Bus Industry

Debate between Andrew Gwynne and Andrew Turner

Tuesday 6th September 2011 Westminster Hall

[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.

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 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 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.