Bus Services Bill [Lords]

Bridget Phillipson Excerpts

2nd reading: House of Commons
Wednesday 1st March 2017 Commons Chamber

[Mrs Villiers]

No, I have already given way.

We need to bear it in mind that, in competing for bus contracts, local operators might be up against large transport groups owned by overseas Governments with deep pockets. I am particularly concerned that the amendment that was approved in the other place will mean that bus operators could even find themselves having to contest for contracts alongside a company owned by the franchising authority that is making the decision to award the contract, giving rise to an obvious and unacceptable conflict of interest. I fear that clause 4 would inevitably result in a number of bus companies going out of business, which would be bad for passengers. I am also concerned that local authorities that are keen to take over the provision of bus services will find that taking on revenue risk could be a very costly exercise that would deplete the funding available to support those crucial non-commercial routes that do not generate enough passengers to cover their costs.

No local authority has introduced a quality contract to re-regulate bus services, despite their having been on the statute book since the early years of this century. I acknowledge that there are different reasons for that, but one of them is that taking over bus operations is inevitably a very expensive project for local authorities. To those who think that passing greater financial responsibility for investing in the bus network from the private sector to local councils is a great idea, I would point out that it involves investment in buses and bus services having to compete with pressing priorities such as social care, libraries, waste collection and all the rest, and that that investment—and bus passengers—are likely to suffer as a result.

Ever since 1986, there has been a vigorous and lively debate about the effect of deregulating bus services outside London. It cannot be denied that many millions of pounds of investment have been made by private sector bus operators in the years since privatisation. That brings me to a key problem with the franchising proposals—namely, the uncertainty that they will cause. If bus operators are unsure about whether their businesses could end up being taken off the road, they will be reluctant to invest in new buses or to improve passenger facilities such as ticketing systems.

[Bridget Phillipson (Houghton and Sunderland South) (Lab)]

I have listened with some frustration to what the right hon. Lady is saying. I fail to grasp why something that works in London and no doubt delivers very well for the people she represents cannot be done in other parts of the country. The insecurity that she talks about could have the reverse effect in large parts of the north-east, where the insecurity at the moment rests with the travelling public, who do not know whether there will be a bus to get them to hospital on a regular basis.

[Mrs Villiers]

There seems to be an assumption that if the London model of regulation were to be applied everywhere else, it would suddenly deliver London standards of bus services, but a causal link between the two has not been established. A whole range of factors in London contributes to the high levels of ridership and the success of the bus network. Simply reproducing that regulatory system elsewhere would not deliver the same end result, not least because Londoners pay several million pounds in congestion charges every year that are recycled into bus services. That larger level of subsidy makes a difference to the quality of the services.

--- Later in debate ---

[Bridget Phillipson (Houghton and Sunderland South) (Lab)]

Second Reading provides a welcome opportunity to discuss the pressing need for changes to bus services in England. Not long after I was first elected in 2010, I met a group of local campaigners who were lobbying a bus company to think again about cuts to a route that would have made it difficult for their children to get to school. Many more changes have followed since, with many further cuts to services. I have championed the campaign and cause ever since those local people first raised it with me.

Change is desperately needed in England’s bus services. Deregulation has been an unmitigated disaster, particularly for people who live in constituencies such as mine where buses are the only option. It is now more than 30 years since the deregulation of the bus industry outside London, which came with the promise that competition would provide greater efficiency, lower fares and, above all, greater passenger numbers. On every one of those measures, deregulation has failed: bus services have become less competitive, less efficient, more expensive and less convenient for the people I represent. Instead of allowing operators the freedom to provide the services that customers want, deregulation has given operators the freedom to do whatever they think is necessary to maximise their profits. Instead of driving competition, as we were promised, it has allowed operators to carve up regions such as the north-east and run local networks as their own private monopolies—that is a strange form of competition indeed.

Across Wearside, deregulation has also enabled operators to cut or needlessly change routes deemed not profitable enough—it is not that they are not profitable, just that they are not making enough money—leaving whole areas without a service. Despite that, operators continue to receive significant taxpayer subsidy, with little to no accountability. In these circumstances, it is hardly surprising that bus patronage has declined everywhere but London over the past 30 years. The knock-on effect is one of ever-declining services and rising subsidies in a growing number of local communities. That has certainly been the experience in my constituency and many others across the north-east. I therefore welcome the Government’s recognition that we need to change the way buses are run in this country, but this Bill falls far short, and I fail to understand the Secretary of State’s rationale for rejecting the amendments made in the other place on the powers that could be given to local authorities.

As the only part of mainland Britain to be spared the disasters of deregulation in the 1980s, in London taxpayer subsidies are used to maintain and improve services in the public interest. Instead of having a network of cosy monopolies, as we have in the north-east, bus operators in London must enter a competitive tendering system that is kept under continuous review by Transport for London, which controls fares and plans the network. Companies that fail to provide a good service are replaced by others that can do a better job—that is as it should be. Thanks to that system of competitive franchising, Londoners today have access to an extensive bus network that can take them all across the capital. Although I of course recognise that as the capital city London provides different and unique opportunities to operators, there are lessons we can and should take for how we run our buses across the rest of the country, too. Bus services in London are fully integrated with the rest of the capital’s public transport network, and Oyster smart ticketing and contactless payments are a standard requirement. Thanks to the Mayor of London’s new hopper fare, Londoners can travel on a second bus for free within one hour of touching in on the first. I look on with envy at the kind of modest change we can make that would make a real difference to the people I represent—if only we were given the powers to make it possible.

The issue of value for money for the taxpayer is important, because buses in London achieve far better returns than buses in any other part of the country, with decreasing levels of subsidy and less subsidy than there is in many metropolitan areas. Let us compare that with the situation in which we find ourselves in the north-east, where we have zero integration of routes and fares; limited use of smart ticketing and new technology; confusing and extortionate pricing structures; ever-changing and inconvenient timetables; routes chopped and changed all the time; older people unable to get to hospital; and young people unable to get to college. I could go on and on with that list. That is why I supported efforts by Nexus and the North East Combined Authority to use existing legislation to re-regulate bus services through the introduction of a quality contract scheme in Tyne and Wear. Many Members have rightly talked about the experience we had in Tyne and Wear. It was a source of real disappointment that we were not able to make that change and that that scheme was rejected. That was a mistake, but none the less it was the decision that was taken. As others have said, that legislation was, unfortunately, flawed in some respects and it was overly complicated, but of course we do not yet know whether Ministers could set that right and allow the north-east the power to introduce that kind of scheme in future. I think we made the case during that process. The issues raised by the quality contract scheme board were not ones that denied the fact that the north-east faced big challenges and needed to address the bus market, and I hope that Ministers will now look carefully at the case the north-east can make for taking those powers back.

I welcome the fact that this Bill is a limited acknowledgment by the Government of what many of us have been arguing for years: that the current system of bus service provision in England is not fit for purpose. For reasons that are unclear to me, the Government intend to press ahead in overturning the amendments that would allow change in places such as the north-east. I appreciate that we have heard much about a two-step process and the need for a compelling case to be made, but I think the north-east can make that case. I would, however, appreciate greater clarity from the Minister as to where that bar will be set. Will it be set at such a level as to prevent that from happening, or can we be assured that there will be a genuine process to allow areas such as the north-east to demonstrate the potential benefits to the local economy and travelling public from taking on the franchising model again? I hope the Minister can say more about that when he responds, and I look forward to the opportunity to discuss the matter with him further when the Bill is in Committee.

The north-east has a strong case that franchising makes sense for the region and will benefit passengers. If the Government are really serious about creating a competitive market for local bus services throughout England and stimulating growth in areas such as the north-east, they have nothing to fear from granting franchising powers to areas such as mine. If the north-east is to fulfil its economic potential and to realise the potential of the great talent, businesses and people we have, we need a Government who will give us the powers to make that happen so that we can support businesses, jobs and growth. Transport is central to that. Transport connections in the north-east are poor and hold back our local economy and our businesses. The Bill provides us with a rare opportunity to reform a broken bus market and put the interests of passengers ahead of profits. I urge Ministers to consider the north-east’s strong case and give us the powers we need to grow our economy.