorious 15-minute visits—75% of councils were reducing the number of visits per week, and 50% were trying to reduce the money spent on an hour of care. Fewer safety checks were being made on older people at home, there was a widespread reduction in the time allowed for bathing and washing, and social services were being cut completely. They include a range of services that are not personal care, but help people to stay in their home—vital services such as help with laundry and shopping and decisions about finances. With the cutbacks in all those services, we are heading for crisis.
In making the changes, councils are often failing to consult. My hon. Friend the Member for Birmingham, Erdington (Jack Dromey) referred to legal challenges resulting from lack of consultation. I believe that the number of judicial review cases has increased by 45%. The renegotiation of fees for residential care provision by councils is also putting great pressure on the care home market. That was not the only reason for the collapse of Southern Cross, but it was certainly one of the reasons.
I welcome the Minister’s statement today on Southern Cross, and I will take the opportunity to ask him three questions arising from it. First, has he established who all the landlords are? Secondly, he said that there is an expectation of a formal transfer of the care homes, with the second wave by the end of October. That expectation
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sounds similar to aspiration. How confident is he that that will happen? The third and most important question relates to the reference the hon. Member for Dartford (Gareth Johnson) made to residents’ rights, including their right to know what their future is and where they will live and not have their care home closed. Can the Minister help us by saying whether any Southern Cross homes are likely to be closed; if so, how many and at what stage will residents be told? My fear is that they will be the last to know.
Those are not the only continuing problems. There is a continuing and exacerbated postcode lottery for who gets what services. Tower Hamlets spends five times as much on each older resident as Cornwall, and such disparity leads to unfairness. Our social care system is definitely creaking at the seams.
The good news concerns the Dilnot commission. The Opposition have made it clear that we will work with the Government to find a solution to long-term funding of care based on the Dilnot recommendations, but funding is not the only matter dealt with in the recommendations of Dilnot and the Law Commission. They include less complex matters that may be less financially challenging, such as recommendations to improve available information, to support carers, and to enable portability of care. We want to ensure that that happens, and quickly. Will the Minister assure us that there will be legislation during the next session of Parliament to deal with the Dilnot recommendations? We all agree that we must get on with this.
We must also ensure that the present strains on the care system are dealt with. The concern is that even if we find a solution for the long-term funding of care, we may look at our care system in a few years, and wonder what is left. That is a genuine and continuing concern for all those involved in the sector. I understand that the business in the main Chamber includes an amendment to the Health and Social Care Bill which may help to regulate providers such as Southern Cross, but we have only 10 hours to discuss more than 1,000 amendments, so perhaps the Minister will take this opportunity to explain whether the Bill has been sufficiently changed to ensure that we will be able properly to regulate social care providers, particularly providers of residential care to elderly people, and whether the legislation will be able to help with that.
I welcome the partnership on dignity and care that has been established by the NHS Confederation, Age UK and the Local Government Group to look at standards of health and social care. I agree with many of the contributions that have been made today. There is concern not only about the funding of care, but about the standard of care. I listened to the passionate speeches by many hon. Members about the dreadful way in which some people have been treated. It is clearly hugely important to keep standards are high as possible. I look forward to the report of the Equality and Human Rights Commission, which I understand will be issued in the next few months.
That brings us back to the cuts. I do not want to sound like a broken record, but I take this opportunity again to warn the Minister that if the Government continue to cut local government funding as they are doing, the biggest area of discretionary spend, which is adult social care, will continue to be cut. The much vaunted additional £2 billion that the Minister says is
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available for adult social care is simply not sufficient. He must not continue to close his eyes to the situation. I know that he feels passionately about the issue, as do we all, but we must be realistic and more must be done to protect the elderly. We must put more money and more investment into social care and ensure that it is not cut to the bone.
12.16 pm
The Minister of State, Department of Health (Paul Burstow): It is a pleasure to serve under your chairmanship, Mrs Main. I congratulate my hon. Friend the Member for Chatham and Aylesford (Tracey Crouch) on securing the debate. The speeches and interventions have demonstrated why we need Back Benchers such as my hon. Friend to raise such subjects, which Parliament has not debated enough over the past 10 or 15 years. That may be one reason why, as several hon. Members have said, social care has historically been the poor relation of the NHS and inadequately funded relative to the NHS.
We should not delude ourselves that many of the problems and pressures that have been amply and passionately described in our debate have emerged in the last 12 months. Indeed, if one takes a run through Hansard reports of the past 30 or 40 years, one sees that they have been raised previously. I do not say that to excuse the obligation that rests with the present Government to address the issues, but I ask hon. Members to bear in mind the fact that we should come to the debate with humility and recognition that past responsibilities were perhaps not fully met.
Attention was drawn to the fact that by 2033 almost a quarter of the population will be over 65. Indeed, some parts of the country have already reached that proportion—my hon. Friend the Member for Newton Abbot (Anne Marie Morris) referred to the situation in Devon. I agree entirely with the point made by my hon. Friend the Member for Dartford (Gareth Johnson) that all too often in these debates we use the language of time bombs and consternation instead of celebrating not just the successes of our health and social care system in supporting vulnerable and frail people, but the contribution that, in turn, older people make in our society, often to their fellow citizens. We should do more of that and I want to make sure that we do.
It is worth saying that if the NHS and social care are to cope, some systems and processes need to change; I will say more about that shortly, but it is also necessary for older people themselves and their families and carers to call the shots about the decisions that affect their lives, so that the system can provide the care that people want, need and feel comfortable with. The whole agenda of personalising services so that people have the resources to be able to make choices and to be in control of those services is important, and the Government are determined to turn that ambition into reality.
Let me say something about the coalition’s commitment to see health and social care provided in ways that achieve better outcomes and deliver more personalised services. A thread running through the comments from hon. Members during the debate is the role of integration, which is a key element in realising better outcomes and better quality in the system. Integration is about care services working together in the interests of people and
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the local populations they serve, and about learning from one another’s experience and ending up with care and support that is of higher quality, safer, and more comforting than ever before.
We also need a sea change in the nature of the working relationships at local level, so that closer working relationships between local authorities and the NHS become the norm rather than the exception. That is one reason why we have made extra funding available. We can debate and will continue to debate in the House whether that funding is adequate, and I have no illusions about the challenges facing local authorities, but the Government have done much to ensure that local authorities have the resources to address them.
NHS funding that goes directly to local authorities for measures that support social care and benefit health will rise to £1 billion per year by 2014-2015. It is the first time that any Government have made such a significant transfer of resources. This year, £650 million has been allocated to PCTs and transferred to local authorities to invest in social care services. That will benefit health and have an overall impact on well-being. I am under no illusions about the interdependencies between health and social care services to which many hon. Members have alluded during the debate. One must look at both parts of the system to understand and mitigate the impact.
I look forward, as ever, to the next chapter of the report on social care by the hon. Member for Islington South and Finsbury (Emily Thornberry). From what I see, however, and from discussions I have had, I know that the picture is far from clear; it is mixed and different authorities are adopting different approaches to the challenges they face in meeting the Government’s deficit reduction targets. Some local authorities are being smart in the ways they confront those challenges and are looking at using telecare and telemedicine, investing in relevant services, and redirecting resources into earlier interventions that can make a big difference up stream. Other authorities—the ones we tend to hear about in debates such as this—are adopting more of a slash and burn approach and tightening eligibility without thinking through the consequences of such decisions and the impact on services. We need to challenge such actions not only in the Chamber but in our constituencies as constituency MPs. These pressures on the system are not new and we have seen such features for many years. Indeed, the vast majority of local authorities already used substantial need as a basis for eligibility and access to services before this Government came into office.
The £650 million that is being transferred to local authorities from the NHS is on top of the £530 million from the Department for Communities and Local Government that will go directly to social service departments.